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FOURTEENTH CONGRESS OF TIIE REPUBLIC) 
OF THE PHILIPPINES 
1 
,\ , 
Second Regular Session 
1 
g hPrp23 P253 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
Eighteen years ago, Republic Act 7160 otherwise known as the Local 
Government Code of 1991, was passed creating an environment of greater local 
autonomy by devolving and decentralizing powers, resources, and responsibilities from 
the central government to local government units. The Code provides power for each 
local government unit to create its own sources of revenue and to levy taxes, fees, and 
charges subject to the provisions in the Code, consistent with the basic policy of local 
autonomy. These taxes, fees, and charges shall accrue exclusively to the local 
government units. 
Although the implementation of the Code was difficult and in a number of cases, 
incomplete to date, this landmark legislation made great strides in making it possible for 
LGUs to develop new businesses, create new jobs; and revitalize communities and work 
for economic growth in their respective communities. 
One of the key objectives of the Code was to provide LGUs greater means to 
create their own sources of revenue in order to carry out their expanded responsibilities. 
In the course of reviewing the Code over the last seventeen years, it has been evident that 
the effectiveness of certain provisions in the Code have been overtalcen by changes in the 
economy. These changes include annual increases in the national inflation rate which has 
reduced the value of tax collections and the rise of new business structures which have 
not existed when the law was first passed. 


As a result, the various reviews of the Code have been integrated into the 
proposed amendments reflected in this bill: 
Increasing the ceiling on the tax on the transfer of real property ownership from 
0.5% to 2% which could increase the annual collection from 1.3 billion pesos to 
5.2 billion pesos. 
Increasing the ceiling on tlie professional tax from 300 pesos to 1,200 pesos 
which could increase the annual collection from 155 million pesos to 620 million 
pesos. 
Increasing the annual fixed tax for delivery truck or vans of manufacturers or 
producers from 500 pesos to 1,500 pesos which could increase the annual 
collections from 90 million pesos to 270 million pesos. 
With these proposed amendments to Book I1 of tlie Local Government Code, 
local governments would be strengthened and further empowered towards the attainment 
of national development goals. 


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FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
1 
Second Regular Session 
1 
S E N A T E  
S.B. No. 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
AMENDING TITLE I, BOOK I1 OF REPUBLIC ACT 7160, OTHERWISE KNOWN 
AS THE LOCAL GOVERNMENT CODE OF 1991 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Sec n 
otherwise 
0 (b) and (c) of Republic Act 7 
mown as 
the Local Government Code of 1991, hereinafter referred to as the Code, is hereby 
amended to read as follows: 
SEC. 130 Fundamental Principles- The following fundamental principles shall 
govern the exercise of the taxing and other revenue-raising powers of local government 
nnits: 
(a) Taxation shall be uniform in each local goveminent unit; 
(b) Taxes, fees, charges and other impositions shall: 
(1) be equitable and based as far as practicable on the taxpayer's ability to pay; 
(2) be levied and collected only for public purposes AND SOLELY WITHIN THE 
TERRITORIAL JURISDICTION OF THE LOCAL GOVERNMENT mrr 
IMPOSING THE TAX; 
( 3 )  not be unjust, excessive, oppressive, or confiscatory; 
(4) not be contrary to law, public policy, national ecnnomic policy, or in restraint 
of trade; 


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(c) LOCAL TAXES, FEES, CHARGES AND OTHER IMPOSITIONS MAY BE PAID 
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THRU ANY BANKING INSTITUTION AUTHORIZED BY THE TAXING 
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LOCAL GOVERNMENT UNIT PURSUANT TO GUIDELINES ADOPTED IN 
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CONSULTATION WITH THE DEPARTMENT OF FINANCE. 
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SECTION 2. Section 131 ofthe Code is hereby amended to read as follows: 
SEC. 131 Defiiiition of Terms 
(a) XXX 
(b) XXX 
(c) “Amusement Places’’ ARE PLACES THAT PROVIDE AMUSEMENT OR 
RECREATION or relaxation places SUCH AS theatres, cinemas, concert halls, 
NIGHT CLUEWBARS, CASINOS, MASSAGE PARLORS, SPA, ICARAOKE 
BARS, circuses, BOXING STADIA, COUNTRY AND SPORTS CLUBS, 
BEACH AND OTHER RESORTS, RECREATIONAL PARKS, COCIQITS, 
and other places of amusement where one seeks [admission to] entertainment 
[oneselfl by [seeing or viewing the show] WATCHING SHOWS or 
performances, OR [entertain oneselfl BY PARTICIPATING lN ACTIVITIES 
OR USING THE FACILITIES THEREAT. 
