Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Manila

Sixteenth Congress
First Regular Session

HOUSE BILLNO,__3538

Introduced by Honorable Raneo E. Abu
2™ District, Batangas

EXPLANATORY NOTE

This bill seeks to strengthen the autonomy, especially the local taxing power
and tax administration, of local government units (LGUs), amending for the
purpose Republic Act No. 7160, otherwise known as the “Local Government Code
of 1991.”

Under the Philippine Constitution, the State is mandated to ensure the
autonomy of local governments. Pursuant to such mandate, Republic Act No.
7160 was enacted. .

Since the passage of the Local Government Code, the political and socio-
economic milieus of local government units have tremendously changed, Like
many other important pieces of legislation, however, the Local Government Code
has to be assessed and amended to address new needs and recommend solutions to
the burgeoning problems of local governance. Some of these problems are
centered in the area of the local taxing power and tax administration of the local
government units, like:

a) A narrow local taxing authority which hamper the ability of LGUs to
raise revenues from local sources;

b) The interference of national government in personnel and fiscal
management of the LGUs;

c) The need to further broaden the tax base of the LGUs;

d) The need to address the leakages from local tax revenues resulting
from local tax exemptions enjoyed by government-owned and
-controlled corporations and investment entities covered by
investment promotion laws; and

e) The need to define the relationship of LGUs vis-a-vis national
government agencies (i.e. Bureau of Internal Revenue).


Local government officials and advocates of local autonomy propose several
amendments to the Local Government Code to strengthen the local autonomy
especially the taxing power and administration of the LGUs. The proposed
amendments include, among others:

a)
b)

°)
4)

e)

Simplifying the business tax to a single rate of 2.5% of gross sales or
receipts which could increase annual collection for the LGUs;
Adjusting the minimum level of the community tax from 5 pesos to
30 pesos and raising the additional tax for every 1,000 pesos of
income from 1 peso to 3 pesos which would increase the annual
collections from 954 million pesos to 1.9 billion pesos;

Including the spas, karaoke bars, country and sports clubs in the list of
businesses subject to local business tax;

Specifically requiring the BIR to share tax information with LGUs;
and

Removing the local tax exemptions of government corporations and
business qualification for'investment incentives.

These proposed amendments would augment the collection of the local
government units which they could use to fund their various projects and

programs.

Hence, immediate approval of this measure is earnestly requested.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Manila

Sixteenth Congress
First Regular Session

HOUSE BILL NO. 3538

Introduced by Honorable Raneo E. Abu
2"? District, Batangas

AN ACT
STRENGTHENING THE LOCAL TAXATION AND FISCAL MATTERS
OF THE LOCAL GOVERNMENT UNITS, AMENDING FOR THE
PURPOSE REPUBLIC ACT NO, 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. Section 129 of Republic Act No. 7160 is hereby amended to
read as follows:
“SEC. 129. Power to Create Sources of Revenue. ~ Each
local government unit shall exercise its powers to create its own
sources of revenue and levy taxes, fees, and charges subject to the
provisions herein, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue exclusively
to the local government units.
FOR PURPOSES OF THIS ACT, | “TAX” REFERS TO
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,”


SEC. 2. Section 130 of the same Act 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 units:
(a) x x x
(b) Taxes, fees, charges and other impositions shall:
qd) x x x
(2) Be levied and collected only for public
purposes WITHIN THE TERRITORIAL JURISDICTION
OF THE GOVERNMENT UNIT IMPOSING THE TAX;
6) x x x
(4) x x x
(c) The collection of LOCAL taxes, fees, charges and
other impositions shall in no case be let to any private person:
PROVIDED, HOWEVER, THAT TAXES, FEES, CHARGES
AND OTHER IMPOSITIONS MAY BE ACCEPTED
THROUGH ANY BANKING INSTITUTION AUTHORIZED
BY THE TAXING LOCAL GOVERNMENT UNIT PURSUANT
TO GUIDELINES ADOPTED IN CONSULTATION WITH THE
DEPARTMENT OF FINANCE.
x x x.”
SEC. 2. Section 131 of the same Act is hereby amended to read as follows:
“SEC. 131. Definition of Terms. — When used in this Title,

the terms:
(@) x x x
(b) x x x

(c) “Amusement Places” include PLACES THAT
PROVIDE RECREATION OR RELAXATION SUCH AS
theatres, cinemas, concert halls, circuses, NIGHT CLUBS, BARS,
CASINOS, MASSAGE PARLORS, SPA, KARAOKE, BOXING


STADIA, COUNTRY AND SPORTS CLUBS, BEACH AND
OTHER RESORTS, RECREATIONAL PARKS, COCKPITS and.
other places of amusement where one seeks admission to entertain
oneself by seeing or viewing the show or performances, OR BY
PARTICIPATING IN THE ACTIVITIES OR USING THE
FACILITIES THEREIN;
x x x

