REVIEWER IN PA 108

(LOCAL GOVERNMENT AND REGIONAL ADMINISTRATION)

LOCAL GOVERNMENT CODE OF 1991

- In 1991, Republic act No. 7160, otherwise known as the Local Government Code was
enacted into law, transferring control and responsibility of delivering basic services to
the hands of local government units (LGU). ..
- It took effect January 1, 1992, after its publication in the newspaper of general
circulation.

DEFINITION OF LOCAL GOVERNMENT

Local Government
1) refers to a political subdivision of a nation or state;
2) constituted by law;
3) has substantial control of local affairs including the power to impose taxes, and
4) the governing body of which is elected or appointed.
5) It has a defined area, a population, and a continuing organization; and
6) the authority to undertake and the power to carry out public activities in a
particular area

In the Philippines, it refers to:

a) provinces
b) cities
c) municipalities, and
d) barangays

STRUCTURES AND TYPES OF LOCAL GOVERNMENT

1) Provinces
- They are the largest political units in the Philippines.
- These are composed of several municipalities and (in some cases) cities.
- The center of governance both for executive and legislative function is the
provincial capitol.
- There are 82 provinces in the Philippines.
- Provincial Board – otherwise known as the Sangguniang Panlalawigan is
the law- making body of the province.

2) Cities
- These are urban centers of population. It can be classified as a highly
urbanized city, independent or chartered city, or as a component city of a
province.
- There are 146 cities in the Philippines.
- The City Council or the Sangguniang Panlalawigan is the law-making body
of the city.
- The center of governance, both for executive and the legislative function is
the city hall.

Types of Cities

a) Highly Urbanized Cities (HUCs)

- Cities with a minimum population of two hundred thousand (200,000)
inhabitants, as certified by the Philippine Statistics Authority, and with the
latest annual income of at least fifty million pesos based on 1991 constant
prices, as certified by the city treasurer.
- There are 33 highly urbanized cities in the Philippines.
 2

Top 10 most competitive HUCs are:

1) Quezon 6) Makati
2) Manila 7) Bacolod
3) Pasay 8) Pasig
4) Davao 9) Muntinlupa
5) Cagayan de Oro 10) Batangas

b) Independent Component Cities (ICC)

- Cities of this type have charters that explicitly prohibit their residents from
voting for provincial officials. All five of them are considered independent
from the province in which they are geographically located.
 (Ex. 1) Cotabato City,  2) Dagupan City, 3)Naga City, 4) Ormoc City, and
5)
Santiago City.)

c) Component Cities (CC)

- Cities which do not meet the preceding requirements are deemed part of the
province in which they are geographically located.
- If a component city is located along the boundaries of two or more provinces, it
shall be considered part of the province of which it used to be a
municipality.
- There are 108 component cities in the Philippines.

3) Municipalities
- These are composed of several barangays.
- created by an Act of Congress and is governed by the Municipality Law.
- They are classified according to their average annual income for the las four
fiscal years.
- The center of governance both for executive and legislative function is the
municipal hall.
- There are 1,493 municipalities in the Philippines.

4) Barangay
- This is the smallest political unit in the Philippines. Each municipality or city is
therefore made up of barangays.
- Serves as:
a) the primary planning and implementing unit of government policies, plans,
programs, projects and activities in the community;
b) forum wherein collective view of the people maybe expressed,
crystallized, and considered; and
c) where disputes maybe amicably settled.
- The primary requisite for the creation of a barangay is a population of at least
2,000. But for highly urbanized cities, a minimum of 5,000 inhabitants
is required.
- The creation of a barangay is done by law or an ordinance of the Sangguniang
Panlalawigan or Sangguniang Panlungsod, and has to be ratified by the
affected voting population through a plebiscite.
- There are 42,046 barangays in the Philippines.

FUNCTIONS AND POWERS OF LGUs

Functions:
1) providing basic social services
2) maintenance
3) improvement and management of public ways, roads
4) promotion of sports
5) development of local areas
6) promote the health and welfare of the local areas
 3

POWERS OF THE LGUs

1) Authorized to impose and collect taxes;

2) Formulate and implement policies and programs to promote the interest and
welfare of their constituents; and
3) Pass all other necessary measures for the protection, security, comfort, and
convenience of the inhabitants within their territorial jurisdiction.