(d) XXX 
(e) XXX 
( f )  “Barangay Micro Business Enterprise (BMBE)” refers to any business entity 
or enterprise registered under the provisions of Republic Act Ninety-One 
Seventy Eight (R.A. 9178), otherwise known as “The Barangay Micro 
Business Enterprises (“BMBEs”) Act of 2002.” 
(g) xxx 
(11) xxx 
(i) XXX 
(j) xxx 
(k) XXX 
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(1) xxx 
(m)XXX 
(n) “Gross Sales or Receipt” include the total aniount of money or its equivalent 
representing the contract price, compensation or service fee, including the amount 
charged or materials supplies with the services and deposits or advance payments 
actually or constnictively received during the taxable [quarter] YEAR for the 
services performed or to be performed for another person excluding discounts if 
determinable at the time of sales, sales return, excise tax, and value-added tax 
(VAT); 
(0) xxx 
(p) “Marginal Farmer or [Fisherman] FISHERFOLIC’ 
refers to an individual 
engaged in subsistence farming or fishing which shall be limited to the sale, 
barter or exchange of agricultural or marine products produced by himself and his 
immediate family; 
(SI xxx 
(r) “MAXIMUM SUSTAINABLE YIELD” REFERS TO THE LARGEST 
AVERAGE QUAN-TITY OF FISH THAT CAN BE HARVESTED FROM 
FiSH STOCKS OR RESOURCE WITH-IN A PERIOD OF TIME ON A 
SUSTAINABLE 
BASIS 
UNDER 
EXISTING 
ENVIRONMENTAL 
CONDITIONS. 
[(r)] (S) “Municipal Waters” includes not only streams, lakes, INLAND BODIES OF 
WATER and tidal waters within the municipality WHICH ARE NOT INCLUDED 
WITHIN THE PROTECTED AREAS AS DEFINED UNDER REPUE?LIC ACT 
NUMBER 7586, OTHERWISE KNOWN AS THE NIPAS LAW, [not being the subject 
of private ownership and not comprised within the national parks,] public forest, timber 
lands, forest reserves or fishery reserves, but also marine waters included between two 
lines drawn perpendicularly to the general coastline from points where the boundary lines 
of the rnunicipality or city touch the sea at low tide and a third line parallel with the 
general coastline INCLUDING OFFSHORE ISLANDS and fifteen (15) kilometers from 
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[it] SUCH COASTLINE. Where two (2) municipalities or cities are so situated on the 
opposite shores that there is less than [fifteen (IS)] THIRTY (30) kilometers of marine 
waters between them, the third line shall be equally distant from opposite shores of the 
respective inunicipalities or cities; 
[(SI1 (TI xxx 
[(t)l (U) xxx 
L(4l (VI xxx 
[(VI1 (W) xxx 
(x) “RESOURCE RENT” REFERS TO THE DIFFERENCE BETWEEN THE 
VALUE OF THE PRODUCT PRODUCED FROM HARVESTING THE 
PUBLICLY- OWNED RESOURCE LESS THE COST OF PRODUCING IT, 
WHERE COST INCLUDES THE NORMAL RETURN TO CAPITAL AND 
LABOR, 
[(w)l (Y) xxx 
(2) “TAX” IS AN IMPOSITION, CHARGE OR BURDEN UPON PERSONS, 
PROPERTY, OR PROPERTY RIGHTS FOR THE USE AND SUPPORT OF THE 
LOCAL GOVERNMENT UNIT TO ENABLE IT TO DISCHARGE ITS 
APPROPRIATE FUNCTIONS. 
