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Republic of the Philippines Oa
HOUSE OF REPRESENTATIVES

Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL NO. Ho

Introduced by Honorable Mark O. Go

EXPLANATORY NOTE

In recognizing the indispensable role of local government units in building our nation
and in securing socio-economic development that benefits all sectors of the Philippine
society, the State through the Constitution, adopted a policy of ensuring local autonomy.
Towards this end, the fundamental law mandated the national legislature to enact a local
government code that shall provide a more responsive and accountable local government
structure instituted through a system of decentralization.

Throughout Philippine history, we sustained a long tradition of centralized governance,
as demonstrated in the concentration of economic and political power in the “Imperial
Manila” and in the isolated pockets of urbanization and development distributed across the
archipelago, such as Baguio, Cebu, Iloilo, and Davao. The enactment of Republic Act No.
7160 or Local Government Code of 1991 sought to grant local government units meaningful
autonomy by empowering them through decentralizing the governance and granting local
‘government units increased powers, functions, and resources. The intention behind setting up
this framework of governance, is to build the capacities and expand the responsibilities of
local actors that they become significant partners of the national government in the
development process. However, the uneven scale and pace of local growth among LGUs,
continue to be manifest, and inequality in the regional level down to the level of the
household continue to persist

Since the implementation of an institutionalized framework of decentralization, many
significant public service functions were devolved to the LGUs, which includes among others
agricultural extension and on-site research, community-based forestry projects, field health
and hospital services, public works and infrastructure, tourism promotion, investment
support, and social welfare services. Likewise, regulatory powers with regards the
enforcement of environmental laws, and compliance with regulations on food products, were
among other powers, devolved. However, more than 25 years after the enactment of the
landmark Local Government Code, the prospect for the many of these devolved functions
leaves much room for improvement. In a 2017 ranking of 195 countries, the Philippines
ranked 120th in terms of access to and quality of healthcare for the treatment of preventable
diseases. Meanwhile, the state of agriculture in the country continues to falter. While the
agriculture sector makes up for more than 24% of our country’s total employment, the sector
accounted for only 7.1% of the our total GDP in the second quarter of 2019. The system of
‘empowering LGUs is aimed at bringing development to the nation as a whole, to spread
growth and leave no sector, province, or community behind. However, regional disparities


continued to widen, and the poverty profile of the country has barely changed over the more
than two decades of implementation of the law. According to a study conducted by the
Philippine Institute for Development Studies, “effective decentralization has not been
realized because devolved functions were not complemented by adequate revenue-raising
powers, clear division of responsibilities, and bureaucratic capacity building.” Therefore,
LGUs continued to face various challenges in the exercise of their devolved service delivery
functions because while the responsibilities where transferred to them, they lack the
appropriate and adequate capabilities to dispose of these functions, particularly in the
implementation of their development programs.

In order to strengthen our system of institutionalized decentralization, and facilitate
actual growth and development across the country, it is the proposal of this measure to
complement the increase functions and responsibilities of LGUs with a rational and equitable
distribution of budget for LGU development

Towards this end, this bill seeks to establish a Local Equitable Allocation Program
(LEAP) and guarantee an equitable appropriation by the National Government of an annual
fund sufficient to implement the LGUs’ Comprehensive Development Plan (CDP). This fund
shall be known as the Local Assistance Fund (LAF). The bill also mandates the Local
Development Councils to conduct an annual review, and if necessary, update and improve
their respective CDP. This CDP would be the basis for the allocation of the LAF. In addition,
to ensure the proper utilization of the LAF, the Department of Interior and Local Government
(DILG) shall conduct an annual performance review of the LGUs’ implementation of their
development programs and activities as identified in their CDPs. Unsatisfactory performance
of the LGU shall result in the reduction of the LGU’s LDF for the following year by 50%.
Furthermore, to better monitor the impact of this measure on the development of LGUs, and
to be able to respond adequately and effectively to the changing circumstances of the LGUs
relevant to the implementation of this measure, it is proposed that five years from effectivity,
the Congress shall conduct a systematic review of the measure.

The budgeting process is in actuality the process of translating the government’s
priorities into monetary form. It is high time that we truly prioritize local development and
substantiate our policy of empowering LGUs by providing them the proper tools to become
drivers of our national growth.

Hence, approval of this bill is earnestly requested.


Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL No. 4559

Introduced by Honorable Mark O. Go

AN ACT TO ESTABLISH THE LOCAL EQUITABLE ALLOCATION PROGRAM
AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Short Title. — This Act shall be known as the “Local Equitable
Allocation Program (LEAP) Act of 2019.”