REQUIREMENTS IN THE CREATION AND CONVERSION OF A LOCAL

GOVERNMENT UNIT
1) INCOME - must be sufficient, based on the acceptable standards to provide for
all essential government facilities and services and special functions commensurate
with the size of its population, as expected of the LGU concerned.
2) POPULATION - is the total number of inhabitants within the territorial
jurisdiction of the Local Government Unit concerned.
3) LAND AREA - This must be contiguous, unless it comprises two or more
islands or is separated by a Local Government Unit independent of the others.
- It must be properly identified by metes and bounds with technical descriptions.
- Land area must be sufficient to provide or such basic services and facilities to meet
the requirements of its populace.

CRITERIA IN THE CREATION, MERGER, AND DIVISION OF LOCAL GOVERNMENT

UNITS
According to 1991 Local Government Code -
  LGU Population Land Area Income
Province* 250,000 2,000 sq.km. P20M
City* 150,000 100 sq.km. P20M
Municipality 25,000 50 sq.km. P2.5M
Barangay 2,000 - -
HUCs 200,000 - P50M

*Province and city must comply with income criterion and with either the population
or land area requisite

** For barangays within Metro Manila and highly urbanized cities, the population
requirement is at least 5,000

CHAPTER 2
THE BARANGAY

Barangay – is the smallest political unit which is composed of the Punong

Barangay, Sangguniang Barangay, Barangay Secretary, Barangay Treasurer, the
Lupong Tagapamayapa, and the Sangguniang Kabataan.

Barangay officials are either elected or appointed.

Elected official – is a person who is an official by virtue of election.

Appointed official - is a person who is not an elected official, but has been
appointed to a government position.
 4

Barangay Officials

ELECTED APPOINTED
Punong Barangay – 1 Barangay Secretary - 1
Sangguniang Barangay Barangay Treasurer - 1
(7 members) Lupong Tagapamayapa
Sangguniang Kabataan (with 10-20 members, with
Chairman -1 Punong Barangay as Chair.)

Points to Ponder:
As the basic political unit, the barangay serves as the primary planning and
implementing unit of government policies, plans, programs, projects and activities in the
community and as a forum wherein the collective views of the people may be
expressed, crystallized and considered, and where disputes maybe amicably settled.

Powers, duties and functions

Punong Barangay
1) Enforce all laws and ordinances which are applicable within the barangay;
2) Negotiate, enter into, and sign contracts for and in behalf of the barangay, upon
authorization of the Sangguniang barangay;
3) Maintain public order in the barangay and, in pursuance thereof, assist the city or
municipal mayor and the Sangguniang Barangay and the barangay assembly, and vote
only to break a tie;
5) Upon approval by a majority of all the members of the Sangguniang Barangay,
appoint or replace the barangay treasurer, the barangay secretary, and other appointive
barangay officials;
6) Organize and lead an emergency group whenever the same may be necessary
for the maintenance of peace and order or on occasions of emergency or calamity
within the barangay;
7) In coordination with the barangay development council, prepare the annual
executive and supplemental budgets of the barangay;
8) Approve vouchers relating to the disbursements of barangay funds;
9) Enforce laws and regulations relating to pollution control and protection of the
environment;
10) Administer the operation of the Katarungang Pambarangay in accordance with
the provisions of this Code;
11) Exercise general supervision over the activities of the Sangguniang Kabataan;
12) Ensure the delivery of basic services;
13) Conduct an Annual Palarong Barangay which shall feature traditional sports and
discipline included in
national and international games.
14) Promote the general welfare of the barangay;
15) Exercise such other powers and performs such other duties and functions as
maybe prescribed by law or ordinances;
16) In the performance of his peace and order functions, the Punong Barangay shall
be entitled to possess and carry the necessary firearm within territorial jurisdiction;
subject to appropriate rules and regulations.

