1?
NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
SENA
S. B. No. 5Si
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*22 JUL 14 P3 53
s^iTur;::DBy;
Introduced by Senator SONNY ANGARA
AN ACT
TO ENHANCE PUBLIC FINANCIAL MANAGEMENT IN LOCAL GOVERNMENT 
UNITS BY AMENDING CERTAIN PROVISIONS IN REPUBLIC ACT NO. 7160, 
OTHERWISE KNOWN AS THE "LOCAL GOVERNMENT CODE OF 1991"
EXPLANATORY NOTE
Over three decades from the enactment and implementation of the Local 
Government Code (RA. 7160), the importance of efficient and effective local public 
financial management has risen with the intensifying complexity of local governance 
and service delivery.
The local government units (LGUs) have realized that to significantly reduce 
local poverty and provide basic services in a sustained and sustainable manner, they 
can no longer rely simply on year-to-year planning and budgeting. There is a need 
to shift from short-term public financial management to medium and long-term 
public financial management, and to achieve this the LGUs will need guidance from 
national government agencies.
To improve public financial management at the local level, there Is a need to 
provide oversight and guidance that is not only timely, relevant and effective but 
also respectful of the principles of local autonomy. There is also a need to harmonize 
and complement if not integrate local public investment with national public 
investment. Again, this only highlights the need to enhance the capacity of LGUs for 
public financial management includes but is not limited to planning, investment 
programming, budgeting, revenue mobilization and administration, expenditure 
management, performance monitoring and management.


With this in mind, this bill mandates oversight national agencies—the 
Department of Interior and Local Government (DILG), the Department of Budget 
and Management (DBM), the Department of Finance (DOF) and the National 
Economic and Development Authority (NEDA) to provide guidance in matters 
regarding local public financial management (PFM). LGUs are then mandated to 
incorporate whatever guidance provided by said oversight national agencies with 
their PFM activities.
This bill likewise emphasizes the oversight role of the Regional Development 
Council and the Province, City and Municipal governments over their respective 
component LGUs in matters regarding PFM. Finally, this bill encourages 
harmonization and complementarity if not integration between local and national 
plans and investment programs.
In view of the foregoing, approval of this bill is earnestly requested.
SONNY ANGARA


NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
SENATE
S. B. No. B41
<©ff»rr of tijr ^r-JTrrJrri'
‘22 JUL 14 P3 54
Rb'CEIVcD
Introduced by Senator SONNY ANGARA
AN ACT
TO ENHANCE PUBLIC FINANCIAL MANAGEMENT IN 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 of Representatives of the Philippines in 
Congress assembled:
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Section 1. Section 3 of Republic Act No. 7160, otherwise known as the Local
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Government Code of 1991, hereinafter referred to as the "Code", is hereby amended
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to read as follows:
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"Sec. 3. Operative Principles of Decentralization. - The formulation and
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implementation of policies and measures on local autonomy shall be
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guided by the following operative principles:
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(a)xxx
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XXX
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(e) Provinces with respect to component cities and municipalities, and
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cities and municipalities with respect to component barangays, shall
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ensure that the acts of their component units are within the scope of
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their prescribed powers and functions AND ADHERE TO THE
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PRINCIPLES AND POLICIES OF GOOD GOVERNANCE AND
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EFFICIENT PUBLIC FINANCIAL MANAGEMENT;
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(f) X X X
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XXX


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(j) Effective mechanisms for ensuring the accountability of local 
government units to their respective constituents shall be strengthened 
in order to upgrade continually the quality of local leadership AND
ADVANCE THE PRINCIPLES AND POLICIES OF GOOD 
GOVERNANCE AND EFFICIENT PUBLIC FINANCIAL 
MANAGEMENT;
(k) X X X
X X X."
Sec. 2. Section 25 (a) of the Code is hereby amendment to read as follows: 
"Sec. 25. National Supervision over Local Government Units. - 
(a) Consistent with the basic policy on local autonomy, the President shall 
exercise general supervision over local government units to ensure that 
their acts are within the scope of their prescribed powers and functions 
AND THE PRACTICE OF GOOD GOVERNANCE AND EFFICIENT 
PUBLIC FINANCIAL MANAGEMENT. THE PRESIDENT SHALL 
INSTRUCT THE DEPARTMENT OF THE INTERIOR AND LOCAL 
GOVERNMENT, THE DEPARTMENT OF FINANCE, THE 
DEPARTMENT OF BUDGET AND MANAGEMENT AND THE 
NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY TO 
FORMULATE GUIDELINES AND DESIGN AND DEVELOP 
PROCESSES AND SYSTEMS TO FACILITATE THIS SUPERVISION.
The President shall exercise supervisory authority directly over 
provinces, highly urbanized cities, and independent component cities; 
through the province with respect to component cities and municipalities; 
and through the city and municipality with respect to barangays.
(b)x X X
X X X.
Sec. 3. Section 29 of the Code is hereby amended to read as follows:
"Sec. 29. Provincial Relations with Component Cities and Municipalities. 
- The province, through the governor, shall ensure that every 
component city and municipality within its territorial jurisdiction acts 
within the scope of its prescribed powers and functions AND


