SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
"13 
NOV 27 P 3 :12 
SENATE 
Senate Bill No. _1_9_6_3 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
When the Local Government Code was enacted in 1991, the intention of 
the framers of the law was to enable local government units (LGUs) to be more 
self sufficient and self reliant in responding to the need of their constituents. 
The noble objective was for the attainment of fiscal autonomy by the LGUs. 
In effect, several functions of national government agencies have been devolved 
to the LGUs. A significant provision in the Local Government Code (LGC) is to 
increase the allocation to LGUs from 11 % to 40%. As time evolved however, it 
was determined that this amount proved insufficient in addressing the cost of 
economic development within their territorial jurisdiction. Hence Local Chief 
Executives line up before their respective Congressmen, Senators and the Office 
of the President including the different line agencies financial assistance to 
augment their scarce resources. 
The realization of genuine autonomy through economic development 
remains a dream to some LGUs, especially those whose officials are political 
opponents of their Congressmen. It is therefore proposed in this measure to 
increase LGUs allotment from 40% to 60%. 
This bill, if enacted into law, will not only benefit LGUs more from taxes 
collected in their respective jurisdiction but will also shorten the present 
bureaucratic intricacies where funds are first remitted to the national government 
before they are allocated to the LGUs. Provisions for automatic retention of their 
respective shares are also provided here so that local legislative bodies could 
immediately appropriate funds for the LGUs priority development projects. 
Local Government Officials are at the forefront in the delivery of basic 
services to our citizens. Let us give what is due them. 
Hence, immediate passage of this bill is earnestly sought. ' 
Senator 


SIXTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
'13 
NOV 27 P 3 :12 
SENATE 
Senate Bill No, 
.1963 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
INCREASING 
THE 
INTERNAL 
REVENUE 
ALLOTMENT 
OF 
LOCAL 
GOVERNMENT 
UNITS 
(LGUs) 
AND 
AUTHORIZING 
ITS 
AUTOMATIC 
RETENTION, AMENDING FOR THAT PURPOSE SECTION 284 AND 286 OF 
RA. 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: 
SECTION 1. Section 284 of Republic Act No. 7160 is hereby amended to 
read as follows: 
"Section 284. - Allotment of Internal Revenue Taxes -
Local 
Government Units shall have a share in the national internal revenue 
taxes based in the collection of the third fiscal year preceding the 
current fiscal year as follows: 
(a) ON the first year of the effectivity of this Code, thirty percent 
(30%): 
(b) On the second year, thirty five percent (35%) [and]; 
(c) On the third year UNTIL SEVENTH YEAR [and thereafter], 
forty percent (40%); 
(d) ON THE EIGHTH YEAR, FIFTY PERCENT (50%)' 
(e)ON THE NINTH YEAR AND THEREAFTER, SIXTY 
PERCENT (60%) 
x x x ... " 
SEC. 2. Section 286 of the Republic Act 7160 is likewise hereby amended 
to read as follows: 
"Section 286. - Automatic [Release] RETENTION of Shares- a) 
The share of each locai' government unit shall be [release] 
RETAINED AUTOMATICALLY BY THE CONCERNED LOCAL 
GOVERNMENT UNIT, without need of nay further action, [directly to] 
By the provincial, city, municipal or barangay treasurer, as the case 
maybe, on a quarterly basis within five (5) days after the end of each 
quarter, and which shall be subject to any lien or holdback that may 
be imposed by the national government for whatever purpose. 
b) x x x ... " 


SEC. 3. All laws, issuances, rules and regulations inconsistent with the 
provisions this Act is hereby amended, repealed or modified accordingly. 
SEC. 4. This Act shall take effect fifteen (15) days after its publication in at 
least two (2) newspapers of national circulation. 
Approved,