Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
19th CONGRESS 
First Regular Session 
HOUSE BILL NO.  ____ 
_____________________________________________________________________ 
Introduced by REP. BERNADETTE “DETTE” G. ESCUDERO 
_____________________________________________________________________ 
EXPLANATORY NOTE 
AN ACT 
TO FURTHER STRENGTHEN LOCAL AUTONOMY THROUGH A MORE 
RATIONALIZED SYSTEM OF DECENTRALIZATION AMENDING FOR 
THE PURPOSE REPUBLIC ACT NUMBER 7160, AS AMENDED, 
OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991 
The Constitution speaks of local autonomy in five (5) occasions,1 all couched 
in mandatory terms. Concomitantly, as a Constitutional mandate, local government 
units are allowed to make independent administrative determinations on their own and 
theirs alone. Hence, any regulations in the exercise of local autonomy must not, in any 
manner or form, result in neither restriction nor control. 
The cases of Pimentel, Jr. vs. Aguirre2 and Mandanas vs. Ochoa3 clarified and 
defined, respectively, the Constitutional grant of local autonomy as specifically 
provided for in Section 2, Article X of the Constitution in the following manner: 
“In Ganzon v. Court of Appeals, we said that local autonomy signified 
"a more responsive and accountable local government structure 
instituted through a system of decentralization." The grant of autonomy 
is intended to "break up the monopoly of the national government over 
the affairs of local governments, x x x not x x x to end the relation of 
partnership and interdependence between the central administration 
and local government units x x x." Paradoxically, local governments 
are still subject to regulation, however limited, for the purpose of 
enhancing self-government.”4 (underscoring supplied)  
Under the Philippine concept of local autonomy, the national 
government has not completely relinquished all its powers over local 
governments, including autonomous regions. Only administrative 
powers over local affairs are delegated to political subdivisions. The 
purpose of the delegation is to make governance more directly 
1 Section 25, Article II; Section 2, Article X; Section 5, Article X; Section 11, Article X; and Section 
14, Article X. 
2 GR No. 132998, 19 July 2000. 
3 GR No. 199802, 03 July 2018. 
4 Pimentel, Jr. vs. Aguirre, GR No. 132998, 19 July 2000. 
July 26, 2022
6:22 pm
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responsive and effective at the local levels. In turn, economic, political 
and social development at the smaller political units are expected to 
propel social and economic growth and development. But to enable the 
country to develop as a whole, the programs and policies effected 
locally must be integrated and coordinated towards a common national 
goal. Thus, policy-setting for the entire country still lies in the President 
and Congress. As we stated in Magtajas v. Pryce Properties Corp., Inc., 
municipal governments are still agents of the national government.5 
(underscoring supplied) 
“The constitutional mandate to ensure local autonomy refers to 
decentralization. In its broad or general sense, decentralization has two 
forms in the Philippine setting, namely: the decentralization of power 
and the decentralization of administration. The decentralization of 
power involves the abdication of political power in favor of the 
autonomous LGUs as to grant them the freedom to chart their own 
destinies and to shape their futures with minimum intervention from the 
central government. This amounts to self-immolation because the 
autonomous LGUs thereby become accountable not to the central 
authorities but to their constituencies. On the other hand, the 
decentralization of administration occurs when the central government 
delegates administrative powers to the LGUs as the means of 
broadening the base of governmental powers and of making the LGUs 
more responsive and accountable in the process, and thereby ensure 
their fullest development as self-reliant communities and more effective 
partners in the pursuit of the goals of national development and social 
progress. This form of decentralization further relieves the central 
government of the burden of managing local affairs so that it can 
concentrate on national concerns.6” (underscoring supplied) 
As ruled in the above cited cases and in Villafuerte vs. Robredo7, the grant of 
local autonomy is not synonymous to local government units’ sovereignty within the 
state but emphasizes interdependence between the national and local government 
agencies. Such that while regulations may be validly imposed on local government 
units, such regulations are but geared toward “enhancing self-governance.8” 
Consequently, decentralization, which is inherent in local autonomy, should 
not be rendered useless and without effect by the necessity of prior approval from 
national government agencies. To the contrary, local governments to be autonomous 
must be able to act promptly and effectively in the exigencies of public service sans 
any undue restrictions. 
Section 4, Article X of the Constitution prescribes the exercise of mere 
supervision, not control, by the President over local government units. Mondano vs. 
Silvosa9 contrasted the President’s power of supervision over local government units 
5 Ibid. 
6 Mandanas vs. Ochoa. GR No. 199802, 03 July 2018. 
7 GR No. 195390, 10 December 2014. 
8 Ibid. 
9 GR No. L-7708, 30 May 1955. 


