FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 
639 
) 
) 
) 
,J 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
·,·1 
. Under Section 325 (a) of the Local Government Code of 1991, it is 
provided that 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 realized in the next preceding fiscal year. 
The term "personal services" is a broad term which includes such items as 
representations, travel and other allowances, bonuses, and the like, which when 
taken together with the basic salaries or wages of employees, amount to a 
sizable sum. 
This restricts the local government units (LGUs) which cannot appropriate 
for "personal services" in excess of the limitations in said Sec. 325 (a) of the 
Local Government Code of 1991. 
It is the purpose of this bill, therefore to amend the provisions of Section 
325 (a) of the Local Government Code by substituting "salaries and wages" for 
the term "personal services" in said section, so that the percentage ceilings in the 
appropriations of the local government units for personal services for one (1) 
year will now be based on salaries and wages only, thereby allowing said LGUs 
a wider elbow room in determining the allocations in their local annual budgets in 
keeping with the concept of local autonomy. 
Senator 


FIFTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
Senate Bill No. 
639 
.~ 
.. 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
AMENDING SECTION 325 (A) OF REPUBLIC ACT NO. 7160, OTHERWISE 
KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991, AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 325 (a) of Republic Act No. 7160, otherwise known 
as the Local Government Code of 1991, is hereby amended to read as follows: 
"Sec. 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] SALARIES AND WAGES OF OFFICIALS AND EMPLOYEES of 
a local government unit for one (I) fiscal year shall not exceed forty-five 
. percent (45%) in the case of the 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 
appropriation 
for 
salaries, 
wages, 
representation and transportation allowances of officials and employees of 
the public utilities, and economic enterprises owned, operated and 
maintained by local government unit concerned, shall not be included in 
the annual budget or in the computation of the maximum amount for 
personal services. The appropriation for the personal services of such 
economic enterprises shall be charged to their respective budgets." 
SEC 2. All laws or parts thereof inconsistent with this Act are hereby 
repealed or modified accordingly. 
SEC. 3. This Act shall take effect upon its approval. 
Approved,