Law on Public Corporation corporations with field units or branches in a

Atty. L. Cabras province, city, or municipality shall furnish the

local chief executive concerned, for his
Administrative System of RP information and guidance, monthly reports
including duly certified budgetary allocations
- Central government
and expenditures.
- Territorial and political subdivision
- Enjoys local autonomy
- Plebiscite and referendum – direct
Internal Revenue Allotment (depends on the
democracy
class and income remittance)

Section 284. Allotment of Internal Revenue

President’s general supervision over LGUs Taxes. - Local government units shall have a
share in the national internal revenue taxes
Section 25. National Supervision over Local
based on the collection of the third fiscal year
Government Units. -
preceding the current fiscal year as follows:
(a) Consistent with the basic policy on local
(a) On the first year of the effectivity of this
autonomy, the President shall exercise
Code, thirty percent (30%);
general supervision over local government
units to ensure that their acts are within the (b) On the second year, thirty-five percent
scope of their prescribed powers and (35%); and
functions.
(c) On the third year and thereafter, forty
The President shall exercise supervisory percent (40%).
authority directly over provinces, highly
Provided, That in the event that the national
urbanized cities, and independent
government incurs an unmanageable public
component cities; through the province with
sector deficit, the President of the Philippines
respect to component cities and
is hereby authorized, upon the
municipalities; and through the city and
recommendation of Secretary of Finance,
municipality with respect to barangays.
Secretary of Interior and Local Government
(b) National agencies and offices with project and Secretary of Budget and Management,
implementation functions shall coordinate and subject to consultation with the presiding
with one another and with the local officers of both Houses of Congress and the
government units concerned in the discharge presidents of the "liga", to make the
of these functions. They shall ensure the necessary adjustments in the internal revenue
participation of local government units both allotment of local government units but in no
in the planning and implementation of said case shall the allotment be less than thirty
national projects. percent (30%) of the collection of national
internal revenue taxes of the third fiscal year
(c) The President may, upon request of the
preceding the current fiscal year: Provided,
local government unit concerned, direct the
further, That in the first year of the effectivity
appropriate national agency to provide
of this Code, the local government units shall,
financial, technical, or other forms of
in addition to the thirty percent (30%) internal
assistance to the local government unit. Such
revenue allotment which shall include the
assistance shall be extended at no extra cost
cost of devolved functions for essential public
to the local government unit concerned.
services, be entitled to receive the amount
(d) National agencies and offices including equivalent to the cost of devolved personal
government-owned or controlled services.

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Barangay – lowest political unit; headed by a - Ecological responsibility
Chairperson; several brgys will constitute a
Section 16. General Welfare. - Every local
city or municipality
government unit shall exercise the powers
expressly granted, those necessarily implied
therefrom, as well as powers necessary,
Two-fold characteristic/Dual Agency/Nature
appropriate, or incidental for its efficient and
of Local Government Units
effective governance, and those which are
Section 15. Political and Corporate Nature of essential to the promotion of the general
Local Government Units. - Every local welfare. Within their respective territorial
government unit created or recognized under jurisdictions, local government units shall
this Code is a body politic and corporate ensure and support, among other things, the
endowed with powers to be exercised by it in preservation and enrichment of culture,
conformity with law. As such, it shall exercise promote health and safety, enhance the right
powers as a political subdivision of the of the people to a balanced ecology,
national government and as a corporate encourage and support the development of
entity representing the inhabitants of its appropriate and self-reliant scientific and
territory. technological capabilities, improve public
morals, enhance economic prosperity and
 Jure imperii – governmental in social justice, promote full employment
nature among their residents, maintain peace and
 Jure gestionis – private functions order, and preserve the comfort and
convenience of their inhabitants.

Seven (7) areas of concern

- Local legislation Section 17. Basic Services and Facilities. -

- Local fiscal administration (a) Local government units shall
- Local development plan endeavor to be self-reliant and shall
- Economic enterprise development continue exercising the powers and
- Organizational management discharging the duties and functions
- Environmental protection and currently vested upon them. They
management shall also discharge the functions and
- Community mobilization responsibilities of national agencies
and offices devolved to them
pursuant to this Code. Local
Relevant Constitutional Provisions government units shall likewise
Section 2. The territorial and political exercise such other powers and
subdivisions shall enjoy local autonomy. discharge such other functions and
responsibilities as are necessary,
- But this “autonomy” does not mean appropriate, or incidental to efficient
full freedom from control and effective provisions of the basic
services and facilities enumerated
LGU Roles in development
herein.
- Periodic consultations with
xxx
appropriate agencies, NGOs and POs
- Capabilities of LGUs implementation xxx
of national programs

2|Page
 (e) National agencies or offices more responsive and accountable local
concerned shall devolve to local government structure instituted through a
government units the responsibility for system of decentralization with effective
the provision of basic services and mechanisms of recall, initiative, and
facilities enumerated in this Section referendum, allocate among the different
within six (6) months after the effectivity local government units their powers,
of this Code. responsibilities, and resources, and provide
for the qualifications, election, appointment
As used in this Code, the term
and removal, term, salaries, powers and
"devolution" refers to the act by which
functions and duties of local officials, and all
the national government confers power
other matters relating to the organization and
and authority upon the various local
operation of the local units.
government units to perform specific
functions and responsibilities.

