Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No, _ 2625 __

Introduced by Honorable Sherwin T. Gatchalian

EXPLANATORY NOTE

The Local Government Code of 1991 has defined and clearly delineated the
Internal Revenue Allotments (IRA) of the local government units. It was the
intention of the law to provide the LGU’s with a share from the proceeds of
national taxes to enable them to attain financial and economic autonomy and
become self-reliant communities through the system of decentralization.

The realities of times however bring about changes that make some
provisions in the law already ineffective or create a gap and a disservice to most
constituents. The last paragraph of Section 285 provides that “the financial
requirements of barangays created by LGU’s after the effectivity of the Local
Government Code shall be the responsibility of the local government unit concerned.”
Although it preserves the entitlements of the provinces, cities, municipalities and
barangays to its original sharing as prescribed in the Code, it is defeatist and
technically deprives the LGU to exercise its political power of creating, dividing and
merging new barangays. Leaving the financial requirements of newly created
barangays to the caprice of an ever changing local administration is contrary to
the principle of a self-reliant system of governance that is espoused by the Code.

This legislation therefore aims to address this uncertainty, in cognizance of
supervening events that necessitates the creation of new barangays. That,
regardless of date of creation, barangay units-shall receive, their IRA share from the
national government.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

2625

House Bill No.

Introduced by Honorable Sherwin T. Gatchalian

AN ACT
AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT 7160 ENTITLED
“THE LOCAL GOVERNMENT CODE OF THE PHILIPPINES” AND FOR
OTHER PURPOSES

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

SECTION 1. The last paragraph of Section 285 of Republic Act 7160
otherwise known as the Local Government Code of the Philippines is hereby
deleted.

“SECTION 285. Allocation to Local Government Units. —

The share of local government units in the internal revenue allotment
shall be allocated in the following manner:
(a) Provinces- Twenty- three percent (23%)
(b.) _ Cities- Twenty- three percent (23%)
(c.)  Municipalities- Thirty-four percent (34%); and
(d.)__ Barangays- Twenty percent (20%)

Provided, however, that the share of each province, city and
municipality shall be determined on the bases of the following formula:

(a) Population- Fifty percent (50%)
(b.) Land Area- Twenty-five percent (25%)
(©) Equal Sharing- Twenty- five percent (25%)

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 pesos (P80,000.00) 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:


fa.)
(1)
(2.)
(b.)
(1)
(2)
(c.)
(1)
(2.)

SECTION 2. Transitory Provision. - All barangays regardless of the date
and manner of creation shall be entitled to the Internal Revenue Allotment
(IRA) in the Fiscal Year immediately following the approval of this act.

SECTION 3. Repealing Cause. ~ All laws, decrees, executive orders,
issuances or regulations inconsistent with the provisions of this Act are hereby

On the first year of the effectivity of this Code:
Population- Forty percent (40%); and
Equal Sharing- Sixty percent (60%)

(On the second year :
Population- Fifty percent (50%); and
Equal Sharing- Fifty percent (50%)

On the third year and thereafter :
Population- Sixty percent (60%); and
Equal Sharing- Forty Percent (40%) ”

Provided, finally, That the financial requirements of barangays]
created by local government units after the effectivity of this Code
shall be the responsibility of the local government unit concerned.

revised or amended accordingly.

SECTION 4. Effectivity Clause. — This Act shall take effect fifteen (15)
days after its publication in the official gazette or in at least two (2) newspapers

of general circulation.

Approved.