Local Government Code of 1991 and the SK Reform Act of 2015

Section 284

Local government units shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year as follows: (as deleted by Mandanas v Ochoa, Jr., GR No 199802, 03 Jul 2018) (a) On the first year of the effectivity of this Code, thirty percent (30%); (b) On the second year, thirty-five percent (35%); and (c) On the third year and thereafter, forty percent (40%). Provided, That in the event that the national government incurs an unmanageable public sector deficit, the President of the Philippines is hereby authorized, upon the recommendation of Secretary of Finance, Secretary of Interior and Local Government and Secretary of Budget and Management, and subject to consultation with the presiding officers of both Houses of Congress and the presidents of the "liga", to make the necessary adjustments in the internal revenue allotment of local government units but in no case shall the allotment be less than thirty percent (30%) of the collection of national internal revenue taxes of the third fiscal year preceding the current fiscal year: Provided, further, That in the first year of the effectivity of this Code, the local government units shall, in addition to the thirty percent (30%) internal revenue allotment which shall include the cost of devolved functions for essential public services, be entitled to receive the amount equivalent to the cost of devolved personal services.

Section 285

The share of local government units in the internal revenue allotment shall be collected in the following manner: (a) Provinces - Twenty-three percent (23%); (b) Cities - Twenty-three percent (23%); (c) Municipalities - Thirty-four percent (34%); and (d) Barangays - Twenty percent (20%) Provided, however, That the share of each province, city, and municipality shall be determined on the basis of the following formula: (a) Population - Fifty percent (50%); (b) Land Area - Twenty-five percent (25%); and (c) Equal sharing - Twenty-five percent (25%) Provided, further, That the share of each barangay with a population of not less than one hundred (100) inhabitants shall not be less than Eighty thousand (P80,000.00) per annum chargeable against the twenty percent (20%) share of the barangay from the internal revenue allotment, and the balance to be allocated on the basis of the following formula: (a) On the first year of the effectivity of this Code: (1) Population - Forty percent (40%); and (2) Equal sharing - Sixty percent (60%) (b) On the second year: (1) Population - Fifty percent (50%); and (2) Equal sharing - Fifty percent (50%) (c) On the third year and thereafter: (1) Population - Sixty percent (60%); and (2) Equal sharing - Forty percent (40%). Provided, finally, That the financial requirements of barangays created by local government units after the effectivity of this Code shall be the responsibility of the local government unit concerned.

Section 286

Automatic Release of Shares. (a) The share of each local government unit shall be released, without need of any further action, directly to the provincial, city, municipal or barangay treasurer, as the case may be, on a quarterly basis within five (5) days after the end of each quarter, and which shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose. (b) Nothing in this Chapter shall be understood to diminish the share of local government units under existing laws.

Section 287

Each local government unit shall appropriate in its annual budget no less than twenty percent (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.

Section 288

The Secretary of Finance, in consultation with the Secretary of Budget and Management, shall promulgate the necessary rules and regulations for a simplified disbursement scheme designed for the speedy and effective enforcement of the provisions of this Chapter.