Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

Seventeenth Congress
irst Regular Session

3983

HOUSE BILL NO.

Introduced by Representative Joel Mayo Z. Almario

EXPLANATORY NOTE

rhe State recognizes the vital role of local government units (LGUs) in
nation building. Rather than being regarded as inferior to the national
government, LGUS are viewed as equal partners in promoting the well-being
and welfare of the citizens, The autonomy of the LGU, as well as its political -
administrative authority within their subdivisions, is greatly valued

To guarantee the full execution of their functions, the State provides for
a policy for fiscal decentralization. ‘As stated in Section 2(a), Chapter I, Title 1
of The Local Government Code, to wit:

“It is hereby declared the policy of the State that the
territorial and political subdivisions of the State shall enjoy genuine
and meaningful local autonomy to enable them to attain their fullest
development as self-reliant communities and make them more
effective partners in the attainment of national goals. Toward this
end, the State shall provide for a more responsive and accountable

government structure instituted through a system of
‘ntralization whereby local government units shall be given
more powers, authority, responsibilities, and resources. The process
of decentralization shall proceed from the national government to
the local government units.”

Despite, however, all the State guarantees, and all the recognized
functions of the LGUs in nation building, the LGUs enjoy a meager share of
the National Budget

‘As such, there is an urgent need to address this deficiency by
implementing budget reform measures that will allow local government units

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(LGUs) to exercise their full authority in pursuit of sustained growth,
development and good governance at the local level

It is the intention of this proposal to institutionalize a more equitable
national budget distribution, allowing LGUs to become active participants in
nation building

Adequate funds shall also be appropriated, authorizing the Local
Government Academy (LGA) to provide the LGUs with the necessary tools in
undertaking effective planning and proper implementation of their PAPs in
accordance with their approved CDPs, This is to ensure that LGUs have
adequate capacity to carry out their mandate for the proper implementation of
the LDFs.

By giving the LGUs the necessary wherewithal to be active participants
in the development of our country, we will end the culture of mendicancy and
political patronage that viciously thrive in our system. Ultimately, this will help
us realize the elusive inclusive growth that we all aspire for as a nation.
Capacity building will enhance local governance, improve delivery of public
service, and strengthen accountability among local governments. These are
important in effectively carrying out devolved functions and ultimately,
attaining local autonomy

It is for this purpose that the approval of this bill is earnestly sought

hie
¢MAYO Z. ALMARIO
Representative
é 2™ District, Davao Oriental



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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
SEVENTEENTH CONGRESS

First Regular Si

House Bill No8 989

Introduced by REPRESENTATIVE JOEL MAYO Z. ALMARIO

AN ACT
INSTITUTING BUDGET REFORMS TO ENSURE THE EQUITABLE
DISTRIBUTION OF FUNDS TO LOCAL GOVERNMENT UNITS FOR
THE PURPOSE OF PROMOTING LOCAL EMPOWERME
ENABLING THEM TO BE AN EFFECTIVE INSTRUMENT IN
ATTAINING INCLUSIVE GROWTH, APPROPRIATING FUNDS.
THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION. 1. Short Title- This Act shall be known as “THE BUDGET
REFORM ACT FOR VILLAGE EMPOWERMENT.”

SECTION. 2. Declaration of Policy. —

(a) It is a declared policy of the State that territorial and political
subdivisions shall enjoy genuine and meaningful local autonomy
to enable them to attain their fullest development as self-reliant
communities and make them more effective partners in the
attainment of national goals;

(b) It is also the policy of the State that meaningful local autonomy
can only be realized through the implementation of locally crafted
development plans that accurately acknowledge and address

perceived local needs;


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(c) _ It is likewise the policy of the state to remedy the fiscal gap
between the expenditure responsibilities of the Local Government
Units (LGUs) and their fiscal capacity;

(d) Moreover, it is the policy of the State to ensure that sufficient
financial resources for development are available to LGUs with
corresponding accountability of improving public services;

(ec) Therefore, the State recognizes that inclusive and sustainable
growth can only be truly achieved by providing the LGUs with
adequate resources and technical capacities that will promote
meaningful development.

SECTION, 3, Allotment for Development. — An annual fund sufficient

to implement the three-year Comprehensive Development Plan (CDP) of each
province, city, municipality, and barangay, to be referred to as the “Local

Development Fund,

is hereby established. The LDF shall be computed on a per
capita basis with the following controls:

(a) Provinces — Not less than Five Hundred Million Pesos, but not more
than One Billion Pesos (P500,000,000.00 to P1,000,000,000.00) per
province per year;

(b) Cities ~ Not less than One Hundred Million Pesos, but not more than
Two Hundred Million Pesos (P100,000,000.00t0 P200,000,000.00)
per city per year,

(c) Municipalities — Not less than Fifty Million Pesos, but not more than
One Hundred Million Pesos (P50,000,000.00 to P100,000,000.00) per
municipality per year; and,

(d) Barangays -Three Million Pesos to Five Million Pesos
(P3,000,000.00 to P5,000,000,00) per barangay per year.