Section 4 of the Local Government Code

Devolved basic services (section 17) Section 4. Scope of Application. - This Code
shall apply to all provinces, cities,
- Agriculture
municipalities, barangays, and other political
- Health
subdivisions as may be created by law, and, to
- Social services
the extent herein provided, to officials,
- Environment and natural resources
offices, or agencies of the national
- Public works
government.
- Tourism
- School building programs
-
Charter cities – section 34 (f), LGC
Features of Local Government Code

- Devolves to LGUs the delivery of basic

Regulatory powers
services that have always belonged to
the National Government 1. Eminent domain
- Grants LGUs significant regulatory
powers that traditionally always Section 19. Eminent Domain. - A local
belonged to the NGAs government unit may, through its chief
- Significantly increases the financial executive and acting pursuant to an
resources available to LGUs thru ordinance, exercise the power of eminent
increased IRA domain for public use, or purpose or welfare
- Recognizes and encourages the active for the benefit of the poor and the landless,
participation of the private sector, upon payment of just compensation, pursuant
NGOs, POs in the process of to the provisions of the Constitution and
governance pertinent laws: Provided, however, That the
power of eminent domain may not be
exercised unless a valid and definite offer has
been previously made to the owner, and such
Structure, powers and functions offer was not accepted: Provided, further,
That the local government unit may
Section 3, Article X of the 1987 Constitution
immediately take possession of the property
Section 3. The Congress shall enact a local upon the filing of the expropriation
government code which shall provide for a proceedings and upon making a deposit with

3|Page
the proper court of at least fifteen percent park, or square shall be temporarily closed for
(15%) of the fair market value of the property athletic, cultural, or civic activities not
based on the current tax declaration of the officially sponsored, recognized, or approved
property to be expropriated: Provided, finally, by the local government unit concerned.
That, the amount to be paid for the
(d) Any city, municipality, or barangay may, by
expropriated property shall be determined by
a duly enacted ordinance, temporarily close
the proper court, based on the fair market
and regulate the use of any local street, road,
value at the time of the taking of the
thoroughfare, or any other public place where
property.
shopping malls, Sunday, flea or night markets,
or shopping areas may be established and
where goods, merchandise, foodstuffs,
2. Open and close roads
commodities, or articles of commerce may be
Section 21. Closure and Opening of Roads. - sold and dispensed to the general public.

(a) A local government unit may, pursuant to

an ordinance, permanently or temporarily
3. Reclassify agricultural lands
close or open any local road, alley, park, or
square falling within its jurisdiction: Provided, Section 20. Reclassification of Lands. -
however, That in case of permanent closure,
(a) A city or municipality may, through an
such ordinance must be approved by at least
ordinance passed by the sanggunian after
two-thirds (2/3) of all the members of the
conducting public hearings for the purpose,
sanggunian, and when necessary, an
authorize the reclassification of agricultural
adequate substitute for the public facility that
lands and provide for the manner of their
is subject to closure is provided.
utilization or disposition in the following
(b) No such way or place or any part thereof cases: (1) when the land ceases to be
shall be permanently closed without making economically feasible and sound for
provisions for the maintenance of public agricultural purposes as determined by the
safety therein. A property thus permanently Department of Agriculture or (2) where the
withdrawn from public use may be used or land shall have substantially greater economic
conveyed for any purpose for which other real value for residential, commercial, or industrial
property belonging to the local government purposes, as determined by the sanggunian
unit concerned may be lawfully used or concerned: Provided, That such
conveyed: Provided, however, That no reclassification shall be limited to the
freedom park shall be closed permanently following percentage of the total agricultural
without provision for its transfer or relocation land area at the time of the passage of the
to a new site. ordinance:

(c) Any national or local road, alley, park, or (1) For highly urbanized and independent
square may be temporarily closed during an component cities, fifteen percent (15%);
actual emergency, or fiesta celebrations,
(2) For component cities and first to the third
public rallies, agricultural or industrial fairs, or
class municipalities, ten percent (10%); and
an undertaking of public works and highways,
telecommunications, and waterworks (3) For fourth to sixth class municipalities, five
projects, the duration of which shall be percent (5%): Provided, further, That
specified by the local chief executive agricultural lands distributed to agrarian
concerned in a written order: Provided, reform beneficiaries pursuant to Republic Act
however, That no national or local road, alley, Numbered Sixty-six hundred fifty-seven (R.A.

4|Page
No. 6657). otherwise known as "The Section 22. Corporate Powers. -
Comprehensive Agrarian Reform Law", shall
(a) Every local government unit, as a
not be affected by the said reclassification and
corporation, shall have the following powers:
the conversion of such lands into other
purposes shall be governed by Section 65 of (1) To have continuous succession in its
said Act. corporate name;
(b) The President may, when public interest so (2) To sue and be sued;
requires and upon recommendation of the
National Economic and Development (3) To have and use a corporate seal;
Authority, authorize a city or municipality to (4) To acquire and convey real or personal
reclassify lands in excess of the limits set in property;
the next preceding paragraph.
(5) To enter into contracts; and
(c) The local government units shall, in
conformity with existing laws, continue to (6) To exercise such other powers as are
prepare their respective comprehensive land granted to corporations, subject to the
use plans enacted through zoning ordinances limitations provided in this Code and other
which shall be the primary and dominant laws.
bases for the future use of land resources: (b) Local government units may continue
Provided. That the requirements for food using, modify, or change their existing
production, human settlements, and industrial corporate seals: Provided, That newly
expansion shall be taken into consideration in established local government units or those
the preparation of such plans. without corporate seals may create their own
(d) Where approval by a national agency is corporate seals which shall be registered with
required for reclassification, such approval the Department of the Interior and Local
shall not be unreasonably withheld. Failure to Government: Provided, further, That any
act on a proper and complete application for change of corporate seal shall also be
reclassification within three (3) months from registered as provided hereon.
receipt of the same shall be deemed as (c) Unless otherwise provided in this Code, no
approval thereof. contract may be entered into by the local
(e) Nothing in this Section shall be construed chief executive in behalf of the local
as repealing, amending, or modifying in any government unit without prior authorization
manner the provisions of R.A. No. 6657. by the sanggunian concerned. A legible copy
of such contract shall be posted at a
conspicuous place in the provincial capitol or
4. Inspection of food products the city, municipal or barangay hall.
5. Adopt quarantine regulations (d) Local government units shall enjoy full
6. Enforcement of the National Building autonomy in the exercise of their proprietary
Code functions and in the limitations provided in
7. Regulation of operation of tricycles this Code and other applicable laws.
8. Regulate real estate trade and
business
9. Licensing of cockpits and regulation
thereof