SEC. 2. Declaration of Policy. ~ It is declared as policy of the State to ensure
meaningful autonomy for local governmant units that will enable them to attain the fullest
development for their localities and become active partners for the attainment of national
goals. The State shall likewise ensure that sufficient financial resources shall be extended to
every local government unit that would augment their funds for the implementation of their
comprehensive devepment plans

SEC. 3. Local Equitable Allocation Program (LEAP). ~ There is hereby established a
Local Equitable Allocation Program (LEAP) to be managed and administered by the
Department of Budget and Management (DBM) and funded by the National Government
through an annual fund to be known as the Local Assistance Fund (LAF) that shall be
apportioned and allocated equitably to every province, city, municipality and barangay to
ensure the implementation of their Comprehensive Development Plan (CDP), to wit:

(a) Provinces — Five Hundred Million Pesos (P500,000,000.00) per province per year;
(b) Cities - One Hundred Million Pesos (P100,000,000.00) per city per year,

(c) Municipalities — Fifty Million Pesos (P50,000,000.00) per municipality per year;
(d) Barangays — Three Million Pesos (P3,000,000.00) per barangay per year.

Provided that, the amount of LAF for each province, city, or municipality shall be based
on the following criteria:

a) 50% of the prescribed amount for each 1" class LGU;
b) 60% of the prescribed amount for each 2” class LGU;
c) 70% of the prescribed amount for each 3" class LGU;
d) 80% of the prescribed amount for each 4" class LGU;


e) 90% of the prescribed amount for each 5" class LGU;
£) 100% of the prescribed amount for each 6" class LGU;

Provided, further, that each barangay shall, at all times, receive the full amount of LAF
prescribed above.

The fund shall be used solely by the LGUs to finance their respective development
projects, activities and programs identified in their approved Comprehensive Development
Plans (CDP). In the allotment of the LDF, fiscal capacity, expenditure responsibilties and
poverty incidence shall be taken into consideration

These funds shall be automatically and directly released to every LGU at the start of the
fiscal year or on quarterly basis within five (5) days at the start of each quarter.

SEC. 4. Restrictions on Utilization of Fund. — No amount shall be used for purposes
not related with the development projects, activities and programs as provided under the CDP
such as:

Administrative expenses such as cash gifts, bonuses, food allowance, medical
assistance, uniforms, supplies, communication, meetings, utilities, petroleum products
and others.

b) Salaries, wages, emoluments, per diems or overtime;

c) Traveling expenses, whether domestic or foreign;

4) Registration fees in trainings, seminars, conferences and conventions;

e) Construction, renovation or repair of administrative offices;

£) Purchase of office furnitures and fixtures;

g) Purchase, maintenance or repair of motor vehicles; and

h) Other analogous expenses

SEC. 5. Comprehensive Development Plan. — Every local government unit shall
formulate a 6-year comprehensive development plan (CDP) pursuant to the provisions of the
Local Government Code and policy issuances of the Department of Interior and Local
Government (DILG). The CDP shall contain development programs and projects that
corresponds to the developmental needs of the constituency and locality of a particular LGU.

The approved CDP shall be funded annually by the National Government in accordance
with Section 3 of this Act. Programs and projects listed under the approved CDP shall be
included and identified in the General Appropriations Act

The Local Development Councils shall conduct an annual review their respective CDP
and may introduce and approve necessary amendments thereto.

SEC. 6. Performance-based Evaluation. — The DILG shall conduct an annual
performance-based evaluation before the end of the fourth quarter of every year on the
implementation of every LGU’s development projects, activities and programs based on the
indicators as provided in their CDP. The evaluation result shall be published before the end
of the first quarter of the following year.

Unsatisfactory performance of an LGU shall result in the reduction of its LAF by fifty
percent (50%) in the following year after the said evaluation. Provided, that, when the LGU
which was previously rated with poor standing have improve on its performance in the next


evaluation period, its LAF shall be restored in full. Provided further, that, the LAF shall be
terminated in case of two (2) consecutive unsatisfactory or poor performance

SEC. 7. Fund Monitoring System. — For purposes of transparency and accountability,
the DILG shall adopt an online system for monitoring and evaluation of all development
projects, activities and programs funded by the LAF. The system shall allow tracking of
expenditures and the status of implementation of development programs and projects.

SEC. 8. Capability Building. — The Local Government Academy (LGA), in
partnership with higher educational institutions (HEIs) with distinguished competencies in
public governance programs, shall establish a continuing capability program for all LGUs

SEC. 9. Sunset Review. — The Congress shall conduct a review five (5) years after the
effectivity of this Act or when it is deemed necessary.

For purposes of this Act, “sunset review” shall mean a systematic evaluation by
Congress on the impact and outcome of this Act, as well as the performance of LGUs in the
implementation of their comprehensive development plan.

SEC. 10. Appropriations. — The amount necessary to carry out the provisions of this
Act shall be included in the annual General Appropriations Act.

SEC. 11. Implementing Rules and Regulations. ~ The Department of Interior and
Local Government in coordination with the Department of Budget and Management, NEDA,
LGA and the various Leagues of LGUs shall promulgate the necessary implementing rules
and regulations within ninety (90) days from the effectivity of this Act

SEC. 12. Separability Clause. — Should any provision of this Act be declared
unconstitutional, the remainder thereof not otherwise affected shall remain in full force and
effect

SEC. 13. Repealing Clause. — All laws, presidential decrees, executive orders,
proclamations or administrative regulations that are inconsistent with the provisions of this
Act are hereby repealed, amended, or modified accordingly.

Effectivity. — This Act shall take effect fifteen (15) days after its publication
Gazette or in a newspaper of general circulation.

Approved,