FOURTEENTH CONGRESS OF THE REPUBLIC) 
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Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
Presidential Decree No. 269, as amended otherwise known as the Rural Electrification 
Decree was issued in 1973 with the objective of attaining total electrification of the entire 
Philippines. However, it has already been more than two (2) decades now since the 
electrification program was launched, yet, there are still numerous areas in the countryside which 
do not have a supply of electricity. The national government has a perennial funding problem 
and therefore local government units, if only to pursue the objective of the law, must be given 
reasonable discretion to tap any available sources of funding to enable them to collaborate with 
the national government in such kind of worthy undertaking for the benefit of the poor people, 
particularly in remote areas. This kind of undertaking however, may not be possible due to the 
existence of a provision in the Local Government Code which provides restrictions on how the 
share of local government units will be spent. 
Section 294 of the Local Government Code expressly limits the use of the share of the 
proceeds derived from the development and utilization of sources of energy to the reduction of 
the cost of electricity in the area where such a source is located. If the number of population is 
considered, the application of the proceeds to lower the cost of electricity will be negligible, 
particularly in densely populated area, but the amount may be sufficient to finance the 
electrification of other areas within the province where the source of energy is located. 
The local government units are supposed to be in a better position to determine the needs 
of their constituents and what is best for them. However, local government units are severely 
restrained to exercise their best option due to the existence of the aforementioned provision in 
the Code which dictated upon them what to do with their own money. This system runs counter 
to the attainment of local autonomy. A curative legislation therefore that will allow local 


government units to use the share of the proceeds derived from the development and utilization 
of various sources of energy as intended in this bill is highly recommended. 
This is a Senate counterpart bill to one filed in the House of Representatives by Rep. 
Emilio C. Macias 11. 


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FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
1 
First Regular Session 
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Introduced by Senator Miriam Defensor Santiago 
AN ACT 
AUTHORIZING LOCAL GOVERNMENT UNITS TO APPLY THE SHARE 
OF THE PROCEEDS DERIVED FROM THE DEVELOPMENT AND UTILIZATION OF 
HYDROTHERMAL, GEOTHERMAL, AND OTHER SOURCES OF ENERGY FOR 
ELECTRIFICATION OF OTHER AREAS WITHIN THE PROVINCE 
WHERE THE SOURCE OF ENERGY IS LOCATED AMENDING FOR THE PURPOSE 
SECTION 294 OF REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS 
THE LOCAL GOVERNMENT CODE OF 1991 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assem bled: 
SECTION 1. Section 294 of Republic Act No. 7160, otherwise known as the Local 
Government Code of 1991, is hereby amended to read as follows: 
“SECTION 294. Development and Livelihood Projects. - The proceeds 
from the share shall be appropriated by their respective sanggunian to finance 
local development and livelihood projects: Provided, however, that at least 
eighty percent (80%) of the proceeds derived from the development and 
utilization of hydrothermal, geothermal and other sources of energy shall be 
applied [solely] FOR ELECTRIFICATION OF OTHER AREAS WITHIN THE 
PROVINCE OR to lower the cost of electricity in the local government unit 
where such a source of energy is located.” 
SECTION 2. This Act shall take effect fifteen (15) days after its publication in at least 
two (2) newspapers of general circulation. 
Approved,