SANGGUNIANG BARANGAY

The Sangguniang Barangay, the legislative body of the barangay shall be

composed of the Punong Barangay as Presiding Officer, and seven (7) regular
sangguniang members elected at large and the Sangguniang Kabataan Chairman,
as member.
 5

POWERS, DUTIES AND FUNCTIONS OF THE SANGGUNIANG BARANGAY

1) Enact ordinances as may be necessary to discharge the responsibilities
conferred upon it by law or ordinance and to promote the general welfare of the
inhabitants therein.
2) Enact tax and revenue ordinances, subject to limitations;
3) Enact annual and supplemental budgets.
4) Provide for the construction and maintenance of barangay facilities and other
public works projects chargeable to the general fund of the barangay or such other
funds actually available for the purpose.
5) Submit to higher LGU suggestions or recommendations for the improvement of
the barangay or for the welfare of the inhabitants;
6) Assist in the establishment, organization and promotion of cooperative
enterprises that will improve the economic condition and well-being of the residents.
7) Regulate the use of multi-purpose halls, multi purpose pavements, grain or copra
dryers, patios and other post-harvest facilities, barangay waterworks, barangay
markets, parking areas or other similar facilities constructed with government funds
within the jurisdiction of the barangay and charge reasonable fees for the use of thereof.
8) Solicit or accept monies, materials and voluntary labor for specific public works
and cooperative enterprises of the barangay;
9) Provide compensation, reasonable allowances or per diems as well as travel
expenses for SB members and other barangay officials subject to budgetary limitations
provided that there shall be no increase in the honoraria of SB until their term expires;
10) Hold fund-raising activities for barangay projects in which proceeds shall accrue
to the general funds of the barangay;
11) Authorize the Punong Barangays to enter into contracts
12) Authorize the barangay treasurer to make direct purchases in an amount not
exceeding P1,000.
13) Prescribe fines not more than P1,000 for barangay ordinances violations;
14) Provide the administrative needs of the Lupong Tagapamayapa;
15) Provide for the organization of community brigades, barangay tanod or
community service as may be necessary.
16) Organize regular lectures, programs, or for a on community problems such as
sanitation, nutrition, literacy and drug abuse, and convene assemblies to encourage
citizen participation.
17) Adopt measures to prevent and control the proliferation of squatters and
mendicants in the barangay.
18) Provide for the proper development and welfare of children, particularly those
below seven (7) years of age;
19) Adopt measures towards the prevention and eradication of drug abuse, child
abuse and juvenile delinquency;
20) Initiate the establishment of a barangay high school, whenever feasible; and
21) Provide for the delivery of basic services.

THE BARANGAY SECRETARY

- The Barangay Secretary shall be appointed by the Punong Barangay with the
concurrence of the majority of all sangguniang barangay members.
- The appointment of the barangay secretary shall not be subject to the attestation
by the Civil Service Commission.
- He/She shall be of legal age, a qualified voter and an actual resident of the
barangay concerned.

Did you know that?

No barangay secretary shall be a sangguniang barangay member if he is a

government employee or a relative of the Punong Barangay within 4th civil degree.
 6

POWERS, DUTIES AND FUNCTIONS OF A BARANGAY SECRETARY

1) Keep custody of all records of the Sangguniang barangay and the barangay
assembly meetings;
2) Prepare and keep the minutes of all meeting of the sangguniang barangay and
the barangay assembly;
3) Prepare a list of members of the barangay assembly and have it posted in
conspicuous places;
4) Assist in the preparation of all necessary forms for the conduct of barangay
elections, initiatives, referenda or plebiscites in coordination with the COIMELEC;
5) Assist the municipal registrar in the registration of births, deaths, and marriages;
6) Keep an updated record of all inhabitants of the barangay containing the
following items of information: name, address, pace and date of birth, sex, civil status,
citizenship, occupation, etc.; and
7) submit a report on the actual number of barangay residents as often as may be
required by the Sangguniang barangay.

Note: The appointment of a barangay secretary need not be attested by the CSC,
thus he/she need not be a civil service eligible.

THE BARANGAY TREASURER

- The Barangay Treasurer shall be appointed by the Punong Barangay with the
concurrence of the majority of all the sannguniang barangay members.
- The appointment of the barangay treasurer shall not be subject to attestation by
the Civil Service Commission.
- The barangay treasurer shall be of legal age, a qualified voter, and an actual
resident of the barangay concerned.

Did You Know That?

No Barangay Treasurer shall be a sangguniang barangay member, if he is a

government employee or a relative of the Punong Barangay within the 4th civil degree.

DUTIES, POWERS AND FUNCTIONS OF A BARANGAY TREASURER

1) Keep custody of barangay funds and properties;
2) Collects and issue official receipts for taxes, fees, contributions, monies,
materials and all other resources accruing to the barangay;
3) Disburse funds;
4) Submit to the Punong Barangay a statement covering the actual and estimates of
income and expenditures;
5) Render a written accounting report of all barangay funds and property under
custody; and
6) Certify availability of funds, if necessary.

