REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No._ 8024

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

EXPLANATORY NOTE

Public financial management includes all components of a Local Government Unit’s budget

upstream (including strategic planning, medium term expenditure framework, annual

budgeting) and downstream (including revenue management, procurement, control, accounting,
reporting, monitoring and evaluation, audits and oversight.)

Good public financial management systems are important for democratic governance,
macro-economic stability, effective use of resources available and poverty reduction. Good PFM
systems can also help prevent corruption and foster aid effectiveness. A sound PFM is a
precondition for making it possible to effectively channel resources to service delivery like basic
‘education and health services, Ineffective public financial management systems, on the other hand,
‘can hamper development and increase the risk of corruption.

in this sense that this measure is proposed. This measure mandates oversight national
agencies: the Department of the Interior and Local Government (DILG), the Department of Finance
(DOF), the Department of Budget and Management (DBM), and the National Economic
Development Authority (NEDA) to provide guidance regarding local public financial management.
LGUs are then directed to utilize whatever guidance provided by the aforementioned agencies.

Furthermore, this proposed measure highlights the oversight role of the Provincial, City, and
Municipal governments, including the Regional Development Council. It also stimulates
harmonization and complementarity between local and national development plans.

In view of the foregoing, approval of this measure is earnestly sought.

». GARY/C. ALEJANO.


REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
‘Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

Howse Bit No. 8024_

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

AN ACT
TO ENHANCE PUBLIC FINANCIAL MANAGEMENT IN LOCAL GOVERNMENT
UNITS BY AMENDING CERTAIN PROVISIONS IN REPUBLIC ACT 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
assembled:

BOOK I- GENERAL PROVISIONS
SEC. 1. Section 3 of the Code is hereby amended to read as follows:
“SEC. 3. Operative Principles of Decentralization. - The formulation and

implementation of policies and measures on local autonomy shall be guided by the
following operative principles:

@

(©) 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
AND ADHERE TO THE PRINCIPLES AND POLICIES OF GOOD
GOVERNANCE AND EFFICIENT PUBLIC FINANCIAL MANAGEMENT;

o

@ 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 AND ADVANCE THE PRINCIPLES AND
POLICIES OF GOOD GOVERNANCE AND EFFICIENT PUBLIC
FINANCIAL MANAGEMENT;

).. ”



SEC. 2. Section 25 (a) of the Code is hereby amendment to read as follows:

“SEC. 25. National Supervision over Local Government Units. - (a) Consistent
with the basic policy on local autonomy, the President shall exercise gencral
supervision over local government units to ensure that their acts are within the scope
of their prescribed powers and functions AND THE PRACTICE OF GOOD
GOVERNANCE AND EFFICIENT PUBLIC FINANCIAL MANAGEMENT.
THE PRESIDENT SHALL INSTRUCT THE DEPARTMENT OF THE
INTERIOR AND LOCAL GOVERNMENT, THE DEPARTMENT OF
FINANCE, THE DEPARTMENT OF BUDGET AND MANAGEMENT AND
‘THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY TO
FORMULATE GUIDELINES AND DESIGN AND DEVELOP PROCESSES
AND SYSTEMS TO FACILITATE THIS SUPERVISION. The President shall
exercise supervisory authority directly over provinces, highly urbanized cities, and
independent component cities; through the province with respect to component cities
and municipalities; and through the city and municipality with respect to
barangays.

(a)
()

SEC. 3. Section 29 of the Code is hereby amended to read as follows:

“SEC. 29. Provincial Relations with Component Cities and Municipalities. - The
province, through the governor, shall ensure that every component city and municipality
within its territorial jurisdiction acts within the scope of its prescribed powers and functions
AND ADHERES TO THE PRINCIPLES AND POLICIES OF GOOD
GOVERNANCE AND EFFICIENT PUBLIC FINANCIAL MANAGEMENT. THE
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, THE
DEPARTMENT OF FINANCE, THE DEPARTMENT OF BUDGET AND
MANAGEMENT AND THE NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY SHALL FORMULATE GUIDELINES AND DESIGN AND
DEVELOP PROCESSES AND SYSTEMS TO SUPPORT THE OVERSIGHT
FUNCTION OF THE PROVINCE. Highly urbanized cities and independent component
cities shall be independent of the province.”