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ADHERES TO THE PRINCIPLES AND POLICIES OF GOOD 
GOVERNANCE AND EFFICIENT PUBLIC FINANCIAL 
MANAGEMENT. FOR THIS PURPOSE, THE DEPARTMENT OF 
INTERIOR AND LOCAL GOVERNMENT, THE DEPARTMENT OF 
FINANCE, THE DEPARTMENT OF BUDGET AND MANAGEMENT 
AND THE NATIONAL ECONOMIC AND DEVELOPMENT 
AUTHORITY SHALL FORMULATE GUIDELINES AND DESIGN 
AND DEVELOP PROCESSES AND SYSTEMS TO SUPPORT THE 
OVERSIGHT FUNCTION OF THE PROVINCE. Highly urbanized 
cities and independent connponent cities shall be independent of the 
province."
Sec. 4. Section 32 of the Code is hereby amended to read as follows:
"Sec. 32. City and Municipal Supervision over Their Respective 
Barangays. - The city or municipality, through the city or municipal 
mayor concerned, shall exercise general supervision over component 
barangays to ensure that said barangays act within the scope of their 
prescribed powers and functions AND ADHERES TO THE 
PRINCIPLES AND POLICIES OF GOOD GOVERNANCE AND 
EFFICIENT PUBLIC FINANCIAL MANAGEMENT. FOR THIS 
PURPOSE, THE DEPARTMENT OF INTERIOR AND LOCAL 
GOVERNMENT, THE DEPARTMENT OF FINANCE, THE 
DEPARTMENT OF BUDGET AND MANAGEMENT AND THE 
national ECONOMIC AND DEVELOPMENT AUTHORITY 
SHALL FORMULATE GUIDELINES AND DESIGN AND DEVELOP 
PROCESSES AND SYSTEMS TO SUPPORT THE EXERCISE OF 
THIS SUPERVISION BY THE CITY AND MUNICIPALITY OVER 
THE iSARANGAYS."
Sec. 5. Section 108 of the Code is hereby amended to read as follows:
"Sec. 108. Representation of Non-governmental Organizations. - 
Within a period of sixty (60) days from the start of organization of local 
development councils, the non-governmental organizations shall 
choose from among themselves their representatives to said councils.