THE MUNICIPALITY

ROLE OF THE MUNICIPALITY

The municipality, consisting of a group of barangays, serves primarily as a general

purpose government for the coordination and delivery of basic, regular, and direct
services and effective governance of the inhabitants within its territorial jurisdiction.

ROLE OF THE CITY

The city, consisting of more urbanized and developed barangays, serves primarily
as a general purpose government for the coordination and delivery of basic, regular,
and direct services, and effective governance of the inhabitants within its territorial
jurisdiction.

ROLE OF THE PROVINCE

The province, composed of a cluster of municipalities, or municipalities and
component cities, and as a political; and corporate unit of government, serves as a
dynamic mechanism for developmental processes and effective governance of local
government and territorial jurisdiction.

THE ELECTIVE LOCAL OFFICIALS

Provincial City Municipal

Executive Governor Mayor Mayor
Vice-Governor Vice-Mayor Vice-Mayor
Legislative Sangguniang Panlalawigan Sangguniang Panlungsod Sangguniang Bayan
Members Members Members
Ligang mga Barangay Liga ng mga Barangay Liga ng Mga Barangay
President President President
SK Federation President SK Federation President SK Federation President
Sectoral Representatives Sectoral Representatives Sectoral Representatives
Federation of Sangguniang - -
Panlalawigan Members

QUALIFICATIONS OF ELECTIVE OFFICIALS

QUALIFICATION GOVERNOR VICE-GOVERNOR SANGGUNIANG

S PANLALAWIGAN
Citizenship Filipino Filipino Filipino
Voting Status Registered Voter Registered Voter Registered Voter
Literacy Able to read and write Able to read and write Able to read and write
Filipino or any other Filipino or any other Filipino or any other
language language language
Residency 1 year 1 year 1 year
Age Requirement 23 years during the 23 years during the 23 years during the
Election Day Election Day Election Day

QUALIFICATION MAYOR VICE-GOVERNOR SANGGUNIANG

S (Independent (Component City) PANLUNGSOD
Component City)
Citizenship Filipino Filipino Filipino
Voting Status Registered Voter Registered Voter Registered Voter
Literacy Able to read and write Able to read and write Able to read and write
Filipino or any other Filipino or any other Filipino or any other
language language language
Residency 1 year 1 year 1 year
Age Requirement 21 years during the 21 years during the 18 years during the
Election Day Election Day Election Day

QUALIFICATION PUNONG BARANGAY SANGGUNIANG

S BARANGAY
MEMBERS
Citizenship Filipino Filipino
Voting Status Registered Voter Registered Voter
Literacy Able to read and write Able to read and write
Filipino or any other Filipino or any other
language language
Residency 1 year 1 year
Age Requirement 18 years during the 18 years during the
Election Day Election Day
 8

DISQUALIFICATION OF LOCAL ELECTIVE OFFICIALS

1) Those sentenced by final judgment for an offense involving moral turpitude or
for an offense punishable by one year or more imprisonment
2) Those removed from office as a result of an administrative case;
3) Those convicted by final judgment for violating the oath of allegiance to the
republic;
4) Those with dual citizenship;
5) Fugitive from justice in criminal or nonpolitical cases here or abroad;
6) Permanent residents of a foreign country; and
7) The insane or feeble-minded

POWERS, DUTIES, AND FUNCTIONS OF LOCAL OFFICIALS

GOVERNORS/MAYORS
1) Exercise general supervision and control overall programs, projects, services
and
activities of the LGU;
2) Enforce all laws and ordinances relative to the governance of the LGU;
3) Initiate and maximize the generation of resources and revenues, and apply the
same to the implementation of development plans, programs, objectives and
priorities;
4) Ensure the delivery of basic services and the provision of adequate facilities
5) Exercise such other powers and perform such other duties and functions
prescribed by law or ordinance.

VICE-GOVERNORS/VICE-MAYORS
1) Be the Presiding Officer of the Sanggunian and sign all warrants drawn on the
treasury for all expenditures of the sanggunian;
2) Subject to civil service law, rules and regulations, appoint all officials of the
sanggunian, except those whose manner of appointment is specifically
provided in RA 7160;
3) Assume the Office of the Governor/Mayor for the unexpired term of the latter in
the event of permanent vacancy;
4) Exercise the powers and perform the duties and functions of the governor/mayor
in cases of temporary vacancy;
5) Exercise such other powers and perform such other duties and functions as
maybe prescribed by law or ordinance.

