TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
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25 JML-3 P5 53
SENATE
S.B. No. 1.1,8
Introduced by SENATOR IMEE R. MARCOS
AN ACT
INSTITUTING THE NATIONAL TAX ALLOTMENT
EXPLANATORY NOTE
Article X Section 6 of the 1987 Constitution states that "Local government units 
shall have a just share, as determined by law, in the national taxes which shall be 
automatically released to them."
The Supreme Court, in Mandanas et al vs. Ochoa, G.R. No. 199802, ruled that 
that the just share of LGUs should not be based solely on national internal revenue 
taxes but all national taxes, including, but not limited to:
(a) national internal revenue taxes enumerated in Section 21 of the National 
Internal Revenue Code,
(b) tariffs and custom duties collected by the Bureau of Customs,
(c) 50% of value-added tax collected in the Autonomous Region of Muslim 
Mindanao, and 30% of all other national tax collections in the Autonomous
Region of Muslim Mindanao,
(d) 60% of national taxes from the national wealth,
(e) 85% of excise taxes from locally manufactured tobacco products,
(f) 50% of national taxes collected under Sections 106, 108, and 116 of the 
National Internal Revenue Code, as provided under Section 283 of the same law, and
(g) 5% of the franchise taxes under Section 6 of RA 6631 and RA 6632.


This bill seeks to institutionalize the Mandanas ruling and the direct remittance 
of the National Tax Allotment to Local Government Units to facilitate accurate and 
prompt distribution of the National Tax Allotment.
For the abovementioned reasons, the immediate passage of this bill is earnestly
sought.
MARGOS


TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
25 JUL -3 ?5 53
SENATE
S.B. No. 118
Introduced by SENATOR IMEE R. MARCOS
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AN ACT
INSTITUTING THE NATIONAL TAX ALLOTMENT
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 "National Tax Allotment
Act".
SEC. 2. Section 284 of Republic Act (R.A.) No. 7160 otherwise known as the 
"Local Government Code of 1991" as amended, is hereby amended to read as follows:
"Section 284. Allotment offlntcrnal Rcvonuo] NATIONAL
Taxes. - Local government units shall have a share in the 
national [internal revenue] taxes based on the collection of 
the third fiscal year preceding the current fiscal year as follows:
(a) On the first year of the effectivity of this Code, thirty percent 
(30%);
(b) On the second year, thirty-five percent (35%); and
(c) On the third year and thereafter, forty percent (40%).
PROVIDED THAT, THE COLLECTION FROM THE 
NATIONAL TAXES, WITHOUT ANY DEDUCTION, WHICH 
ARE FOR INCLUSION IN THE BASE OF THE JUST SHARE 
FOR LOCAL GOVERNMENT UNITS SHALL INCLUDE, BUT 
SHALL NOT BE LIMITED TO, THE FOLLOWING:


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(i) 
THE NATIONAL INTERNAL REVENUE TAXES 
ENUMERATED IN SECTION 21 OF THE NATIONAL 
INTERNAL REVENUE CODE (NIRC)/ AS AMENDED, 
AS COLLECTED BY THE BUREAU OF INTERNAL 
REVENUE AND THE BUREAU OF CUSTOMS;
(ii) 
TARIFF AND CUSTOMS DUTIES COLLECTED BY 
THE BUREAU OF CUSTOMS;
(iii) 
25% OF THE NATIONAL TAXES COLLECTED IN 
THE BANGSAMORO AUTONOMOUS REGION, AS 
PROVIDED IN ARTICLE XII, SECTION 10 OF 
REPUBLIC ACT NO. 11054 OTHERWISE KNOWN 
AS THE "ORGANIC LAW FOR THE BANGSAMORO 
AUTONOMOUS REGION IN MUSLIM MINDANAO"
(iv) 
60% OF THE NATIONAL TAXES COLLECTED FROM 
THE EXPLOITATION AND DEVELOPMENT OF THE 
NATIONAL WEALTH;
(V) 
85% OF THE EXCISE TAXES COLLECTED FROM
LOCALLY MANUFACTURED VIRGINIA AND OTHER 
TOBACCO PRODUCTS;
(Vi) ENTIRE 50% OF THE NATIONAL TAXES 
COLLECTED UNDER SECTIONS 106,108, AND 116 
OF THE NIRC, AS PROVIDED UNDER SECTION 283 
OF THE NIRC; AND
(vii) 5% OF THE 25% FRANCHISE TAXES GIVEN TO 
THE NATIONAL GOVERNMENT UNDER SECTION 6 
OF REPUBLIC ACT NO. 6631 AND SECTION 8 OF 
REPUBLIC ACT NO. 6632.
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Provided, That in the event that the national government incurs 
an unmanageable public sector deficit, the President of the 
Philippines is hereby authorized, upon the recommendation of 
Secretary of Finance, Secretary of Interior and Local 
Government and Secretary of Budget and Management, and 
subject to consultation with the presiding officers of both 
Houses of Congress and the presidents of the liga, to make the 
necessary adjustments in the [internal revenue] NATIONAL 
TAX allotment of local government units but in no case shall 
the allotment be less than thirty percent (30%) of the collection 
of national [internal- revenue] taxes of the third fiscal year 
preceding the current fiscal year: Provided, further. That in the 
first year of the effectivity of this Code, the local government 
units shall, in addition to the thirty percent (30%) [internal 
revenue] NATIONAL TAX allotment which shall include the 
cost of devolved functions for essential public services, be


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entitled to receive the amount equivalent to the cost of
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devolved personal services."
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SEC. 3. Section 293 of R.A. No. 7160 otherwise known as the''Local Government
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Code of 1991" as amended, is hereby amended to read as follows:
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"Section 293. Remittance of the Share of Local Government
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Units. - The share of local government units from the utilization
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and development of national wealth shall be remitted in
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accordance with Section 286 of this Code: Provided, however,
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That PERSONS, NATURAL OR JURIDICAL, INCLUDING
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[in the case of any] government [agency] AGENCIES or
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government-owned or controlled corporations engaged in the
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utilization and development of the national wealth, [such
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share] shall fbe] directly remit[ted] to the provincial, city,
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municipal or barangay treasurer OF THE HOST LOCAL
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GOVERNMENT CONCERNED ITS FORTY PERCENT
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(40%) SHARE DERIVED FROM NATIONAL WEALTH
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TAXES UNDER SECTION 290 OF THIS CODE AND THE
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REMAINING SIXTY PERCENT (60%) TO THE NATIONAL
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GOVERNMENT [concerned] within five (5) days after the end
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of each quarter."
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SEC. 4. Section 521 or R.A. No. 7160 otherwise known as the "Local Government
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Code of 1991" as amended, is hereby further amended to read as follows:
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"Section 521. Mandatory Review [Every Five Years]. -
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Congress shall undertake a mandatory review of this Code at
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least once every five (5) years and as often as it may deem
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necessary, with the primary objective of providing a more
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responsive and accountable local government structure.
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PROVIDED THAT, EVERY THREE (3) YEARS AFTER THE
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EFFECTIVmr OF THIS ACT, THE PHILIPPINE
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INSTITUTE FOR DEVELOPMENT STUDIES (PIDS) SHALL
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SUBMIT FOR CONSIDERATION OF CONGRESS AN
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ASSESSMENT OF THE TRUE COST OF DEVOLVED
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FUNCTIONS AND RECOMMEND AN ADJUSTMENT OF
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THE NATIONAL TAX ALLOTMENT, AS MAY BE
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NECESSARY."
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SEC. 5. Separability Clause. - If for any reason any part or provision of this Act 
shall be deemed unconstitutional or invalid, the other sections or provisions hereof shall 
not be affected and shall remain in force and effect.
SEC. 5. Repealing Clause. - All laws, decrees, executive issuances, rules and 
regulations inconsistent with this Act are hereby repealed or modified accordingly.
SEC. 6. Effectivity. - This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,