Corporate Powers

5|Page
 territorial jurisdiction of the local government
unit concerned; and

(c) Land Area. - It must be contiguous, unless

it comprises two or more islands or is
separated by a local government unit
independent of the others; properly identified
Types of LGUs under the Constitution by metes and bounds with technical
1. Section 1. The territorial and political descriptions; and sufficient to provide for such
subdivisions of the Republic of the basic services and facilities to meet the
Philippines are the provinces, cities, requirements of its populace.
municipalities, and barangays. There Compliance with the foregoing indicators shall
shall be autonomous regions in be attested to by the Department of Finance
Muslim Mindanao and the (DOF), the National Statistics Office (NSO), and
Cordilleras as hereinafter provided. the Lands Management Bureau (LMB) of the
Department of Environment and Natural
2. Section 11. The Congress may, by Resources (DENR).
law, create special metropolitan
political subdivisions, subject to a
plebiscite as set forth in Section 10
Section 10. Plebiscite Requirement. - No
hereof. The component cities and
creation, division, merger, abolition, or
municipalities shall retain their basic
substantial alteration of boundaries of local
autonomy and shall be entitled to
government units shall take effect unless
their own local executive and
approved by a majority of the votes cast in a
legislative assemblies. The jurisdiction
plebiscite called for the purpose in the
of the metropolitan authority that will
political unit or units directly affected. Said
thereby be created shall be limited to
plebiscite shall be conducted by the
basic services requiring coordination.
Commission on Elections (COMELEC) within
one hundred twenty (120) days from the date
of effectivity of the law or ordinance effecting
LGU Creation criteria such action, unless said law or ordinance fixes
Section 7. Creation and Conversion. - As a another date.
general rule, the creation of a local
government unit or its conversion from one
level to another level shall be based on INCOME
verifiable indicators of viability and projected
LGU Income
capacity to provide services, to wit:
requirement
(a) Income. - It must be sufficient, based on (annual income)
acceptable standards, to provide for all Province or city At least 20 million*
essential government facilities and services Municipality At least 200 million
and special functions commensurate with the converted into a city
Municipality 2.5 million
size of its population, as expected of the local
Barangay No specific income
government unit concerned;
requirement
(b) Population. - It shall be determined as the *for the immediately preceding 2 consecutive years
based on 1991 constant prices
total number of inhabitants within the

6|Page
POPULATION the sangguniang panlungsod for the city; the
sangguniang bayan for the municipality; and
LGU Population
the sangguniang barangay for the barangay.
requirement
Province or city Not less than Section 49. Presiding Officer. -
250,000 inhabitants
Municipality Not less than (a) The vice-governor shall be the presiding
150,000 officer of the sangguniang panlalawigan; the
Barangay At least 2,000 city vice-mayor, of the sangguniang
But if within cities panlungsod; the municipal vice-mayor, of the
and municipalities in sangguniang bayan; and the punong
Metro Manila or barangay, of the sangguniang barangay. The
HUCs – at least presiding officer shall vote only to break a tie.
5,000 inhabitants
(b) In the event of the inability of the regular
presiding officer to preside at a sanggunian
LAND AREA session, the members present and
LGU Land area constituting a quorum shall elect from among
requirement themselves a temporary presiding officer. He
(square kilometers) shall certify within ten (10) days from the
Province 2,000 passage of ordinances enacted and
City 100 resolutions adopted by the sanggunian in the
Municipality 50 session over which he temporarily presided.
Barangay Must be contiguous;
identified by metes
and bounds or by Powers of the Local Chief Executives (LCEs)
more or less
permanent natural - Execute laws and ordinances
boundaries - Appointing authority
- Supervisory authority
- Issue Executive orders
Branches/Composition
- Police power
Executive Branch – composed of Provincial - Visitorial power
Governor, City and Municipal mayors, and - Issuance of permit
Punong Barangays called local chief - Mayors can solemnize marriage
executives (LCEs), they exercise executive
powers
Powers of Sanggunian
Legislative Branch – serves as lawmaking and
consultative body: Sangguniang Panlalawigan - Approve ordinance and pass
(Province), Sangguniang Panglungsod (City), resolutions
Sangguniang Bayan (Municipality); and - Generate and maximize the use of
Sannguniang Pangbarangay (Section 48, LGC) resources and revenues
- Enact ordinances, levying taxes,
charges and fees
Sanggunian composition - Grant tax exemption

Section 48. Local Legislative Power. - Local

legislative power shall be exercised by the Officials common to all Barangays
sangguniang panlalawigan for the province;
- Punong Barangay

7|Page
 - 7 Sanggunian Members (c) Ordinances enacted by the sangguniang
- Sangguniang Kabataan Chairman barangay shall, upon approval by the majority
- Barangay Secretary of all its members, be signed by the punong
- Barangay Treasurer barangay.

Elective Officials common to all Provinces

Veto power of LCEs
- Governor
Section 55. Veto Power of the Local Chief
- Vice Governor
Executive. -
- Sangguniang Panlalawigan
o Presiding Officer (a) The local chief executive may veto any
o Regular member ordinance of the sanggunian panlalawigan,
o President of Liga ng mga sangguniang panlungsod, or sanggunian
Barangay bayan on the ground that it is ultra vires or
o President of SK Federation prejudicial to the public welfare, stating his
o President of Federation of reasons therefor in writing.
Sanggunian Members
(b) The local chief executive, except the
o 3 sectoral representatives
punong barangay, shall have the power to
veto any particular item or items of an
appropriations ordinance, an ordinance or
Approval of ordinances (section 54) resolution adopting a local development plan
Section 54. Approval of Ordinances. - and public investment program, or an
ordinance directing the payment of money or
(a) Every ordinance enacted by the creating liability. In such a case, the veto shall
sangguniang panlalawigan, sangguniang not affect the item or items which are not
panlungsod, or sangguniang bayan shall be objected to. The vetoed item or items shall
presented to the provincial governor or city or not take effect unless the sanggunian
municipal mayor, as the case may be. If the overrides the veto in the manner herein
local chief executive concerned approves the provided; otherwise, the item or items in the
same, he shall affix his signature on each and appropriations ordinance of the previous year
every page thereof; otherwise, he shall veto it corresponding to those vetoed, if any, shall be
and return the same with his objections to the deemed reenacted.
sanggunian, which may proceed to reconsider
the same. The sanggunian concerned may (c) The local chief executive may veto an
override the veto of the local chief executive ordinance or resolution only once. The
by two-thirds (2/3) vote of all its members, sanggunian may override the veto of the local
thereby making the ordinance or resolution chief executive concerned by two-thirds (2/3)
effective for all legal intents and purposes. vote of all its members, thereby making the
ordinance effective even without the approval
(b) The veto shall be communicated by the of the local chief executive concerned.
local chief executive concerned to the
sanggunian within fifteen (15) days in the case
of a province, and ten (10) days in the case of Issues and concerns in decentralization
a city or a municipality; otherwise, the
ordinance shall be deemed approved as if he - Devolution simply increase the
had signed it. powers of local bosses and warlords
further entrenching them