with that of the President’s power of control over all officials in the national 
government, thus: 
“In administrative law, supervision means overseeing or the power or 
authority of an officer to see that subordinate officers perform their 
duties. If the latter fail or neglect to fulfill them, the former may take 
such action or step as prescribed by law to make them perform their 
duties. Control, on the other hand, means the power of an officer to 
alter or modify or nullify or set aside what a subordinate officer ha[s] 
done in the performance of his duties and to substitute the judgment of 
the former for that of the latter.”10 
Otherwise stated, “supervisory power, when contrasted with control, is the 
power of mere oversight over an inferior body; it does not include any restraining 
authority over such body.11”  
In view of the foregoing, this bill seeks to amend Republic Act No. 7160, as 
amended, or the Local Government Code of 1991, taking into consideration its more 
than three (3) decade implementation and the way it has been interpreted and applied 
as a Constitutionally prescribed and mandated policy.  
For local autonomy to be made effective, it must amount to effective authority 
for local government units to decide matters concerning local affairs. And although it 
may not be absolute, the parameters limiting its exercise must not give the national 
government the power to restrict the actions of local government units or to substitute 
its judgment with their own. 
Respectfully submitted. 
      MARIE BERNADETTE G. ESCUDERO 
10 Ibid. 
11 Taule vs. Santos, citing Hebron vs. Reyes, GR No. 90336, 12 August 1991. 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
19th CONGRESS 
First Regular Session 
HOUSE BILL NO.  ____ 
_____________________________________________________________________ 
Introduced by REP. BERNADETTE “DETTE” G. ESCUDERO 
_____________________________________________________________________ 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled: 
Section 1. 
Declaration of State Policies and Principles. – It is hereby 
declared a policy of the State to ensure local autonomy of its territorial and political 
subdivisions consistent with decentralization inherent in local autonomy thereby 
ensuring local administrative determination without undue restrictions. 
Sec. 2. Interpretation. –  The provisions of this Act shall be interpreted in 
favor of local autonomy and to ensure the independent administrative determination 
of local government units free from any control or regulation of national agencies 
such that the national government is not given the power to restrain or substitute the 
judgement of local government units with its own.  
Sec. 3. Amendments. – The following provisions of Republic Act No. 7160, as 
amended, are hereby amended as follows: 
“Section 3. Operative Principles of Decentralization. - The formulation and 
implementation of policies and measures on local autonomy shall be guided by 
the following operative principles:  
(a) There shall be an effective allocation among the different local
government units of their respective powers, functions, responsibilities,
and resources INDEPENDENT OF ANY RESTRICTIONS FROM
NATIONAL AGENCIES;
(b) There shall be established in every local government unit an
INDEPENDENT, accountable, efficient, and dynamic organizational
structure and operating mechanism that will meet the priority needs
and service requirements of its communities;
(c)
Subject to civil service law, rules and regulations AS
GUIDELINES 
AND 
WITHOUT 
RESTRICTING
ADMINISTRATIVE 
DETERMINATION, 
local 
officials 
and
employees paid wholly or mainly from local funds shall be appointed
or removed, according to merit and fitness, by the appropriate
appointing authority;
2400


