NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE
52
S. No.
TIME
£
BILLS &ylNDEX
Introduced by Senator FRANCIS G. ESCUDERO
AN ACT
TO FURTHER STRENGTHEN LOCAL AUTONOMY THROUGH A MORE 
RATIONALIZED SYSTEM OF DECENTRALIZATION AMENDING FOR THE 
PURPOSE REPUBLIC ACT NUMBER 7160, AS AMENDED, OTHERWISE 
KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991
EXPLANATORY NOTE
The Constitution speaks of local autonomy in five (5) occasions,1 all couched in 
mandatory terms. Concomitantly, as a Constitutional mandate, local government units 
are allowed to make independent administrative determinations on their own and 
theirs alone. Hence, any regulations in the exercise of local autonomy must not, in 
any manner or form, result in neither restriction nor control.
The cases of Pimentel, Jr. vs. Aguirre2 and Mandanas vs. Ochoa3 clarified and 
defined, respectively, the Constitutional grant of local autonomy as specifically 
provided for in Section 2, Article X of the Constitution in the following manner:
"7/7 Ganzon v. Court of Appeals, we said that local autonomy signified "a 
more responsive and accountable local government structure instituted 
through a system of decentralization." The grant of autonomy is intended 
to "break up the monopoly of the national government over the affairs of
local governments, xxx not xxx to end the relation of partnership and
interdependence between the centra! administration and local
government units xxx. "Paradoxically, local governments are still subject 
to regulation, however limited, for the purpose of enhancing self-
government /4 funderscoring supplied)
Under the Philippine concept of local autonomy, the national government 
has not completely relinquished all Its powers over local governments. 
Including autonomous regions. Only administrative powers over local
1 Section 25, Article II; Section 2, Article X; Section 5, Article X; Section 11, Article X; and Section 14, Article 
X.
2GRNo. 132998, 19 July 2000.
3 GR No. 199802, 03 July 2018.
4 Pimentel, Jr. vs. Aguirre, GR No. 132998, 19 July 2000.


affairs are delegated to political subdivisions. The purpose of the 
delegation is to make governance more directly responsive and effective 
at the local levels. In turn, economic, political and social development at 
the smaller political units are expected to propel social and economic 
growth and development But to enable the country to develop as a 
whole, the programs and policies effected locally must be integrated and 
coordinated towards a common national goal. Thus, policy-setting for the 
entire country still lies in the President and Congress. As we stated 
in Magtajas v. Pryce Properties Corp., Inc., municipal governments are 
still agents of the national government5 (underscoring supplied)
"The constitutional mandate to ensure local autonomy refers to 
decentralization. In its broad or general sense, decentralization has two 
forms in the Philippine setting, namely: the decentralization of power and 
the decentralization of administration. The decentralization of power 
involves the abdication of political power in favor of the autonomous LGUs 
as to grant them the freedom to chart their own destinies and to shape 
their futures with minimum intervention from the centra! government.
This amounts to self-immolation because the autonomous LGUs thereby 
become accountable not to the centra! authorities but to their 
constituencies. On the other hand, the decentralization of administration 
occurs when the centra! government delegates administrative powers to
the LGUs as the means of broadening the base of governmental powers
and of making the LGUs more responsive and accountable in the process.
and thereby ensure their fullest development as self-reliant communities
and more effective partners in the pursuit of the goals of national
development and social progress. This form of decentralization further
relieves the centra! government of the burden of managing local affairs
so that it can concentrate on national concerns.6"!underscoring supplied)
As ruled in the above cited cases and in VHiafuerte vs. Robredo7, the grant of 
local autonomy is not synonymous to local government units' sovereignty within the 
state but emphasizes interdependence between the national and local government 
agencies. Such that while regulations may be validly imposed on local government 
units, such regulations are but geared toward "enhancing self-governance.8"
Consequently, decentralization, which is inherent in local autonomy, should not 
be rendered useless and without effect by the necessity of prior approval from national 
government agencies. To the contrary, local governments to be autonomous must be 
able to act promptly and effectively in the exigencies of public service sans any undue 
restrictions.
Section 4, Article X of the Constitution prescribes the exercise of mere 
supervision, not control, by the President over local government units. Mondano vs.
5 Ibid.
6 Mandarins vs. Ochoa. GRNo. 199802, 03 July 2018.
7 GR No. 195390, 10 December 2014.
8 Ibid.