8|Page
 - “absorptive capacities of LGUs” – are - Mandatory positions must be filled
they adequately prepared to assume and cannot be contractualized
the increased responsibilities and
exercise the powers devolved to
them? Guidelines on Organizational Structure
- Resistance of certain devolved
agencies to devolution and - LGUs may create an optional position
subsequent moves to recentralize the provided all mandatory positions
health sector were created in accordance with
- Unequal distribution of financial budgetary limitations
resources due to not-so studied - Administrative staff, Information
formula with cities gaining a windfull Officer and Legal Officers are co-
while municipalities and provinces are terminus with the LCE
not able to afford the cost of - Heads of departments and offices
devolution may be appointed by LCE with
- “lags” in the release of IRA majority concurrence of all members
- Lack of guidelines from the NGs in of Sanggunian
operationalizing devolution - Office
- Continuing need to define and clarify o Section - at least 3 personnel
intergovernmental relations o Division – at least 2 sections
- Hesitance among NGOs and POs to o Department – at least 4
participate due to distrust divisions
- General lack of information about the
LGC among various stakeholders
- Do NGOs have capabilities to assume Human Resource Management
increased responsibilities in local
Section 77. Responsibility for Human
governance?
Resources and Development. - The chief
- Need to monitor “people
executive of every local government unit shall
empowerment provisions” harmonize
be responsible for human resources and
GO-NGO relations and clarify and
development in his unit and shall take all
delineate intra-NGO relation
personnel actions in accordance with the
- 40-60 share in the national revenues
Constitutional provisions on civil service,
equivalent only to 14% of national
pertinent laws, and rules and regulations
budget
thereon, including such policies, guidelines
- 45-55 personnel services limitation
and standards as the Civil Service Commission
may establish: Provided, That the local chief
executive may employ emergency or casual
Section 76. Organizational Structure and employees or laborers paid on a daily wage or
Staffing Pattern. - Every local government unit piecework basis and hired through job orders
shall design and implement its own for local projects authorized by the
organizational structure and staffing pattern sanggunian concerned, without need of
taking into consideration its service approval or attestation by the Civil Service
requirements and financial capability, subject Commission: Provided, further, That the
to the minimum standards and guidelines period of employment of emergency or casual
prescribed by the Civil Service Commission. laborers as provided in this Section shall not
Appointive Officials exceed six (6) months.

9|Page
The Joint Commission on Local Government Compensation
Personnel Administration organized pursuant
Section 81. Compensation of Local Officials
to Presidential Decree Numbered Eleven
and Employees. - The compensation of local
Hundred thirty-six (P.D. No. 1136) is hereby
officials and personnel shall be determined by
abolished and its personnel, records,
the sanggunian concerned: Provided, That the
equipment and other assets transferred to the
increase in compensation of elective local
appropriate office in the Civil Service
officials shall take effect only after the terms
Commission.
of office of those approving such increase
shall have expired: Provided, further, That the
increase in compensation of the appointive
Identified Appointing Authorities
officials and employees shall take effect as
- Local Chief Executives provided in the ordinance authorizing such
- Vice Governor/Mayor increase: Provided, however, That said
- Finance Secretary increases shall not exceed the limitations on
budgetary allocations for personal services
provided under Title Five, Book II of this Code:
Limitation on Appointment Provided, finally, That such compensation may
Section 79. Limitation to Appointments. - No be based upon the pertinent provisions of
person shall be appointed in the career Republic Act Numbered Sixty-seven fifty-eight
service of the local government if he is related (R.A. No 6758), otherwise known as the
within the fourth civil degree of consanguinity "Compensation and Position Classification Act
or affinity to the appointing or recommending of 1989".
authority. The punong barangay, the sangguniang
barangay member, the sangguniang kabataan
chairman, the barangay treasurer, and the
Public Notice of Vacancy; personnel selection barangay secretary shall be entitled to such
board compensation, allowances, emoluments, and
Section 80. Public Notice of Vacancy; such other privileges as provided under Title
Personnel Selection Board. - One Book III of this Code.

(a) Whenever a local executive decides to fill a Elective local officials shall be entitled to the
vacant career position, there shall be posted same leave privileges as those enjoyed by
notices of the vacancy in at least three (3) appointive local officials, including the
conspicuous public places in the local cumulation and commutation thereof.
government unit concerned for a period of
not less than fifteen (15) days.
Resignation of elective officials
(b) There shall be established in every
province, city or municipality a personnel Section 82. Resignation of Elective Local
selection board to assist the local chief Officials. -
executive in the judicious and objective (a) Resignations by elective local officials shall
selection or personnel for employment as well be deemed effective only upon acceptance by
as for promotion, and in the formulation of the following authorities:
such policies as would contribute to employee
welfare. (1) The President, in the case of
governors, vice-governors, and mayors and

