THJRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
1 
First Regular Session 
1 
SENATE 
S.B. NO. 
Introduced by Senator JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
Under Section 325 (a) of the Local Government Code of 1991 , it is provided that 
the total appropriations, whether annual or supplemental, for personal services of a 
local government unit for one (1) fiscal year shall not exceed forty- five percent (45%) in 
the case of first to third class provinces, cities, and municipalities, and fifty- five 
percent (55%) in the case of fourth class or lower, of the total annual income realized in 
the next preceding fiscal year. 
The term “personal services” is a broad term which includes such items are 
representations, travel, and other allowances, bonuses, and the like, which when taken 
together with the basic salaries or wages of employees, amount to a sizable sum. 
This restricts the LGUs which cannot appropriate for “personal services” in 
excess of the limitations in said Sec. 325 (a) of the Local Government Code of 1991. 
It is the purpose of this bill, therefore, to amend the provisions of Section 325v (a) 
of said Local Government Code of 1991 by substituting “ salaries and wages” for the 
term “ personal services” in said section, so that the percentage ceilings in the 
appropriations of he local government units for personal services for one (1) year will 
now be based on “SALARIES AND WAGES” only, thereby allowing said LGUs a wider 
elbow room in determining the alloCations in their local annual budgets in keeping with 
the concept of local autonomy. 
GO EJE CITOESTRADA 
< 
/Senator 


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3
 
THIRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
1 
S.B. NO. 
5 
Introduced by Senator JINGGOY EJERCITO ESTRADA 
AN ACT 
AMENDING SECTION 325(A) OF REPUBLIC ACT NO. 7160, OTHERWISE KNOWN 
AS THE LOCAL GOVERNMENT CODE OF 1991, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of he Philippines in 
Congress assembled: 
SECTION I. 
Section 325 (a) of republic Act No. 7160, otherwise known as the 
Local Government Code of 1991 , is hereby amended to read as follows: 
Sec. 325. General Limitations. - The use of the provincial, city and municipal 
funds shall be subject to the following limitations: 
(a) The total appropriations, whether annual or supplemental, for [personal 
services] SALARIES AND WAGES OF OFFICIALS AND EMPLOYEES 
of a local government unit for one (I) 
fiscal year shall not exceed forty- 
five (45%) in the case if the first to third class provinces, cities, and 
municipalities, and fifty- five percent (55%) in the case of fourth class 
or lower, of the total annual income from regular sources realized in 
the next preceding fiscal year. The appropriation for salaries, wages, 
representation and transportation allowances of officials and 
employees of the public utilities, and economic enterprises owned, 
operated and maintained by local government unit concerned, shall not 
be included in the annual budget or in the computation of the maximum 
amount for personal services. The appropriation for the personal 
services of such economic enterprises shall be charged to their 
respective budgets." 


SECTION 2. All laws or parts thereof inconsistent with this Act are hereby 
repealed or modified accordingly. 
SECTION 3. This Act shall take effect upon its approval. 
Approved,