SHvosdP contrasted the President's power of supervision over local government units 
with that of the President's power of control over all officials in the national 
government, thus:
"7/7 administrative iaw, supervision means overseeing or the power or 
authority of an officer to see that subordinate officers perform their 
duties. If the iatter faii or negiect to fuifiii them, the former may take 
such action or step as prescribed by iaw to make them perform their 
duties. Controi, on the other hand, means the power of an officer to alter 
or modify or nuUify or set aside what a subordinate officer ha[s] done in 
the performance of his duties and to substitute the judgment of the 
former for that of the iatter./<L0
Otherwise stated, ^'"supervisory power, when contrasted with control, is the 
power of mere oversight over an inferior body; it does not inciude any restraining 
authority over such body.11"
In view of the foregoing, this bill seeks to amend Republic Act No. 7160, as 
amended, or the Local Government Code of 1991, taking into consideration its more 
than three (3) decade implementation and the way it has been interpreted and applied 
as a Constitutionally prescribed and mandated policy.
For local autonomy to be made effective, it must amount to effective authority 
for local government units to decide matters concerning local affairs. And although it 
may not be absolute, the parameters limiting its exercise must not give the national 
government the power to restrict the actions of local government units or to substitute 
its judgment with their own.
RESPECTFULLY SUBMITTED.
FRANCIS G. ESCUDERQ
9 GR No. L-7708, 30 May 1955.
10 Ibid.
11 Taiile V.V. Santos^ citing Hebron vs. Reyes, GR No. 90336, 12 August 1991.


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NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE
s. No. 52
BILLS &MNDEX
Introduced by Senator FRANCIS G. ESCUDERO
AN ACT
TO FURTHER STRENGTHEN LOCAL AUTONOMY THROUGH A MORE 
RATIONALIZED SYSTEM OF DECENTRALIZATION AMENDING FOR 
THE PURPOSE REPUBLIC ACT NUMBER 7160, AS AMENDED, 
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 assembled:
Section 1. Declaration of State Policies and Principles. - It is hereby 
declared a policy of the State to ensure local autonomy of its territorial and 
political subdivisions consistent with decentralization inherent in local 
autonomy thereby ensuring local administrative determination v/ithout undue 
restrictions.
Sec. 2. Interpretation. - The provisions of this Act shall be 
Interpreted in favor of local autonomy and to ensure the independent 
administrative determination of local government units free from any control 
or regulation of national agencies such that the national government is not 
given the power to restrain or substitute the judgement of local government 
units with its own.
Sec. 3. Amendments. - The following provisions of Republic Act 
No. 7160, as amended, are hereby amended as follows:
'Section 3. Operative Principles of Decentralization. - The formulation
and implementation of policies and measures on local autonomy shall
be guided by the following operative principles:
(a) There shall be an effective allocation among the different 
local government units of their respective powers, functions, 
responsibilities, and resources INDEPENDENT OF ANY 
RESTRICTIONS FROM NA TIONAL AGENCIES;
(b) There shall be established in every local government unit an 
INDEPENDENT, accountable, efficient, and dynamic


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organizational structure and operating mechanism that will meet 
the priority needs and service requirements of its communities;
(c) Subject to civil service law, rules and regulations AS
GUIDELINES AND WITHOUT RESTRICTING 
ADMINISTRATIVE DETERMINATION, local officials and 
employees paid wholly or mainly from local funds shall be 
appointed or removed, according to merit and fitness, by the 
appropriate appointing authority;
(d) The vesting of duty, responsibility, and accountability in local 
government units shall be accompanied with provision for 
reasonably adequate resources to INDEPENDENTL Y AND 
EFFECTIVELY discharge their powers and [effectively] carry 
out their functions: hence, they shall have the power to create 
and broaden their own sources of revenue and the right to a 
just share in national taxes and an equitable share in the 
proceeds of the utilization and development of the national 
wealth within their respective areas;
(e) 
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;
(f) Local government units may group themselves, consolidate 
or coordinate their efforts, services, and resources commonly 
beneficial to them;
(g) The capabilities of local government units, especially the 
municipalities and barangays, shall be enhanced by providing 
them with opportunities to participate actively in the 
implementation of national programs and projects AND THE
MEANS AND CAPABILITIES TO INDEPENDENTL Y CARRY 
ON THEIR RESPECTIVE PROGRAMS AND PROJECTS;
(h) There shall be a continuing mechanism to enhance local 
autonomy not only by legislative enabling acts but also by 
administrative and organizational reforms;
(i) Local government units shall share with the national 
government the responsibility in the management and 
maintenance of ecological balance within their territorial 
jurisdiction, subject to the provisions of this Code and national 
policies;


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(]) Effective mechanisms for ensuring the accountabiiity of iocai 
government units to their respective constituents shaii be 
strengthened in order to upgrade continuaiiy the quaiity of iocai 
ieadership;
(k) The reaiization of iocai autonomy shaii be faciiitated through 
improved coordination of nationai government poiicies and 
programs and extension of adequate technicai and material 
assistance to less developed and deserving iocai government 
units;
(!) The participation of the private sector in local governance, 
particularly in the delivery of basic services, shaii be encouraged 
to ensure the viability of local autonomy as an alternative 
strategy for sustainable development; and
(m) The national government shall ensure that decentralization 
contributes to the continuing improvement of the performance 
of local government units and the quaiity of community life."
"Section 76. Organizational Structure and Staffing Pattern. - Every local 
government unit shaii INDEPENDENTLY design and implement its 
own organizational structure and staffing pattern taking into 
consideration its service requirements and financial capability, subject to 
the minimum standards and guidelines prescribed FOR THE PURPOSE 
by the Civil Service Commission WITHOUT RESTRICTING THE 
ADMINISTRATIVE DETERMINATION OF LOCAL GOVERNMENT 
UNITS."
Section 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 persona! 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 from regular sources realized in the next 
preceding fiscal year. The appropriations for salaries, wages, 
representation and transportation allowances of off dais and 
employees of the public utilities and economic enterprises 
owned, operated, and maintained by the local government unit 
concerned shall not be included in the annual budget or in the 
computation of the maximum amount for persona! services. The 
appropriations for the persona! services of such economic 
enterprises shall be charged to their respective budgets;


