SYMPOSIUM ON THE REVIEW OF THE
1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
20 August 2014
Eastwood Richmonde Hotel, Quezon City
Review of Laws, Supreme Court
Decisions & Congress Bills On Local
Gov’t Code Fiscal Matters
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
SCOPE OF THE REVIEW: WHERE WE ARE
on laws, jurisprudence and bills filed
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Expenditure assignment
Revenue assignment & taxing powers
Intergovernmental fiscal transfers
LGU borrowing and credit finance
Creation of LGUs
Inter-LGU alliances
Fiscal administration
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
OBJECTIVES OF THE REVIEW
1. Facilitate the understanding and consideration
of earlier laws and jurisprudence on fiscal
matters of the Local Government Code of 1991
2. Map existing proposals and the views of
Congress in the form of pending bills
3. Identify pending bills that may allow certain
stakeholder proposals to be put forward
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
No. of Laws on Fiscal Matters Enacted, 1991-2014
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Laws Amending the LGC
• R.A. 8185 (6/11/1996) amended Sec. 324 (d) of
the LGC by providing that the 5% calamity fund
shall be used for relief, rehabilitation,
reconstruction and other works or services
• R.A. 9009 (1/24/2001) amended Sec. 450 of the
LGC by increasing the annual income
requirement for conversion into a component
city from P20 million to P100 million
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Laws Amending the LGC
• RA 9184 (1/10/2003) amended Title Six,
Book II of RA 7160 on property and supply
management in the local government units
• R.A. 9640 (5/21/2009) reduced the rate of
amusement tax from not more than 30%
to 10% of gross receipts
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
No. of laws on fiscal-related matters, 1991-2014
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Expenditure Assignment
• Social welfare and development - RA 9994 mandated the
creation of OSCA, RA 9593 the creation of a permanent
tourism officer, and RA 9344 the appointment of licensed
social worker as its local social welfare and development
officer tasked to assist children in conflict with the law
• Agriculture extension - RAs 9296 & 10536 on meat
inspection, RA 10611 on sanitation & food safety, RA 10601
on agric’l & fisheries mechanization development
• Environment and natural resource management - RA
9003 on solid waste management, RA 9275 on water quality
management
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Revenue Assignment
• Mining and quarry permits and fees. RA 7942 on the
Philippine Mining Act of 1995.
•
Professional tax. RA 9646 regulated the practice of
real estate service expanding the tax subject.
• Fees for correction of clerical/typographical errors in
civil registry. RA 10172 authorized the city or municipal
civil registrar to collect reasonable fees as a condition for
accepting the petition.
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
National Gov’t-LGU Fiscal Transfers
• Special share in excise tax on cigarettes – RA Nos.
7171, 8240, 9334, and 10351
• Share in incremental VAT - RA 7643
• Capitation payments from PhilHealth - RA 7875,
otherwise known as the National Health Insurance Act Of
1995, as amended by RA 9241 & RA 10606 augmented
LGUs’ income from its health facilities through the
capitation payments given by the PHIC
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Fiscal Incentives/Tax Exemptions
• Exemption of residential facilities/retirement villages for
senior citizens and PWDs from payment of real property
taxes - RA 7432 & RA 9442
• Exemption of ancestral domains from real property tax
and other forms of exaction under RA 8371
• Different LGU sharing scheme in the 5% gross income
tax on ecozones – RA Nos. 7916, 8748, 7922, 9728,
9490, 10083, & 9593
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Inter-LGU Alliances
• RA 7820 created Partido Dev. Administration
(PDA) to accelerate the development of 10
municipalities in Camarines Sur.
PDA is a legal entity endowed with corporate
power, e.g. enter into contract, incur
indebtedness, etc. RA 8989, approved on 31
December 2000, streamlined the organization of
the PDA .
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Creation of LGUs
• In the past 23 years since the enactment of RA
7160, there were 93 laws passed by Congress
creating LGUs broken down as follows:
4 provinces, 81 cities, 4 municipalities and 4
barangays.
• Two laws were passed that consolidated
municipalities to become a city – RA 8471
(Samal City) and RA 8806 (Sorsogon City).