10 | P a g e
vice-mayors of highly urbanized cities and Practice of Profession
independent component cities;
Section 90. Practice of Profession. -
(2) The governor, in the case of
(a) All governors, city and municipal mayors
municipal mayors, municipal vice-mayors, city
are prohibited from practicing their profession
mayors and city vice-mayors of component
or engaging in any occupation other than the
cities;
exercise of their functions as local chief
(3) The sanggunian concerned, in the executives.
case of sanggunian members; and
(b) Sanggunian members may practice their
(4) The city or municipal mayor, in the professions, engage in any occupation, or
case of barangay officials. teach in schools except during session hours:
Provided, That sanggunian members who are
(b) Copies of the resignation letters of elective
also members of the Bar shall not:
local officials, together with the action taken
by the aforesaid authorities, shall be furnished (1) Appear as counsel before any court in any
the Department of the Interior and Local civil case wherein a local government unit or
Government. any office, agency, or instrumentality of the
government is the adverse party;
(c) The resignation shall be deemed accepted
if not acted upon by the authority concerned (2) Appear as counsel in any criminal case
within fifteen (15) days from receipt thereof. wherein an officer or employee of the
national or local government is accused of an
(d) Irrevocable resignations by sanggunian
offense committed in relation to his office.
members shall be deemed accepted upon
presentation before an open session of the (3) Collect any fee for their appearance in
sanggunian concerned and duly entered in its administrative proceedings involving the local
records: Provided, however, That this government unit of which he is an official; and
subsection does not apply to sanggunian
(4) Use property and personnel of the
members who are subject to recall elections
government except when the sanggunian
or to cases where existing laws prescribed the
member concerned is defending the interest
manner of acting upon such resignations.
of the government.

(c) Doctors of medicine may practice their

profession even during official hours of work
only on occasions of emergency: Provided,
That the officials concerned do not derive
monetary compensation therefrom.

11 | P a g e
Prohibitions any election, initiative, referendum, plebiscite,
or recall, except to vote, nor shall he use his
Section 89. Prohibited Business and
official authority or influence to cause the
Pecuniary Interest. -
performance of any political activity by any
(a) It shall be unlawful for any local person or body. He may, however, express his
government official or employee, directly or views on current issues, or mention the
indirectly, to: names of certain candidates for public office
whom he supports. Elective local officials may
(1) Engage in any business transaction with take part in partisan political and electoral
the local government unit in which he is an activities, but it shall be unlawful for them to
official or employee or over which he has the solicit contributions from their subordinates
power of supervision, or with any of its or subject these subordinates to any of the
authorized boards, officials, agents, or prohibited acts under the Omnibus Election
attorneys, whereby money is to be paid, or Code.
property or any other thing of value is to be
transferred, directly or indirectly, out of the
resources of the local government unit to
Section 94. Appointment of Elective and
such person or firm;
Appointive Local Officials; Candidates Who
(2) Hold such interests in any cockpit or other Lost in an Election. - (a) No elective or
games licensed by a local government unit; appointive local official shall be eligible for
appointment or designation in any capacity to
(3) Purchase any real estate or other property any public office or position during his tenure.
forfeited in favor of such local government
unit for unpaid taxes or assessment, or by Unless otherwise allowed by law or by the
virtue of a legal process at the instance of the primary functions of his position, no elective
said local government unit; or appointive local official shall hold any other
office or employment in the government or
(4) Be a surety for any person contracting or any subdivision, agency or instrumentality
doing business with the local government unit thereof, including government-owned or
for which a surety is required; and controlled corporations or their subsidiaries.
(5) Possess or use any public property of the
local government unit for private purposes.
Section 95. Additional or Double
(b) All other prohibitions governing the Compensation. - No elective or appointive
conduct of national public officers relating to local official or employee shall receive
prohibited business and pecuniary interest so additional, double, or indirect compensation,
provided for under Republic Act Numbered unless specifically authorized by law, nor
Sixty-seven thirteen (R.A. No. 6713) otherwise accept without the consent of Congress, any
known as the "Code of Conduct and Ethical present, emoluments, office, or title of any
Standards for Public Officials and Employees" kind from any foreign government. Pensions
and other laws shall also be applicable to local or gratuities shall not be considered as
government officials and employees. additional, double, or indirect compensation.

Section 93. Partisan Political Activity. - No

local official or employee in the career civil
service shall engage directly or indirectly in
any partisan political activity or take part in

12 | P a g e
 the name of the officer whom he shall
designate to act for and in his behalf during
his absence.

Annual Report

Section 97. Annual Report. - On or before

March 31 of each year, every local chief
executive shall submit an annual report to the
sanggunian concerned on the socio-economic,
Permission to Leave Station political and peace and order conditions, and
other matters concerning the local
Section 96. Permission to Leave Station. - government unit, which shall cover the
(a) Provincial, city, municipal, and barangay immediately preceding calendar year. A copy
appointive officials going on official travel of the report shall be forwarded to the
shall apply and secure written permission Department of the Interior and Local
from their respective local chief executives Government. Component cities and
before departure. The application shall specify municipalities shall likewise provide the
the reasons for such travel, and the sangguniang panlalawigan copies of their
permission shall be given or withheld based respective annual reports.
on considerations of public interest, financial
capability of the local government unit
concerned and urgency of the travel. LOCAL FISCAL ADMINISTRATION AND
TAXATION
Should the local chief executive concerned fall
to act upon such application within four (4) Section 305. Fundamental Principles. - The
working days from receipt thereof, it shall be financial affairs, transactions, and operations
deemed approved. of local government units shall be governed
by the following fundamental principles:
(b) Mayors of component cities and
municipalities shall secure the permission of (a) No money shall be paid out of the local
the governor concerned for any travel outside treasury except in pursuance of an
the province. appropriations ordinance or law;

(c) Local government officials traveling abroad (b) Local government funds and monies shall
shall notify their respective sanggunian: be spent solely for public purposes;
Provided, That when the period of travel (c) Local revenue is generated only from
extends to more than three (3) months, sources expressly authorized by law or
during periods of emergency or crisis or when ordinance, and collection thereof shall at all
the travel involves the use of public funds, times be acknowledged properly;
permission from the Office of the President
shall be secured. (d) All monies officially received by a local
government officer in any capacity or on any
(d) Field officers of national agencies or offices occasion shall be accounted for as local funds,
assigned in provinces, cities, and unless otherwise provided by law;
municipalities shall not leave their official
stations without giving prior written notice to (e) Trust funds in the local treasury shall not
the local chief executive concerned. Such be paid out except in fulfillment of the
notice shall state the duration of travel and

