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FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
Second Regular Session )

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HOUSE of REPRESENTATIVES
House Bill No. __5587

Introduced by: MA. THERESA B. BONOAN-DAVID
4% District, City of Manila

EXPLANATORY NOTE

One of the hallmarks of the present Local Government Code for the country is its
emphasis on the wisdom of autonomy. That is, making Local Government Units (LGUs)
independent and allowing them to become effective partners in nation building. One of the
provisions in the said statute that fully guarantees local autonomy and the dynamism of the
LGUs as a political unit is Section 521. The said mandate provides that Congress shall
undertake a mandatory review of the code at least once every five years and as often as it
may deem necessary, with the primary objective of providing a more responsive and
accountable local government structure.

With that backdrop, the proposed bill is submitted seeking to further institutionalize
local autonomy by strengthening the fiscal autonomy of local government units. One of the
means to accomplish this is by giving LGUs greater leeway in the choice of its depository
bank.

National government agencies have interpreted differently the preference over
government-owned banks as depository bank. The Department of Budget and Management
has interpreted the provision to mean that a local government unit shall choose only one
depository bank within its area of jurisdiction.

On the other hand, the Commission on Audit ruled that a rural bank may accept
deposits of local government notwithstanding the presence of government-owned banks
within the locality provided said bank is authorized by the Monetary Board of the Bangko
Sentral ng Pilipinas and prior authority is given by the sanggunian and local chief executive
concerned.

The review of this code is something which almost all local government units awaits
and anticipated with great enthusiasm as it will pave the way for a more effective public
fiscal.

In view of the foregoing, the passage of this bill is earnestly sought.

MA. Pe aad DAVID

4th District, City of Manila


FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
Second Regular Session )

HOUSE of REPRESENT, S
House Bill No.__ 08

Introduced by: MA. THERESA B. BONOAN-DAVID
4% District, City of Manila

AN ACT PROVIDING FOR GREATER FISCAL AUTONOMY IN FAVOR OF
LOCAL GOVERNMENT UNITS (LGUs) IN THE CHOICE OF DEPOSITORY
BANKS, AMENDING SECTION 311 OF REPUBLIC ACT NO. 7160,
OTHERWISE KNOWN AS THE LOCAL GOVERNMENT ACT OF 1991

Be it enacted by the Senate and House of Representatives in Congress of
the Philippines assembled:

SECTION 1. Section 311 is hereby amended by adding a new paragraph to read as
follows;

“Sec. 311. Depository Accounts - Local treasurers shall
maintain depository accounts in the name of their respective
local government units with banks DULY AUTHORIZED BY
THE BANGKO SENTRAL NG PILIPINAS [preferably
government-owned] located in or nearest their respective
areas of jurisdiction. Earnings of each depository account shall
accrue exclusively thereto.”

SECTION 2. Repealing Clause. - All laws, presidential decrees, executive orders,
proclamations, rules and regulations, or parts thereof which are inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

SECTION 3. Effectivity Clause. - This Act shall take effect fifteen (15) days from its
publication in the Official Gazette or in at least two (2) newspapers of general.

Approved.