EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S E N A T E  
S. B. No. 8 4 R
•19 JUL 31 P4-.10
Introduced by Senator SONNY ANGARA Rtui r
AN ACT
TO 
RATIONALIZE 
THE 
FUNCTIONAL 
ASSIGNMENTS 
OF 
LOCAL 
GOVERNMENT UNITS BY AMENDING CERTAIN PROVISIONS IN  REPUBLIC 
ACT NO. 7160, OTHERWISE KNOWN AS THE "LOCAL GOVERNMENT CODE 
OF 1991"
EXPLANATORY NOTE
Republic Act No. 7160 or the Local Government Code of 1991 has devolved to 
all LGUs the administration of basic services, including agriculture, environmental 
protection, health, maintenance of public works and highways, social welfare, and 
tourism. The law was enacted to empower local government units (LGUs) with the 
end in view of improving the delivery of services to the public, thereby becoming 
effective instruments of both local and national development.
However, in the 28 years since the passage of the Local Government Code, 
studies have shown minimal improvement with regard to local services delivery, with 
the exception of some cities. LGUs have often complained that there is a mismatch 
between the devolved functions and the intergovernmental fiscal transfers and 
revenue raising powers provided to them under the Code.
This clear case of "finance not following function" has been a rallying cry of 
LGUs wishing to increase their share of the Internal Revenue Allotment (IRA). But, 
the problem is not simply solved by bridging the finance gap. All things being equal 
(e.g., capacity of LGUs to implement projects), there is an equally great mismatch in 
the functions of local public goods and services and the level of the LGUs. Many 
functions devolved to LGUs like the Barangay and Municipality have clear externality 
effects or benefits outside the boundaries of the LGUs. For example, health 
objectives and programs are more national than local although their implementation


can be local. Because of this, the devolved functions do not have the explicit or 
implicit incentives built in.
Consequently, there is a need to qualify what functions should be left to the 
national government, what should be shared, and what should be fully devolved, 
based on a clear understanding of who are included in the LCD's scope of 
beneficiaries so that they will have built in incentive mechanisms that will encourage 
the LCDs to make the investment or finance the function. The delineation of 
functions is not only between the LCDs and the National Government but equally 
important among LCDs at different levels.
In view of the foregoing, approval of this bill is earnestly requested.
SONNY ANGARA


EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
uC i!)c 
ti tarp
S E N A T E
S. B. No. 846
•19 
JUL31 
P 4:10
Introduced by Senator SONNY ANGARA
RECEi. L* 13‘i.
AN ACT
TO 
RATIONALIZE 
THE 
FUNCTIONAL 
ASSIGNMENTS 
OF 
LOCAL 
GOVERNMENT UNITS BY AMENDING CERTAIN PROVISIONS IN  REPUBLIC 
ACT NO. 7160, OTHERWISE KNOWN AS THE "LOCAL GOVERNMENT CODE 
OF 1991"
Be it enacted by the Senate and House o f Representatives o f the Phiiippines in 
Congress assembled:
1 
Section 1. Section 3 (a) of Republic Act No. 7160, otherwise known as the Local
2 
Government Code of 1991, hereinafter referred to as the "Code", is hereby amended
3 
to read as follows:
4 
"Sec. 3. Operative Principles o f Decentralization. -  The formulation and
5 
implementation of policies and measures on local autonomy shall be
6 
guided by the following operative principles:
7 
(a) There shall be an effective allocation BETWEEN THE NATIONAL
8 
GOVERNMENT AND among the different local government units of
9 
their respective powers, functions, responsibilities, and resources
10 
INTO 
NATIONAL 
GOVERNMENT, 
FULLY-DEVOLVED, 
AND
11 
SHARED FUNCTIONS BASED ON THE SCOPE OF BENEFITS,
12 
EFFECTS 
OR 
IMPACTS 
EXTERNAL 
TO 
THE 
LOCAL
13 
GOVERNMENT U N IT AND RESPONSBILITY FOR THE SETTING
14 
OF 
POLICIES 
AND 
STANDARD, 
PLANNING 
AND
15 
PROGRAMMING, IMPLEMENTATION AND EXECUTION, AND
16 
ORIGIN AND OWNERSHIP OF THE FUNDING SOURCE;
1