SEC. 4, Section 32 of the Code is hereby amended to read as follows:

“SEC. 32. City and Municipal Supervision over their respective Barangays. -
‘The city or municipality, through the city or municipal mayor concemed, shall exercise
general supervision over component barangays to ensure that said barangays act within the
scope of their prescribed powers and functions AND ADHERES TO THE PRINCIPLES
AND POLICIES OF GOOD GOVERNANCE AND EFFICIENT PUBLIC
FINANCIAL MANAGEMENT. THE DEPARTMENT OF THE INTERIOR AND
LOCAL GOVERNMENT, THE DEPARTMENT OF FINANCE, THE
DEPARTMENT OF BUDGET AND MANAGEMENT AND THE NATIONAL
ECONOMIC AND DEVELOPMENT AUTHORITY SHALL FORMULATE
GUIDELINES AND DESIGN AND DEVELOP PROCESSES AND SYSTEMS TO
SUPPORT THE EXERCISE OF THIS SUPERVISION BY THE CITY AND
MUNICIPALITY OVER THE BARANGAYS.”



SEC. 5. Section 108 of the Code is hereby amended to read as follows:

“SEC. 108. Representation of Non-governmental Organizations. - Within a
period of sixty (60) days [from] PRIOR TO the start of organization of local development
councils, the non-governmental organizations shall choose from among themselves their
representatives to said councils. WITHIN THE SAME SIXTY (60) DAY PERIOD, [T]
the local sanggunian concemed shall accredit non-governmental organizations subject to
such criteria as may be provided by law AND GUIDELINES PREPARED BY THE
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT AND THE
DEPARTMENT OF BUDGET AND MANAGEMENT. THE SELECTION PROCESS
SHALL BE CONDUCTED ONCE EVERY THREE @) YEARS IN ORDER TO
ENSURE THAT THE NON-GOVERNMENTAL — ORGANIZATIONS
REPRESENTED IN THE LOCAL DEVELOPMENT COUNCIL ARE CURRENTLY
ACTIVE AND TO EXPAND AND IMPROVE THE COVERAGE OF COMMUNITY
ISSUES AND CONCERNS.”

SEC. 6. Section 109 of the Code is hereby amended to read as follows:
“SEC. 109. Functions of Local Development Councils. —

(a) The provincial, city, and municipal development councils shall exercise the
following functions:

(1) Formulate COMPREHENSIVE long-term, medium-term, and annual socio-
economic development plans and policies;

(2) Formulate the medium-term and annual public investment programs;

(3) Appraise and prioritize socio-economic MEDIUM-TERM AND ANNUAL
PUBLIC INVESTMENT [development] programs and projects;

(4) Formulate local investment incentives to promote the inflow and direction of
private investment capital;

(5) Coordinate, monitor, and evaluate the implementation of [development]
MEDIUM-TERM AND ANNUAL PUBLIC INVESTMENT programs and

Projects; and,
(© Perform such other functions as may be provided by law or component authority.
(b) The barangay development council shall exercise the following functions:

(1) Mobilize people's participation in local development efforts;
(2) Prepare barangay development plans based on local requirements;
) Monitor and evaluate the implementation of national or local programs and

projects; and

(4) Perform such other functions as may be provided by law or competent

authority.

() THE DEPARTMENT OF THE INTERIOR AND LOCAL
GOVERNMENT, THE DEPARTMENT OF FINANCE, THE DEPARTMENT OF
BUDGET AND MANAGEMENT AND THE NATIONAL ECONOMIC AND
DEVELOPMENT AUTHORITY SHALL ISSUE MANUALS AND RELATED
ISSUANCES TO GUIDE THE LOCAL DEVELOPMENT COUNCILS OF THE
PROVINCE, MUNICIPALITY, CITY AND BARANGAY IN THE PREPARATION
OF THEIR MEDIUM-TERM COMPREHENSIVE LOCAL DEVELOPMENT


PLANS AND MEDIUM-TERM AND ANNUAL PUBLIC INVESTMENT
PROGRAMS.

SEC. 7. Section 113 of the Code is hereby amended to read as follows:

“SEC. 113. Secretariat. - There is hereby constituted for each local development
council a secretariat which shall be responsible for providing technical support,
documentation of proceedings, preparation of reports and such other assistance as may be
required in the discharge of its functions. The local development council may avail of the
services of any non-governmental organization or educational or research institution for
this purpose.

‘The secretariats of the provincial, city, and municipal development councils shall be
headed by their respective planning and development coordinators WITH THEIR
RESPECTIVE TREASURERS, BUDGET OFFICERS AND ACCOUNTANTS AS
MEMBERS. The secretariat of the barangay development council shall be headed by the
barangay [secretary] TREASURER who shall be assisted by the BARANGAY
SECRETARY AND ADVISED BY THE city or municipal planning and development
coordinator concerned.”

