SEVENTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES, )
Second Regular Session )

"18 APR 26 -P3:43

SENATE
RECEIV cu &
s.B. No. 1790 —_ f

Introduced by Senator SONNY ANGARA

AN ACT
TO RATIONALIZE THE FUNCTIONAL ASSIGNMENTS OF LOCAL
GOVERNMENT UNITS BY AMENDING CERTAIN PROVISIONS IN REPUBLIC
ACT 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF
1991

EXPLANATORY NOTE

In the 26 years since the passage of the Local Government Code (R.A. 7160),
many studies have shown that based on Section 17, local service delivery has not
improved significantly on the average except maybe for some cities. LGUs have
often complained that there is a mismatch between the functions devolved them and
the intergovernmental fiscal transfers and revenue raising powers provided to them
under the Code.

This clear case of “finance not following function” has been a rallying cry of LGUs
wishing to increase the share of the Internal Revenue Allotment (IRA) to equal that of
the National Government.

However, the problem is not simply solved by bridging the finance gap. All things
equal (e.g., capacity of LGUs to implement projects), there is an equally great
mismatch in the functions of local public goods and services and the level of the
LGUs. Many functions devolved to LGUs like the Barangay and Municipality have
clear externality effects or benefits outside the boundaries of the LGUs. For example,
health objectives and programs are more national than local although their
implementation can be local. Because of this, the devolved functions do not have the
explicit or implicit incentives built in.



Consequently, there is a need to qualify what functions should be left to the
national government, what should be shared, and what should be fully devolved
based on a clear understanding of who are included in the LGU's scope of
beneficiaries so that they will have built in incentive mechanisms that will encourage
the LGUs to make the investment or finance the function. The delineation of
functions are not only between the LGUs and the National Government but equally
important among LGUs at different levels.

In view of the foregoing, approval of this bill is earnestly requested.

SONNY ANGARA



Doaure
of tye aecertary

SEVENTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )

Second Regular Session ) "18 19826 P33

$.B. No. 1790

Introduced by Senator SONNY ANGARA

AN ACT
TO RATIONALIZE THE FUNCTIONAL ASSIGNMENTS OF LOCAL
GOVERNMENT UNITS BY AMENDING CERTAIN PROVISIONS IN 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 1. Section 3 (a) of Republic Act No. 7160, otherwise known as the
Local Government Code of 1991, hereinafter referred to as the “Code”, is hereby

amended to read as follows:

eran

©

“SEC. 3. Operative Principles of Decentralization. - The formulation and
implementation of policies and measures on local autonomy shall be guided
by the following operative principles:

(a) There shall be an effective allocation BETWEEN THE NATIONAL
GOVERNMENT AND among the different local government units of their
respective powers, functions, responsibilities, and resources INTO
NATIONAL GOVERNMENT, FULLY-DEVOLVED, AND SHARED
FUNCTIONS BASED ON THE SCOPE OF BENEFITS, EFFECTS OR
IMPACTS EXTERNAL TO THE LOCAL GOVERNMENT UNIT AND
RESPONSBILITY FOR THE SETTING OF POLICIES AND STANDARD,
PLANNING AND PROGRAMMING, IMPLEMENTATION AND EXECUTION,
AND ORIGIN AND OWNERSHIP OF THE FUNDING SOURCE;



(b) xxx

Xxx"
SEC. 2. Section 17 of the Code is hereby amendment to read as follows:

“SEC. 17. Basic Services and Facilities. — (a) Local government units shall
endeavor to be self-reliant and shall continue exercising the powers and
discharging the duties and functions currently vested upon them. They shall
also discharge the functions and responsibilities of national agencies and
offices devolved to them pursuant to this Code. Local government units shall
likewise exercise such other powers and discharge such other functions and
responsibilities as are necessary, appropriate, or incidental to efficient and
effective provisions of the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, the
following:

(1) For a Barangay:

[f) Agricultura

Gili) (i) Services and facilities related to general hygiene and sanitation,

beautification, and solid waste collection;

44 (ii) Maintenance of katarungang pambarangay;
l
systems;]

(v4 (ili) Infrastructure facilities such as multi-purpose hall, multipurpose
pavement, plaza, sports center, and other similar facilities;

(vii) (iv) Information and reading center; and
(vii (v) Satellite or public market, where viable;

(2) For a Municipality:
(i) Extension and on-site research services and facilities related to
agriculture and fishery activities which include dispersal of livestock
and poultry, fingerlings, and other seedling materials for aquaculture;