(@) x x x

(E-1)“BARANGAY MICRO BUSINESS ENTERPRISE
(BMBE)” REFERS TO ANY BUSINESS ENTITY OR
ENTERPRISE AS DEFINED AND REGISTERED UNDER
REPUBLIC ACT NO, 9178, OTHERWISE KNOWN AS “THE
BARANGAY MICRO BUSINESS ENTERPRISES (BMBEs) ACT
OF 2002;”

= x x

(n) “Gross Sales or Receipt” include the total amount of
money or its equivalent representing the contract price,
compensation or service fee, including the amount charged or
materials supplied with the services and deposits or advance
payments actually or constructively 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) x x x

(p) “Marginal Farmer or [Fisherman] FISHERFOLK”
refers to an individual engaged in subsistence farming or fishing
which shall be limited to the sale, barter or exchange or
agricultural or marine products produced by himself and his

immediate family;”


(P-1) “MAXIMUM SUSTAINABLE YIELD” REFERS
TO THE LARGEST AVERAGE QUANTITY OF FISH THAT
CAN BE HARVESTED FROM FISH STOCKS OR RESOURCE
WITHIN A PERIOD OF TIME ON A SUSTAINABLE BASIS
UNDER EXISTING ENVIRONMENTAL CONDITIONS.

x x x

(r) “Municipal Waters” include 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 REPUBLIC ACT
NO. 7586, OTHERWISE KNOWN AS THE “NATIONAL
INTEGRATED PROTECTED AREAS SYSTEM (NIPAS) ACT OF
1992,” [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 municipality or city
touch the sea at low tide and a third line parallel with the general
coastline INCLUDING ANY OFFSHORE ISLAND and fifteen
(15) kilometers from fit] SUCH COASTLINE. Where two (2)
municipalities or cities are so situated on the opposite shores that
there is less than [fifteen (15)] THIRTY (30) kilometers of marine
waters between them, the third line shall be equally distant from
opposite shores of the respective municipalities OR CITIES.

() x x x

(V-1) “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) x x x
(W-1)*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 FISHERY SPECIES,
OR A COMBINATION OF AREA AND SPECIES THAT WILL
NOT EXCEED THE MAXIMUM SUSTAINABLE YIELD;
x x see"
SEC. 3. Paragraphs (d), (f), (h), (n) and (0) of Section 133 of the same Act
are hereby amended to read as follows:
“SEC. 133. Common Limitations on the ‘Taxing Powers of
Local Government Units. ~ Unless otherwise provided herein, the
exercise of the taxing powers of provinces, cities, municipalities
and barangays shall not extend to the levy of the following:
(a) x x | x
x x x
(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 unit
concerned OR BY A PRIVATE PERSON OR ENTITY;
(e) x x x
(f — Taxes[, fees or charges} on agricultural and aquatic
products when sold by marginal farmers or [fishermen]

FISHERFOLK;
(gs) x x x


(h) Excise taxes on [articles enumerated under the
National Internal Revenue Codé as amended and taxes, fees and
charges on] petroleum products;

x x x

(1) {Taxes,] [f]Fees [or charges] for the registration of
motor vehicles [and’ for the issuance of all kinds of licenses or
permits for the driving thereof,] except [tricycles] MOTOR
VEHICLES REGULATED BY THE LOCAL GOVERNMENT
UNITS;

(m) x x x; AND

[(n) Taxes, fees, or charges on Countryside and Barangay
Business Enterprises and cooperatives duly registered under R.A.
6810 and Republic Act Numbered Sixty-nine hundred thirty-eight
(R.A. 6938) otherwise known as the “Cooperatives Code of the
Philippines,” respectively; and]

[(o)] (N) Taxes[, fees or charges] of any kind on the
National Government, [its agencies and instrumentalities, and local
government 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
AUTHORITY, GAMBLING 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.”
SEC. 4. Paragraph (a) of Section 135 of the same Act is hereby amended to
read as follows:
“SEC, 135. Tax on Transfer of Real Property Ownership. —
(a) The province may impose a tax on the sale, donation, barter, or
on any other mode of transferring ownership or title of real
property at the rate of not more [fifty percent (50%) of one percent
(1%)] than TWO PERCENT (2%) of the total consideration

involved in the acquis

‘ion of the property or of the fair market
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. 6657 shall be exempt
from this tax.”
SEC. 5. Section 137 of the same Act 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 businessfes} enjoying a  franchise[,]
GRANTED BY CONGRESS, A NATIONAL GOVERNMENT
AGENCY OR A LOCAL GOVERNMENT UNIT. THESE
BUSINESSES SHALL INCLUDE POWER GENERATION,
TRANSMISSION AND DISTRIBUTION,
TELECOMMUNICATIONS, ICE PLANTS 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 (50%) 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].

x % x.”


SEC. 6. Section 138 of the same Act is hereby amended to read as follows:

“SEC. 138. Tax on Sand, Gravel and Other Quariy
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.