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(b) No official or employee shall be entitled to a salary rate 
higher than the maximum fixed for his position or other 
positions of equivalent rank by applicable laws or rules and 
regulations issued thereunder;
(c) No local fund shall be appropriated to increase or adjust 
salaries or wages of officials and employees of the national 
government, except as may be expressly authorized by law;
(d) In cases of abolition of positions and the creation of new 
ones resulting from the abolition of existing positions in the 
career service, such abolition or creation shall be made in 
accordance with pertinent provisions of this code and the civil 
service law, rules and regulations AS GUIDELINES WITHOUT 
RESTRICTING THE ADMINISTRATIVE DETERMINATION 
OF LOCAL GOVERNMENT UNITS;
(e) Positions in the official piantiHa for career positions which are 
occupied by incumbents holding permanent appointments shall 
be covered by adequate appropriations;
(f) No changes in designation or nomenclature of positions 
resulting in a promotion or demotion in rank or increase or 
decrease in compensation shall be allowed, except when the 
position is actually vacant, and the filling of such positions shall 
be strictly made in accordance with the civil service iaw, rules 
and regulations;
(g) The creation of new positions and salary increases or 
adjustments shall in no case be made retroactive;
(h) The annual appropriations for discretionary purposes of the 
local chief executive shall not exceed two percent (2%) of the 
actual receipts derived from basic real property tax in the next 
preceding calendar year. Discretionary funds shall be disbursed 
only for public purposes to be supported by appropriate 
vouchers and subject to such guidelines as may be prescribed 
by iaw. No amount shall be appropriated for the same purpose 
except as authorized under this Section."
""Section 288. Rules and Regulations. - The Secretary of Finance, in 
consultation with the Secretary of Budget and Management AND THE 
LOCAL GOVERNMENT UNITS THROUGH THEIR RESPECTIVE 
LEAGUES, shall promulgate the necessary rules and regulations for a 
simplified disbursement scheme designed for the speedy and effective 
enforcement of the provisions of this Chapter WITHOUT


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RESTRICTING THE ADMINISTRATIVE 
LOCAL GOVERNMENT UNITS/’
DETERMINATION OF
Section 326. [Review of] Appropriation Ordinances of Provinces, 
Highiy-Urbanized Cities, Independent Component Cities, and 
Municipaiities within the Metropoiitan Maniia Area. - [The Department 
of Budget and Management shaii review o] Ordinances authorizing the 
annuai or suppiementai appropriations of provinces, highiy-urbanized 
cities, independent component cities, and municipaiities within the 
Metropoiitan Maniia Area SHALL BE IN ACCORDANCE WITH THE 
GUIDELINES SET IN THE BUDGET OPERATIONS MANUAL AS 
PROVIDED FOR IN SECTION 354 OF THIS CODE WITHOUT 
NEED OF ANY REVIEW [in accordance with the immediately 
succeeding Section]."
"'Section 354. Administrative Issuances; Budget Operations Manual. - 
The Secretary of Budget and Management AND THE LOCAL 
GOVERNMENT UNITS THROUGH THEIR RESPECTIVE LEAGUES 
jointly with the Chairman of the Commission on Audit shall, [within one 
(1) year from the effectivity of this Code] IF SO REQUESTED BY 
LOCAL GOVERNMENT UNITS THROUGH THEIR RESPECTIVE 
LEAGUES, promulgate a Budget Operations Manual for local 
government units to improve and systematize methods, techniques, and 
procedures employed in budget preparation, authorization, execution, 
and accountability WITHOUT RESTRICTING THE 
ADMINISTRATIVE DETERMINATION OF LOCAL GOVERNMENT 
UNITS."
"Section 383. Implementing Rules and Regulations. - The Chairman of 
the Commission on Audit AND THE LOCAL GOVERNMENT UNITS 
THROUGH THEIR RESPECTIVE LEAGUES shall promulgate the rules 
and regulations necessary to effectively implement the provisions of this 
Tide, including requirements as to testing, inspection, and 
standardization of supply and property WITHOUT RESTRICTING THE 
ADMINISTRATIVE DETERMINATION OF LOCAL GOVERNMENT 
UNITS."
Sec. 4. Separability Clause. - If any provision of this Act or the 
application of such provision to any person or circumstance is declared 
invalid, the remainder of the Act or the application of such provision to other 
persons or circumstances shall not be affected thereby.
Sec. 5. Repealing Cause. - All laws, decrees, administrative issuances, 
rules and regulations, and orders or parts thereof inconsistent with this Act 
are deemed repealed or modified accordingly.


Sec. 6. Effectivity. - This Act shall take effect after fifteen (15) days 
following the completion of its publication in the Official Gazette or in two (2) 
national newspapers of general circulation, whichever comes first.
Approved/