SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
'13 
DEC 11 
P2:46 
SEN A T 1:.) 0 .~ (' 
Senate Bill No. 
,~ 
v U 
RECEIVED BV:---r--
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
Local governance is the key to true national development. Through the 
strengthening and empowerment of local government units, Filipinos will have a 
more direct and more meaningful participation in charting the course of their 
progress and development. 
Thus, this bill endeavors to institute a new local government code that would 
further strengthen the existing political framework for local autonomy. 
The salient features of this proposed measures are as foHows: 
1. The creation of regional governments for regional administration. 
2. The creation of a Local Government Bank which shall provide 
efficient 
and 
responsive 
general 
banking 
services 
to 
local 
governments. 
3. The proposal to exempt Local Government Bonds from all taxes in 
order to make it attractive for the citizens to patronize and at the same 
time initiate a worthy tradition and the institutionalization of bond 
flotation among local authorities. 
4. The institution of an autonomous local government salary 
administration based on the principle of affordability with certain 
limitations of the frequency of salary increases among 
local 
governments. 
5. Transfer of administrative and technical supervision of real 
property tax assessment and collection to the proposed Regional 
Governments. The intention of this proposal is to free real property tax 
administration at the local level from undue political pressures. 
6. Mandatory 
Formulation 
of 
Performance 
Standards 
for 
Local 
Governments. 
7. Measures to enhance fiscal autonomy at the local level thru improved 
revenue generation and allocation and more efficient, transparent and 
responsive fiscal management. 
Premises considered, the approval of this urgent measure is earnestly sought. 
OY EJERCITO ESTRADA 
Senator 


SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
Senate Bill No. 2036 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
PROVIDING FOR A NEW LOCAL GOVERNMENT CODE OF THE 
PHILIPPINES 
'13 
OCC II P Z :4' 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
TITLE ONE-
BASIC PRINCIPLES 
Chapter 1 
The Code: Policy and Application 
SECTION 1. Local Government Code of the Philippines. This Act shall 
be known and cited as the "New Local Government Code of the Philippines". 
SEC. 2. Declaration of Policies. (a) It is hereby declared the policy of the 
State that the territorial and political subdivisions of the State shall enjoy genuine 
and meaningful local autonomy to enable them to attain their fullest development 
as self-reliant communities and make them more responsive and accountable 
local governments shall be given more powers, authority, responsibilities, and 
resources. 
(b) It is also the policy of the State to ensure the accountability of local 
governments through the institution of effective mechanisms of recall, initiative 
and referendum. 
(c) It is likewise the policy of the State to require all national agencies and 
offices to conduct periodic consultations with appropriate local government, non-
governmental and people's organizations, and other concerned sectors of the 
community before any project or program is implemented in their respective 
jurisdictions. 
SEC. 3. Operative Principles. The formulation and implementation of 
policies and measures on local autonomy shall be guided by the following 
operative principles: 