2



palay, corn, and vegetable seed farms; medicinal plant gardens; fruit
tree, coconut, and other kinds of seedling nurseries; demonstration
farms; quality control of copra and improvement and development of
local distribution channels, preferably through cooperatives;
interbarangay irrigation system; water and soil resource utilization and
conservation projects; and enforcement of fishery laws in municipal
waters including the conservation of mangroves;

(ii) Pursuant to national policies and subject to supervision, control and
review of the DENR, implementation of community-based forestry
projects which include integrated social forestry programs and similar
projects; management and control of communal forests with an area
not exceeding fifty (50) square kilometers; establishment of tree parks,
greenbelts, and similar forest development projects WHOSE
IMPLEMENTATON MAY BE SHARED WITH THE PROVINCE
AND/OR A NATIONAL GOVERNMENT AGENCY;

(iii) Subject to the provisions of Title Five, Book | of this Code, health
services which include the implementation of programs and projects on
primary health care, maternal and child care, and communicable and
non-communicable disease control services, access to secondary and
tertiary health services; purchase of medicines, medical supplies, and
equipment needed to carry out the services herein enumerated
WHOSE IMPLEMENTATION MAY BE SHARED WITH THE
PROVINCE AND/OR A NATIONAL GOVERNMENT AGENCY;

(iv) Social welfare services which include programs and projects on
child and youth welfare, family and community welfare, women's
welfare, welfare of the elderly and disabled persons; community-based
rehabilitation programs for vagrants, beggars, street children,
scavengers, juvenile delinquents, and victims of drug abuse; livelihood
and other pro-poor projects; nutrition services; and family planning
services;

(v) Information services which include investments and job placement
information systems, tax and marketing information systems, and

maintenance of a public library;



20

(vi) Solid waste disposal system or environmental management system
and services or facilities related to general hygiene and sanitation
WHOSE IMPLEMENTATION MAY BE SHARED WITH THE
PROVINCE OR THROUGH INTER-LGU COOPERATION;

(vii) Municipal buildings, cultural centers, public parks including
freedom parks, playgrounds, and other sports facilities and equipment,
and other similar facilities;

(vill) Infrastructure facilities intended primarily to service the needs of
the residents of the municipality and which are funded out of municipal
funds including but not limited to, municipal roads and bridges; school
buildings and other facilities for public elementary and secondary
schools; clinics, health centers and other health facilities necessary to
carry out health services; communal irrigation, small water impounding
projects and other similar projects; fish ports; artesian wells, spring
development, rainwater collectors and water supply systems; seawalls,
dikes, drainage and sewerage, and flood control; traffic signals and
road signs; and similar facilities;

(ix) Public markets, slaughterhouses and other municipal enterprises;
(x) Public cemetery;

(xi) Tourism facilities and other tourist attractions, including the
acquisition of equipment, regulation and supervision of business
concessions, and security services for such facilities; [and]

(xii) Sites for police and fire stations and substations and municipal jail;
(XIll) MAINTENANCE OF BARANGAY ROADS AND BRIDGES AND
WATER SUPPLY SYSTEMS;

(XIV) HEALTH AND SOCIAL WELFARE SERVICES WHICH
INCLUDE MAINTENANCE OF BARANGAY HEALTH CENTER AND
DAY-CARE CENTER; AND

(XV) AGRICULTURAL SUPPORT SERVICES WHICH INCLUDE
PLANTING MATERIALS DISTRIBUTION SYSTEM AND
OPERATION OF FARM PRODUCE COLLECTION AND BUYING
STATIONS WHOSE IMPLEMENTATION MAY BE SHARED WITH
THE BARANGAY.



Rw

Secwiy8] 84

(3) For a Province:

(i) Agricultural extension and on-site research services and facilities
which include the prevention and control of plant and animal pests and
diseases; dairy farms, livestock markets, animal breeding stations, and
artificial insemination centers; and assistance in the organization of
farmers and fishermen's cooperatives, and other collective
organizations, as well as the transfer of appropriate technology;

(ii) Industrial research and development services, as well as the
transfer of appropriate technology;

(iii) Pursuant to national policies and subject to supervision, control and
review of the DENR, enforcement of forestry laws limited to
community-based forestry projects, pollution control law, small-scale
mining law, and other laws on the protection of the environment; and
mini-hydroelectric projects for local purposes;

(iv) Subject to the provisions of Title Five, Book | of this Code, health
services which include hospitals and other tertiary health services;