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WITHIN THE SAME SIXTY (60) DAY PERIOD, [T] the local 
sanggunian concerned shall accredit non-governmental organizations 
subject to such criteria as may be provided by law AND GUIDELINES 
PREPARED BY THE DEPARTMENT OF INTERIOR AND LOCAL 
GOVERNMENT AND THE DEPARTMENT OF BUDGET AND 
MANAGEMENT. THE SELECTION PROCESS SHALL BE 
CONDUCTED ONCE EVERY THREE (3) YEARS TO ENSURE THAT 
THE NON-GOVERNMENTAL ORGANIZATIONS REPRESENTED 
IN THE LOCAL DEVELOPMENT COUNCIL ARE CURRENTLY 
ACTIVE AND TO EXPAND AND IMPROVE THE COVERAGE OF 
COMMUNITY ISSUES AND CONCERNS."
Sec. 6. Section 109 of the Code is hereby amended to read as follows: 
"Sec. 109, Functions of Local Development Councils. -
(a) The provincial, city, and municipal development councils shall 
exercise the following functions:
(1) Formulate COMPREHENSIVE long-term, medium-term, and 
annual socio-economic development plans and policies;
(2) Formulate the medium-term and annual public investment 
programs;
(3) 
Appraise and prioritize socio-economic [development]
MEDIUM-TERM AND ANNUAL PUBLIC INVESTMENT
programs and projects;
(4) Formulate local investment incentives to promote the inflow 
and direction of private investment capital;
(5) Coordinate, monitor, and evaluate the implementation of 
[development] MEDIUM-TERM AND ANNUAL PUBLIC 
INVESTMENT programs and projects; and
(6) Perform such other functions as may be provided by law or 
component authority.
(b) The barangay development council shall exercise the following 
functions:
(1) Mobilize people’s participation in local development efforts;
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(2) 
Prepare barangay development plans based on local 
requirements;
(3) Monitor and evaluate the implementation of national or local 
programs and projects; and
(4) Perform such other functions as may be provided by law or 
competent authority.
(C) THE DEPARTMENT OF INTERIOR AND LOCAL 
GOVERNMENT, THE DEPARTMENT OF FINANCE, THE 
DEPARTMENT OF BUDGET AND MANAGEMENT AND THE 
NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY 
SHALL ISSUE MANUALS AND RELATED ISSUANCES TO GUIDE 
THE LOCAL DEVELOPMENT COUNCILS OF THE PROVINCE, 
MUNICIPALITY, CITY AND BARANGAY IN THE PREPARATION 
OF THEIR MEDIUM-TERM COMPREHENSIVE LOCAL 
DEVELOPMENT PLANS AND MEDIUM-TERM AND ANNUAL 
PUBLIC INVESTMENT PROGRAMS."
Sec. 7. Section 110 of the Code is hereby amended to read as follows: 
"Sec. 110. Meetings and Quorum. - The local development council 
shall meet at least once every six (6) months or as often as may be 
necessary. WRITTEN NOTICE OF MEETING SHALL BE SENT TO 
THE MEMBERS OF THE LOCAL DEVELOPMENT COUNCIL AT 
LEAST TEN (10) DAYS PRIOR TO THE MEETING."
Sec. 8. Section 113 of the Code is hereby amended to read as follows: 
"Sec. 113. Secretariat - There is hereby constituted for each local 
development council a secretariat which shall be responsible for 
providing technical support, documentation of proceedings, 
preparation of reports and such other assistance as may be required in 
the discharge of its functions. The local development council may avail 
of the services of any non-governmental organization or educational or 
research institution for this purpose.
The secretariats of the provincial, city, and municipa. development 
councils shall be headed by their respective planning and development


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coordinators WITH THEIR RESPECTIVE TREASURERS, BUDGET 
OFFICERS AND ACCOUNTANTS AS MEMBERS. The secretariat of 
the barangay development council shall be headed by the barangay 
[secretary-] TREASURER who shall be assisted by the BARANGAY 
SECRETARY AND ADVISED BY THE city or municipal planning and 
development coordinator concerned."
Sec. 9. Section 114 of the Code is hereby amended to read as follows: 
"Sec. 114. Relation of Local Development Councils to the Sanggunian 
and the Regional Development Council. -
(a) 
The policies, programs, and projects proposed by local 
development councils shall be submitted to the sanggunian concerned 
for appropriate action. The COMPREHENSIVE local development 
plans approved by their respective sanggunian [may] SHOULD be 
[integrated] ALIGNED with the development plans of the next higher 
level [ef] local development council.
(b) X X X"
Sec. 10. Section 316 of the Code is hereby amended to read as follows: 
"Sec. 316. Local Finance Committee. - There is hereby created in 
every province, city or municipality a local finance committee to be 
composed of the local planning and development officer, the local 
budget officer, [and] the local treasurer, AND THE LOCAL 
ACCOUNTANT. It shall exercise the following functions:
(a)x X X
X X X."
Sec. 11. Section 319 of the Code is hereby amended to read as follows: 
"Sec. 319. Legislative Authorization of the Budget. - On or before the 
end of the current fiscal year, the sanggunian concerned shall enact, 
through an ordinance, the annual budget of the local government unit 
for the ensuing fiscal year on the basis of the estimates of income and 
expenditures submitted by the local chief executive AND THE 
APPROVED ANNUAL INVESTMENT PROGRAM WHICH IS THE


