Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. ____ 
Introduced by CIBAC Party-List Representative 
HON. EDUARDO ‘BRO. EDDIE’ C. VILLANUEVA 
AN ACT  
ENSURING THE EQUITABLE DISTRIBUTION OF FUNDS BETWEEN THE 
NATIONAL GOVERNMENT AND THE LOCAL GOVERNMENT UNITS, 
APPROPRIATING FUNDS THEREFOR  
AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
The Local Government Code of 1991 (LGC), or the Republic Act No. 
7160, seeks to empower local government units (LGUs) by granting them 
the authority to formulate and implement projects and programs suitable 
for their respective communities. Furthermore, consistent with the national 
objective of creating effective and efficient LGUs, the LGC also allows 
provisions for LGUs to be able to fund said projects and programs. Thus, 
there has been mandated an increase in the share of LGUs from the 
national government’s annual tax collection through the distribution of the 
Internal Revenue Allotment (IRA) and an authorization for LGUs to impose 
local fees and taxes to generate additional resources. 
Despite the said provisions, however, many LGUs still continue to 
suffer from limited fiscal resources, resulting to their inability to provide 
quality services to their constituents, a stark contrast to what was initially 
envisioned when the LGC was enacted in 1991. To date, many LGUs still 
rely on direct provision from the national government, especially for 
programs and projects that contribute to their local development. 
November 7, 2022
8:05 am
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This bill, therefore, seeks to provide additional funding for LGUs by 
giving each barangay, municipality, city, and province a Local 
Development Fund (LDF). The LDF aims to supplement the funding of 
LGUs to ensure that their developmental programs and projects are 
adequately funded. Furthermore, in order to promote equity in terms of 
income distribution, this bill provides for higher funding to lower-income 
LGUs compared to their higher-income counterparts.  
 
This bill also outlines various safeguards (such as, but not limited 
to, compliance with local development plan, local capacity-building, multi-
sectoral monitoring and evaluation) to ensure that funds are used as 
intended. 
 
Finally, this bill also mandates that at least 10% of the LDF be 
utilized for programs aimed towards the enhancement and promotion of 
technical skills training and education in the community. 
 
In view of the foregoing, the passage of this bill is earnestly sought.  
 
 
 
 
HON. EDUARDO “BRO. EDDIE” C. VILLANUEVA 
 
 
 
 
 
 
 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No. ______ 
Introduced by CIBAC Party-List Representative 
HON. EDUARDO ‘BRO. EDDIE’ C. VILLANUEVA 
AN ACT  
ENSURING THE EQUITABLE DISTRIBUTION OF FUNDS BETWEEN THE 
NATIONAL GOVERNMENT AND THE LOCAL GOVERNMENT UNITS, 
APPROPRIATING FUNDS THEREFOR  
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the 
1 
Philippines in Congress assembled: 
2 
3 
4 
SECTION 1. Short Title. – This Act shall be known as the “Local 
5 
Budgeting Reform Act.”  
6 
7 
SEC. 2. Declaration of Policy. – The State and all its territorial and 
8 
political subdivisions shall enjoy genuine and meaningful local autonomy 
9 
to enable them to attain their fullest development as self-reliant 
10 
communities and make them more effective partners in the attainment of 
11 
national goals. For this purpose, the State recognizes that meaningful 
12 
local autonomy can only be realized through the implementation of locally 
13 
crafted development plans that accurately acknowledge and address 
14 
perceived local needs. It also recognizes that inclusive and sustainable 
15 
growth can only be truly achieved by empowering the local government 
16 
units (LGUs) through the provision of adequate resources and technical 
17 
capacities that will promote meaningful development. 
18 
19 
SEC. 3. Allotment for Development. – To achieve the policies 
20 
declared in this Act, the National Government shall guarantee an annual 
21 
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fund sufficient to implement the three-year Comprehensive Development 
1 
Plan (CDP) of each province, city, municipality, and barangay, herein 
2 
referred to as the “Local Development Fund” (LDF), to wit: 
3 
 
4 
a) Provinces – Fifty Million Pesos to One Hundred Million Pesos 
5 
(Php50,000,000.00 to Php100,000,000.00) per province per 
6 
year; 
7 
 
8 
b) Cities – Ten Million Pesos to Twenty Million Pesos 
9 
(Php10,000,000.00 to Php20,000,000.00) per city per year; 
10 
 
11 
c) Municipalities – Five Million Pesos to Ten Million Pesos 
12 
(Php5,000,000.00 to Php10,000,000.00) per municipality per 
13 
year; and 
14 
 
