The constitution mandates that local governments must have local autonomy. The smallest local government unit, the barangay or village, is descended from the balangay of the Maragtas legend, where the first Austronesian people reached the Philippines via the boat. The prehistoric barangays were headed by datus. Currently, barangays are grouped into municipalities or cities, while municipalities and cities may be further grouped into provinces. Each barangay, municipality or city, and province is headed by a barangay chairman, mayor, or governor, respectively, with its legislatures being the Sangguniang Barangay (village council), Sangguniang Bayan (municipal council) or Sangguniang Panlungsod (city council), and the Sangguniang Panlalawigan (provincial board).
Regions are the highest administrative divisions but do not have powers possessed under them; however, autonomous regions are given wider powers than other local government units. While the constitution allows autonomous regions in the Cordilleras and in Muslim Mindanao, only the Autonomous Region in Muslim Mindanao (ARMM) exists, with the proposed autonomous region in Cordillera being defeated after two plebiscites. The ARMM has a regional governor and a regional assembly.
While local government units have autonomy, most of their budget is derived from the Internal Revenue Allotment, a disbursement from the national government which is ultimately derived from taxes. This makes most local government units ultimately dependent on the national government, unless they have other sources of income, such as property taxes.