Features of the 1991 Local Government Code

The 1991 Local Government Code contains five features that set it apart from previous decentralization attempts in the country, thereby earning for itself comments of being revolutionary or radical in character.

First, the Code devolves or transfers the responsibility for the delivery of various aspects of basic services to local governments.

Second, it transfers certain regulatory and licensing powers to local governments.

Third, it increases the financial resources available to LGUs by broadening their taxing powers, providing them with a specific share from the national wealth exploited in their area (e.g., mining, fishery, and forestry), and increasing their automatic share from national taxes, i.e., the internal revenue allotment (IRA) shares, from a low 11% to as much as 40%.*

Fourth, it lays down the policy framework for the direct involvement of civil society, most specially nongovernment organizations (NGOs) and people’s organizations (POs), in the process of local governance --- in other words, some degree of debureaucratization.

Finally, the Code encourages LGUs to be more entrepreneurial by providing them with opportunities to enter into joint ventures with the private sector, engage in built-operate-transfer (BOT) arrangements, float bonds, obtain loans from local private institutions, and the like.

* With respect to G.R. No. 199802 and G.R. No. 208488 of 2018 which were upheld in 2019 by the Supreme Court, the automatic share of local governments shall come from all national taxes and not just the internal revenue allotment (IRA) shares of 40%.

Conceptualized by: Dr. Maria Ela Atienza (Professor and Chair), Asst. Prof. Jan Robert Go (Assistant Professor), and Herby Jireh Esmeralda (Research Assistant)


Atienza, Maria Ela. “Local Governments and Devolution in the Philippines.” In Philippine Politics and Governance, edited by Noel Morada and Teresa Encarnacion Tadem, 427-428. Quezon City: Department of Political Science, University of the Philippines Diliman, 2006.

G.R. No. 199802 and G.R. No. 208488,  (July 3, 2018).

Philippines. The Local Government Code. Republic Act No. 7160. 1991.