SEVENTEENTH CONGRESS OF THE ) Sthic, of the sees etary
REPUBLIC OF THE PHILIPPINES )
Second Regular Session ) "8 WRI P3239
SENATE RECEIv: i) £ p
s.B. No.1786

Introduced by Senator SONNY ANGARA

AN ACT
TO ENHANCE INTER-LGU COOPERATION BY AMENDING CERTAIN
PROVISIONS IN BOOK | OF REPUBLIC ACT 7160, OTHERWISE KNOWN AS
THE LOCAL GOVERNMENT CODE OF 1991

EXPLANATORY NOTE

A key feature of the Local Government Code (RA 7160) is the recognition that
local issues and development often do not respect geographic and administrative
boundaries. Environmental concerns cut across municipalities and sometimes even
provinces and regions.

For instance, road infrastructure investments made in one province can improve
the access of agricultural goods in an adjoining province by connecting both of them
to a national artery. As a result, the benefit of thinking “outside the boundaries” for
their mutual benefit has become apparent to many LGUs. Fortunately, the Local
Government Code has foreseen this and encourages inter-LGU cooperation
ventures.

However, what the Code has not foreseen was that a new vehicle is needed
Whenever memorandums of agreement are insufficient to maximize the potential of
inter-LGU cooperation. Although LGUs can share their resources for a venture,
because existing law does not allow them to formalize a legal personality for the
venture, they cannot collectively contract credit financing for the venture. This is
mainly because based on a Department of Justice opinion that although LGUs have
a corporate personality they cannot form a corporation among themselves because
the Corporation Code of the Philippines states that only natural persons can form
corporation.



It is in this regard that an amendment of the Code is necessary for the creation
of a mechanism by which LGUs that wish to organize themselves into a legal entity
can access credit financing or other debt instruments, making their alliance more
efficient and effective.

In view of the foregoing, approval of this bill is earnestly sought

GEL

INNY ANGARA



SEVENTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )

Second Regular Session ) ‘ie mep-26 P39

SENATE RECEIVe & EG

$.B. No. 1786

|
| Introduced by Senator SONNY ANGARA

AN ACT
TO ENHANCE INTER-LGU COOPERATION BY AMENDING CERTAIN
PROVISIONS IN BOOK | OF REPUBLIC ACT 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:

1 SECTION 1. Section 3 of Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, hereinafter referred to as the “Code”, is hereby amended

3 to read as follows:

| 4 “SEC. 3. Operative Principles of Decentralization. - The formulation and
5 implementation of policies and measures on local autonomy shall be guided

6 by the following operative principles:

| 7 (a)xxx

8 XXX

. 9 (f) Local government units may group themselves, consolidate or coordinate
10 their efforts, services, and resources for purposes commonly beneficial to
u them THROUGH MUTUAL AGREEMENT OR THROUGH THE FORMATION
2 OF AN ALLIANCE WITH A LEGAL PERSONALITY;
13 (9) xxx

14 XXX"



SEC. 2. Section 33 of the Code is hereby amendment to read as follows:

“SEC. 33. Cooperative Undertakings Among Local Government Units
THROUGH MUTUAL AGREEMENT. - Local government units may, through
appropriate ordinances, group themselves, consolidate, or coordinate their
efforts, services, and resources for purposes commonly beneficial to them
THROUGH MUTUAL AGREEMENT. In support of such undertaking, the local
government units involved may upon approval by the sanggunian concerned
after a public hearing conducted for the purpose, contribute funds, real estate,
equipment, and other kinds of property and appoint or assign personnel under
such items and conditions as may be agreed upon by the participating local

government units through Memoyanda of Agreement.”

SEC. 3. A new Section 33-A in Book | of the Code is hereby inserted as follows:

“SEC. 33-A. COOPERATIVE UNDERTAKINGS AMONG LOCAL
GOVERNMENT UNIT THROUGH THE FORMATION OF AN ALLIANCE
WITH LEGAL PERSONALITY. - LOCAL GOVERNMENT UNITS MAY
GROUP THEMSELVES, CONSOLIDATE, OR COORDINATE THEIR
EFFORTS, SERVICES, AND RESOURCES FOR PURPOSES COMMONLY
BENEFICIAL TO THEM THROUGH THE FORMATION OF AN ALLIANCE
WITH A LEGAL PERSONALITY. FOR THIS PURPOSE, A NATIONAL
REGISTRY OF ALLIANCES (NRA) SHALL BE FORMED TO REGISTER
THE ALLIANCE OF LGUS AND ESTABLISH THE LEGAL PERSONALITY
AND ALL THE CONSEQUENT IMPLICATIONS OF THE SAME. THE NRA
SHALL BE COMPOSED OF THE SECRETARY OF THE DEPARTMENT OF
INTERIOR AND LOCAL GOVERNMENT AS CHAIR WITH THE
PRESIDENTS OR CHAIRMEN OF THE LEAGUES OF PROVINCES,
CITIES, AND MUNICIPALITIES AND THE LIGA NG MGA BARANGAYS AS.
BOARD MEMBERS. THE NRA BOARD SHALL FORMULATE THE
REQUIREMENTS, GUIDELINES, AND PROCEDURES FOR THE
APPLICATION, CREATION, REGISTRY, REGULATION AND MONITORING
OF INTER-LGU ALLIANCES COVERED BY THE NRA. THE



aus

a

REGISTRYAND SECRETARIAT SHALL BE HOUSED AT THE
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT.”

SEC. 4. Repealing Clause. - All general and special laws, acts, city charters,
decrees, executive orders, proclamations and administrative regulations, or part or
parts thereof which are inconsistent with any of the provisions of this Act are hereby

repealed or modified accordingly.
SEC. 5. Separability Clause. - If, for any reason or reasons, any part of
provision of this Act shall be held unconstitutional or invalid, other parts or provisions

hereof which not affected thereby shall continue to be in full force and effect.

SEC. 6. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,