13 | P a g e
purpose for which the trust was created or Sources
the funds received; Local
Taxes
(f) Every officer of the local government unit
whose duties permit or require the possession
Section 134. Scope of Taxing Powers. - Except
or custody of local funds shall be properly
as otherwise provided in this Code, the
bonded, and such officer shall be accountable
province may levy only the taxes, fees, and
and responsible for said funds and for the
charges as provided in this Article.
safekeeping thereof in conformity with the
provisions of law;

(g) Local governments shall formulate sound

financial plans, and local budgets shall be
Real Property Tax
based on functions, activities, and projects, in
terms of expected results; Section 197. Scope. - This Title shall govern
the administration, appraisal, assessment,
(h) Local budget plans and goals shall, as far as
levy and collection of real property tax.
practicable, be harmonized with national
development plans, goals, and strategies in
order to optimize the utilization of resources
and to avoid duplication in the use of fiscal External
and physical resources; IRA
Section 284. Allotment of Internal Revenue
(i) Local budgets shall operationalize approved Taxes. - Local government units shall have a
local development plans; share in the national internal revenue taxes
based on the collection of the third fiscal year
(j) Local government units shall ensure that
preceding the current fiscal year as follows:
their respective budgets incorporate the
requirements of their component units and (a) On the first year of the effectivity of this
provide for equitable allocation of resources Code, thirty percent (30%);
among these component units;
(b) On the second year, thirty-five percent
(k) National planning shall be based on local (35%); and
planning to ensure that the needs and
aspirations of the people as articulated by the (c) On the third year and thereafter, forty
local government units in their respective percent (40%).
local development plans are considered in the Provided, That in the event that the national
formulation of budgets of national line government incurs an unmanageable public
agencies or offices; sector deficit, the President of the Philippines
(l) Fiscal responsibility shall be shared by all is hereby authorized, upon the
those exercising authority over the financial recommendation of Secretary of Finance,
affairs, transactions, and operations of the Secretary of Interior and Local Government
local government units; and and Secretary of Budget and Management,
and subject to consultation with the presiding
(m) The local government unit shall endeavor officers of both Houses of Congress and the
to have a balanced budget in each fiscal year presidents of the "liga", to make the
of operation. necessary adjustments in the internal revenue
allotment of local government units but in no
case shall the allotment be less than thirty
Resource generation and allocation percent (30%) of the collection of national

14 | P a g e
internal revenue taxes of the third fiscal year Provided, further, That the share of each
preceding the current fiscal year: Provided, barangay with a population of not less than
further, That in the first year of the effectivity one hundred (100) inhabitants shall not be
of this Code, the local government units shall, less than Eighty thousand (P80,000.00) per
in addition to the thirty percent (30%) internal annum chargeable against the twenty percent
revenue allotment which shall include the (20%) share of the barangay from the internal
cost of devolved functions for essential public revenue allotment, and the balance to be
services, be entitled to receive the amount allocated on the basis of the following
equivalent to the cost of devolved personal formula:
services.
(a) On the first year of the effectivity of this
Code:

National Wealth (1) Population - Forty percent (40%); and

Section 289. Share in the Proceeds from the (2) Equal sharing - Sixty percent (60%)
Development and Utilization of the National
(b) On the second year:
Wealth. - Local government units shall have
an equitable share in the proceeds derived (1) Population - Fifty percent (50%); and
from the utilization and development of the
national wealth within their respective areas, (2) Equal sharing - Fifty percent (50%)
including sharing the same with the (c) On the third year and thereafter:
inhabitants by way of direct benefits.
(1) Population - Sixty percent (60%); and

(2) Equal sharing - Forty percent (40%).

Allocation to Local Government
Provided, finally, That the financial
Section 285. Allocation to Local Government requirements of barangays created by local
Units. - The share of local government units in government units after the effectivity of this
the internal revenue allotment shall be Code shall be the responsibility of the local
collected in the following manner: government unit concerned.
(a) Provinces - Twenty-three percent (23%);

(b) Cities - Twenty-three percent (23%); Section 286. Automatic Release of Shares. -
(c) Municipalities - Thirty-four percent (34%); (a) The share of each local government unit
and shall be released, without need of any further
(d) Barangays - Twenty percent (20%) action, directly to the provincial, city,
municipal or barangay treasurer, as the case
Provided, however, That the share of each may be, on a quarterly basis within five (5)
province, city, and municipality shall be days after the end of each quarter, and which
determined on the basis of the following shall not be subject to any lien or holdback
formula: that may be imposed by the national
government for whatever purpose.
(a) Population - Fifty percent (50%);
(b) Nothing in this Chapter shall be
(b) Land Area - Twenty-five percent (25%);
understood to diminish the share of local
and
government units under existing laws.
(c) Equal sharing - Twenty-five percent (25%)