The proceeds of the tax on sand, gravel and other quarry

resources shalll be distributed as follows:

(1) Province ~ Thirty percent (30%)

(2) Component 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%).”

SEC. 7. Paragraph (a) of Section 139 of the same Act 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 pesos (P300)] ONE THOUSAND TWO HUNDRED


PESOS (P1,200.00). THE SANGGUNIANG PANLALAWIGAN
MAY INCREASE THE CEILING ON THE PROFESSIONAL
TAX ONCE EVERY THREE (3) YEARS BASED ON THE
PAST THREE-YEAR AVERAGE OF THE CONSUMER PRICE
INDEX AS OFFICIALLY PUBLISHED BY THE NATIONAL
STATISTICS COORDINATION BOARD.
x x xP
SEC. 8. Paragraph (a) of Section 141 of the same Act is hereby amended to
read as follows: :

“SEC. 141. Annual Fixed 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 tax 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 (P500.00)| ONE
THOUSAND ‘FIVE HUNDRED PESOS (P1,500.00). THE
SANGGUNIANG PANLALAWIGAN MAY INCREASE THE
CEILING ON THE ANNUAL FIXED TAX ONCE EVERY
THREE (3) YEARS BASED ON THE PAST THREE-YEAR
AVERAGE OF THE CONSUMER PRICE INDEX ' AS
OFFICIALLY PUBLISHED BY THE NATIONAL STATISTICS
COORDINATION BOARD.

(b) x x x.”
SEC. 9. Section 143 of the same Act is hereby amended to read as follows:

“SEC. 143. Tax on Business. — The municipality may

impose taxes on ANY [the following] business[es:] INCLUDING

i


THOSE SUBJECT TO FRANCHISE TAX UNDER SECTION
137 OF THIS CODE, AT RATES NOT EXCEEDING TWO AND
A HALF PERCENT (2.5%) OF GROSS SALES OR RECEIPTS
OF THE PRECEDING CALENDAR YEAR.

IN. THE CASE OF EXPORTERS, INDIRECT
EXPORTERS AND EXPORT SUB-CONTRACTORS, THE
RATE SHALL BE ONE-HALF OF THE GROSS SALES OR
RECEIPTS OF THE PRECEDING CALENDAR YEAR.

[(a) On manufacturers, assemblers, repackers, processors,
brewers, distillers, rectifiers, and compounders of liquors, distilled
spirits, and wines or manufacturers or any article of commerce of
whatever kind or nature, in accordance with the following
schedule:

With gross sales or receipts for the Amount of Tax
preceding calendar year in the amount of:

Amount of Tax

Per Annum
Less than 10,000.00 165.00
P10,000.00 or more but less than 15,000.00 220.00
15,000.00 or more but less than 20,000.00 302.00
20,000.00 or more but less than 30,000.00 440.00
30,000.00 or more but less than 40,000.00 660.00
40,000.00 or more but less than 50,000.00 825.00
50,000.00 or more but less than 75,000.00 1,320.00
75,000.00 or more but less than 100,000.00 1,650.00

100,000.00 or more but less than 150,000.00 2,200.00

150,000.00 or more but less than 200,000.00 2,750.00


200,000.00 or more but less than 300,000.00 3,850.00,

300,000.00 or more but less than 500,000.00 5,500.00

500,000.00 or more but less than 750,000.00 8,000.00

750,000.00 or more but less than 1,000,000.00 10,000.00
1,000,000.00 or more but less than 2,000,000.00 13,750.00
2,000,000.00 or more but less than 3,000,000.00 16,500.00
3,000,000.00 or more but less than 4,000,000.00 19,800.00
4,000,000.00 or more but less than 5,000,000.00 23,100.00
5,000,000.00 or more but less than 6,500,00.00 24,375.00
6,500,000.00 or more at a rate not exceeding thirty-seven

and a half percent (37 43%) of one
percent (1%)

(b) On wholesalers, distributors, or dealers in any article of
commerce of whatever kind or nature in accordance with the
following schedule:

With gross sales or receipts for the Amount of Tax
preceding calendar year in the amount of:

Amount of Tax.

Per Annum
Less than P1,000.00 18.00
P 1,000.00 or more but less than P2,000.00 33.00
2,000.00 or more but less than 3,000.00 50.00
3,000.00 or more but less than 4,000.00 72.00
4,000.00 or more but less than 5,000.00 100.00
5,000.00 or more but less than 6,000.00 121.00