(d) The vesting of duty, responsibility, and accountability in local 
government units shall be accompanied with provision for reasonably 
adequate resources to INDEPENDENTLY AND EFFECTIVELY 
discharge their powers and [effectively] carry out their functions: 
hence, they shall have the power to create and broaden their own 
sources of revenue and the right to a just share in national taxes and 
an equitable share in the proceeds of the utilization and development 
of the national wealth within their respective areas;  
 
(e) Provinces with respect to component cities and municipalities, and 
cities and municipalities with respect to component barangays, shall 
ensure that the acts of their component units are within the scope of 
their prescribed powers and functions;  
 
(f) Local government units may group themselves, consolidate or 
coordinate their efforts, services, and resources commonly beneficial 
to them;  
 
(g) The capabilities of local government units, especially the 
municipalities and barangays, shall be enhanced by providing them 
with opportunities to participate actively in the implementation of 
national programs and projects AND THE MEANS AND 
CAPABILITIES TO INDEPENDENTLY CARRY ON THEIR 
RESPECTIVE PROGRAMS AND PROJECTS;  
 
(h) There shall be a continuing mechanism to enhance local autonomy 
not only by legislative enabling acts but also by administrative and 
organizational reforms;  
 
(i) Local government units shall share with the national government 
the responsibility in the management and maintenance of ecological 
balance within their territorial jurisdiction, subject to the provisions of 
this Code and national policies;  
 
(j) Effective mechanisms for ensuring the accountability of local 
government units to their respective constituents shall be strengthened 
in order to upgrade continually the quality of local leadership;  
 
(k) The realization of local autonomy shall be facilitated through 
improved coordination of national government policies and programs 
and extension of adequate technical and material assistance to less 
developed and deserving local government units;  
 
(l) The participation of the private sector in local governance, 
particularly in the delivery of basic services, shall be encouraged to 
ensure the viability of local autonomy as an alternative strategy for 
sustainable development; and 
  


(m) The national government shall ensure that decentralization 
contributes to the continuing improvement of the performance of local 
government units and the quality of community life.” 
 
 
“Section 76. Organizational Structure and Staffing Pattern. - Every local 
government unit shall INDEPENDENTLY design and implement its own 
organizational structure and staffing pattern taking into consideration its 
service requirements and financial capability, subject to the minimum 
standards and guidelines prescribed FOR THE PURPOSE by the Civil 
Service Commission WITHOUT RESTRICTING THE ADMINISTRATIVE 
DETERMINATION OF LOCAL GOVERNMENT UNITS.”  
 
 
“Section 325. General Limitations. - The use of the provincial, city, and 
municipal funds shall be subject to the following limitations:  
 
(a) The total appropriations, whether annual or supplemental, for 
personal services of a local government unit for one (1) fiscal year 
shall not exceed forty-five percent (45%) in the case of first to third 
class provinces, cities and municipalities, and fifty-five percent (55%) 
in the case of fourth class or lower, of the total annual income from 
regular sources realized in the next preceding fiscal year. The 
appropriations for salaries, wages, representation and transportation 
allowances of officials and employees of the public utilities and 
economic enterprises owned, operated, and maintained by the local 
government unit concerned shall not be included in the annual budget 
or in the computation of the maximum amount for personal services. 
The appropriations for the personal services of such economic 
enterprises shall be charged to their respective budgets;  
 
(b) No official or employee shall be entitled to a salary rate higher 
than the maximum fixed for his position or other positions of 
equivalent rank by applicable laws or rules and regulations issued 
thereunder; 
 
(c) No local fund shall be appropriated to increase or adjust salaries 
or wages of officials and employees of the national government, except 
as may be expressly authorized by law;  
 
(d) In cases of abolition of positions and the creation of new ones 
resulting from the abolition of existing positions in the career service, 
such abolition or creation shall be made in accordance with pertinent 
provisions of this code and the civil service law, rules and regulations 
AS 
GUIDELINES 
WITHOUT 
RESTRICTING 
THE 
ADMINISTRATIVE 
DETERMINATION 
OF 
LOCAL 
GOVERNMENT UNITS; 
  


(e) Positions in the official plantilla for career positions which are 
occupied by incumbents holding permanent appointments shall be 
covered by adequate appropriations;  
 