15 | P a g e
Section 290. Amount of Share of Local (3) Barangay - Thirty-five percent (35%)
Government Units. - Local government units
Provided, however, That where the natural
shall, in addition to the internal revenue
resources are located in two (2) or more
allotment, have a share of forty percent (40%)
provinces, or in two (2) or more component
of the gross collection derived by the national
cities or municipalities or in two (2) or more
government from the preceding fiscal year
barangays, their respective shares shall be
from mining taxes, royalties, forestry and
computed on the basis of:
fishery charges, and such other taxes, fees, or
charges, including related surcharges, (1) Population - Seventy percent (70%); and
interests, or fines, and from its share in any
co-production, joint venture or production (2) Land area - Thirty percent (30%)
sharing agreement in the utilization and (b) Where the natural resources are located in
development of the national wealth within a highly urbanized or independent component
their territorial jurisdiction. city:
Section 291. Share of the Local Governments (1) City - Sixty-five percent (65%); and
from any Government Agency or Owned or
Controlled Corporation. - Local government (2) Barangay - Thirty-five percent (35%)
units shall have a share based on the Provided, however, That where the natural
preceding fiscal year from the proceeds resources are located in such two (2) or more
derived by any government agency or cities, the allocation of shares shall be based
government-owned or controlled corporation on the formula on population and land area as
engaged in the utilization and development of specified in paragraph (a) of this Section.
the national wealth based on the following
formula whichever will produce a higher share
for the local government unit:
Budgetary Limitation
(a) One percent (1%) of the gross sales or
Section 325. General Limitations. - The use of
receipts of the preceding calendar year; or
the provincial, city, and municipal funds shall
(b) Forty percent (40%) of the mining taxes, be subject to the following limitations:
royalties, forestry and fishery charges and
(a) The total appropriations, whether annual
such other taxes, fees or charges, including
or supplemental, for personal services of a
related surcharges, interests, or fines the
local government unit for one (1) fiscal year
government agency or government owned or
shall not exceed forty-five percent (45%) in
controlled corporation would have paid if it
the case of first to third class provinces, cities
were not otherwise exempt.
and municipalities, and fifty-five percent
(55%) in the case of fourth class or lower, of
the total annual income from regular sources
Section 292. Allocation of Shares. - The share realized in the next preceding fiscal year. The
in the preceding Section shall be distributed in appropriations for salaries, wages,
the following manner: representation and transportation allowances
(a) Where the natural resources are located in of officials and employees of the public
the province: utilities and economic enterprises owned,
operated, and maintained by the local
(1) Province - Twenty percent (20%); government unit concerned shall not be
(2) Component City/Municipality - Forty-five included in the annual budget or in the
percent (45%); and computation of the maximum amount for
personal services. The appropriations for the

16 | P a g e
personal services of such economic purpose except as authorized under this
enterprises shall be charged to their Section.
respective budgets;

(b) No official or employee shall be entitled to

Review of Appropriate Ordinances
a salary rate higher than the maximum fixed
for his position or other positions of Section 326. Review of Appropriation
equivalent rank by applicable laws or rules Ordinances of Provinces, Highly-Urbanized
and regulations issued thereunder; Cities, Independent Component Cities, and
Municipalities within the Metropolitan
(c) No local fund shall be appropriated to
Manila Area. - The Department of Budget and
increase or adjust salaries or wages of officials
Management shall review ordinances
and employees of the national government,
authorizing the annual or supplemental
except as may be expressly authorized by law;
appropriations of provinces, highly-urbanized
(d) In cases of abolition of positions and the cities, independent component cities, and
creation of new ones resulting from the municipalities within the Metropolitan Manila
abolition of existing positions in the career Area in accordance with the immediately
service, such abolition or creation shall be succeeding Section.
made in accordance with pertinent provisions
of this code and the civil service law, rules and
regulations; Section 327. Review of Appropriation
Ordinances of Component Cities and
(e) Positions in the official plantilla for career
Municipalities. - The sangguniang
positions which are occupied by incumbents
panlalawigan shall review the ordinance
holding permanent appointments shall be
authorizing annual or supplemental
covered by adequate appropriations;
appropriations of component cities and
(f) No changes in designation or nomenclature municipalities in the same manner and within
of positions resulting in a promotion or the same period prescribed for the review of
demotion in rank or increase or decrease in other ordinances.
compensation shall be allowed, except when
If within ninety (90) days from receipt of
the position is actually vacant, and the filling
copies of such ordinance, the sangguniang
of such positions shall be strictly made in
panlalawigan takes no action thereon, the
accordance with the civil service law, rules
same shall be deemed to have been reviewed
and regulations;
in accordance with law and shall continue to
(g) The creation of new positions and salary be in full force and effect. If within the same
increases or adjustments shall in no case be period, the sangguniang panlalawigan shall
made retroactive; have ascertained that the ordinance
authorizing annual or supplemental
(h) The annual appropriations for
appropriations has not complied with the
discretionary purposes of the local chief
requirements set forth in this Title, the
executive shall not exceed two percent (2%)
sangguniang panlalawigan shall, within the
of the actual receipts derived from basic real
ninety-day period hereinabove prescribed
property tax in the next preceding calendar
declare such ordinance inoperative in its
year. Discretionary funds shall be disbursed
entirety or in part. Items of appropriation
only for public purposes to be supported by
contrary to limitations prescribed in this Title
appropriate vouchers and subject to such
or in excess of the amounts prescribed herein
guidelines as may be prescribed by law. No
shall be disallowed or reduced accordingly.
amount shall be appropriated for the same

17 | P a g e
The sangguniang panlalawigan shall within the assistance shall be extended at no extra cost
same period advise the sangguniang to the local government unit concerned.
panlungsod or sangguniang bayan concerned
(d) National agencies and offices including
through the local chief executive of any action
government-owned or controlled
on the ordinance under review. Upon receipt
corporations with field units or branches in a
of such advice, the city or municipal treasurer
province, city, or municipality shall furnish the
concerned shall not make further
local chief executive concerned, for his
disbursements of funds from any of the items
information and guidance, monthly reports
of appropriation declared inoperative,
including duly certified budgetary allocations
disallowed or reduced.
and expenditures.

Relations with PNP

Section 28. Powers of Local Chief Executives

Intergovernmental relations over the Units of the Philippine National
Police. - The extent of operational supervision
Section 25. National Supervision over Local
and control of local chief executives over the
Government Units. -
police force, fire protection unit, and jail
(a) Consistent with the basic policy on local management personnel assigned in their
autonomy, the President shall exercise respective jurisdictions shall be governed by
general supervision over local government the provisions of Republic Act Numbered
units to ensure that their acts are within the Sixty-nine hundred seventy-five (R.A. No.
scope of their prescribed powers and 6975), otherwise known as "The Department
functions. of the Interior and Local Government Act of
1990", and the rules and regulations issued
The President shall exercise supervisory pursuant thereto.
authority directly over provinces, highly
urbanized cities, and independent component Section 29. Provincial Relations with
cities; through the province with respect to Component Cities and Municipalities. - The
component cities and municipalities; and province, through the governor, shall ensure
through the city and municipality with respect that every component city and municipality
to barangays. within its territorial jurisdiction acts within the
scope of its prescribed powers and functions.
(b) National agencies and offices with project Highly urbanized cities and independent
implementation functions shall coordinate component cities shall be independent of the
with one another and with the local province.
government units concerned in the discharge
of these functions. They shall ensure the
participation of local government units both
Section 35. Linkages with People's and Non-
in the planning and implementation of said
governmental Organizations. - Local
national projects.
government units may enter into joint
(c) The President may, upon request of the ventures and such other cooperative
local government unit concerned, direct the arrangements with people's and non-
appropriate national agency to provide governmental organizations to engage in the
financial, technical, or other forms of delivery of certain basic services, capability-
assistance to the local government unit. Such building and livelihood projects, and to
develop local enterprises designed to improve