6,000.00 or more but less than 7,000.00 143.00


7,000.00 or more but less than 8,000.00 165.00

8,000.00 or more but less than 10,000.00 187.00
10,000.00 or more but less than 15,000.00 220.00
15,000.00 or more but less than 20,000.00 275.00
20,000.00 or more but less than 30,000.00 330.00
30,000.00 or more but less than 40,000.00 440.00
40,000.00 or more but less than 50,000.00 660.00
50,000.00 or more but less than 75,000.00 990.00
75,000.00 or more but less than 100,000.00 1,320.00
100,000.00 or more but less than 150,000.00 1,870.00
150,000.00 or more but less than 200,000.00 2,420.00
200,000.00 or more but less than 300,000.00 3,300.00
300,000.00 or more but less than 500,000.00 4,400.00
500,000.00 or more but less than 750,000.00 6,600.00
750,000.00 or more but less than 1,000,000.00 8,800.00
1,000,000.00 or more but less than 2,000,000.00 10,000.00
2,000,000.00 or more at a rate not exceeding ‘fifty
percent (50%) of one percent
a%%)

(c) On exporters, and on manufacturers, millers,
producers, wholesalers, distributors, dealers or retailers of essential
commodities enumerated hereunder at a rate not exceeding one-
half (4) of the rates prescribed under subsections (a), (b) and (d) of
this section:

())__ Rice and com;


(2) Wheat or cassava flour, meat, dairy products,
locally manufactured, processed or preserved food, sugar,
salt and other agricultural, marine, and fresh water products,
whether in their original state or not;

(3) Cook oil and cooking gas;

(4) Laundry soap, detergents, and medicine;

(5) Agricultural implements, equipment and post-
harvest facilities, fertilizers, pesticides, _ insecticides,
herbicides and other farm inputs;

(6) Poultry feeds and other animal feeds;

(7) School supplies; and

(8) Cement.

(d) On Retailers.
With gross sales or receipts Rate of tax for the preceding
calendar year of:

Rate of Tax
Per Annum

P400,000.00 or less %

more than P400,000.00 1%

Provided, however, That barangays shall have the exclusive
power to levy taxes, as provided under Section 152 hereof, on
gross sales or receipts or the preceding calendar year of Fifty
thousand pesos (P50,000.00) or less, in the case of cities, and
Thirty thousand pesos (P30,000.00) or less, in the case of
municipalities.

(e) On contractors and other independent contractors, in
accordance with the following schedule:

With gross receipts for the preceding calendar year in the

amount of:

1s


Amount of Tax

Per Annum
Less than P5,000.00, 27.50
5,000.00 or more but less than P10,000.00 61.60
10,000.00 or more but less than 15,000.00 104.50
15,000.00 or more but less than 20,000.00 165.00
20,000.00 or more but less than 30,000.00 275.00
30,000.00 or more but less than 40,000.00 385.00
40,000.00 or more but less than 50,000.00 550.00
50,000.00 or more but less than 75,000.00 880.00
75,000.00 or more but less than 100,000.00 1,320.00
100,000.00 or more but less than 150,000.00 1,980.00
150,000.00 or more but less than 200,000.00 2,640.00
200,000.00 or more but less than 250,000.00 3,630.00
250,000.00 or more but less than 300,000.00 4,620.00
300,000.00 or more but less than 400,000.00 6,160.00
400,000.00 or more but less than $00,000.00 8,250.00
500,000.00 or more but less than 750,000.00 9,250.00
750,000.00 or more but less than 1,000,000.00 10,250.00
1,000,000.00 or more but less than 2,000,000.00 11,500.00
2,000,000.00 or more at a rate not exceeding fifty

percent (50%) of one percent (1%)

(f) On banks and other financial institutions, at a rate not

exceeding fifty percent (50%) of one percent (1%) on the gross

16


receipts of the preceding calendar year derived from interest,
commissions and discounts from lending activities, income from
financial leasing, dividends, rentals on property and profit from
exchange or sale of property, insurance premium.

(g) On peddlers engaged in the sale of any merchandise
or article of commerce, at a rate not exceeding Fifty pesos (P50.00)
per peddler annually.

(h) On any business, not otherwise specified in the
preceding paragraphs, which the sanggunian concerned may deem
proper to tax: Provided, That on any business subject to the
excise, value-added or percentage tax under the National Internal
Revenue Code, as amended, the rate of tax shall not exceed two
percent (2%) of gross sales or receipts of the preceding calendar
year. The sanggunian concerned may prescribe a schedule of
graduated tax rates but in no case to exceed the rates prescribed
herein. |”
SEC. 10, Section 146 of the same Act is hereby amended to read as

follows:
“SE

imposed under Section 143 shall be payable for every separate or

146. Payment of Business Taxes. — (a) The taxes

distinct establishment or place where business subject to the tax is
conducted and one line of business does not become exempt by
being conducted with some other businesses for which such tax has
been paid. The tax on a business must be paid by the person
conducting the same.

(b) In cases where a person conducts or operates two (2)
or more fof the] businesses [mentioned in Section 143 of this
Code] which are subject to the same rate of tax, the tax shall be
computed on the combined total gross sales or receipts of the said

two (2) or more related businesses.

wv


(c) In cases where a person conducts or operates two (2)
or more businesses [mentioned in Section 143 of this Code] which
are subject to different rates of tax, the gross sales or receipts of
each business shall be, separately reported for the purpose of
computing the tax due from each business.”

