WHEREAS, under the National Internal Revenue Code and other
existing laws, internal revenue allotments are apportioned among the
local governments on the basis of various formulas for distribution;
WHEREAS, the present system of internal revenue allotments
has resulted in a lopsided distribution of funds among the local
government units such that a few provinces and cities receive greater
shares while the majority receive less; and
WHEREAS, for purposes of administrative simplicity and
efficiency and in order to establish a more equitable system of
distribution of allotments and introduce the developmental concept in
the allocation of funds to local governments, it has become imperative
and compelling to revise the present internal revenue allotment system;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081, dated September 21, 1972, and General
Order No. 1, dated September 22, 1972, as amended, in order to
transform the tax system into an effective tool for the implementation
of the desired changes such as income redistribution and reforms in our
new society, do hereby order and decree that the present system of
national internal revenue allotments to local governments be revised as
herein provided:
Twenty per centum (20%) of the collections from
national internal revenue taxes not otherwise accruing to special funds
and special accounts in the general fund shall accrue to local
governments to be computed on the basis of the collections of the third
fiscal year preceding the current fiscal year.
This allotment shall be distributed as follows:
Thirty per centum (30%) to provinces
Forty-five per centum (45%) to municipalities
Twenty-five per centum (25%) to cities
The share of each local government unit shall be determined on
the basis of the following formula:
Seventy per centum (70%) — Population
Twenty per centum (20%) — Land Area
Ten per centum (10%) — Equal Sharing
For the first three fiscal years of implementation of this
Decree (FY's 1974, 1975 and 1976) the annual allotment of any local
government shall not increase by more than fifteen per centum
(15%) nor decrease by more than fifty per centum (50%) of its
actual allotment during the fiscal year 1970-71. Thereafter, the shares
of each local government shall be determined solely on the basis of
Sections 1, 2 and 3 hereof.
There is hereby created a Barrio Development Fund to be
constituted of the ten percent shares of the barrios in real estate
tax collections as provided under Republic Act No. 3590 (the Revised
Barrio Charter) and annual contributions from each province, city and
municipality in an amount not exceeding P500 per barrio, which fund
shall be spent solely for community development projects that would meet
the requirements set forth by the Secretary of Local Government and
Community Development. The Provincial Treasurer shall be the custodian
of this fund and he shall maintain in his books a special account
therefor. Releases of this fund shall be made through the Municipal
Treasurer concerned who shall be responsible for the proper disbursement
and accounting of the same.
Each province, city and municipality shall appropriate in
its annual general fund budget no less than twenty per centum
(20%) of its annual allotment for development projects.
The development plans of the local units shall be subject to the
approval of the Secretary of Local Government and Community Development,
who shall issue the necessary guidelines for the purpose.
In addition, five per centum (5%) of the
collections from national internal revenue taxes not otherwise
accruing to special funds and special accounts in the general fund shall
accrue to a local government fund which shall he released by the
President as financial aid to local governments or to projects.
This revised allotment system shall take effect July 1, 19
73.
The Secretary of Finance shall issue the necessary rules
and regulations for the prompt and effective implementation of this
Decree.
All laws or parts of law inconsistent herewith are hereby revoked
or modified accordingly.
Done in the City of Manila, this 3rd day
of March, in the year of Our Lord, nineteen hundred and seventy-three.
(Sgd.) FERDINAND E. MARCOS
President
Republic of the Philippines
By the President:
(Sgd.) ALEJANDRO MELCHOR
Executive Secretary
In order to facilitate the implementation of this Presidential
Order No. 144, the Department of Finance issued the following:
Finance Order No. 13 -73, dated April 5, 1973, on the allotments of
revenues to local governments; and
Finance Provincial Circular No. 21-73, dated August 15, 1973, on the
preparation and submittal of requests for financial aid from the Local
Government Fund.