PERMANENT VACANCIES AND RULE OF SUCCESSION

1) If a permanent vacancy occurs in the Office of the Governor/Mayor, the Vice-
Governor/Mayor shall become the Governor/Mayor;
2) The highest sangguniang member, or in the case of his permanent inability,
the second highest ranking sanggunian shall fill in the vacant vice position;
3) Permanent vacancy in the sanggunian shall be filled thru appointment.
4) Except for the sangguniang barangay in which nomination from the political
party of the elevated sangguniang bayan shall be considered.

POINTS TO PONDER
A permanent vacancy arises when:
1) an elective official fills a higher vacant office,
2) refuses to assume office,
3) fails to qualify,
4) dies,
5) is removed from office,
6) voluntarily resigns,
 7) or is otherwise permanently incapacitated to discharge the functions of his office

TEMPORARY VACANCIES AND RULE OF SUCCESSION

- The Vice-Governor/Mayor or highest ranking sangguniang member shall

automatically exercise the power of the local chief executive if the period of
temporary incapacity exceeds 30 working days;
- When the incumbent local chief executive is traveling within the country but
outside his jurisdiction for a period of not more than three (3) consecutive
days, he may designate in writing the OIC of the said office;
- If the local chief executive is to travel outside the country, he is to designate an
acting official for his position, i.e. either the Vice- Mayor.

Points to Ponder
Temporary vacancy occurs due to incapacity to perform duties for physical or
legal reasons such as but not limited to leave of absence, travel abroad, and
suspension from office.

THE APPOINTED OFFICIALS

PROVINCIAL CITY MUNICIPALITY

Secretary Mandatory Mandatory Mandatory
Treasurer Mandatory Mandatory Mandatory
Assessor Mandatory Mandatory Mandatory
Accountant Mandatory Mandatory Mandatory
Budget Officer Mandatory Mandatory Mandatory
Planning and Mandatory Mandatory Mandatory
Development
Coordinator
Engineer Mandatory Mandatory Mandatory
Health Officer Mandatory Mandatory Mandatory
Administrator Mandatory Mandatory Optional
Legal Officer Mandatory Mandatory Optional

CHAPTER 3
LOCAL GOVERNMENT TAXATION

LOCAL AUTONOMY

- Each local government unit has the power to create its own sources of revenue and to
levy taxes, fees and charges;
- The grant of power to create sources of revenue is consistent with the basic policy of
local autonomy;
- The taxes, fees and charges shall accrue exclusively to the LGUs.

FUNDAMENTAL PRINCIPLES

The following fundamental principles shall govern the exercise of the taxing and other
revenue-raising powers of LGUs:
1) Taxation shall be uniform in each LGU. The uniformity required is only within the
territorial jurisdiction of a province, a city, a municipality, or a barangay
2) Taxes, fees, charges, or other impositions shall:
a) Be equitable and based, as far as practicable, on the taxpayer’s ability to
pay;
b) Be levied and collected only for public purposes;
 c) Not be unjust, excessive, oppressive, or confiscatory;

10

3) Not be contrary to law, public policy, national economic policy, or in restraint

of trade;
4) The revenue collected pursuant to the provisions of this Rule shall ensure solely
to the benefit of, and be subjected to disposition by the LGU levying the tax,
fee, charges or other imposition unless otherwise specifically provided in this
Rules; and
5) Each LGU shall as far as practicable , evolve a progressive system of taxation.