SEC. 8. Section 114 of the Code is hereby amended to read as follows:

“SEC. 114, Relation of Local Development Councils to the Sanggunian and the
Regional Development Council. -

{a) The policies, programs, and projects proposed by local development councils
shall be submitted to the sanggunian concemed for appropriate action. The
COMPREHENSIVE local development plans approved by their respective sanggunian
{may] SHOULD be [integrated] ALIGNED with the development plans of the next higher
level of local development council.

(b) The approved development plans of met highly-urbanized cities, and
independent component cities shall be submitted to the regional development council, which
shall be integrated into the regional development plan for submission to the National
Economic and Development Authority, in accordance with existing laws.”

BOOK II - LOCAL TAXATION AND FISCAL MATTERS,
SEC. 9. Section 316 of the Code is hereby amended to read as follows:
“SEC. 316. Local Finance Committee. - There is hereby created in every province,
city or municipality a local finance committee to be composed of the local planning and

development officer, the local budget officer, [and] the local treasurer, AND THE.
LOCAL ACCOUNTANT.

@)
SEC. 10. Section 319 of the Code is hereby amended to read as foll

“SEC. 319. Legislative Authorization of the Budget. - On or before the end of the
current fiscal year, the sanggunian concerned shall, through an ordinance, the annual budget
of the local government unit for the ensuing fiscal year on the basis of the estimates of
income and expenditures submitted by the local chief executive AND THE APPROVED


ANNUAL INVESTMENT PROGRAM WHICH IS THE ENSUING YEAR SLICE OF
THE MEDIUM-TERM PUBLIC INVESTMENT PROGRAM.”

SEC. 11. Section 324 of the Code is hereby amended to read as follows:

“SEC. 324. Budgetary Requirements. - The budgets of local government units for
any fiscal year shall comply with the following requirements:

(a) The aggregate amount appropriated shall not exceed the estimates of income
AND THE ANNUAL INVESTMENT PROGRAM WHICH IS THE ENSUING
YEAR SLICE OF THE MEDIUM-TERM PUBLIC INVESTMENT

SEC. 12.Section 352 of the Code is hereby amended to read as follows:

“SEC. 352. Posting of the Summary of Income and Expenditures. - Local
treasurers, accountants, budget officers, and other accountable officers shall, within thirty
G0) days from the end of the fiscal year, post in at least three (3) publicly accessible and
conspicuous places in the local government unit OR THE OFFICIAL WEBSITE OF
THE LOCAL GOVERNMENT UNIT, IF AVAILABLE, AND THE OFFICIAL
WEBSITE OF THE BUREAU OF LOCAL GOVERNMENT FINANCE OF THE
DEPARTMENT OF FINANCE, OR AN OFFICIAL GOVERNMENT WEBSITE
DESIGNATED BY THE BUREAU OF LOCAL GOVERNMENT FINANCE OF THE
DEPARTMENT OF FINANCE FOR SUCH PURPOSE a summary of all revenues
collected and funds received including the appropriations and disbursements of such funds
during the preceding fiscal year.”

BOOK Il - LOCAL GOVERNMENT UNITS
SEC. 13. Section 513 of the Code is hereby amended to read as follows:

“SEC. 513. Failure to Post and Publish the Itemized Monthly Collections and
Disbursements. - Failure by the local treasurer of the local chief accountant to post the
itemized monthly collections and disbursements of the local government unit concerned
within ten (10) days following the end of every month and for at least two (2) consecutive
weeks at prominent places in the main office building of the local government unit
concemed, its plaza and main street, and to publish said itemization in a newspaper of
general circulation, where available, in the territorial jurisdiction of such unit OR THE
OFFICIAL WEBSITE OF THE LOCAL GOVERNMENT UNIT, IF AVAILABLE,
AND THE OFFICIAL WEBSITE OF THE BUREAU OF LOCAL GOVERNMENT
FINANCE OF THE DEPARTMENT OF FINANCE, OR AN OFFICIAL
GOVERNMENT WEBSITE DESIGNATED BY THE BUREAU OF ~—_ LOCAL
GOVERNMENT FINANCE OF THE DEPARTMENT OF FINANCE FOR SUCH
PURPOSE shall be punished by a fine not exceeding Five hundred pesos (P500.00) or by
imprisonment not exceeding one (1) month, or both such fine and imprisonment, at _the
discretion of the court.


Scorsueun—

SEC. 14.- Repealing Clause. All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Act are hereby repealed or modified accordingly.

SEC. 15. - Separability Clause. \f, for any reason or reasons, any part of provision of this
‘Act shall be held unconstitutional or invalid, other parts or provisions hereof which not affected
thereby shall continue to be in full force and effect.

SEC. 16. Effectivity Clause. This Act shall take effect after fifteen (15) days from its
publication in the Official Gazette or in two (2) newspaper of general circulation.

Approved,