15 
d) Barangays – One Million Pesos to Three Million Pesos 
16 
(Php1,000,000.00 to Php3,000,000.00) per barangay per year. 
17 
 
18 
Provided, That the amount of LDF for each province, city, or 
19 
municipality shall be based on the following criteria: 
20 
 
21 
a) 50% of the prescribed amount for each 1st class LGU; 
22 
 
23 
b) 60% of the prescribed amount for each 2nd class LGU; 
24 
 
25 
c) 70% of the prescribed amount for each 3rd class LGU; 
26 
 
27 
d) 80% of the prescribed amount for each 4th class LGU; 
28 
 
29 
e) 90% of the prescribed amount for each 5th class LGU; and 
30 
 
31 
f) 100% of the prescribed amount for each 6th class LGU. 
32 
 
33 
Provided, further, That each barangay shall, at all times, receive the 
34 
full amount of LDF prescribed above. 
35 
 
36 
These funds shall be automatically and directly released to every 
37 
LGU at the start of every fiscal year or on a quarterly basis within five (5) 
38 
days at the start of each quarter. No lien, holdback or any other imposition, 
39 
of whatever nature, may be imposed by the National Government against 
40 
the LDF. 
41 
 
42 


SEC. 4. Purpose of Local Development Fund. – The LDF shall be 
1 
used solely by the LGUs to finance their respective development projects, 
2 
activities and programs (PAPs) identified in their approved CDPs; 
3 
Provided, That no less than ten percent (10%) of the LDF shall be allotted 
4 
to PAPs geared towards the enhancement and promotion of technical 
5 
skills training of the citizens in the concerned LGU. 
6 
 
7 
The use of the LDF contrary to the stated purpose shall make the 
8 
approving authority and all persons who allow such diversion liable for 
9 
technical malversation as defined and penalized under Article 220 of Act 
10 
No. 3815, otherwise known as the “Revised Penal Code.”  
11 
 
12 
SEC. 5. Expenditures Not Covered. – No amount shall be paid out 
13 
of the LDF to items that are not related to or connected with the 
14 
development PAPs, such as:  
15 
 
16 
a) 
Administrative expenses, such as cash gifts, bonuses, food 
17 
allowance, medical assistance, uniforms, supplies, meetings, 
18 
communication, water and light, petroleum products and the 
19 
like; 
20 
 
21 
b) 
Salaries, wages, emoluments, per diems, or overtime pay; 
22 
 
23 
c) 
Travelling expenses, whether domestic or foreign; 
24 
 
25 
d) 
Registration or participation fees in trainings, seminars, 
26 
conferences and conventions, except if such disbursement is 
27 
for technical skills training as provided under Section 4 above; 
28 
 
29 
e) 
Construction, repair, or refinishing of administrative offices; 
30 
 
31 
f) 
Purchase of administrative office’s furniture, fixtures, equipment 
32 
or appliances; or 
33 
 
34 
g) 
Purchase, maintenance, or repair of motor vehicles or 
35 
motorcycles. 
36 
 
37 
The LDF shall not be used to finance PAPs that may duplicate or 
38 
overlap with PAPs that are being implemented or funded by National 
39 
Government Agencies (NGAs). No LDF shall also be utilized as a 
40 
counterpart fund to support NGAs’ identified PAPs. 
41 
 
42 


SEC. 6. Comprehensive Local and Multi-Sectoral Development 
1 
Plan. – Consistent with Republic Act No. 7160, otherwise known as the 
2 
“Local Government Code of 1991,” every LGU shall formulate a three (3)-
3 
year CDP that is reflective of and responsive to the developmental needs 
4 
of their respective localities with corresponding periodic timelines. The 
5 
approved CDPs shall be funded yearly by the National Government in 
6 
accordance with Section 3 hereof, without prejudice to the LGUs’ use of 
7 
their locally sourced revenues to attain the objectives of their respective 
8 
CDPs.  
9 
 
10 
The Local Development Councils shall conduct an annual review of, 
11 
and if necessary, update their respective CDPs. The CDPs shall be 
12 
formulated and approved in accordance with the provisions of the Local 
13 
Government Code. 
14 
 
15 
The approved CDPs of each LGU shall be the basis for the allocation 
16 
of the Local Development Fund. In the event that the CDP is updated and 
17 
funding has been re-adjusted, the affected development project should 
18 
first be approved before it may be funded and implemented. 
19 
 