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ENSUING YEAR EQUIVALENT OF THE MEDIUM-TERM PUBLIC 
INVESTMENT PROGRAM."
Sec. 12. Section 324 of the Code is hereby amended to read as follows: 
"Sec. 324. Budgetary Requirements. - The budgets of local 
government units for any fiscal year shall comply with the following 
requirements:
(a) The aggregate amount appropriated shall not exceed the estimates
of income AND THE ANNUAL INVESTMENT FROG51AM WHICH 
IS THE ENSUING YEAR EQUIVALENT OF THE MEDIUM-TERM 
PUBLIC INVESTMENT PROGRAM;
(b) X X X
X X X."
Sec. 13. Section 352 of the Code is hereby amended to read as follows: 
"Sec. 352. Posting of the Summary of Income and Expenditures. - 
Local treasurers, accountants, budget officers, and other accountable 
officers shall, within thirty (30) days from the end of the fiscal year, 
post in at least three (3) publicly accessible and conspicuous places in 
the local government unit OR THE OFFICIAL WEBSITE OF THE 
LOCAL GOVERNMENT UNIT, IF AVAILABLE, AND THE 
OFFICIAL WEBSITE OF THE BUREAU OF LOCAL GOVERNMENT 
FINANCE OF THE DEPARTMENT OF FINANCE, OR AN OFFICIAL 
GOVERNMENT WEBSITE DESIGNATED BY THE BUREAU OF 
LOCAL GOVERNMENT FINANCE OF THE DEPARTMENT OF 
FINANCE FOR SUCH PURPOSE a summary of all revenues collected 
and funds received including the appropriations and disbursements of 
such funds during the preceding fiscal year."
Sec. 14. Section 513 of the Code is hereby amended to read as follows: 
"Sec. 513. Faiiure to Post and Pubiish the Itemized Monthiy Coiiections 
and Disbursements. - Failure by the local treasurer of the local chief 
accountant to post the itemized monthly ccllections and disbursements 
of the local government unit concerned within ten (10) days following 
the end of every month and for at least two (2) consecutive weeks at


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prominent places in the main office building of the local government 
unit concerned, its plaza and main street, and to publish said 
itemization in a newspaper of general circulation, where available, in 
the territorial jurisdiction of such unit OR THE OFFICIAL WEBSITE 
OF THE LOCAL GOVERNMENT UNIT, IF AVAILABLE, AND THE 
OFFICIAL WEBSITE OF THE BUREAU OF LOCAL GOVERNMENT 
FINANCE OF THE DEPARTMENT OF FINANCE, OR AN OFFICIAL 
GOVERNMENT WEBSITE DESIGNATED BY THE BUREAU OF 
LOCAL GOVERNMENT FINANCE OF THE DEPARTMENT OF 
FINANCE FOR SUCH PURPOSE shall be punished by a fine not 
exceeding Five hundred pesos (P500.00) or by imprisonment not 
exceeding one (1) month, or both such fine and imprisonment, at the 
discretion of the court."
Sec. 15. Section 395 (e) (5) of the Code is hereby amended to read as
follows:
"Sec. 395. Barangay Treasurer: Appointment/ Qualifications, Powers 
and Duties. - 
(a) X X X 
XXX
(e) The barangay treasurer shall:
(1) XXX 
XXX
(5) Render a written accounting report of all barangay funds and 
property under his custody AND A SUMMARY OF ALL 
REVENUES COLLECTED AND FUNDS RECEIVED INCLUDING 
APPROPRIATIONS AND DISBURSEMENTS OF SUCH FUNDS 
[aMhe end of each calendar year] WITHIN THIRTY (30) DAYS 
FROM THE END OF THE FISCAL YEAR, [eind] ensure that such 
report shall be made available to the members of the barangay 
assembly and other government agencies concerneo, AND POST 
IN AT LEAST THREE (3) PUBLICLY ACCESSIBLE AND


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CONSPICUOUS PLACES IN THE BARANGAY OR THE
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OFFICIAL WEBSITE OF THE BARANGAY, IF AVAILABLE;
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(6) XXX
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XX X."
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Sec. 16. Implementing Rules and Regulations. - The Department of Interior
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and Local Government, the Department of Budget and Management, the
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Department of Finance and the National Economic and Development Authority shall
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formulate and issue the necessary rules and regulations to implement the provisions
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of this Act within sixty (60) days from its effectivity.
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Sec. 17. Repealing Clause. - All general and special laws, acts, city charters,
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executive orders, presidential proclamations, issuances, rules and regulations, or
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parts thereof wnich are contrary to or inconsistent with any of the provisions of this
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Act are hereby repealed, amended, or modified accordingly.
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Sec. 18. Separability Clause. - If any portion or provision of this Act is
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subsequently declared invalid or unconstitutional, other provisions hereof which are
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not affected thereby shall remain in full force and effect.
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Sec. 19. Effectivity Clause. - This Act shall take effect fifteen (15) days after
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its publication in the Official Gazette or in a newspaper of general circulation.
Approved,