(a) There shall be an effective allocation among the different local 
governments of their respective powers, functions, responsibilities, and 
resources; 
(b) There shall be established in every local government an accountable, 
efficient 
and 
dynamic 
organizational 
structure 
and 
operating 
mectlanism that will meet the priority needs and service requirements 
of its communities; 
(c) Subject to civil service law, rules and regulations, local officials and 
employees paid wholly or mainly from local funds shall be appointed or 
removed, according to merit and fitness by the appropriate authority; 
(d) The functions, responsibility, and accountability vested in local 
governments shall be accompanied with provision for reasonable 
adequate resources to discharge their powers and effectively carry out 
their functions, hence, they shall have the power to create and broaden 
their own sources of revenue and the right to a just share in national 
taxes and an equitable share in· the proceeds of the utilization and 
development of the natural wealth within their respective areas; 
(e) Provinces with respect to component cities and municipalities, and 
cities and municipalities with respect to component barangays, shall 
ensure that the acts of their component units are within the scope of 
their prescribed powers and functions; 
(f) Local governments may group themselves, consolidate or coordinate 
their efforts, services, and resources for purposes commonly beneficial 
to them; 
(g) The capabilities of local governments, especially the municipalities and 
barangays, shall be enhanced by providing them with opportunities to 
participate actively in the implementation of national programs and 
projects; 
(h) There shall be a continuing mechanism to enhance local autonomy not 
only by legislative enabling acts but also by administrative and 
organizational reforms; 
(i) Local governments shall share with the national government the 
responsibility in the management and maintenance of ecological 
balance within their territorial jurisdiction subject to the proviSions of 
this Code and national policies; 
U) Effective mechanisms for ensuring the accountability of local 
governments to their respective constituents shall be strengthened in 
order to upgrade continually the quality of local leadership; 
(k) The realization of local autonomy shall be facilitated through improved 
coordination of national government policies and programs and 
extension of adequate technical and material assistance to less 
developed and deserving local governments; 
(I) The participation of the private sector in local governance, particularly 
in the delivery of basic services, shall be encouraged to ensure the 
viability of local autonomy as an alternative strategy for sustainable 
development; and 


(m)The national government shall ensure that decentralization contributes 
to 
tile 
continuing 
improvement of the 
perforlTlance 
of local 
governments and the quality of community life. 
SEC. 4. Scope of Application. This Code shall apply to all provinces, 
cities, municipalities, barangays and other political subdivisions as may be 
created by law, and, to the extent herein provided, to officials, offices, or 
agencies of the national government. 
SEC. 5. Rules of Interpretation. In the interpretation of the provisions of 
this Code, the following rules shall apply 
(a) Any provision on a power of local government shall be liberally 
interpreted in its favor, and in case of doubt, any question thereon shall 
be resolved in favor of devolution of powers and of the lower local 
government. Any fair and reasonable doubt as to the existence of the 
power shall be interpreted in favor of the local government concemed; 
(b) In case of doubt, any tax ordinance or revenue measure shall be 
construed strictly against the local government enacting it, and liberally 
in favor of the taxpayer; 
(c) The general welfare provisions in this Code shall be liberally 
interpreted to give more powers to local governments in accelerating 
economic development and upgrading the quality of life for the people 
in the community; 
(d) In the resolution of controversies arising under this Code where no 
legal provision or jurisprudence applies, resort may be had to the 
customs and traditions in the place where the controversies take place. 
Chapter 2 
General Powers and Attributes of Local Governments 
SEC. 6. Authority to Create Local Governments. A local government may 
created, divided, merged, abolished, or its boundaries substantially altered either 
by law enacted by Congress in the case of a province, city, municipality, or any 
other political subdivision, or by ordinance passed by the sangguniang 
panlalawigan or sangguniang panlungsod concerned in the case of a barangay 
located within its territorial jurisdiction. 
SEC. 7. Creation and Conversion. As a general rule, the creation of a local 
government or its conversion from one level to another level shall be based on 
verifiable indicators of visibility and projected capacity to provided services, to 
wit; 
(c) Income -
It must be sufficient, based on acceptable standards, to 
provide for all essential government facilities and services and special 
functions commensurate with the size of its populations, as expected 
of the local government concerned; 