SE
to read as follows:

“SEC. 148. Fees for Sealing and Licensing of Weights and

. 11, Paragraph (b) of Section 148 of the same Act is hereby amended

Measures. ~

(a) x x x

(b) The sangguniang bayan shall prescribe the necessary
regulations for the use of such weights and measures, subject to
such guidelines as shall be prescribed by the Department of
Science and Technology. ‘The sanggunian concerned shall, by
appropriate ordinance, penalize fraudulent practices and unlawful
possession or use of instruments of weights and measures and
prescribe the criminal penalty therefore in accordance with the
provisions of this Code: Provided, however, That the sanggunian
concerned may authorize the municipal treasurer to settle an
offence not involving the commission of fraud before a case
therefore is filed in court, upon payment of a compounded penalty
AS PRESCRIBED BY THE SANGGUNIAN of not less than
[Two hundred pesos'(P200)] ONE THOUSAND PESOS (P1,000).
THE SANGGUNIAN MAY INCREASE THE CEILING ON THE
FEES FOR SEALING AND LICENSING OF WEIGHTS AND
MEASURES ONCE EVERY THREE (3) YEARS BASED ON
THE PAST THREE-YEAR AVERAGE OF THE CONSUMER
PRICE INDEX AS OFFICIALLY PUBLISHED BY THE
NATIONAL STATISTICS COORDINATION BOARD.”

18


SEC. 12. Paragraph (a) and subparagraph (3) of Paragraph (b) of Section
149 of the same Act are hereby amended to read as follows:

“SEC. 149. Fishery Rentals, Fees and Charges. — (a)
Municipalities shall have the exclusive authority to grant fishery
privileges in the municipal waters and impose rentals, fees or
charges therefore in accordance with the provisions of this
Section: PROVIDED, THAT RENTALS, FEES OR CHARGES
ARE BASED ON ESTIMATES OF RESOURCE RENT AS
DETERMINED BY THE SANGGUNIAN CONCERNED IN
CONSULTATION WITH THE FISHERIES AND AQUATIC
RESOURCE MANAGEMENT COUNCILS = (FARMC)
ESTABLISHED UNDER REPUBLIC ACT NO. 8550,
OTHERWISE KNOWN AS THE “PHILIPPINE FISHERIES
CODE OF 1998.”

(b) The sangguniang bayan may:

qa) x x x

Q) x x x

(3) Issue licenses for the operation of fishing
vessels of three (3) tons or less for which purpose the
sangguniang bayan shall promulgate rules and regulations
regarding the issuances of such licenses to qualified
applicants under existing laws: PROVIDED, THAT THE

TOTAL NUMBER OF LICENSES ISSUED IS

CONSONANT WITH THE TOTAL ALLOWABLE

CATCH AS DETERMINED BY THE SANGGUNIAN

CONCERNED, IN CONSULTATION WITH THE

FISHERIES, AND AQUATIC RESOURCE

MANAGEMENT COUNCILS (FARMC): Provided,

however, That the sanggunian concerned shall, by

appropriate ordinance, penalize the use of explosives,

19


noxious or poisonous substances, electricity, muro-ami, and

other deleterious methods of fishing and prescribe a

criminal penalty therefor in accordance with the provisions

of this Code: Provided, finally, That the sanggunian

concerned shall have the authority to prosecute any
violation of the provisions of applicable fishery laws.”
SEC. 13. Section 150 of the same Act is hereby amended to read as
follows: :

“SEC. 150. Situs of the Tax. — (a) For purposes of
collection of the taxes under Section 143 of this Code,
{manufacturers, assemblers, repackers, brewers, distillers,
rectifiers and compounders of liquor, distilled spirits and wines,
millers, producers, exporters, wholesalers, distributors, dealers,
contractors, banks.and other financial institutions, and other]
ALL businesses[,} maintaining or operating branch or sales outlet
elsewhere shall record the sale in the branch or sales outlet
making the sale or transaction, and the tax thereon shall accrue
and shall be paid to the CITY OR municipality where such branch
or sales outlet is located. In cases where there is no such branch or
sales outlet in the city or municipality where the sale or transaction
is made, the sale shall be duly recorded in the principal office and
the taxes due shall accrue and shall be paid to such city or
municipality.

(b) The following sales allocation shall apply to
[manufacturers, assemblers, contractors, producers, and exporters]
ALL BUSINESSES with factories, project offices, plants, and
plantations in the pursuit of their business:

(1) Thirty percent (30%) of all sales recorded in
the principal office shall be taxable by the city or

municipality where the principal office is located; and

20


(2) Seventy percent (70%) of all sales recorded in
the principal office shall be taxable by the city or
municipality where the factory, project office, plant, or
plantation is located.

c) Incase of a plantation located at a place other than the
place where the factory is located, said seventy percent (70%)
mentioned in subparagraph (b) of subsection (2) above shall be
divided as follows: :

(1) _ Sixty percent (60%) to the city or municipality
where the factory is located; and ‘

(2) Forty percent (40%) to the city or municipality
where the plantation is located.

