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

SIXTEENTH CONGRESS
First Regular Session

House Bill No. 1726

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INTRODUCED BY REPRESENTATIVE XAVIER JESUS “XJ” D. ROMUALDO

EXPLANATORY NOTE

This proposed measure, which was filed in the previous Congress by the
late Representative Pedro P. Romualdo, seeks to remove the Internal
Revenue Allotment (IRA) of the Metropolitan Manila Development
Authority (MMDA) by amending Republic Act (RA) No. 7924, the statute
which created the agency.

Article 10, Section 6 of the 1987 Constitution states that “[Ilocal
government units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to them.” This
constitutional provision is implemented by RA No. 7160, otherwise known
as the Local Government Code of 1991, which provides for the allotment
of a share in the National Internal Revenue Taxes to local government
units (LGUs).

According to jurisprudence:

A local government is a ‘political subdivision of a nation or
state which is constituted by law and has substantial control of
local affairs.’ The Local Government Code of 1991 defines a
local government unit as a ‘body politic and corporate’ — one
endowed with powers as a political subdivision of the National
Government and as a corporate entity representing the
inhabitants of its territory. Local government units are the
provinces, cities, municipalities and barangays. They are also

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the territorial and political subdivisions of the state."

Clearly, the MMDA is not a local government unit. Indeed, the Supreme
Court has ruled that the MMDA is not a local government unit, but rather
an administrative agency:

The MMDA is, as termed in the charter itself, a ‘development
authority.’ It is an agency created for the purpose of laying
down policies and coordinating with the various national
government agencies, people's organizations, — non~
governmental organizations and the private sector for the
efficient and expeditious delivery of basic services in the vast
metropolitan area. All its functions are administrative in nature
and these are actually summed up in the charter itself--*

It is thus beyond doubt that the MMDA is not a local
government unit or a public corporation endowed with
legislative power. It is not even a ‘special metropolitan political
subdivision’ as contemplated in Section 11, Article X of the
Constitution. The creation of a ‘special metropolitan political
subdivision’ requires the approval by a majority of the votes
cast in a plebiscite in the political units directly affected. R.A.
No. 7924 was not submitted to the inhabitants of Metro Manila
in a plebiscite. The Chairman of the MMDA is not an official
elected by the people, but appointed by the President with the
rank and privileges of a cabinet member. In fact, part of his
function is to perform such other duties as may be assigned to
him by the President, whereas in local government units, the
President merely exercises supervisory authority. This
emphasizes the administrative character of the MMDA.”

Since the MMDA is not a local government unit, it should not be entitled to
an Internal Revenue Allotment. However, Section 10 (b) of RA No. 7924
provides that the MMDA shall continue to receive the IRA allocated to the
now defunct Metro Manila Authority (incidentally, it would seem that even

1 Metropolitan Manila Development Authority v. Bel-Air Village Association, Inc., GR.
No. 135962, March 27, 2000. See also Metropolitan Manila Development Authority v.
Garin, G.R. No. 130230, April 15, 2005.

2 Id, (Emphasis supplied).

3 Id. (Emphasis supplied).


the Metro Manila Authority was not a local government unit).' This is an
aberration in the law that should be corrected. Under our legal system,
only local government units — provinces, cities, municipalities, and
barangays — are entitled to the IRA. An agency of the Executive
Department, such as the MMDA, is not and should not be entitled to a
portion of the share of LGUs in the National Internal Revenue Taxes.

If this proposed measure becomes law, local government units will finally
receive the full Internal Revenue Allotment due them and will have
additional financial resources in order to better and more efficiently
deliver basic and vital services within their respective jurisdictions.

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

Vo ee

XAVIER JESUS “XJ” D. ROMUALDO.

4 See id.

In 1990, President Aquino issued Executive Order (E.0.) No. 392 and constituted the
Metropolitan Manila Authority (MMA). The powers and functions of the MMC were
devolved to the MMA. It ought to be stressed, however, that not all powers and functions of
the MMC were passed to the MMA. The MMA’s power was limited to the ‘delivery of
basic urban services requiring coordination in Metropolitan Manila.’ The MMA’s
governing body, the Metropolitan Manila Council, although composed of the mayors of the
component cities and municipalities, was merely given the power of: (1) formulation of
policies on the delivery of basic services requiring coordination and consolidation; and (2)
promulgation of resolutions and other issuances, approval of a code of basic services and
the exercise of its rule-making power.

Under the 1987 Constitution, the local government units became primarily responsible for
the governance of their respective political subdivisions. The MMA’s jurisdiction was
limited to addressing common problems involving basic services that transcended local
boundaries. It did not have legislative power. Its power was merely to provide the local
‘government units technical assistance in the preparation of local development plans. Any
semblance of legislative power it had was confined to a ‘review [of] legislation proposed by
the local legislative assemblies to ensure consistency among local governments and with
the comprehensive development plan of Metro Manila,’ and to ‘advise the local
‘governments accordingly.”

When R.A. No. 7924 took effect, Metropolitan Manila became a ‘special development and
administrative region’ and the MMDA a ‘special development authority’ whose functions
‘were ‘without prejudice to the autonomy of the affected local government units.”


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

SIXTEENTH CONGRESS
First Regular Session

1726

House Bill No.

INTRODUCED BY REPRESENTATIVE XAVIER JESUS “XJ” D. ROMUALDO.

AN ACT
REMOVING THE INTERNAL REVENUE ALLOTMENT OF THE METROPOLITAN
MANILA DEVELOPMENT AUTHORITY (MMDA), AMENDING FOR THE PURPOSE
REPUBLIC ACT NO. 7924, ENTITLED “AN ACT CREATING THE
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEFINING ITS
POWERS AND FUNCTIONS, PROVIDING FUNDS THEREFORE AND FOR OTHER
PURPOSES”

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

Section 1. Section 10 of Republic Act No. 7924 is hereby amended by deleting
paragraph (b) and changing the lettering of the other paragraphs thereof, which
shall then read as follows:

“Section 10. Sources of Funds and the Operating Budget of the Metropolitan
Manila Development Authority:

(a) To carry out the purposes of this Act, the amount of One billion pesos
(P1,000,000,000.00) is hereby authorized to be appropriated for the initial
operation of the MMDA. Thereafter, the annual expenditures including capital
outlays of the MMDA shall be provided in the General Appropriations Act.

(b) The MMDA is likewise empowered to levy fines, and impose fees and
charges for various services rendered.

(c) Five percent (5%) of the total annual gross revenue of the preceding year,
net of the internal revenue allotment, of each local government unit mentioned in
Section 2 hereof, shall accrue and become payable monthly to the MMDA by
each city or municipality. In case of failure to remit the said fixed contribution,
the DBM shall cause the disbursement of the same to MMDA chargeable against
the IRA allotment of the city or municipality concerned the provision of Section
286 of RA 7160 to the contrary notwithstanding.”

Section 2. All other laws, decrees, executive orders, rules and regulations, or
parts thereof, inconsistent with the provisions of this Act are hereby modified,
amended or repealed accordingly.


Section 3. This Act shall take effect fifteen (15) days following the completion of
its publication in a newspaper of general circulation in the Philippines.

Approved,