Book IV - Title Three

Sec. 526. Application of this Code to Local Government Units in the Autonomous Regions. - This Code shall apply to all provinces, cities, municipalities and barangays in the autonomous regions until such time as the regional government concerned shall have enacted its own local government code.

Sec. 527. Prior Approval or Clearance on Regular and Recurring Transactions. - Six (6) months after effectivity of this Code, prior approval of or clearance from national agencies or offices shall no longer be required for regular and recurring transactions and activities of local government units.

Sec. 528. Deconcentration of Requisite Authority and Power. - The national government shall, six (6) months after the effectivity of this Code, effect the deconcentration of requisite authority and power to the appropriate regional offices or field offices of national agencies or offices whose major functions are not devolved to local government units.

Sec. 529. Tax Ordinances or Revenue Measures. - All existing tax ordinances or revenue measures of local government units shall continue to be in force and effect after the effectivity of this Code unless amended by the Sanggunian concerned, or inconsistent with, or in violation of, the provisions of this Code.

Sec. 530. Local Water Districts. - All powers, functions, and attributes granted by Presidential Decree Numbered One Hundred Ninety-Eight (P.D. No. 198), otherwise known as "The Provincial Water Utility Act of 1973," to the Local Water Utilities Administration (LWUA) may be devolved in toto to the existing local water districts should they opt or choose to exercise, in writing, such powers, functions and attributes: Provided, That all obligations of the local government unit concerned to the LWUA shall first be settled prior to said devolution.

Sec. 531. Debt Relief for Local Government Units. -

1. Unremitted national collections and statutory contributions. - All debts owed by local government units to the national government in unremitted contributions to the Integrated National Police Fund, the Special Education Fund, and other statutory contributions as well as in unremitted national government shares of taxes, charges, and fees collected by the local government units, are hereby written off in full.


2. Program loans. -
1. Program loans secured by local government units which were relent to private persons, natural or juridical, shall likewise be written off from the books of the local government units concerned: Provided, however, That the national government agency tasked with the implementation of these programs shall continue to collect from the debtors belonging to the private sector concerned.


2. Program loans granted to local government units by national government agencies and which were utilized by the local units for community development, livelihood, and other small-scale projects are hereby written off in full.


3. Settlement of debts due to government financing institutions (GFIs), government-owned and controlled corporations (GOCCs), and private utilities. - The national government shall assume all debts incurred or contracted by local government units from GFIs, GOCCs, and private utilities that are outstanding as of December 31, 1988, in accordance with the following schemes:
1. Debts due GFIs. - The national government may buy outstanding obligations incurred by local government units from government financing institutions at a discounted rate.


2. Debts due GOCCs. - The national government may settle such obligations at discounted rate through offsetting, only to the extent of the obligations of local governments against the outstanding advances made by the National Treasury in behalf of the government-owned and controlled corporations concerned.


3. Debts Due Private Utilities.- The national government may settle these obligations at a discounted rate by offsetting against the outstanding obligations of such private utilities to government-owned corporations. GOCCs may in turn offset these obligations against the outstanding advances made by the National Treasury in their behalf.

In the case of obligations owed by local government units to private utilities which are not indebted to any GOCC or national government agency, the national government may instead buy the obligations of the local government units from the private utilities at a discounted rate, upon concurrence by the private utilities concerned.

4. Limitations. - Obligations to the Home Development and Mutual Fund (Pag-ibig), Medicare, and those pertaining to premium contributions and amortization payments of salary and policyloans to the Government Service Insurance System are excluded from the coverage of this Section.


5. Recovery schemes for the national government. - Local government units shall pay back the national government whatever amounts were advanced or offset by the national government to settle their obligations to GFIs, GOCCs, and private utilities. The national government shall not charge interest or penalties on the outstanding balance owed by the local government units.



These outstanding obligations shall be restructured and an amortization schedule prepared, based on the capability of the local government unit to pay, taking into consideration the amount owed to the National Government.