(d) In cases where a [manufacturer, assembler, producer,
exporter or contractor] BUSINESS has two (2) or more factories,
project offices, plants, or plantations located in different localities,
the seventy percent (70%) sales allocation mentioned in
subparagraph (b) or subsection (2) above shall be prorated among
the localities where the factories, project offices, plants, and
plantations are located in proportion to their respective volumes of
production during the'period for which the tax is due.

() x x x”

SEC. 14. Section 151 of the same Act is hereby amended to read as
follows:

“SEC. 151. Scope of Taxing Powers. - Except as
otherwise provided in this Code, the city may levy the taxes, fees,
and charges which the province or municipality may impose:
Provided, however, That the taxes, fees and charges levied and
collected by [ highly urbanized and independent component } cities
shall accrue to them and distributed in accordance with the
provisions of this Code.

aa


x x x.
SEC. 15. Section 152 of the same Act is hereby amended to read as follows:

“SEC. 152. Scope of Taxing Powers. ~ The barangays may
levy taxes, fees and charges, as provided in this Article, which
shall exclusively accrue to them:

(a) Taxes — On stores or retailers with fixed business
establishments with gross sales or receipts of the preceding
calendar year of [Fifty) ONE HUNDRED Thousand pesos
{(P50,000.00)] (P100,000.00) or less, in the case of cities and
[Thirty] SIXTY thousand pesos [(P30,000.00)] (P60,000.00) or
less, in the case of municipalities, at a rate not exceeding one
percent (1%) on such gross sales or receipts.

x x a

5. 16. Section 155 of the same Act is hereby amended to read as follows:
“SEC. 155. Toll Fees or Charges. — The sanggunian
concerned may prescribe the terms and conditions and fix the rates
for the imposition of toll fees or charges, for the use of any public
road, pier or wharf, waterway, bridge, ferry or telecommunication
system funded and constructed by the local government unit
concerned: Provided, That no such toll fees or charges shall be
collected from GOVERNMENT-OWNED VEHICLES. [officers
and enlisted men of the Armed Forces of the Philippines and
members of the Philippine National Police, on mission, post office
personnel delivering mail, physically-handicapped, and disabled
who are sixty-five (65) years or older.]
x x xe
SEC. 17. Section 157 of the same Act is hereby amended to read as follows:
“SEC. 157. Individuals Liable to Community Tax. — Every
inhabitant of the Philippines eighteen (18) years of age or over

who has been regularly employed on a wage or salary basis for at

2


least thirty (30) consecutive working days during any calendar
year, or who is engaged in business or occupation, or who owns
real property with an aggregate market value of One thousand
pesos (P1,000.00) or more, or who is required by law to file an
income tax return shall pay an annual community tax of NOT
MORE THAN [Five (P5.00)] THIRTY pesos (P30.00) and an
annual additional tax of NOT MORE THAN [One Peso (P1)]
TWO PESOS (P2) for every One Thousand pesos (P1,000) of
income [regardless of whether] from business, exercise of
profession, EMPLOYMENT or from property [which in no case
shall exceed Five Thousand pesos (P5,000.00)].

In the case of husband and wife, the additional tax herein
imposed shall be based upon the total property owned by them and
the total gross receipts or earnings derived by them: PROVIDED,
THAT DISABLED PERSONS AND SENIOR CITIZENS NOT
GAINFULLY EMPLOYED, NOT ENGAGED IN BUSINESS
OR EARNING LESS THAN SIXTY THOUSAND PESOS
(P60,000.00) ANNUALLY SHALL PAY A FIX AMOUNT OF
THIRTY PESOS (P30.00).”

SEC. 18. Section 158 of the same Act is hereby amended to read as follows:

“SEC. 158. Juridical Persons Liable to Community Tax. -
Every corporation no matter how created or organized, whether
domestic or resident foreign, engaged in or doing business in the
Philippines shall pay an annual community tax of [Five hundred
(P500.00)] ONE THOUSAND pesos (P1,000.00) and an annual
additional tax [, which, in no case, shall exceed Ten thousand
pesos (P10,000.00)] in accordance with the following schedule:

(1) For every [Five thousand pesos (P5,000.00)] ONE
THOUSAND PESOS (P1,000.00) worth of real property in the
Philippines owned by it during the preceding year based on the

2B


valuation used for the payment of the real property tax under
existing laws, found in the assessment rolls of the city or
municipality where the real property is situated — [Two Pesos
(P2.00)] THREE PESOS (P3.00); and

(2) For every [Five] ONE thousand pesos [(P5,000.00)]
(P1,000.00) of gross receipts or earnings derived by it from its
business in the Philippines during the preceding year - [Two]
THREE pesos {(P2.00)} (P3.00).

