MS. JANE V. ABELLAAssistant Director

LGU Shares fromNational Wealth

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Presentation Outline

I. Legal Bases

II. Shares of LGUs

III. Amount of Shares

IV. Use of Fund

V. Types of National Wealth

VI. Reference Issuances

VII. Process Flow

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Legal Bases of All Types of National Wealth

R.A. No. 7160 (Local Government Code of 1991)

• Sec. 289 - Share in the Proceeds from the Developmentand Utilization of the National Wealth

• Sec. 290 - Amount of Share of LGUs

• Sec. 291 - Share of the Local Governments from any GOCC

• Sec. 292 – Allocation of Shares

• Sec. 293 – Remittance of the Share of LGUs

• Sec. 294 – Development and Livelihood Projects

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Sec. 289 - Share in the Proceeds from the Development and Utilization of

National Wealth

LGUs shall have an equitable share in the proceeds derived from the utilization and development of the national wealth within their respective areas, including sharing the same with the inhabitants by way of direct benefits

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40% of the gross collection of preceding fiscal yearfrom:

• Mining taxes

• Royalties

• Forestry charges

• Fishery charges

• Other taxes, fees, or charges, including relatedsurcharges, interests, or fines, and from its share inany co-production, joint venture or production sharingagreement in the utilization and development of thenational wealth within their territorial jurisdiction

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Sec. 290 – Amount of Share of Local Government Units

Sec. 291 - Share of LGU from Any GOCC

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based on the preceding fiscal year

from the proceeds derived by any GOCC engaged in the utilization and development of national wealth

whichever is higher:

• 1% of the gross sales or receipts of the preceding CYor

• 40% of taxes, charges and such other fees, including related surcharges, interests or fines the GOCC would have paid if it were otherwise exempt

Sec. 292 (Art. 389, IRR) –Allocation of Shares

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Where Natural resources are located in:

PROVINCE

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2 OR MORE

• Provinces

• Component Cities or Municipalities

• Highly Urbanized or Independent Component Cities

• Barangays

share is distributed as follows

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Sec. 292 (Art. 389, IRR) –Allocation of Shares

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Sec. 292 (Art. 389, IRR) –Allocation of Shares

HIGHLY URBANIZED OR INDEPENDENT COMPONENT CITY

share is distributed as follows

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Sec. 293 - Remittance of the Share of LGUs

Remitted in accordance with Section 286 of the LGC(Automatic Release of Shares)

In the case of any GOCC engaged in the utilizationand development of the national wealth

Share shall be directly remitted to the provincial,city, municipal or barangay treasurer concernedwithin five (5) days after the end of each quarter

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Use of Fund: Sec. 294 - Development and Livelihood Projects

Shares shall be appropriated by the respectiveSanggunian

To finance local development and livelihood projects

In case of energy resources (hydrothermal, geothermal and other sources of energy) –

at least 80% of proceeds shall be applied solely tolower the cost of electricity in the LGU where thesource of energy is located

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Types of National Wealth and the Authorized Collecting Agencies

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NATIONAL WEALTH AUTHORIZED

COLLECTING AGENCYGUIDELINES

Mining Taxes Bureau of the Internal

Revenue (BIR)

DOF-DBM-DILG-DENR

Joint Circular 2009-1

dated March 31, 2009

Royalty Income from

Mineral Reservation

Mines and Geo-

Sciences Bureau (MGB)

DENR-DOF-DBM-DILG

Joint Circular No. 2010-

1 dated June 25, 2010

Forest Charges Department of

Environment and Natural

Resources (DENR)

DBM-DOF-DENR-DOE

Joint Circular No. 2006-1

dated February 13, 2006

Energy Resources

Production

Department of Energy

(DOE)

DBM-DOF-DENR-DOE

Joint Circular No. 2006-1

dated February 13, 2006

Reference Issuances

DBM-DOF-DENR-DOE Joint CircularNo. 2006-1 dated February 13, 2006

Revised guidelines and procedures on therelease of the share of local governmentunits in the proceeds from thedevelopment and the utilization of nationalwealth

• Covers all type of National Wealth

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Reference Issuances

DOF-DBM-DILG-DENR Joint Circular No. 2009-1dated March 31, 2009

Updated guidelines and procedures in the release of theshare of local government units from the collectionsderived by the national government from MINING TAXES

Streamline and update the guidelines and procedures for therelease of shares of LGUs from Mining Taxes

Clarify the roles and responsibilities of all NGAs involved in thepreparation, approval and submission of a Joint Certification asbasis for the release of shares of LGUs by the DBM

Provides timelines for the submission, processing and release ofthe shares of LGUs

