The enactment of Republic Act No. 7160, otherwise known as the Local Government Code of 1991 (LGC), marked a revolutionary shift in the Philippine administrative landscape. By transitioning from a highly centralized system to a decentralized framework, the LGC sought to transform Local Government Units (LGUs) into self-reliant communities and active partners in the attainment of national goals.

Underpinned by the constitutional mandate of local autonomy, the Code provides the legal infrastructure for the organization, powers, and operations of provinces, cities, municipalities, and barangays.

I. Fundamental Principles of Decentralization

The LGC is anchored on the principle that local governments are better positioned than the national government to address the specific needs of their constituents. The key pillars include:

Devolution: The transfer of power and authority from national government agencies (NGAs) to LGUs to perform specific functions and responsibilities.
Deconcentration: The mobilization of financial and human resources to local levels.
Empowerment: The integration of the private sector and non-governmental organizations (NGOs) into the process of local governance.

II. Common Powers of Local Government Units

Every LGU is a body politic and corporate, endowed with powers to be exercised in conformity with law.

1. General Welfare Clause (Section 16)

Perhaps the most potent provision, this mandates LGUs to exercise powers necessary for the efficient and effective governance of their jurisdictions. This includes the promotion of health and safety, the enhancement of economic prosperity, and the preservation of comfort and convenience for their inhabitants.

2. Power to Create Sources of Revenue (Section 129)

LGUs have the inherent power to create their own sources of revenue and to levy taxes, fees, and charges. These resources accrue exclusively to the LGU to ensure financial independence.

3. Power of Eminent Domain (Section 19)

An LGU may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose, or welfare. This requires the payment of just compensation and is subject to the oversight of the Department of Agrarian Reform if agricultural lands are involved.

4. Reclassification of Lands (Section 20)

A city or municipality may, through an ordinance, authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in certain cases, such as when the land ceases to be economically feasible for agriculture.

III. The Inter-Governmental Relations and Shares

The Code ensures that LGUs are not left without the means to perform their devolved functions.

National Tax Allotment (NTA): Formerly known as the Internal Revenue Allotment (IRA), this is the LGU's share in national internal revenue taxes. Following the Mandanas-Garcia ruling, this share now includes all national taxes, significantly increasing local budgets.
Share in National Wealth: LGUs are entitled to an equitable share in the proceeds derived from the utilization and development of the national wealth within their respective areas (e.g., mining, forestry, and energy resources).

IV. Devolved Basic Services and Facilities (Section 17)

The LGC explicitly lists the services that the national government has handed over to LGUs:

Health: Operation of secondary and tertiary hospitals (Provinces) and primary health care (Municipalities).
Agriculture: Extension and on-site research services.
Social Welfare: Programs for the disabled, elderly, and victims of drug abuse.
Public Works: Construction and maintenance of local roads, bridges, and drainage systems funded by local funds.
Environmental Protection: Community-based forestry projects and solid waste management.

V. Structural Organization and Human Resources

The Code defines the roles of the elective and appointive officials:

The Local Chief Executive: The Governor (Province), Mayor (City/Municipality), or Punong Barangay. They exercise general supervision and control over all programs and activities of the LGU.
The Sanggunian: The local legislative body (Sangguniang Panlalawigan, Panlungsod, Bayan, or Barangay). They enact ordinances, approve resolutions, and appropriate funds.
Local Boards: The LGC mandates the creation of functional boards such as the Local Health Board, Local School Board, and Local Development Council, which must include representatives from the private sector.

VI. Accountability and Supervision

While LGUs enjoy autonomy, they are not independent states.

Presidential Supervision: The President of the Philippines exercises general supervision over LGUs to ensure that their acts are within the scope of their prescribed powers and functions. This is typically coursed through the Department of the Interior and Local Government (DILG).
Disciplinary Actions: The LGC provides the grounds and procedures for the suspension or removal of elective local officials for causes such as disloyalty to the Republic, culpable violation of the Constitution, or corruption.
People’s Participation: The Code institutionalizes the role of the people through mechanisms like Local Initiative and Referendum, and the Recall of elective officials due to loss of confidence.

VII. The Katarungang Pambarangay (Section 399)

A unique feature of the Philippine local government system is the Lupong Tagapamayapa. This system provides a venue for the amicable settlement of disputes at the barangay level, serving as a mandatory precursor to judicial proceedings for most minor civil and criminal cases. This reduces the clogging of court dockets and promotes peace within the community.