20 
SEC. 7. Performance-Based Evaluation. – A performance-based 
21 
evaluation shall be conducted by the Performance Evaluation Committee 
22 
(PEC) chaired by the Undersecretary for Local Government of the 
23 
Department of Interior and Local Government (DILG). Before the end of 
24 
the fourth quarter of each year, the PEC shall conduct an annual 
25 
performance review of the LGUs’ implementation of their development 
26 
PAPs based on the indicators identified in their CDPs. The results of the 
27 
review shall be published and made available to the public, thru online or 
28 
otherwise, on or before April 30 of each year. 
29 
 
30 
Unsatisfactory performance of an LGU shall result in the reduction 
31 
of its LDF by fifty percent (50%) in the following year after the said 
32 
evaluation; Provided, however, That when the LGU which was previously 
33 
rated with poor standing improves on its performance in the next 
34 
evaluation period, full funding shall be restored; Provided further, That the 
35 
distribution of the LDF to the LGU shall be terminated in case of two (2) 
36 
consecutive unsatisfactory performance scores; Provided, finally, That 
37 
LGUs, whose LDF has been terminated, may reapply for funding of their 
38 
CDPs one (1) year following its termination. 
39 
 
40 
SEC. 8. Web-based Monitoring System. – The PEC shall adopt a 
41 
web-based application to facilitate the monitoring and evaluation of all 
42 
PAPs funded by the LDF. 
43 


 
1 
The system shall allow tracking of expenditures and the status of 
2 
implementation of the PAPs. The status of the PAPs shall be updated 
3 
monthly by the LGUs or as frequently as may be necessary. The local 
4 
chief executive of each LGU shall be responsible for monitoring the 
5 
compliance of the LGU with all reportorial requirements. 
6 
 
7 
In case of non-reporting or failure to adequately comply with the 
8 
reportorial requirements, the PEC shall advise the Department of Budget 
9 
and Management (DBM) to suspend the release of funding to the 
10 
delinquent LGU until such time that it complies with the requirements.  
11 
 
12 
The system shall be accessible to the general public and all 
13 
information, including, but not limited to, funding/cost, location, contractor, 
14 
progress status, number of beneficiaries, date of completion and 
15 
responsible government official, of the PAPs shall be disclosed. 
16 
 
17 
An amount, which shall not be less than Twenty-Five Million Pesos 
18 
(Php25,000,000.00) is hereby appropriated to fund the establishment of a 
19 
web-based monitoring system. 
20 
 
21 
SEC. 9. Performance Evaluation Committee. – There is hereby 
22 
created a PEC in charge of the monitoring and evaluation of the 
23 
implementation of development PAPs funded by the LDF based on the 
24 
indicators provided under the CDPs. The PEC shall be composed of the 
25 
following: 
26 
 
27 
a) The Undersecretary for Local Government of the DILG, as 
28 
Chairman; 
29 
 
30 
b) The Assistant Director-General for Planning of the National 
31 
Economic and Development Authority (NEDA); 
32 
 
33 
c) The Assistant Secretary for Policy and Planning of the DBM; 
34 
 
35 
d) The Executive Director of the Bureau of Local Government 
36 
Finance (BLGF) of the Department of Finance (DOF); 
37 
 
38 
e) A representative from each of the various leagues of the different 
39 
LGUs concerned; 
40 
 
41 


f) A representative from the National Commission on Indigenous 
1 
Cultural Communities/Indigenous Peoples (NCIP), if applicable; 
2 
and 
3 
 
4 
g) Four (4) representatives from accredited civil society groups 
5 
and/or non-government organizations in the locality where the 
6 
CDP is to be implemented. 
7 
 
8 
The representatives from the accredited civil society groups and/or 
9 
non-government organizations shall be selected based on the criteria and 
10 
mechanisms to be determined for this purpose by the PEC. 
11 
 
12 
The various Regional Project Monitoring Committees (RPMC) shall 
13 
assist the PEC in its task and shall act as the secretariat of the PEC with 
14 
respect to their region. 
15 
 
16 
SEC. 10. Capacity Building. – The Local Government Academy 
17 
(LGA), in consultation with institutions of higher learning with distinguished 
18 
competencies in public governance programs, is hereby mandated to 
19 
ensure within one (1) year after the effectivity of this Act, that all territorial 
20 
and political subdivisions are capacitated to effectively plan and 
21 
implement the development projects in their respective CDPs. For this 
22 
purpose, an amount, which shall not be more than Fifty Million Pesos 
23 
(Php50,000,000.00) shall be appropriated for capacity building of all 
24 
LGUs. 
25 
 