The National Government is hereby authorized to deduct from the quarterly share of each local government unit in the internal revenue collections an amount to be determined on the basis of the amortization schedule of the local unit concerned: Provided, That such amount shall not exceed five percent (5%) of the monthly internal revenue allotment of the local government unit concerned.

As incentive to debtor-local government units to increase the efficiency of their fiscal administration, the national government shall write off the debt of the local government unit concerned at the rate of five percent (5%) for every one percent (1%) increase in revenues generated by such local government unit over that of the preceding year. For this purpose, the annual increase in local revenue collection shall be computed starting from the year 1988.

6. Appropriations. - Such amount as may be necessary to implement the provisions of this Section shall be included in the annual General Appropriations Act.

Sec. 532. Elections for the Sangguniang Kabataan. -

1. The first elections for the Sangguniang kabataan to be conducted under this Code shall be held thirty (30) days after the next local elections: Provided, That, the regular elections for the Sangguniang kabataan shall be held one hundred twenty (120) days after the Barangay elections thereafter.


2. The amount pertaining to the ten percent (10%) allocation for the kabataang Barangay as provided for in Section 103 of Batas Pambansa Blg. 337 is hereby reappropriated for the purpose of funding the first elections mentioned above. The balance of said funds, if there be any after the said elections, shall be administered by the Presidential Council for Youth Affairs for the purpose of training the newly elected Sangguniang kabataan officials in the discharge of their functions.


3. For the regular elections of the Sangguniang kabataan, funds shall be taken from the ten percent (10%) of the Barangay funds reserved for the Sangguniang kabataan, as provided for in Section 328 of this Code.


4. All seats reserved for the pederasyon ng mga Sangguniang kabataan in the different Sanggunians shall be deemed vacant until such time that the Sangguniang kabataan chairmen shall have been elected and the respective pederasyon presidents have been selected: Provided, That, elections for the kabataang Barangay conducted under Batas Pambansa Blg. 337 at any time between January 1, 1988 and January 1, 1992 shall be considered as the first elections provided for in this Code. The term of office of the kabataang Barangay officials elected within the said period shall be extended correspondingly to coincide with the term of office of those elected under this Code.

Sec. 533. Formulation of Implementing Rules and Regulations. -

1. Within one (1) month after the approval of this Code, the President shall convene the Oversight Committee as herein provided for. The said Committee shall formulate and issue the appropriate rules and regulations necessary for the efficient and effective implementation of any and all provisions of this Code, thereby ensuring compliance with the principles of local autonomy as defined under the Constitution.


2. The Committee shall be composed of the following:
1. The Executive Secretary, who shall be the Chairman;


2. Three (3) members of the Senate to be appointed by the President of the Senate, to include the Chairman of the Committee on Local Government;


3. Three (3) members of the House of Representatives to be appointed by the Speaker, to include the Chairman of the Committee on Local Government;


4. The Cabinet, represented by the following:
1. Secretary of the Interior and Local Government;


2. Secretary of Finance;


3. Secretary of Budget and Management; and


5. One (1) representative from each of the following:
1. The League of Provinces;


2. The League of Cities;


3. The League of Municipalities; and


4. The Liga ng mga Barangay.
3. The Committee shall submit its report and recommendation to the President within two (2) months after its organization. If the President fails to act within thirty (30) days from receipt thereof, the recommendation of the Oversight Committee shall be deemed approved. Thereafter, the Committee shall supervise the transfer of such powers and functions mandated under this Code to the local government units, together with the corresponding personnel, properties, assets and liabilities of the offices or agencies concerned, with the least possible disruptions to existing programs and projects. The Committee shall likewise recommend the corresponding appropriations necessary to effect the said transfer.



For this purpose, the services of a technical staff shall be enlisted from among the qualified employees of Congress, the government offices, and the leagues constituting the Committee.

4. The funding requirements and the secretariat of the Committee shall be provided by the Office of the Executive Secretary.


5. The sum of Five million pesos (P5,000,000), which shall be charged against the Contingent Fund, is hereby allotted to the Committee to fund the undertaking of an information campaign on this Code. The Committee shall formulate the guidelines governing the conduct of said campaign, and shall determine the national agencies or offices to be involved for this purpose.