The dividends received by a corporation from another
corporation however shall, for the purpose of the additional tax, be
considered as part of the gross receipts or eamings of said
corporation.”

SEC. 19. Section 162 of the same Act is hereby amended to read as follows:

“SEC. 162. Community Tax Certificate. — A community
tax certificate shall be issued to every person or corporation upon
payment of the community tax. A community tax certificate may
also be issued to any person or corporation not subject to the
community tax upon payment of [One (1)] THIRTY pesoS
(P30.00).”

SEC. 20. Section 171 of the same Act is hereby amended to read as follows:

“SEC. 171. Examination of Books of Accounts and
Pertinent Records of Businessmen by Local Treasurers. — The
provincial, city, municipal or Barangay treasurer may, by himself
or through any of his deputies duly authorized in writing, examine
the ‘books, accounts, and other pertinent records of any person,
partnership, corporation, or association subject to local taxes, fees
and charges in order to ascertain, assess, and collect the correct
amount of the tax, fee, or charge. Such examination shall be made
during regular business hours, only once for every tax period, arid

shall be certified to by the examining official. Such certificate


shall be made of record in the books of accounts of the taxpayer
examined.

In case the examination herein authorized is made by a duly
authorized deputy of the local treasurer, the written authority of
the deputy concerned shall specifically state the name, address,
and business of the taxpayer whose books, accounts, and pertinent
records are to be examined, the date and place of such
examination, and the procedure to be followed in conducting the
same.

For this purpose, the records of the revenue district office of
the Bureau of Internal Revenue shall be made available to the local
treasurer, his deputy or duly authorized representative.

THE REVENUE DISTRICT OFFICER SHALL, UPON
REQUEST, FURNISH THE CITY OR MUNICIPAL
TREASURER, SUCH OTHER PERTINENT INFORMATION
REQUIRED IN SAID EXAMINATION. THE CITY AND
MUNICIPAL TREASURERS AND THEIR DEPUTIES AND
AUTHORIZED REPRESENTATIVES SHALL AT ALL TIMES
KEEP THE INFORMATION STRICTLY CONFIDENTIAL
AND SHALL BE USED ONLY TO ASCERTAIN, ASSESS,
AND COLLECT THE CORRECT AMOUNT OF LOCAL TAX,
FEE OR CHARGE. SUCH RECORDS SHALL NOT BE
DIVULGED TO ANY THIRD PERSONS EXCEPT UPON
ORDER OF A COURT OF COMPETENT JURISDICTION.
THE CITY OR MUNICIPAL TREASURERS OR THEIR
DEPUTIES OR AUTHORIZED REPRESENTATIVES SHALL
BE ADMINISTRATIVELY LIABLE FOR THEIR
DISCLOSURE TO ANY THIRD PARTY OR PERSON,
WITHOUT PREJUDICE TO PROSECUTION UNDER
EXISTING LAWS.

25


THE EXAMINATION SHALL BE MADE DURING
REGULAR BUSINESS HOURS NOT OFTENER THAN ONCE
A YEAR FOR EVERY TAX PERIOD, WHICH SHALL BE THE
YEAR IMMEDIATELY PRECEDING THE EXAMINATION,
AND SHALL BE CERTIFIED BY THE EXAMINING
OFFICIAL. SUCH CERTIFICATION SHALL BE MADE OF
RECORD IN THE BOOKS OF ACCOUNTS OF THE
TAXPAYER EXAMINED.

ALL BUSINESSES MUST KEEP PROPER BOOKS OF
ACCOUNTS. IN THE CASE OF BUSINESSES WITH
REVENUES ABOVE SIX HUNDRED THOUSAND PESOS
(P600,000.00), THE FINANCIAL STATEMENTS MUST BE
AUDITED BY A CERTIFIED PUBLIC ACCOUNTANT. FOR
BUSINESSES WITH REVENUES ABOVE ONE HUNDRED
THOUSAND PESOS (P100,000.00) BUT BELOW ‘SIX
HUNDRED THOUSAND PESOS  (P600,000.00), THE
ACCOUNTS SHALL BE PREPARED BY A BOOKKEEPER.”
SEC. 21. Section 188 of the same Act is hereby amended to read as follows:

“SEC. 188. Publication of Tax Ordinances and Revenue
Measures, — Within {ten (10)} FIFTEEN (15) days after their
approval, certified true copies of all provincial, city and municipal
tax ordinances or revenue measures shall be published in full for
three (3) consecutive days in a DAILY newspaper PUBLISHED
AND CIRCULATED LOCALLY fof local circulation:] OR
ONCE A WEEK FOR THREE (3) CONSECUTIVE WEEKS IN
CASE OF A WEEKLY NEWSPAPER PUBLISHED AND
CIRCULATED LOCALLY.  [Provided, however, That,| [iJIn
provinces, cities, and municipalities where there are no
newspapers THAT ARE PUBLISHED AND CIRCULATED
LOCALLY [of local circulation], the same [may] SHALL