These funds shall be automatically and directly released to every LGU at

the start of the fiscal year, or on quarterly basis within five (5) days at the start
of each quarter. No lien, holdback or any other imposition, of whatever nature,

may be imposed by the National Government against the said fund


SECTION. 4. Purpose of the Local Development Fund. — The fund
shall be used solely by the LGUs to finance their respective development
projects, activities and programs (PAPs) identified in their approved
Comprehensive Local Development Plans (CDPs). Allowable PAPs and
allocations for such shall be as follows:

(a) Education — Ten percent (10%) of total LDF;

(b) Health — Ten percent (10%) of total LDF;

(c) Inducement of investments and employment- Ten percent

(10%) of total LDF;

(d) Peace and order ~ Ten percent (10%) of total LDF;

(e) Environment management — Ten percent (10%) of total LDF,

(D) Dis

(g) Tourism — Five (5%) of total LDF; and
‘orty (40%) of total LDF.

ster Preparedness — Five (5%) of total LDF;

(h) Infrastructure —

Funds previously allocated, may not be realigned for a different purpose,
unless specifically mentioned and approved in the CDP, as provided in Section
6 hereof.

The use of the said fund contrary to the stated purpose shall make the
approving authority and all persons who allow such diversion liable for
technical malversation as defined and penalized under Article 220 of Act No.
3815, otherwise known as the "Revised Penal Code".

SECTION.

out of the LDF to items that are not related to or connected with the

ixpenditures Not Covered. - No amount shall be paid

development PAPs such as:

(a) Administrative expenses such as cash gifts, bonuses, food allowance,
medical assistance, uniforms, supplies, meetings, communication, water
and light, petroleum products and the like;

(b) Salaries, wages, emoluments, per diems or overtime pay;

(c) Travelling expenses, whether domestic or foreign:

(d) Registration or participation fees in trainings, seminars, conferences and

conventions;


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(e) Construction, repair or refinishing of administrative offices;

(1) Purchase of administrative office’s furniture, fixtures, equipment or
appliances;

‘g) Purchase, maintenance or repair of motor vehicles or motorcycles

the LDF shall

The LDF shall not be used as a loan guarantee. Likewis

not be used to finance PAPs that may duplicate or overlap with PAPs that are
being implemented or funded by the National Government Agencies (NGAs)
No LDF shall be utilized as a counterpart fund to support NGAs° identified
PAPs,

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“TION. 6. ComprehensiveLocal Development Plan, — Consistent
with Republic Act 7160, otherwise known as the “Local Government Code of
1991”, every LGU shall formulate a three-year CDP that is reflective of and
responsive to the developmental needs of their respective localities with
corresponding periodic timelines. The approved CDPs shall be funded yearly by
the National Government in accordance with Section 3 hereof.

The Local Development Councils shall conduct an annual review, and if
necessary, update their respective CDPs. The CDPs shall be formulated and
approved in accordance with the provisions of Republic Act 7160.

The approved CDPs of each LGU shall be the basis for the allocation of
the Local Development Fund, In the event that the CDP is updated and funding,
has been re-adjusted, the affected development project should first be approved

before it may be funded and implemented.

TION. 7. Performance-based Evaluation. — A performance-based

evaluation shall be conducted by the Performance Evaluation Committee (PEC)
chaired by the Undersecretary for Local Government of the Department of
Interior and Local Government (DILG). Before the end of the fourth quarter of
the year, said committee shall conduct an annual performance review of the
LGUs' implementation of their development PAPs based on the indicators
identified in their CDPs. The results shall be published before the end of the

first quarter of the following year


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Unsatisfactory performance of an LGU shall result in the reduction of its
LDF by fifty percent (50%) in the following year after the said evaluation;
Provided however, That, when the LGU which was previously rated with poor

standing improves on its performance in the next evaluation period, full funding

shall be restored; Provided further, Tha

, LDF shall be terminated in case of two
(2) consecutive unsatisfactory performance; Provided finally, That, LGUs,
whose LDF has been terminated, may reapply for funding of their CDPs a year

following its termination.

SECTION. 8. Web-based Monitoring System. —  \n the spirit of

transparency and accountability, the PEC shall adopt a web-based application to

facilitate the monitoring and evaluation of all PAPs funded by the LDF, The
system shall allow tracking of expenditures and the status of implementation of
the PAPs, The status of the PAPs shall be updated monthly by the LGUs or as
frequently as may be necessary. It is the responsibility of the Chief Executive of
the LGU to make sure that the reportorial requirements are complied with. In
case of non-reporting or failure to comply with the reportorial requirements, the
PEC shall advise the Department of Budget and Management (DBM) to
suspend the release of funding to the delinquent LGU until such time that it
complies with the requirements. The system shall be accessible to the general
public and all information, including but not limited to funding/cost, location,
contractor, progress status, number of beneficiaries, date of completion and
responsible government official, of the PAPs shall be disclosed

s (P100,000,000.00) is hereby

appropriated to fund the establishment ofa web-based monitoring system

The amount of One Hundred Million Pes

SECTION, 9. Performance Evaluation Committee. - ‘There is hereby
created a Performance Evaluation Committee in charge of the monitoring and
evaluation of the implementation of development PAPs under the LDF based on
the indicators provided under the CDPs, composed of the following,