18 | P a g e
productivity and income, diversity agriculture, *sections 232, 235, 135, 236, 235 (a), 257, 258,
spur rural industrialization, promote 260, 20, 557, 558, 138
ecological balance, and enhance the economic **sections 143, 156, 137, 136, 139, 140, 141, 149,
and social well-being of the people. 153

Section 36. Assistance to People's and Non- System of Budget Administration

governmental Organizations. - A local
government unit may, through its local chief Local government budgeting
executive and with the concurrence of the 1. Allocation
sanggunian concerned, provide assistance, o Economic efficiency
financial or otherwise, to such people's and o Technical efficiency
non-governmental organizations for o Net social benefits/costs
economic, socially-oriented, environmental,
2. Distribution
or cultural projects to be implemented within
3. Stabilization/Growth
its territorial jurisdiction.

Taxation – sources of income of local

governments

If it’s not in the IRA, you cannot collect it bilygextiprhzvw

countaBdA
In terms of spending, there (1) should have
basis on law; and, (2) with public purpose

Local Revenue generation

Section 129. Power to Create Sources of

Revenue. - Each local government unit shall
exercise its power to create its own sources of
revenue and to levy taxes, fees, and charges
subject to the provisions herein, consistent
with the basic policy of local autonomy. Such
taxes, fees, and charges shall accrue
exclusively to the local government units.

Five distinct classes of potential LGU

revenues

1. Land-based tool* Budget preparation

2. Community activity-based tools**
3. Infrastructure based tools (sections - Done by the local chief executive and
250, 155) the local finance committee
4. Debt-based tools (sections 297-302) Section 317. Submission of budget
5. Revenue-sharing tools (sections 290, proposals by Heads of Departments or
291 and congressional funds) Offices

19 | P a g e
 - Each head of department or office 1. Barangay Aid – aid to barangays by the
shall submit a budget proposal for his province, city or municipality shall not be less
department or office to the local chief than P1,000 per barangay (324 c)
executive on or before the 15th of July
2. Calamity Fund – 5% of the annual
each year;
appropriations for unforeseen expenditures
- Provided, that the budget proposal
shall be set aside in the local budget for
for each department or office shall be
calamities as declared by the sanggunian
categorized under either proposal of
concerned (324 d)
economic, social or general services;
- Provided, further, that each service 3. Development Plan/debt servicing – debt
shall be covered by the budget of at servicing in the local budget is fixed at not
least 1 department or office of the more than 20% of the regular income of the
LGU concerned. local government unit (324 b)
xxx
4. Discretionary Fund (sec. 325 h) – the
Two parts of executive budget: annual appropriations for discretionary
Section 317 (b) purposes of the LCE shall not exceed 2% of
Budget proposals of departments or the actual receipts derived from basic real
offices shall be divided into 2 primary property tax in the next preceding calendar
categories, namely: year
(1) the current operating Budget Authorization
expenditures; and,
(2) the capital outlay - Legislative discussion of proposed
budget is done by the Sanggunian
xxx between October 16 and November
17
- Enact annual budget via appropriation
Preparation of the Budget by the Local ordinance on or before the current
Executive fiscal year

Section 318, par. 2.

- The local chief executive shall submit Budget Review

the said executive budget to the Section 326. Review of appropriation
sanggunian concerned not later than ordinances of provinces, HUCs, ICCs and
the 16th of October of the current Municipalities within Metro Manila Areas.
fiscal year.
- Failure to submit such budget on the - DBM Power of review. The DBM has
date prescribed herein shall subject the power to review ordinances
the LCE to such criminal and authorizing annual or supplemental
administrative penalties as provided appropriations of provinces, cities and
for under this Code and other municipalities
applicable laws Section 327. Review of appropriation
ordinances of component cities and
municipalities.
Budgetary requirements (section 324)
- The Sangguniang Panlalawigan shall
The budgets of LGUs for any fiscal year shall review the ordinance authorizing the
comply with the following requirements: annual or supplemental

20 | P a g e
 appropriations of component cities
and municipalities in the same - No transfer of appropriation from
manner and within the same period one item to another (336) [technical
prescribed for the review of other malversation; juggling funds not
ordinances allowed] –
- If within 90 days from receipt, the
Sanngunian takes no action, the same - Funds shall be available exclusively for
shall be deemed to have been the specific purpose for which they
reviewed in accordance with law and have been appropriated
shall continue to be in full force and - No ordinance shall be passed
effect. authorizing any transfer of
- Sangguniang Panglungsod or Bayan appropriations from one item to
power of review – sanggunians of another
cities and municipalities have the  juggling of funds whereby monies
power to review the barangay appropriated for specific purposes are
budgets. transferred or utilized for other
o The review must be purposed is prohibited
completed within 60 days
from receipt of the ordinance
o If no action was taken within Budget Accountability (COA)
the said period, the ordinance
is deemed approved (328 b)  see Section 340

Budget execution

- Actual release and disbursement of

funds

Limitations in disbursements

- Overdrafts discouraged (337) –

disbursements may be made from
amounts in the possession of the local
treasury but in no case shall such
exceed 50% of the uncollected
estimated revenue

- Cash advances (339) – no cash

advance shall be granted to any local
official or employee, elective or
appointive, unless made in
accordance with the rules and
regulations as the COA may prescribe

- No advance payments (338) – no

money shall be paid on account of any
contract under which no services have
been rendered or goods delivered

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