INSTEAD be posted FOR AT LEAST ONE (1) MONTH in
PROVINCIAL CAPITOLS, CITY OR MUNICIPAL HALLS,
ALL BARANGAY HALLS AND OTHER [at least two (2)}
conspicuous and publicly accessible places.”
SEC. 22. Section 192 of the same Act is hereby amended to read as follows:
“SEC. 192, Authority to Grant Local Tax Exemption
Privileges. — UNLESS OTHERWISE PROVIDED IN THIS
CODE, THE [L]local government units [may], through
[ordinances] duly approved ORDINANCES, MAY grant. tax
exemption, incentives or reliefs FOR THE PURPOSE OF
PROMOTING OR ENCOURAGING INVESTMENTS IN THEIR
JURISDICTIONS, under such terms and conditions as they may
deem necessary: PROVIDED, THAT THE DURATION OF
SUCH INCENTIVES SHALL NOT EXCEED FIVE (5)
CONSECUTIVE YEARS FROM THE EFFECTIVE DATE
GRANTING THE INCENTIVE: PROVIDED, FURTHER, THAT
SUCH INCENTIVE SHALL BE AVAILED OF ONLY ONCE.”
SEC. 23. Section 193 of the same Act is hereby amended to read as follows:
“SEC. 193. Withdrawal of Tax Exemption Privileges. ~
Unless otherwise provided in, this Code, tax’ exemptions or
incentives granted to, or,presently enjoyed by all-persons, whether
natural or juridical, including government-owned or -controlled
corporations, AND OTHER SIMILAR GOVERNMENT
AGENCIES OR ENTITIES GENERATING REVENUES AS
DETERMINED BY THE DEPARTMENT OF FINANCE SUCH
AS BUT NOT LIMITED TO, PHILIPPINE PORTS
AUTHORITY, MANILA INTERNATIONAL AIRPORT
AUTHORITY, PHILIPPINE RECLAMATION AUTHORITY,
PHILIPPINE RETIREMENT AUTHORITY, [except local water

districts, cooperatives duly registered under R.A. 6398, non-stock


and non-profit hospitals and educational institutions,] are hereby
withdrawn [upon the effectivity of this Code] EFFECTIVE
JANUARY 1, 2014.

EXCEPT AS. PROVIDED HEREIN, NO LAW
PROVIDING TAX EXEMPTION FROM LOCAL
GOVERNMENT TAXES, FEES AND CHARGES SHALL BE
ENACTED WITHOUT PRIOR CONSULTATION WITH THE
LEAGUES OF PROVINCES, CITIES AND MUNICIPALITIES
AND LIGA NG MGA BARANGAY AND PRIOR
RECOMMENDATION OF THE DEPARTMENT OF
FINANCE.” . ;
SEC. 24. Section 235 of the same Act is hereby amended to read as follows:

SEC. 235. Additional Levy on Real Property for the Special
Education Fund (SEF). — A province or city, or a municipality
within the Metropolitan Manila Area, may levy and collect an
annual tax of [one percent (1%)] ONE AND ONE HALF
PERCENT (1%%) on the assessed value of real property IN
THEIR RESPECTIVE TERRITORIAL JURISDICTION [which
shall be] in addition to the basic real property tax PROVIDED
UNDER THIS CODE. The proceeds thereof shall exclusively
accrue to the Special Education Fund (SEF).”

SEC. 25. Section 272 of the same Act is hereby amended to read as follows:

“SEC. 272. Application of Proceeds of the [Additional One
Percent] SEF Tax. — The proceeds from the additional [one
percent (1%)] ONE AND ONE HALF PERCENT (114%) tax on
real property accruing to the SEF OF THE PROVINCE, CITY OR
MUNICIPALITY WITHIN THE METROPOLITAN MANILA
AREA shall be automatically released to the local school boards:
Provided, That in the case of provinces, the proceeds shall be
divided equally between the provincial and the municipal school


boards: Provided, however, That the proceeds shall be allocated

for the operation and maintenance of public schools, construction

and repair OR IMPROVEMENT of PUBLIC school buildings,

OR RELATED facilities and equipment, educational research,

purchase of books and periodicals, HONORARIUM FOR

TEACHERS CONDUCTING EXTENSION CLASSES and sports

development as determined and approved by: the local school

board.”

SEC. 26. The Secretary of the Interior Local Government shall promulgate
such rules and regulations as may be necessary for the effective implementation of
this Act.

SEC. 27. If any section or ‘provision of this Act shall be declared
unconstitutional or invalid, the remaining sections or provisions not affected shall
remain in full force and effect.

SEC. 28, This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in two (2) national newspapers of general circulation.

Approved,

29