(v) Social welfare services which include programs and projects on
rebel retumees and evacuees; relief operations; and population
development services;

(vi) Provincial buildings, provincial jails, freedom parks and other public
assembly areas and similar facilities;

(vii) Infrastructure facilities intended to service the needs of the
residence of the province and which are funded out of provincial funds
including, but not limited to, provincial roads and bridges; inter-
municipal waterworks, drainage and sewerage, flood control, and
irrigation systems; reclamation projects; and similar facilities;

(viii) Programs and projects for low-cost housing and other mass
dwellings, except those funded by the Social Security System (SSS),
Government Service Insurance System (GSIS), and the Home
Development Mutual Fund (HDMF): Provided, That national funds for
these programs and projects shall be equitably allocated among the
regions in proportion to the ratio of the homeless to the population;

(ix) Investment support services, including access to credit financing;



(x) Upgrading and modernization of tax information and collection
services through the use of computer hardware and software and other
means;
(xi) Inter-municipal telecommunications services, subject to national
policy guidelines; and
(xi) Tourism development and promotion programs;
(4) For a City:
All the services and facilities of the municipality and province, and in
addition thereto, the following:
(i) Adequate communication and transportation facilities;
(ii) Support for education, police and fire services and facilities;

(c) Notwithstanding the provisions of subsection (b) hereof, public works and
infrastructure projects and other facilities, programs and services funded by
the national government under the annual General Appropriations Act, other
special laws, pertinent executive orders, and those wholly or partially funded
from foreign sources, are not covered under this Section, except in those
cases where the local government unit concerned is duly designated as the
implementing agency for such projects, facilities, programs, and services.

(d) The designs, plans, specifications, testing of materials, and the
procurement of equipment and materials at from both foreign and local
sources necessary for the provision of the foregoing services and facilities
shall be undertaken by the local government unit concemed, based on
national policies, standards and guidelines.

(e) National agencies or offices concerned shall devolve to local government
units the responsibility for the provision of basic services and facilities
enumerated in this Section within six (6) months after the effectivity of this
Code.

As used in this Code, the term "devolution" refers to the act by which the
national government confers power and authority upon the various local
government units to perform specific functions and responsibilities.

(f) The national government or the next higher level of local government unit

may provide or augment the basic services and facilities assigned to a lower

level of local government unit when such services or facilities are not made
6



available or, if made available, are inadequate to meet the requirements of its
inhabitants BASED ON GUIDELINES ISSUED BY THE DEPARTMENT OF
THE INTERIOR AND LOCAL GOVERNMENT

(g) The basic services and facilities hereinabove enumerated shall be funded
from the share of local government units in the proceeds of national taxes and
other local revenues and funding support from the national government, its
instrumentalities and government-owned or controlled corporations which are
tasked by law to establish and maintain such services or facilities. Any fund or
resource available for the use of local government units shall be first allocated
for the provision of basic services or facilities enumerated in subsection (b)
hereof before applying the same for other purposes, unless otherwise
provided in this Code.

(h) Regional offices of national agencies or offices whose functions are
devolved to local government units as provided herein shall be phased out
within one (1) year from the approval of this Code. Said national agencies and
offices may establish such field units as may be necessary for monitoring
purposes and providing technical assistance to local government units. The
properties, equipment, and other assets of these regional offices shall be
distributed to the local government units in the region in accordance with the
ules and regulations issued by the oversight committee created under this
Code.

(i) The devolution contemplated in this Code shall include the transfer to local
government units of the records, equipment, and other assets and personnel
of national agencies and offices corresponding to the devolved powers,
functions, and responsibilities.

Personnel of said national agencies or offices shall be absorbed by the
local government units to which they belong or in whose areas they are
assigned to the extent that it is administratively viable as determined by the
said oversight committee: Provided, That the rights accorded to such
personnel pursuant to civil service law, rules and regulations shall not be
impaired: Provided, further, That regional directors who are career executive
service officers and other officers of similar rank in the said regional offices
who cannot be absorbed by the local government unit shall be retained by the
national government, without any diminution of rank, salary or tenure.

7



aAurun

(j) To ensure the active participation of the private sector in local governance,
local government units may, by ordinance, sell, lease, encumber, or otherwise
dispose of public economic enterprises owned by them in their proprietary
capacity.

Costs may also be charged for the delivery of basic services or facilities

enumerated in this Section.

SEC. 3. 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. 4. 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. 5. 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,