(f) No changes in designation or nomenclature of positions resulting in 
a promotion or demotion in rank or increase or decrease in 
compensation shall be allowed, except when the position is actually 
vacant, and the filling of such positions shall be strictly made in 
accordance with the civil service law, rules and regulations;  
 
(g) The creation of new positions and salary increases or adjustments 
shall in no case be made retroactive; 
 
(h) The annual appropriations for discretionary purposes of the local 
chief executive shall not exceed two percent (2%) of the actual receipts 
derived from basic real property tax in the next preceding calendar 
year. Discretionary funds shall be disbursed only for public purposes 
to be supported by appropriate vouchers and subject to such guidelines 
as may be prescribed by law. No amount shall be appropriated for the 
same purpose except as authorized under this Section.” 
 
 
“Section 288. Rules and Regulations. - The Secretary of Finance, in 
consultation with the Secretary of Budget and Management AND THE 
LOCAL GOVERNMENT UNITS THROUGH THEIR RESPECTIVE 
LEAGUES, shall promulgate the necessary rules and regulations for a 
simplified disbursement scheme designed for the speedy and effective 
enforcement of the provisions of this Chapter WITHOUT RESTRICTING 
THE 
ADMINISTRATIVE 
DETERMINATION 
OF 
LOCAL 
GOVERNMENT UNITS.” 
 
“Section 326. [Review of] Appropriation Ordinances of Provinces, Highly-
Urbanized Cities, Independent Component Cities, and Municipalities within the 
Metropolitan Manila Area. – [The Department of Budget and Management 
shall review o] Ordinances authorizing the annual or supplemental 
appropriations of provinces, highly-urbanized cities, independent component 
cities, and municipalities within the Metropolitan Manila Area SHALL BE IN 
ACCORDANCE WITH THE GUIDELINES SET IN THE BUDGET 
OPERATIONS MANUAL AS PROVIDED FOR IN SECTION 354 OF THIS 
CODE WITHOUT NEED OF ANY REVIEW [in accordance with the 
immediately succeeding Section].”  
 
“Section 354. Administrative Issuances; Budget Operations Manual. - The 
Secretary of Budget and Management AND THE LOCAL GOVERNMENT 
UNITS THROUGH THEIR RESPECTIVE LEAGUES jointly with the 
Chairman of the Commission on Audit shall, [within one (1) year from the 
effectivity of this Code] IF SO REQUESTED BY LOCAL GOVERNMENT 
UNITS THROUGH THEIR RESPECTIVE LEAGUES, promulgate a Budget 
Operations Manual for local government units to improve and systematize 
methods, techniques, and procedures employed in budget preparation, 


authorization, execution, and accountability WITHOUT RESTRICTING THE 
ADMINISTRATIVE DETERMINATION OF LOCAL GOVERNMENT 
UNITS.” 
 
“Section 383. Implementing Rules and Regulations. - The Chairman of the 
Commission on Audit AND THE LOCAL GOVERNMENT UNITS 
THROUGH THEIR RESPECTIVE LEAGUES shall promulgate the rules 
and regulations necessary to effectively implement the provisions of this Title, 
including requirements as to testing, inspection, and standardization of supply 
and property WITHOUT RESTRICTING THE ADMINISTRATIVE 
DETERMINATION OF LOCAL GOVERNMENT UNITS.” 
 
 
 
Sec. 4.  Separability Clause. - If any provision of this Act or the application of 
such provision to any person or circumstance is declared invalid, the remainder of the 
Act or the application of such provision to other persons or circumstances shall not be 
affected thereby. 
 
 
 
Sec. 5. Repealing Clause. - All laws, decrees, administrative issuances, rules 
and regulations, and orders or parts thereof inconsistent with this Act are deemed 
repealed or modified accordingly. 
 
 
 
Sec. 6. Effectivity. - This Act shall take effect after fifteen (15) days following 
the completion of its publication in the Official Gazette or in two (2) national 
newspapers of general circulation, whichever comes first. 
 
 
Approved,