1. The Undersecretary for Local Government of the DILG, as Chairman;


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2. The Assistant Director-General for Planning of the National Economic
and Development Authority (NEDA);

3. The Assistant Secretary for Policy and Planning of the DBM;

4. The Executive Director of the Bureau of Local Government Finance
(BLGF) of the Department of Finance (DOF);

5. A representative from each of the various leagues of the different LGUs
concerned;

6. A representative from the National Commission on Indigenous Cultural
Communities/Indigenous Peoples (NCIP), if applicable; and,

7. Four representatives from accredited civil society groups and/or non-
government organizations in the locality where the CDP is to be
implemented
‘The representatives from the accredited civil society groups and/or non-

government organizations shall be selected based on the criteria and
mechanisms to be determined for this purpose by the PEC
The various Regional Project Monitoring Committees (RPMC) shall

as

the PEC in its task of monitoring and evaluation and shall act as the

secretariat of the PEC with respect to their region.

SECTION. 10. Capacity Building. - The Local Government Academy
(LGA), in consortium with institutions of higher learning with distinguished
competencies in public governance programs, is hereby mandated to ensure,
within one (1) year after the effectivity of this Act, that all territorial and
political subdivisions are capacitated to effectively plan and implement the
development projects in their respective CDPs. For this purpose, the amount of
One Billion Pesos (P1,000,000,000.00) is hereby appropriated for capacity
building of all LGUs.

No Local Development Fund shall be released without a certification

from the LGA that the LGU is capacitated to plan and implement its CDP.


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SECTION. 11. Procurement. — Procurement for the purpose of
implementing the CPDs must be consistent with the provisions of Republic Act

9184, otherwise known as “Government Procurement Reform Act”.

SECTION. 12. Penal Provision —

a) It shall be unlawful for any person to withhold the release of the LDF
to the LGUs within the period specified in Section 3 hereof Any person
violating the provision of this law shall suffer the penalty of imprisonment
ranging from one year and one day to six years (1 year and 1 day to 6 years),
and a fine of five hundred thousand pesos (P500,000.00), and temporary
absolute disqualification from holding any public office or employment in the
government, including any Government-Owned and/or Controlled Corporations
(GOCCs), and their subsidiaries.

b) The Local Chief Executive shall be administratively liable, without
prejudice to any civil or criminal liabilities he may have incurred under existing
laws, in case of failure to report the status of their development PAPs as
required under Section 8 of this Act

c) Any government official or employee who shall prevent the reporting
or disclosure of any information or data pertaining to a funded development
PAP as mandated by Section 8 of this Act, shall be held administratively liable
without prejudice to any civil or criminal liability he may have incurred under

existing laws

SECTION. 13. Oversight Committee. There is hereby created a
Congressional Oversight Committee to monitor and oversee the implementation
of the provisions of this Act. The Committee shall be composed of five (5)
members from the Senate and five (5) members from the House of
Representatives to be chaired by the Chairpersons of the Committee on Local

Government from both the Senate and House of Representatives.


SECTION. 14, Sunset Review. Five (5) years following the effectivity
of this Act, or as the need arises, the Congress shall conduct a sunset review.
For purposes of this Act, the term “sunset review” shall mean a systematic
evaluation by Congress of the accomplishments and impact of this Act, as well

as the performance of LGUs, for purposes of determining remedial legislation

SECTION. 15. Implementing Rules and Regulations, — For the
effective implementation of this Act, the Secretary of the DILG, with the
Secretaries of the DOF and the DBM and in consultation with the various
leagues of the different LGUs, shall issue the necessary Implementing Rules and

Regulations,

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TION, 16. Suppletory Application of Existing Laws, - The
provisions of Republic Act No. 7160, otherwise known as the "Local
Government Code of 1991", and other laws consistent with this Act shall have
suppletory effect,

SECTION. 17. Repealing Clause. - All laws, presidential decrees,

executive orders, presidential proclamations, rules and regulations or parts
thereof contrary to or inconsistent with this Act are hereby repealed, superseded

or modified accordingly

SECTION, 18, Separability Clause. - Any portion or provision of this
Act that may be declared unconstitutional or invalid shall not have the effect of
nullifying other portions or provisions hereof, as long as such remaining

portions or provisions can still subsist and be given effect in their entirety

SECTION. 19, Effectivity. - This Act shall take effect fifteen (15) days
after its complete publication in the Official Gazette or in at least two (2)

newspapers of general circulation

Approved,
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