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(b) X X X
XXX."
Sec. 2. Section 17 of the Code is hereby amendment to read as follows: 
"Sec. 17. Basic Services and Facilities. -  (a) Local government units 
shall endeavor to be self-reliant and shall continue exercising the 
powers and discharging the duties and functions currently vested upon 
them. They shall also discharge the functions and responsibilities of 
national agencies and offices devolved to them pursuant to this Code. 
Local government units shall likewise exercise such other powers and 
discharge such other functions and responsibilities as are necessary, 
appropriate, or incidental to efficient and effective provisions of the 
basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, the 
following:
(1) For a Barangay:
[(+3— AgHeultural— support—services—which— include— planting 
materials distribution system and operatien ef farm produce 
collcction-and-buying stations;
maintenance of barongay health centep and-day-care center;
(iii)] (i) Services and facilities related to general hygiene and 
sanitation, beautification, and solid waste collection;
[(iv)] (ii) Maintenance of katarungang pambarangay; 
[ (v)- Maintenance of barongay roads and bridges-a n d -water
[(vi)] (iii) Infrastructure facilities such as multi-purpose hall, 
multipurpose pavement, plaza, sports center, and other similar 
facilities;
[(vti)] (iv) Information and reading center; and 
[(vm)] (v) Satellite or public market, where viable;


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(2) For a Municipality:
(i) Extension and on-site research services and facilities related 
to agriculture and fishery activities which include dispersal of 
livestock and poultry, fingerlings, and other seedling materials 
for aquaculture; 
palay, corn, and vegetable seed farms; 
medicinal plant gardens; fruit tree, coconut, and other kinds of 
seedling nurseries; demonstration farms; quality control of 
copra and improvement and development of local distribution 
channels, 
preferably 
through 
cooperatives; 
interbarangay 
irrigation system; water and soil resource utilization and 
conservation projects; and enforcement of fishery laws in 
municipal waters including the conservation of mangroves;
(ii) Pursuant to national policies and subject to supervision, 
control and review of the DENR, implementation of community- 
based forestry projects which include integrated social forestry 
programs and similar projects; management and control of 
communal forests with an area not exceeding fifty (50) square 
kilometers; establishment of tree parks, greenbelts, and similar 
forest development projects WHOSE IMPLEMENTATON MAY 
BE SHARED W ITH THE PROVINCE AND/OR A NATIONAL 
GOVERNMENT AGENCY;
(iii) Subject to the provisions of Title Five, Book 1 of this Code, 
health services which include the implementation of programs 
and projects on primary health care, maternal and child care, 
and communicable and non-communicable disease control 
services, access to secondary and tertiary health services; 
purchase of medicines, medical supplies, and equipment needed 
to 
carry 
out 
the 
services 
herein 
enumerated 
WHOSE 
IMPLEMENTATION 
MAY 
BE 
SHARED 
W ITH 
THE 
PROVINCE 
AND/O R 
A 
NATIONAL 
GOVERNMENT 
AGENCY;


