EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
SENATE 
S. B. No. 1634
DATE
T»ME
W£>EX
Introduced by Senator SONNY ANGARA
AN ACT
AMENDING SECTIONS 296 AND 311 OF REPUBLIC ACT NO. 7160, AS 
AMENDED OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 
1991
EXPLANATORY NOTE
One of the key objectives of the Local Government Code (R.A. 7160) of 1991 
was to provide LGUs greater access to financing including but not limited to credit 
financing, debt issuance and public-private partnerships or PPPs.
Whiie several LGUs have benefited from these aiternative sources of financing 
to improve local service delivery, others have encountered significant hindrances in 
accessing them. In particular, the Code limits availment of credit lines solely for 
stabilizing local funds. The Code likewise expresses a preference for government- 
owned banks in opening depository accounts.
These must be reiaxed to afford LGUs access to more abundant private 
capital markets. Further, the painful experience of COVID-19 makes us realize that 
more funds should be invested in the health sector. Thus, LGUs should be given 
enough leeway to look for funding source for projects that are necessary to 
adequately respond to future epidemic.
In view of the foregoing, approvai of this bili is earnestiy sought.
NY ANGARA


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
SENATE 
S. B. No. 1634
DATE
TtME
Introduced by Senator SONNY ANGARA
AN ACT
AMENDING SECTIONS 296 AND 311 OF REPUBLIC ACT NO. 7160, AS 
AMENDED 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:
1 
Section 1. Section 296 of Republic Act No. 7160, otherwise known as the
2 
Local Government Code of 1991, hereinafter referred to as the "Code", is hereby
3 
amended to read as follows:
4 
"Sec. 296. General Policy. - (a) It shall be the basic policy that any
5 
local government unit may create indebtedness, and avail of credit
6 
facilities to finance UPDATING AND/OR UPGRADING OF PUBLIC
7 
HEALTH FACILITIES, local infrastructure and other socio-economic
8 
development projects in accordance with the approved local
9 
development plan and public investment program.
10 
(b) [A-local-govcrnmGnt-unit-may-avail-of-crGdit-linG5-from-governmGnt
11 
or privQtG banlcs and■ iGnding-institutions-for-thG-purposG-of-stabifeing
12 
loc-al-financGs]. ANY LOCAL GOVERNMENT UNIT MAY AVAIL OF
13 
LOANS, CREDITS, AND OTHER FORMS OF INDEBTEDNESS
14 
FROM GOVERNMENT OR PRIVATE BANKS AND LENDING
15 
INSTITUTIONS, SUBJECT TO THE REQUIREMENTS SPECIFIED
16 
UNDER THIS CODE AND TO REGULATIONS THAT MAY BE
17 
PROMULGATED BY THE BANGKO SENTRAL NG PILIPINAS."


1 
Sec. 2. Section 311 of the Code is hereby amended to read as follows:
2 
"Sec. 311. Depository Accounts. - Local treasurers shall maintain
3 
depository accounts in the name of their respective local government
4 
units with banks [r-prcfcrobly—government-owned;] located in or
5 
nearest to their respective areas of jurisdiction. Earnings of each
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depository account shall accrue exclusively thereto."
7 
Sec. 3. Repealing Clause. - All general and special laws, acts, city charters,
8 
executive orders, presidential proclamations, issuances, rules and regulations, or
9 
parts thereof which are contrary to or inconsistent with any of the provisions of this
10 
Act are hereby repealed, amended, or modified accordingly.
11 
Sec. 4. Separability Clause. - If any portion or provision of this Act is
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subsequently declared invalid or unconstitutional, other provisions hereof which are
13 
not affected thereby shall remain in full force and effect.
14 
Sec. 5. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
15 
publication in the Official Gazette or In a newspaper of general circulation.
Approved,