(d) Population - It shall be determined as the total number of inhabitants 
within the territorial jurisdiction of the local government concerned; and 
(e) land Area - It must be contiguous, unless it comprises two or more 
islands or is separated by a local government independent of the 
others; properly identified by metes and bounds with technical 
descriptions; and sufficient to provide for such basic services and 
facilities to meet the requirements of its populace. 
Compliance with foregoing indicators shall be attested to by the 
Department of Finance (DO F), the National Statistics Office (NSO), and 
the lands Management Bureau (lMB) of the Department 0 Environment 
and Natural Resources (DENR). 
SEC. 8. Division or Merger. Division or merger of existing local 
governments shall comply with same requirements herein prescribed for their 
creation: Provided however, That such division shall not reduce the income, 
population, or land are of the local government(s) shall not fall below its current 
income classification prior to such division. 
The income classification of local governments shall be updated within six 
months from the effectivity of this Code to reflect the changes in their financial 
positions resulting from the increased revenues as provided herein. 
SEC. 9. Abolition of Local Governments. A local government may be 
abolished when its income, population, or land area has been irreversibly 
reduced to less than the minimum standards prescribed for its creation. 
The law or ordinance abolishing a local government shall specify the 
province, city, municipality, or barangay with which the local government sought 
to be abolished will be incorporated or merged. 
SEC. 10. Plebiscite Requirement. No creation, division, merger, abolition, 
or substantial alteration of boundaries of local governments shall take effect 
unless approved by a majority of the votes cast in a plebiscite called for the 
purpose in the political unit or units directly affected. Said plebiscite shall be 
conducted by the Commission on Elections (Comelec) within one hundred twenty 
(120) days from the date of effectivity of the law or ordinance effecting such 
action unless said law or ordinance fixes another date. 
SEC. 11. Naming of Local Governments and Public Places, Streets and 
Structures. 
(a) 
The sangguniang panlalawigan, 
sangguniang panlunsod, 
sanggunian bayan which ever is the case may, after conducting public hearing 
and in conclusion with the Philippine Historical Commission (PHC), change the 
name of the following within its territorial jurisdiction: 
For Provinces: 
(1) Cities and municipalities, upon the recommendation of the 
sanggunian concerned; 
(2) Provincial 
roads, 
avenues, 
boulevards, 
thorough-fares, 
and 
bridges; 


For Cities: 
(3) Public vocational or technical schools and other post-secondary 
and tertiary schools; 
(4) Provincial hospitals, health centers, and other health facilities; and 
(5) Any other public place or building owned by the provincial 
governrnent. 
(1) Barabgays, 
upon the 
recommendation of the sangguniang 
barangay concerned; 
(2) Roads, avenues, boulevards, thorough fares, and bridges; 
(3) Public elementary, secondary and vocational or technical schools, 
community colleges and non-chartered colleges; 
(4) Hospitals, health centers and other health facilities; and 
(5) Any other public place or building owned by the city government. 
For Municipalities: 
(1) Barangays, upon recommendation of the sangguniang barangay 
concerned; 
(2) Barangay roads, avenues, boulevards, thorough fares, and 
bridges; 
(3) Public elementary, secondary and vocational or technical schools, 
post-secondary and other tertiary schools; 
(4) Hospitals, health centers and other health facilities; and 
(b) Any other public place or building owned by the local government. 
(1) None of the foregoing local governments, institutions, places, or 
buildings shall be named after a living person, nor maya change of 
name be made unless for a justifiable reason and, in any case, not 
oftener than once every ten years. The name of a local government 
or a public place, street or structure with historical, cultural, or 
ethnic significance shall not be changed, unless by a unanimous 
vote of the sanggunian concerned and in consultation with the 
PHC. 
(2) A change of name of a public school shall be made only upon the 
recommendation of the local school board concerned. 
(3) A change of name of public hospitals, health centers, and other 
health facilities shall be made only upon recommendation of the 
local health board concerned. 
(c) Changes of names of local government 


