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THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
First Regular Session 
S E N A T E  
TaEGE 
S.B. No.' 
Introduced by Senator JINGGOY EJERCITO ESTRADA 
'I 
EXPLANATORY NOTE 
There is a compelling need to review and rationalize the internal revenue 
allotments of the local government units. The current system of allocation has already 
become inequitable particularly to the cities. Thus is so because since the effectivity of 
the Local Government Code (R.A. 7160) ten years ago, many municipalities have been 
converted to cities. 
The internal revenue allotment (IRA) of cities has been fixed at 23%. In 1992, 
there were only about 60 cities. However, the number has remarkable increased such 
that the IRA for cities has considerably been reduced to the prejudice especially of old 
cities prior to the passage of the Local Government Code. 
This situation has consequently unduly and inequitably constrained the urban 
centers or cities in delivering basic services and in implementing much needed 
infrastructure projects. The cities thus are in dire need of more fliiancial resources to 
counterbalance the effects of ever increasing urbanization and migration from the 
countiyside, such as the need 'to provide for more social services and economic 
opportunities, 
111 view of the above, immediate consideration of this measure is requested. 
i 
EJERCITO ESTRADA 
Senator 
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* -  
THIRTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
S E N A T E  
- 
r' 
S.B. No: 
:' 
'I 
Introduced by Senator JINGGOY EJERCITO ESTRADA 
AN ACT 
RATIONALIZING. THE NTERNAL REVENUE ALLOTMENTS OF LOCAL 
GOVERNMENT UNITS AMENDING FOR THIS PURPOSE REPUBLIC ACT 
NUMBERED 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE 
OF 1991 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assern bled 
SECTION 1. Section 285, Chapter 1, Title III of Republic Act No. 7160, 
otheiwise luiown as the Local Government Code of 1991 is herebp amended to read as 
follows: 
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"SECTION 285. Allocation to Local Government Units. The share of 
local government units in the internal revenue allotment shall be collected in the 
fo 110 wing manner : 
(a) 
(b) 
(c) 
(d) 
Provinces - Twenty-three percent (23%); 
Cities - Twenty-[three] FIVE percent ([23] 25%); 
Municipalities - Thirty-[four] TWO percent ([34] 32%); and 
Baraiigays - Twenty percent (20%) 
PROVIDED THAT, ANY. SUBSEQUENT CONVERSION OF LOCAL 
GOVERNMENT UNITS IN ACCORDANCE WITH SECTION 7 OF THIS 
CODE SHALL NOT AFFECT ITS FORMER CLASSIFI 
PROVIDED 
ABOVE FOR PURPOSES OF COMPUTING ITS IN , 
REVENUE 
ALLOTMENT SHARE; 
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Provided [, however] FURTdER, That the share of each province, city, and 
municipality shall be determined on the basis of the following formula: 
(a) 
Population - Fifty percent (50%); 
(b) Land Area - Twenty-five percent (25%); and 
(c) Equal sharing - Twenty-five percent (25%) 
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Provided, further, That the share of each barangay with a population of not less 
than one hundred (100) inhabitants shall not be less than Eighty thousand 
(P80,OOO.OO) per annum chargeable against the twenty percent (20%) share of the 
barangay from the internal revenue allotment, and the balance to be allocated on 
the basis of the following formula: 
(a) 
On the first year of the effectivity of this Code: 
(1) 
(2) 1 
Population - Forty percent (40%); and 
Equal sharing - Sixty percent (60%) 
(b) 
On tlie second year: 
(1) Population - Fifty percent (50%); and 
(2) Equal sharing - Fifty percent (50%) 
(c) 
On the third year and thereafter: 
(1) Population - Sixty percent (60%); and 
(2) Equal sharing - Forty percent (40%). 
Provided, finally, That the financial requirements of barangays created by local 
government units after tlie effectivity of this Code shall be the responsibility of 
the local go'veniment unit concerned." 
SEC. 2. All laws, executive orders, rules and regulations:' or any part thereof 
inconsistent herewith are repealed or modified accordingly. 
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SEC. 3. - This Act shall take effect immediately upon its complete publication in 
at least two (2) newspapers of general circulation. 
Approved,