COMMON LIMITATIONS
LGUs shall not extend to the levy of the following:
- Income tax;
- Documentary stamp tax;
- Taxes on estates, inheritance, gifts, legacies & other acquisitions;
- Customs duties, registration fees of vessel & wharfage, tonnage dues;
- Taxes, fees and charges and other impositions upon goods carried into or out of,
or passing thru, the territorial jurisdictions of LGUs;
- Taxes, fee or charges on agricultural & aquatic products when sold by marginal
farmers or fishermen;
- Taxes on business enterprises;
- Excise taxes & taxes, fee or charges on petroleum products;
- Percentage or Value Added Tax;
- Taxes on the gross receipts of transportation contractors & persons engaged in
the transportation of passengers or freight;
- Taxes on premiums paid by way of reinsurance or retrocession;
- Taxes, fees for the registration of motor vehicles & licensor permits;
- Taxes, fees or charges on Philippine products actually exported;
- Taxes, fees or charges on countryside and barangay business enterprises &
cooperatives
- Taxing and Other Revenue-Raising Powers of Provinces
- Franchise Tax
- Tax rate not exceeding 50% of 1% of the gross annual receipts of businesses
enjoying a franchise;
- Professional Tax;
- Tax rate not exceeding Php300.00;
- Tax on Sand, Gravel, and other Quarry Resources;

The province may levy and collect not more than 10% of fair market value
(FMV) in the locality per cubic meter of ordinary stones, sand, gravel, earth and
other quarry resources;

The proceeds of the tax on sand, gravel, and other quarry resources shall be
distributed as follows:
Province – 30%
Component city / municipality – 30%
Barangay – 40%

Amusement Tax
- Tax rate not more than 30% of the gross receipts from admission fees of
theaters, cinemas, concert halls, circuses, boxing stadia and other amusement
places

Annual Fixed Tax for Every Delivery Truck or Van

- Php500.00 annual fixed tax for every truck or van used in the delivery of
distilled spirits, fermented liquors, soft drinks, cigarettes and other products
 11

TAXING AND OTHER REVENUE-RAISING POWERS OF MUNICIPALITIES

Tax on Business
- On manufacturers, assemblers, repackers, processors, brewers, distillers,
rectifiers, and compounders;

Tax on Business
- On wholesalers, distributors, or dealers;

Tax on Business
- On exporters and manufacturers, millers, producers, dealers or retailers of
essential commodities e.g. rice and corn, flour, meat, preserved food, sugar, salt,
cooking oil & gas, laundry soap, poultry feeds, school supplies and cement;
- On banks and other financial institutions;
- On peddlers (Php50.00 per peddler annually);
- Fees for Sealing and Licensing of Weights and Measures
- Fishery Rentals, Fees and Charges

TAXING AND OTHER REVENUE-RAISING POWERS OF CITIES

Scope
- Levy and collect any of the taxes, fees, charges and impositions that the
province and the municipality may impose

Uniform Tax rates

- Professional Tax (Php300.00)
- Amusement Tax (not more than 30% of admission fees)
- Sharing of Tax on Sand, Gravel and other Quarry Resources
- Highly urbanized city - 60%
- Barangay where the sand, gravel&
other quarry resources are extracted - 40%

TAXING AND OTHER REVENUE-RAISING POWERS OF CITIES

- Taxes on stores and retailers

Tax rate of not more than 1% on gross sales or receipts of P50,000 for
those barangays within the city, and P30,000 for those within municipalities,
with fixed business establishments;
- Service fees or charges for services rendered in connection with the usage
of barangay owned properties or service facilities
- Fee for the issuance of barangay clearance
- Other fees and charges on:
- Commercial breeding of fighting cocks;
- Cockfights and cockpits;
- Places of recreation which charge admission fees; and
- Billboards, signboards, neon signs and outdoor advertisements

COMMON REVENUE-RAISING POWERS

- LGUs shall exercise the power to collect charges for services rendered in
relation with the usage of public utilities owned, operated and maintained by
them at rates to be fixed by the sanggunian thru ordinance.
- These services may be the use of any public road, pier or wharf, waterway,
bridge, or ferry or telecommunication system.
 - The following persons shall be exempted from the payment of said toll fees and
charges:

12

- Officers and enlisted members of AFP and PNP on mission;

- Post office personnel delivering mail;
- Persons who are physically handicapped;
- Disabled citizens who are 65 years or older
- Community Tax
The rate of the community tax may be levied and collected from individuals
shall be P5.00 plus an additional tax of P1.00 for every P1,000.00 income
regardless of whether from business, exercise of profession or from property
but in no case shall exceed P5,000.00;
Exemptions:
- Diplomatic and consular representatives
- Transient visitors
- Community tax will be collected in the municipality/city where an individual
resides.
- CTC will be printed by the BIR.

CHAPTER 4
SHARES OF LOCAL GOVERNMENT UNITS IN THE PROCEEDS OF
NATIONAL TAXES

The Internal Revenue Allotments (IRA) are a major source of income of many local
government units.