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DENR-DOF-DBM-DILG Joint Circular No. 2010-1dated June 25, 2010

Revised guidelines and procedures on the release ofthe share of local government units derived by thenational government from ROYALTY INCOMECOLLECTED FROM MINERAL RESERVATIONS

Streamline and enhance the guidelines and procedures for therelease of LGUs’ share from royalty income

Clarify the roles and responsibilities of all NGAs involved in thepreparation, approval and submission of a Joint Certificationas basis for the release of shares of LGUs by the DBM

Provides timelines for the submission, processing and releaseof the shares of LGUs

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Reference Issuances

COLLECTING AGENCY

• Submits to DBM CO on or before March 15 of every year a Certification of the projected total shares of LGUs based on the collections from preceding fiscal year

DBM CENTRAL OFFICE (DBM CO)

• Programs the amount representing share of LGUs in the NEP for submission to Congress as basis for inclusion in the GAA

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Process Flow:Budget Preparation

Process Flow: Budget Execution

COLLECTING AGENCY

• Initiates the preparation of the Joint Certification of actual collections in the immediately preceding year and the computes the share of LGU beneficiaries

BTr• Reconciles amounts of collections and remittances and signs

Joint Certification

DBM CO

• Issues an Advisory to DBM ROs

• Updates/ Monitors Status of releases and balances

DBM ROs• Processes and issues the SARO, Debit Voucher, NCA and

Notices of ADA Issued for the accounts of the beneficiary LGUs

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Mining Taxes: Timelines –Submission, Processing, Release

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Period

BIR BTr DBM

Submission of Joint Certification to BTr

Validation and Submission of Joint

BIR and BTrCertification to DBM

Release of Funds

1st Qtr Collection(March 31 of Current Year)

June 15, Current Year July 31, Current Year

Within February,

Ensuing Year

2nd Qtr Collection(June 30 of Current Year) Sept 15, Current Year Oct 31, Current Year

3rd Qtr Collection(Sept 30 of Current Year) Dec 15, Current Year Jan 31, Ensuing Year

4th Qtr Collection(Dec 31 of Current Year) March 15, Ensuing Year

April 30, EnsuingYear

Within May,Ensuing Year

Royalty Income (Mineral Reserves): Timelines –Submission, Processing, Release

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Period

MGB BTr DBM

Submission of Joint Certification to BTr

Validation and Submission of Joint

MGB and BTrCertification to DBM

Release of Funds

January 1 to December 31, Current Year

Within 60 days from the end of the Preceding Year

Validation – within 30 days from submission of MGB Collections

Submission to DBM – within 15 days after completion of validation

Within 30 days from receipt of the Joint MGB-BTr

Certification from the BTr

Status of Shares of LGUs from National Wealth – Yet to be Released

Mining TaxesShares in 2014 collections -

2nd, 3rd and 4th quarters

The directive to release already endorsed to

the DBM ROs

The shares of LGUs in the 2nd-4th quarter

collections shall be released upon

submission of joint certifications of actual

collections

Royalties from

Mineral Reservation

The remaining P491,632,478 or

51% of the CY 2014 collections

Only the amount of P474,120,000 or 49% of

the shares of LGUs in the CY 2014

collections were already released

Remaining unreleased share re-

appropriated in the FY 2016 Budget

Forest ChargesShares of LGUs in the prior

years collections

Shares of LGUs shall be released upon

submission of certifications of actual

collections by the DENR-CO

Energy Resources

Shares of LGUs from Energy

Resources collected in CY 2014

were already released except

for the shares of undentified

LGUs in the Province of

Palawan

Share of LGUs in the Province of Palawan

shall be released upon submission by the

DOE of the certifications of actual

collections (including the list of LGU

beneficiaries and their corresponding

shares)

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Recommendations for DBMPH-EITI 1st Country Report

GAPS RECOMMENDATIONS OUTPUTS

No disaggregation of data to indicate mining industry’s portion in the LGU share from national wealth

Recording of LGUs’ share in national wealth should be revised to reflect amounts coming from each sector(e.g., mining oil, coal, -on a per company basis)

Revised reporting and recording procedures

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Available Data for DBM per Certification by Collecting Agencies

AUTHORIZED COLLECTING AGENCY AVAILABLE INFORMATION IN CERTIFICATION

BIR

1. Name of Company2. Date of Collection3. Mining Taxes Paid4. Place of Extraction5. Details of LGU Shares

MGB

1. Place of Extraction2. Name of Company3. Royalties Paid4. Details of LGU Shares

DBM can only comply with the requireddisaggregation if the data in the Certification bythe collecting agencies will include such details

Thank you!

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