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(iv) Social welfare services which include programs and projects 
on child and youth welfare, family and community welfare, 
women's welfare, welfare of the elderly and disabled persons; 
community-based rehabilitation programs for vagrants, beggars, 
street children, scavengers, juvenile delinquents, and victims of 
drug abuse; livelihood and other pro-poor projects; nutrition 
services; and family planning services;
(v) Information services which include investments and job 
placement information systems, tax and marketing information 
systems, and maintenance of a public library;
(vi) Solid waste disposal system or environmental management 
system and services or facilities related to general hygiene and 
sanitation WHOSE IMPLEMENTATION MAY BE SHARED 
W ITH 
THE 
PROVINCE 
OR 
THROUGH 
INTER-LGU 
COOPERATION;
(vii) Municipal buildings, cultural centers, public parks including 
freedom parks, playgrounds, and other sports facilities and 
equipment, and other similar facilities;
(viii) Infrastructure facilities intended primarily to service the 
needs of the residents of the municipality and which are funded 
out of municipal funds including but not limited to, municipal 
roads and bridges; school buildings and other facilities for public 
elementary and secondary schools; clinics, health centers and 
other health facilities necessary to carry out health services; 
communal irrigation, small water impounding projects and other 
similar projects; fish ports; artesian wells, spring development, 
rainwater collectors and water supply systems; seawalls, dikes, 
drainage and sewerage, and flood control; traffic signals and 
road signs; and similar facilities;
(ix) Public markets, slaughterhouses and other municipal 
enterprises;
(x) Public cemetery;


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(xi) Tourism facilities and other tourist attractions, including the 
acquisition of equipment, regulation and supervision of business 
concessions, and security services for such facilities; [ar^d]
(xii) Sites for police and fire stations and substations and 
municipal jail;
( X III)  
MAINTENANCE 
OF 
BARANGAY 
ROADS 
AND 
BRIDGES AND WATER SUPPLY SYSTEMS;
(X IV ) HEALTH AND SOCIAL WELFARE SERVICES WHICH 
INCLUDE 
MAINTENANCE 
OF 
BARANGAY 
HEALTH 
CENTER AND DAY-CARE CENTER; AND
(XV) 
AGRICULTURAL 
SUPPORT 
SERVICES 
WHICH 
INCLUDE 
PLANTING 
MATERIALS 
DISTRIBUTION 
SYSTEM 
AND 
OPERATION 
OF 
FARM 
PRODUCE 
COLLECTION 
AND 
BUYING 
STATIONS 
WHOSE 
IMPLEMENTATION 
MAY 
BE 
SHARED 
W ITH 
THE 
BARANGAY.
(3) For a Province:
(i) Agricultural extension and on-site research services and 
facilities which include the prevention and control of plant and 
animal pests and diseases; dairy farms, livestock markets, 
animal breeding stations, and artificial insemination centers; 
and assistance in the organization of farmers and fishermen's 
cooperatives, and other collective organizations, as well as the 
transfer of appropriate technology;
(ii) Industrial research and development services, as well as the 
transfer of appropriate technology;
(iii) Pursuant to national policies and subject to supervision, 
control and review of the DENR, enforcement of forestry laws 
limited to community-based forestry projects, pollution control 
law, small-scale mining law, and other laws on the protection of 
the environment; and mini-hydroelectric projects for local 
purposes;


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(iv) Subject to the provisions of Title Five, Book I of this Code, 
health services which include hospitals and other tertiary health 
services;
(v) Social welfare services which include programs and projects 
on rebel returnees and evacuees; 
relief operations; 
and 
population development services;
(vi) Provincial buildings, provincial jails, freedom parks and 
other public assembly areas and similar facilities;
(vii) Infrastructure facilities intended to service the needs of the 
residence of the province and which are funded out of provincial 
funds including, but not limited to, provincial roads and bridges; 
inter-municipal waterworks, drainage and sewerage, flood 
control, and irrigation systems; reclamation projects; and similar 
facilities;
(viii) Programs and projects for low-cost housing and other 
mass dwellings, except those funded by the Social Security 
System (SSS), Government Service Insurance System (GSIS), 
and the Home Development Mutual Fund (HDMF): Provided, 
That national funds for these programs and projects shall be 
equitably allocated among the regions in proportion to the ratio 
of the homeless to the population;
(ix) Investment support services, including access to credit 
financing;
(x) Upgrading and modernization of tax information and 
collection services through the use of computer hardware and 
software and other means;
(xi) Inter-municipal telecommunications services, subject to 
national policy guidelines; and
(xii) Tourism development and promotion programs;
(4) For a City:
All the services and facilities of the municipality and province, 
and in addition thereto, the following:


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(i) Adequate communication and transportation facilities;
(ii) Support for education, police and fire services and facilities;
(c) Notwithstanding the provisions of subsection (b) hereof, public 
works and infrastructure projects and other facilities, programs and 
services funded by the national government under the annual General 
Appropriations Act, other special laws, pertinent executive orders, and 
those wholly or partially funded from foreign sources, are not covered 
under this Section, except in those cases where the local government 
unit concerned is duly designated as the implementing agency for such 
projects, facilities, programs, and services.
(d) The designs, plans, specifications, testing of materials, and the 
procurement of equipment and materials at from both foreign and 
local sources necessary for the provision of the foregoing services and 
facilities shall be undertaken by the local government unit concerned, 
based on national policies, standards and guidelines.
(e) National agencies or offices concerned shall devolve to local 
government units the responsibility for the provision of basic services 
and facilities enumerated in this Section within six (6) months after the 
effectivity of this Code.
As used in this Code, the term "devolution" refers to the act by 
which the national government confers power and authority upon the 
various local government units to perform specific functions and 
responsibilities.
(f) The national government or the next higher level of local 
government unit may provide or augment the basic services and 
facilities assigned to a lower level of local government unit when such 
services or facilities are not made available or, if made available, are 
inadequate to meet the requirements of its inhabitants BASED ON 
GUIDELINES ISSUED BY THE DEPARTMENT OF THE INTERIOR 
AND LOCAL GOVERNMENT.
(g) The basic services and facilities hereinabove enumerated shall be 
funded from the share of local government units in the proceeds of


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national taxes and other local revenues and funding support from the 
national government, its instrumentalities and government-owned or 
controlled corporations which are tasked by law to establish and 
maintain such services or facilities. Any fund or resource available for 
the use of local government units shall be first allocated for the 
provision of basic services or facilities enumerated in subsection (b) 
hereof before applying the same for other purposes, unless otherwise 
provided in this Code.
(h) Regional offices of national agencies or offices whose functions are 
devolved to local government units as provided herein shall be phased 
out within one (1) year from the approval of this Code. Said national 
agencies and offices may establish such field units as may be 
necessary for monitoring purposes and providing technical assistance 
to local government units. The properties, equipment, and other assets 
of these regional offices shall be distributed to the local government 
units in the region in accordance with the rules and regulations issued 
by the oversight committee created under this Code.
(i) The devolution contemplated in this Code shall include the transfer 
to local government units of the records, equipment, and other assets 
and personnel of national agencies and offices corresponding to the 
devolved powers, functions, and responsibilities.
Personnel of said national agencies or offices shall be absorbed by 
the local government units to which they belong or in whose areas 
they are assigned to the extent that it is administratively viable as 
determined by the said oversight committee: Provided, That the rights 
accorded to such personnel pursuant to civil service law, rules and 
regulations shall not be impaired: Provided, further, That regional 
directors who are career executive service officers and other officers of 
similar rank in the said regional offices who cannot be absorbed by the 
local government unit shall be retained by the national government, 
without any diminution of rank, salary or tenure.
8


1 
(j) To ensure the active participation of the private sector in local
2 
governance, local government units may, by ordinance, sell, lease,
3 
encumber, or otherwise dispose of public economic enterprises owned
4 
by them in their proprietary capacity.
5 
Costs may also be charged for the delivery of basic services or
6 
facilities enumerated in this Section."
7 
Sec. 5. Repealing Clause. -  All general and special laws, acts, city charters,
8 
executive orders, presidential proclamations, issuances, rules and regulations, or
9 
parts thereof which are contrary to or inconsistent with any of the provisions of this
10 
Act are hereby repealed, amended, or modified accordingly.
11 
Sec. 6. Separability Clause. -  If any portion or provision of this Act is
12 
subsequently declared invalid or unconstitutional, other provisions hereof which are
13 
not affected thereby shall remain in full force and effect.
14 
Sec. 7. Effectivity Clause. -  This Act shall take effect fifteen (15) days after its
15 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,