Internal Revenue Allotment – is the share of the local government units out of the
country’s overall revenue collections.

The government sources for revenue are tax collected from people and
corporations.
Revenue is critical as it determines how much money will be available for
spending.

Without revenues, there will be no budget, and thus, no spending.

ALLOCATION TO LOCAL GOVERNMENT UNITS

- Forty percent (40%) of the total internal revenues will be divided among the
various LGUs.
- The share of the local government units in the Internal Revenue Allotment (IRA)
shall be allocated in the following manner:
a) Provinces - 23%
b) Cities - 23%
c) Municipalities - 34%
d) Barangays - 20%
- Provided, however, that the share of each province, city, and municipality shall
be determined on the basis of the following formula:
a) Population - 50%
b) Land Area - 25%
c) Equal Sharing - 25%
- Provided further that the share of each barangay with a population of not less
than 100 inhabitants shall not be less than P80,000 per annum chargeable against the
20% share of the barangay from the IRA.

AUTOMATIC RELEASE OF SHARES

 - The share of each LGU shall be released, without need of any further action,
directly to the provincial, city, municipal or barangay treasurer, on a quarterly basis,
within five (5) days after the end of each quarter, and which shall not be subject to any
holdback that may be imposed by the National Government.

13

Local Development Projects

- Each LGU shall appropriate in its annual budget no less than 20% of its annual
Internal Revenue Allotment for development projects.
Copies of the development plans of local government units shall be furnished the
Department of Interior and Local Government.

SHARE OF LOCAL GOVERNMENT UNITS IN THE NATIONAL WEALTH

- Share in the Proceeds from the Development and Utilization of the National
Wealth.
- LGUs shall have an equitable share in the proceeds derived from the utilization
and development of the national wealth within their respective areas, including the same
with the inhabitants by way of direct benefits.

AMOUNT OF SHARE OF LOCAL GOVERNMENT UNITS

- LGU’s shall, in addition to the IRA, have a share of 40% of the gross collection
derived by the national government from mining taxes, royalties, forestry, and fishery
charges, and such other taxes, fees, or charges, including related surcharges, interests,
or fines in the utilization and development of the national wealth within their territorial
jurisdiction.

SHARE OF THE LOCAL GOVERNMENTS FROM ANY GOVERNMENT AGENCY OR

GOVERNMENT-OWNED OR CONTROLLED CORPORATION (GOCC)
- LGUs shall have a share from the proceeds derived by any government agency
or GOCC engaged in the utilization and development of the national wealth
based on the following formula whichever will produce a higher share for the
local government unit.
a) One percent (1%) of the gross sales or receipts;
b) Forty percent (40%) of the mining taxes, royalties, forestry, and fishery
charges and such other taxes, fees, or charges, including related surcharges,
interests, or fines the government agency or GOCC would have paid if it were
not otherwise exempt.

ALLOCATION OF SHARES
The share should be distributed in the following manner:

a) Where the natural resources are located in the province:

1) Province - 20%
2) Component City/Municipality - 45%
3) Barangay - 35%

When the natural resources are located in 2 or more provinces, or in 2

or more component cities or municipalities, or in 2 or more
barangays, their respective shares shall be computed on the basis
of:
1) Population - 70%
2) Land Area - 30%

Where the natural resources are located in a highly urbanized or

independent component city:
1) City - 65%
 2) Barangay - 35%

14

Where the natural resources are located in such two (2) or more cities,
the allocation of shares shall be based on the formula on population
and land area.

REMITTANCE OF THE SHARE OF LOCAL GOVERNMENT UNITS

-The share of LGUs from the utilization and development of national
wealth shall be remitted in accordance with Section 286 of this Code.
- In the case of any government agency or GOCC engaged in the
utilization and development of the national wealth, such shall be directly
remitted to the provincial, city, municipal, or barangay treasurer concerned
within five (5) days after the end of each quarter.

DEVELOPMENT AND LIVELIHOOD PROJECTS

- The proceeds from the share of local government units shall be
appropriated by their respective sanggunian to finance local development and
livelihood projects.
- At least 80 percent of the proceeds derived from the development and
utilization of hydrothermal, geothermal, and other sources of energy shall be
applied solely to lower the cost of electricity in the local government unit where
such a source of energy is located.