(aa) “TOTAL ALLOWABLE CATCH” REFERS TO THE MAXIMUM 
HARVEST ALLOWED TO BE TAKEN DURING A GIVEN PERIOD OF TIME 
FROM ANY FISHERY AREA, OR FROM ANY OR GROUP OF FlSHERY 
SPECIES, OR A COMBINATION OF AREA AND SPECIES THAT WOULD 
NOT EXCEED THE MAXIMUM SUSTAINABLE YIELD; 
(BB) XXX 
[(Y)l (CC) xxx 
Nz)l (DD) XxX 
SECTION 3. Section 133 (d), (q, (h), (l), (in) ar,3 ( 0 )  of the Code is hereby 
amended to read as follows: 
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SEC. 133 Common Limitations on the Taxing Powers of Local Government 
Units. 
(a) XXX 
(b) XXX 
(c) XXX 
(d) Custom duties AND registration fees of vessel WITH TONNAGE FIVE (5) 
TONS AND ABOVE [and] wharfage on wharves, tonnage dues, and all other 
kinds of customs fees, charges and dues except wharfage on wharves constructed 
[and] maintained OR OPERATED by the local government concerned OR BY A 
PRIVATE PERSON OR ENTITY. 
(e) XXX 
(9 Taxes [, fees or charges] on agricultural and aquatic products when sold by 
marginal farmers or [fishermen] FISHERFOLK; 
(8) XXX 
(h) Excise taxes on [articles enumerated under the National Internal Revenue Code, 
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(i) XXX 
as amended and taxes, fees and charges on] petroleum products 
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0 )  xxx 
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(I<) XXX 
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(I) [Taxes] fees, [or charges] for the registration of motor vehicles [and for the 
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issuance of all kinds or licenses or permits for the driving thereof] except 
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[tricycles] 
MOTOR 
VEHICLES 
REGULATED 
BY 
THE 
LOCAL 
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GOVERNMENTS. 
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(m)XXX 
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(n) [Taxes, fees, or charges on Countryside and Barangay Business Enterprises and 
cooperatives duly registered under R.A. 6810 and Republic Act Numbered Sixly- 
nine hundred thirty-eight (R.A. 6938) otherwise known as the “Cooperatives 
Code ofthe Philippines,” respectively, and] 
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(0) Taxes, [fees and charges] of any kind on the National Government, [its agencies 
and instrumentalities, and local goveimmeiit units] EXCEPT QUASI-PUBLIC 
CORPORATIONS, 
GOVERNMENT 
BANKS, 
FINANCING 
AND 
INVESTMENT INSTITUTIONS, REVENUE- GENERATING AGENCIES 
SUCH AS, BUT NOT LIMITED TO, PHILIPPINE PORTS AUTHORITY, 
MANILA INTERNATIONAL AIRPORT AUTHaRITY, GAMBLTNG AND 
GAMING ENTERPRISES OPERATED BY THE National GOVERNMENT OR 
ITS AGENTS OR INSTRUMENTALITIES, OR CONTRACTED OUT BY IT 
TO FOREIGN AND DOMESTIC CORPORATIONS, INDIVIDUALS OR 
ENTITIES, WHICH HAVE BEEN GIVEN PERMITS BY THE LOCAL 
GOVERNMENT UNITS, AND OTHER SIMILAR ORGANIZATIONS AS 
DETERMINED BY THE DEPARTMENT OF FINANCE. 
SECTION 4. Section 135 (a) of the Code is hereby amended to read as follows: 
SEC. 135 Tax on Transfer of Real Property Ownership 
SEC. 135(a) The province may impose a tax on the sale, donation, barter, or on any 
other mode of transferring ownership or title of real properly at the rate of not more [fifty 
percent (50%) of one percent (1%)1 than TWO PERCENT (2%) of the total consideration 
involved in the acquisition of the property or of the fair inarket value in case the 
monetary consideration involved in the transfer is not substantial, whichever is higher. 
The sale, transfer or other disposition of real property pursuant to R.A. No. 6657 shall be 
exempt from this tax. 