(1) The change of name of any local government shall be effective only 
upon ratification in a plebiscite conducted for the purpose in the 
political unit directly affected. 
(2) In any change of name, the Office of the President, Regional 
Government and the National Census and Statistics Office, the 
representative of the legislative district Goncerned, and the Bureau 
of Posts shall be notified. 
. 
SEC. 12. Commencement Corporate Existence. When a new local 
government is created, its corporate existence shall commence upon the election 
and qualification of its chief executive and a majority of the members of its 
sanggunian, unless some other time is fixed therefore by the law or ordinance 
creating it. 
SEC. 13. Political and Corporate Nature of Local Governments. Every 
local government created or recognized under this Code is a body politic and 
corporate endowed with powers to be exercised by it in conformity with law. As 
such, it shall exercise powers as a political subdivision of the national 
government and as a corporate entity representing the inhabitants of its territory. 
SEC. 14. General Welfare Clause. Every local government shall exercise 
the powers expressly granted, those necessarily implied therefrom, as well as 
powers necessary, appropriate or incidental for it is efficient and effective 
governanGe, and those whiGh are essential to the promotion of the general 
welfare. Within their respective territorial jurisdiction, local governments shall 
ensure and support, among other things, the preservation and enrichment of 
culture, promote healthy and safety, enhance the right of the people to a 
balanced ecology, encourage and support the development of appropriate and 
self-reliant scientific and technological capabilities, improved public morals, 
enhance economic prosperity and social justice, promote full employment among 
their residents, maintain peace and order, and preserve the comfort and 
convenience of their inhabitants. 
SEC. 15. Basic Guidelines in the Delivery of Basic Services and Facilities. 
(a) Local governments shall endeavor to be self-reliant and shall continue 
exercising the powers and discharging the functions currently vested upon 
them including those dev.olved to them. 
(b) Local governments shall involve the active participation of the civil society, 
and business including other sectors such as NGO's and people's 
organization. 
. 
SEC. 16. Power of Eminent Domain. A local government may, through its 
chief executive and acting pursuant to an ordinance, exercise the power of 
eminent domain for public use, or purpose, or welfare for the benefit of the poor 
and the landless, upon payment of just compensation, pursuant to the provisions 
of the Constitution and pertinent laws: Provided however, that the power of 
eminent domain may not be exercised unless a valid and definite offer has been 
previously made to the owner, and such offer was not accepted: Provided, 
further, That the local government may immediately take possession of the 


property upon the filling of the expropriation proceedings an upon making a 
deposit with the proper Gourt of at least fifteen percent (15%) of the fair market 
value of the property based on the current tax declaration of the property to be 
expropriated: Provided finally, that the amount to be paid for the expropriated 
property shall be determined by the proper court, based on the fair market value 
at the time of the taking of the property. 
SEC. 17. Local Taxation. Local governments shall have the power to 
create its own sources of revenue and levy taxes or imposed charges or fees. 
SEC. 18. Reclassification of Lands. (a) A city or municipality may through 
an ordinance passed by the sanggunian after conducting public hearings for the 
purpose, authorize the reclassification of agricultural lands and provide for the 
manner of their utilization or disposition in the following cases: (1) when the land 
ceases to be economically feasible and sound for agricultural purposes as 
determined by the Department of Agriculture or (2) where the land shall have 
substantially greater economic value for residential, commercial, or industrial 
purposes, as determined by the sanggunian concerned: Provided, that such 
reclassification shall be limited to the following percentage of the total agricultural 
land area at the time of the passage of the ordinance: 
(1) Highly urbanized and independent component cities, fifteen percent 
(15%); 
(2) For the component cities and first to third class municipalities, ten 
percent (10%); and 
(3) For the fourth to sixth class municipalities, five percent (5%) ; 
Provided, furlher, That agricultural lands distributed to agrarian 
reform beneficiaries pursuant to republic Act Numbered Sixty-six 
hundred fifty-seven (RA No. 6657), otherwise known as "The 
Comprehensive Agrarian Reform Law", shall not be affected by the 
said reclassification and the conversion of such lands into other 
purposes. 
(b) The President may, when public interest so requires and upon 
recommendation 
by the 
National 
Economic and 
Development 
Authority, authorize a city or municipality to reclassify lands in excess 
of the limits set in the next preceding paragraph. 
(c) The local governments shall, in conformity with existing laws, continue 
to prepare their respective comprehensive land use plans enacted 
through zoning ordinances which shall be the primary and dominant 
bases for the future use of land resources: Provided, That the 
requirements for food production, human settlements, and industrial 
expansion shall be taken into consideration in the preparation of such 
plans. 
(d) Where approval by a national agency is required for classification, 
such 
(e) approval shall not be unreasonably withheld. Failure to act on a proper 
and complete application for reclassification within three (3) months 
from receipt of the same shall be deemed as approval thereof. 


