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SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
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First Regular Session 
'13 
SEP 10 
1\11 :00 
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SENATE 
Senate Bill No. 
1 591 
RECEIVE!) By"-r-
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The Local Government Code. of 1991 was .. enacted to empower local 
government units by providing them responsibilities in the delivery of basic 
services to respective localities. To equip them with this gargantuan task, their 
share from the taxes remitted to the National Government was increased to 80%. 
However, owing to our country's inexperience in the devolution of services, 
a number of problems, especially in the health sector, were encountered. These 
were compounded by the fact that there is a mismatch between the Internal 
Revenue Allocation per local government unit and the cost of health services 
devolution. 
This bill proposes thedaductiG>nl:of the cost of devolved functions, including 
the cost of city-hospitals, less capital outlays, from the Internal Revenue Allotment 
before it is divided among the local government units. The bill likewise seeks the 
direct release of the amount corresponding to the amount of devolved functions to 
the local government units concerned. 
In view of the foregoing, early approval of this bill is earnestly sought. 
OY EJERCITO ESTRADA 
Senator 


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SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
Senate Bill No. 1591 
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) 
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'13 
SEP 10 Pi\1:00 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
AMENDING SECTION 285 OF REPUBLIC ACT NO. 7160 OTHERWISE AS THE 
LOCAL GOVERNMENT CODE OF 1991, PROVIDING FOR GOVERNMENT 
UNITS RE-ALLOCATION OF THE INTERNAL REVENUE ALLOTMENT OF 
LOCAL GOVERNMENT UNITS 
Be it enacted by the Senate and the House of Representatives of Congress 
assembled: 
SECTION 1. - Section 285 of Republic Act No. 7160, otherwise known as 
the Local Government code of 1991, is hereby amended to read as follows: 
"SECTION 285. ALLOCATION TO LOCAL GOVERNMENT 
UNITS. THE SHARE ,OF"THE,LQCAL GOVERNMENT UNITS IN 
THE INTERNAL REVENUE ALLOTMENT SHALL BE ALLOCATED 
STARTING IN 2004, AFTER DEDUCTING THEREFROM TNE 
COST OF DEVOLVED FUNCTIONS AND CAPITAL OUTLAYS, 
INCREASED AT THE RATE OF TEN PERCENT (10%) PER 
ANNUM FROM THE EFFECTIVITY OF THIS CODE. THE TOTAL 
COST SO DEDUCTED SHALL BE DISTRIBUTED AND DIRECTLY 
REMITTED 
TO 
THE 
LOCAL 
GOVERNMENT 
UNITS 
CONCERNED AND THE NET OR BALANCE OF THE INTERNAL 
REVENUE ALLOTMENT SHALL BE ALLOCATED IN THE 
FOLLOWING MANNER: 
a) Provinces -
b) Cities-
d) Barangays -
c) Municipalities -
Twenty-three percent (23%); 
Twenty-three percent (23%); 
Twenty percent (20%); 
Thirty-four percent (34%); 
"Provided, however, That the shares of each provinces, city 
and municipality shall be determined on the basis of the following 
formula; 
a) Population -
[Fifty percent (50%)] 
FIFTY FIVE PERCENT (55%) 
b) Land Area -
[Twenty-five percent (25%)] 
"TWENiY PERCENT (20%) 
c) Equal Sharing - Twenty- five percent (25 %) 
"Provided, further, That the share of each barangay with a 
population not less than hundred (100) inhabitants shall not be less 
than Eighty Thousand pesos (P80,000.00) per annum chargeable 
against the twenty percent (20%) share of the barangay from the 


internal revenue allotment, and the balance to be allocated on the 
basis of the following formula: 
a) On the year of the effectivity of this Code: 
1) Population - Forty percent (40%); and 
2) Equal sharing - Sixty percent (60%) 
b) On the second year: 
1) Population - Fifty percent (50%); and 
2) Equal sharing - Fifty percent (50%) 
c) On the third year 
1) Population - Sixty percent (60%); and 
2) Equal sharing - Forty percent (40%) 
"Provided, 
final/y, 
That the financial 
requirements of 
barangays created by local government units after the effectivity of 
this Code shall be the responsibility of the local government units 
concerned." 
SEC. 2. Effectivity - This Act shall take effect upon approval. 
Approved,