26 
No LDF shall be released without a certification from the LGA that 
27 
the LGU is capacitated to plan and implement its CDP. 
28 
 
29 
SEC. 11. Procurement. – Procurement for the purpose of 
30 
implementing the CDPs must be consistent with the provisions of Republic 
31 
Act No. 9184, otherwise known as the “Government Procurement Reform 
32 
Act,” as amended. 
33 
 
34 
SEC. 12. Penal Provision. – It shall be unlawful for any person to 
35 
withhold the release of the LDF to the LGUs within the period specified in 
36 
Section 3 hereof, except as provided under this Act.  
37 
 
38 
Unless otherwise provided in this Act, any person violating the 
39 
provision of this Act shall suffer the penalty of imprisonment ranging from 
40 
one (1) year and one (1) day to six (6) years, and a fine of Five Hundred 
41 
Thousand 
Pesos 
(Php500,000.00), 
and 
temporary 
absolute 
42 
disqualification from holding any public office or employment in the 
43 


government, 
including 
any 
government-owned 
and/or 
controlled 
1 
corporations (GOCCs), and their subsidiaries. 
2 
 
3 
The Local Chief Executive shall be administratively liable, without 
4 
prejudice to any civil or criminal liabilities he may have incurred under 
5 
existing laws, in case of failure to report the status of their development 
6 
PAPs as required under Section 8 of this Act. 
7 
 
8 
Any government official or employee who shall prevent the reporting 
9 
or disclosure of any information or data pertaining to a funded 
10 
development PAP as mandated by Section 8 of this Act shall be held 
11 
administratively liable, without prejudice to any civil or criminal liability 
12 
he/she may have incurred under existing laws. 
13 
 
14 
SEC. 13. Oversight Committee. – There is hereby created a Joint 
15 
Congressional Oversight Committee to monitor and oversee the 
16 
implementation of the provisions of this Act. The Committee shall be 
17 
composed of five (5) members from the Senate and five (5) members from 
18 
the House of Representatives to be jointly chaired by the Chairperson of 
19 
the Committees on Local Government of the Senate and the House of 
20 
Representatives. 
21 
 
22 
SEC. 14. Sunset Review. – Five (5) years following the effectivity 
23 
of this Act, or as the need arises, the Congress shall conduct a sunset 
24 
review. For the purposes of this Act, the term “sunset review” shall mean 
25 
a systematic evaluation by Congress of the accomplishments and impact 
26 
of this Act, as well as the performance of LGUs, for purposes of 
27 
determining remedial legislation. 
28 
 
29 
SEC. 15. Coordination with Other Agencies. – In adopting 
30 
technical skills training program, each LGU shall closely coordinate with 
31 
the Technical Education and Skills Development Authority (TESDA), and 
32 
with other relevant government agencies in order to efficiently and 
33 
effectively carry out their respective CDPs. 
34 
 
35 
SEC. 16. Implementing Rules and Regulations. – Within sixty (60) 
36 
days from the effectivity of this Act, the Secretary of the DILG, with the 
37 
Secretaries of the DOF and the DBM and in consultation with the various 
38 
leagues of the different LGUs and other relevant stakeholders, shall issue 
39 
the necessary rules and regulations for the effective implementation of 
40 
this Act. 
41 
 
42 


SEC. 17. Suppletory Application of Existing Laws. – The 
1 
provisions of the Local Government Code of 1991 and other laws 
2 
consistent with this Act shall have suppletory effect. 
3 
 
4 
SEC. 18. Repealing Clause. – All laws, presidential decrees, 
5 
executive orders, presidential proclamations, rules and regulations or 
6 
parts thereof contrary to or inconsistent with this Act are hereby repealed, 
7 
superseded or modified accordingly.  
8 
 
9 
SEC. 19. Separability Clause. – Any portion or provision of this Act 
10 
that may be declared unconstitutional or invalid shall not have the effect 
11 
of nullifying other portions or provisions hereof, as long as such remaining 
12 
portions or provisions can still subsist and be given effect in their entirety. 
13 
 
14 
SEC. 20. Effectivity. – This Act shall take effect fifteen (15) days 
15 
after its publication in the Official Gazette or in at least two (2) newspapers 
16 
of general circulation. 
17 
 
18 
Approved,
19 


 
 
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1