(b) xxx 
SECTION 5 .  Section 137 of the Code is hereby amended to read as follows: 
SEC. 137. Franchise Tax. - Notwithstanding any exemption granted by any law 
or other special laws, the province may impose a tax on 4NY business[es] enjoying a 
franchise GRANTED BY CONGRESS, a National GOVERNMENT AGENCY OR A 
LOCAL 
GOVERNMENT 
UNIT, 
INCLUDmG 
POWER 
GENERATION, 
TRANSMISSION AND DISTRIBUTION, TELECOMMUNICATIONS, ICE PLANTS 


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AND STORAGE FACILITIES, LEGAL GAMBLING OR GAMING ACTIVITIES, 
AND OTHER SIMILAR BUSINESSES, BASED ON INCOME REALIZED WITHIN 
ITS TERRITORIAL JURISDICTION at a rate not exceeding fifty percent (SO%) of one 
percent (1%) of the gross annual receipts for the preceding calendar year [based on the 
income receipt, or realized within its territorial jurisdiction]. 
SECTION 6. Section 138 of the Code is hereby amended to read as follows: 
SEC. 138 Tax on Sand, Gravel and other Quarry Resources. - The province 
may levy and collect not more than ten percent (10%) of fair market value in the locality 
per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, as 
defined under the National Internal Revenue Code, as amended, extracted from public 
lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters 
within its territorial jurisdiction. 
The permit to extract sand, gravel, and other quarry resources shall be issued 
[exclusively] by the provincial governor [pursuant to the ordinance of the Sangguniang 
Panlalawigan] UPON THE RECOMMENDATION OF THE MAYOR OF THE CITY 
OR MUNICIPALITY CONCERNED. 
The proceeds of the lax on sand, gravel and other quarry resources shall be 
distributed as follows: 
(1) Province - Thirty percent (30%); 
(2) Compoiient City or Municipality where the sand, gravel, and other quarry resources 
are extracted - Thirty percent (30%); and 
(3) Barangay where the sand, gravel, and other quarry resources are extracted - Forty 
percent (40%). 
SECTION 7. Section 139 of the Code is hereby amended to read as follows: 
SEC, 139 Professional Tax - (a) The province may levy an annual professional 
tax on each person engaged in the exercise or practice of his profession requiring 
government examination at such amount and reasonable classification as the 
Sangguniang Panlalawigan may determine but shall in no case exceed [Three hundred 
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pesos (P300)] ONE THOUSAND TWO HUNDRED PESOS (P 1,200). 
THE 
SANGGUNIANG PANLALAWIGAN MAY INCREASE THE CEILING ON THE 
PROFESSIONAL TAX ONCE EVERY THREE (3) YEARS BASED ON THE PAST 
THREE (3) YEAR AVERAGE OF THE CONSUMER PRICE INDEX AS 
OFFICIALLY PUBLISHED BY THE NATIONAL STATISTICS COORDINATING 
BOARD”. 
SECTION 8. Section 141 of the Code is hereby amended to read as follows: 
SEC. 141 Annual Fired Tax For Every Delivery Truck or Van of 
Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain 
Products - (a) The province may levy an annual fixed t?*x for every truck, van or any 
vehicle used by manufacturers, producers, wholesalers, dealers or retailers in the delivery 
or distribution of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and 
other products as may be determined by the Sangguniang Panlalawigan, to sales outlets, 
or consumers, whether directly or indirectly, within the province in an amount not 
exceeding [FIVE hundred pesos (PSOO)] ONE THOUSAND FIVE HUNDRED PESOS 
(PI ,500). THE SANGGUNIANG PANLALAWIGAN MAY INCREASE THE 
CEILING ON THE PROFESSIONAL TAX ONCE EVERY THREE (3) YEARS 
BASED ON THE PAST THREE (3) YEAR AVERAGE OF THE CONSUMER PRICE 
INDEX AS OFFICIALLY PUBLlSNED BY THE NATIONAL STATISTICS 
COORDINATING BOARD”. 
SECTION 9. Separability Clause. - If any provision or part thereof is held invalid 
or unconstitutional, the remainder of the law or the provision not otherwise affected shall 
remain valid and subsisting. 
SECTION 10. Repealing Clause. - All laws, presidential decree or issuance, 
executive orders, letter of instruction, administrative order, rule and regulation contrary 
to, or inconsistent with the provisions of this Act are hereby repealed, modified, or 
amended accordingly. 
SECTION 11. Bsfectivily Clause. ~ 
This Act shall take effect fifteen (15) days 
following its publication in at least two (2) newspapers of general circulation. 
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Approved,