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Fiscal Administration
• Recognition and use of e-transactions as provided under
RA 8792 (E-commerce law)
• Creation of Philippine Tax Academy under RA 10143 to
serve as a learning institution for tax collectors and
administrators of the government and selected
applicants from the private sector. It shall handle all the
trainings, continuing education programs and other
courses for all the officials and personnel of the BIR,
BOC & BLGF.
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Supreme Court Decisions
• Over the last 10 years, the Supreme Court promulgated
a number of decisions that had an impact on the
revenue-raising powers of provinces.
The cases mostly concerned the franchises of
telecommunications companies and the tax treatment of
government-owned and controlled corporations such as
the National Power Corp. and the Philippine Ports
Authority. One case stemmed from the issue about the
release of the internal revenue allotment (IRA) of LGUs.
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
HOUSE/SENATE BILLS FILED ON
LOCAL GOVERNMENT FINANCE
AND FISCAL
DECENTRALIZATION
DURING THE
TH
16
Congress
Expenditure Assignment
• Mandatory appointment of municipal agriculturists,
cooperatives officer, environment and natural resources
officer, registered and licensed architects or civil
engineers as local building officials, & social welfare and
development officers
• 4 HBs proposed the re-nationalization of health
services but no counterpart bill in the Senate
• Revert to the national gov’t the devolved basic
agricultural functions/responsibilities of LGUs
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Revenue Assignment/Taxing Powers
 On real property taxation, the creation of Real Property Valuation
Service in the Bureau of Local Government Finance (BLGF) to
conduct the review of the schedule of market values (SMVs) and
recommend for approval to the Secretary of Finance, thereby
separating the technical function of valuation from the political
function of taxation.
 Simplify the business tax structure by abolishing the graduated
business tax rates and changing the tax rate to not more than 2.5%
of the gross sales or receipts of the preceding year.
 Abolition of the community tax and the use of the community tax
certificate.
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Inter-governmental Transfers
• 26 House bills and 8 Senate bills filed on IRA mostly
increasing the LGU share from 40% to 50% or 60% and
expanding the base of its computation from internal
revenue taxes to national taxes to include collections
from the Bureau of Customs and other tax collecting
agencies
• 4 House bills and 2 Senate bills propose that persons,
natural or juridical, engaged in utilization and
development of national wealth, shall remit directly a
40% share to the host LGUs, at the same time, 60%
share of the national government is remitted.
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Borrowing/Credit Finance
• 2 House bills were filed on credit finance:
 Suggests that the accumulated loan obligations of the
LGU shall in no case exceed fifty (50%) percent of the
internal revenue allotment
 Bill seeking to bar local government units from
obtaining loan for infrastructure projects one year
prior to every national and/or local elections.
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Creation of LGUs
• Most of the bills will increase the income requirements
for converting a municipality to a component city, to high
urbanized city, and creation of a province and
municipality.
• A House bill stating that an LGU may be created,
divided, merged, abolished, or its boundaries
substantially altered ONLY by law enacted by Congress.
• HB 4644 creating the Agoo-Aringay City**
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Local Fiscal Administration
• Bills mandating LGUs to disclose certain documents for
the information of the public in line with the principle of
transparency in local governance.
• Bill seeking to transfer the power to review appropriation
ordinances of component cities and municipalities from
the Sanggunian Panlalawigan to DBM.
• Bill providing for the exclusion of IRA in the income
classification system of LGUs amending Sec. 4a of EO
249.
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
The Way Forward
• The review of laws and SC decisions provided the
perspective of what has been done
• Pending bills in Congress have been mapped to reveal
priority areas of reforms under legislative
consideration
• Proposals and views from all sectors will be incorporated
in the position papers that will serve as the basis for
crafting proposed LGC amendments
SYMPOSIUM ON THE REVIEW
OF THE 1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
SYMPOSIUM ON THE REVIEW OF THE
1991 LOCAL GOVERNMENT CODE
Improving Lives Through Local Governance Reform:
Transparency, Accountability and Better Services
Thank You!
20 August 2014
Eastwood Richmonde Hotel, Quezon City