14'h Congress of the Republic ) 
of the Philippines 
) 
1" Regular Session 
) 
, .,;, 
Explanatory Note 
This legislative measure seeks to amend Sections 284 and 286 of 
Republic Act 7160, otherwise known as the Local Government Code of 1991. 
Under this bill, the local government units are entitled to a forty percent 
(40%) share of national taxes. This is consistent with the mandate under Article 
X, Section 6 of the 1987 Constitution that "Local government units shall have a 
just share, as determined by law, in the national taxes which shall be 
automatically released to them." 
Furthermore, it is proposed that the share of each local government unit 
shall be released, without need of any further action, directly to the provincial, city, 
municipal or barangay treasurer, as the case may be, on a monthly or quarterly 
basis within five (5) days after the end of each month or quarter. Said share shall 
not be subject to any lien or holdback that may be imposed by the Central 
government. 
The internal revenue allotment (IRA) of local governments has been the 
lifeblood of many of them as far as operations at the local level is concerned. 
The IRA shares, as contemplated in the proposed amendments, are enhanced 
and broadened to include sharing in national taxes. Broadening the share of 
local governments to go beyond internal revenue and to include all taxes, is one 
of the more radical amendments being proposed. 
This is consistent with the promotion and enhancement of local financial 
autonomy. 
The approval of this bill is therefore, 9qrnestly requested. 


14'h Congress of the Republic ) 
of the Philippines 
) 
Is' 
Regular Session 
) 
AN ACT AMENDING SECTIONS 284 AND 286 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: 
SECTION I, 
Section 284 of RA 7160 is hereby amended and shall read as 
follows: 
Section 284. (Allotment) SHARE of (Internal Revenue) NATIONAL 
taxes. UPON APPROVAL OF THIS CODE, AS AMENDED, (L) local 
government units (shall have a) ARE ENTITLED TO A FORTY PERCENT 
(40%) share (in the) OF national (internal revenue) taxes based on 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 and thereafter, forty percent (40%). Provided, 
That in the event that the national government incurs an unmanageable 
public sector deficit, the President of the Philippines is hereby authorized, 
upon the recommendation of Secretary of Finance, Secretary of Interior 
and Local Government and Secretary of Budget and Management, and 
subject to consultation with the presiding officers of both Houses of 
Congress and the presidents of the liga, to make the necessary 
adjustments in the internal revenue allotment of local government units but 
in no case shall the allotment be less than thirty percent (30%) of the 
collection of national internal revenue taxes of the third fiscal year 
preceding the current fiscal year: Provided, further That in the first year of 
the effectivity of this Code, the local government units shall, in addition to 
the thirty percent (30%) internal revenue allotment which shall include the 
cost of devolved functions for essential public services, be entitled to 
receive the amount equivalent to the cost of devolved personal services.) 
SECTION 2. Section 286 of RA 7160 is hereby amended and shall read as 
follows: 
Section 286. Automatic Release of Shares. - (a) The share of each 
local government unit IS CONSIDERED OBLIGATED AND IT shall be 
released, without need of any further action, directly to the provincial, city, 
municipal or barangay treasurer, as the case may be, on a MONTHLY OR 
quarterly basis within five (5) days after the end of each MONTH OR 
quarter, (and which ) 


(B) SAID SHARE shall not be subject to any lien or holdback that 
may be imposed by the (national) CENTRAL government for whatever 
purpose. 
the share of local government units under existing laws. 
((b)) (C) Nothing in this Chapter shall be understood to diminish 
SECTION 3. All laws, decrees, executive orders, proclamations, rules and 
regulations, or parts thereof inconsistent herewith are hereby repealed or 
modified accordingly. 
SECTION 4. Separability Clause. - If any provision of this Act is held invalid or 
unconstitutional, the other provisions not affected hereby shall remain valid and 
subsisting. 
SECTION 5. This Act shall take effect fifteen (15) days after its publication in at 
least two (2) national newspapers of general circulation. 
Approved,