(f) Nothing in this Section shall be construed as repealing, amending, or 
modifying in any manner the provisions of RA No. 6657. 
SEC. 19. Closure and opening of Roads. (a) Local government may 
pursuant to an ordinance, permanently or temporarily close or open any local 
road, alley, park, or square failing within its jurisdiction: Provided however, That 
in case or permanent closure, such ordinance must be approved by at least two-
thirds (2/3) of all the members of the sanggunian, and when necessary, an 
adequate substitute for the public facility that is subject to closure is provided. 
(b) No such way or place or any part thereof shall be permanently closed 
without making provisions for the maintenance of public safety therein. 
A property thus permanently withdrawn from public use may be used 
or conveyed for any purp·ose for which other real property belonging to 
the local government concerned may be lawfully used or conveyed: 
Provided, however, That no freedom park shall be closed permanently 
without provision for its transfer or relocation to a new site. 
(c) Any national or local road, alley, park, or square may be temporarily 
closed during an actual emergency, or fiesta celebration, public rallies, 
agricultural or industries fairs, or an undertaking of public works and 
highways, telecommunications, and waterworks projects, the duration 
of which shall be specified by the local chief executive concerned in a 
written order: Provided, however; That no national or local road, alley, 
park, or square shall set temporarily closed for athletic, cultural, or 
civic activities not officially sponsored, recognized, or approved by the 
local government concerned. 
(d) Any city, municipality, or barangay may, by a duty enacted close and 
regulate the use of any local ordinance, temporarily street, road, 
thoroughfare, or any other public place where shopping malls, 
Sunday, flea or night markets, or shopping areas may be established 
and where goods, merchandise, foodstuffs, commodities, or articles of 
commerce may be sold and dispensed to the general public. 
SEC. 20. Corporate Powers. (a) Every local government, as a corporation, 
shall have the following powers: 
(1) To have continuous succession in its corporate name; 
(2) To sue and be sued; 
(3) To have and use a corporate seal; 
(4) To acquire and convey real or personal property; 
(5) To enter into contact; and 
(6) To exercise such other powers as are granted to corporations, 
subject to the limitations provided in this Code and other laws. 
(b) Local governments may continue using, modify, or change their 
existing corporate seals: Provided, That newly established local 
governments or those without corporate seals may create their own 
corporate seals which shall be registered with the Department of the 


Interior and Local Government and the National Historical Institute; 
Provided, further, That any change of corporate seal shall also be 
registered as provided herein. 
(c) Unless otherwise provided in this Code, the local chief executive in 
behalf of the local government may enter into contract without prior 
authorization by the sanggunian concerned. A legible copy of such 
contract shall be posted at conspicuous places in the provincial capitol 
or the city, municipal or barangay halls. 
(e) Local governments shall enjoy full autonomy in the exercise of their 
propriety functions and in the management of their economic 
enterprises subject to the limitations provide in this Code and other 
applicable laws. 
SEC. 21. Authority to Negotiate and Secure Grants. Local chief executive 
may, upon authority of the sanggunian, negotiate and secure financial grants or 
donations in kind, from all legal sources· including countries with which the 
Philippines has diplomatic relations in support of the basic services and facilities, 
however, that project financed by such grants or assistance with national security 
implications shall be given clearance by the national agency concerned. 
SEC. 22. Uability for Damages. Local governments and their officials are 
not exempt from liability for death or injury to persons or damage· to property. 
TITLE TWO-
INTERGOVERNMENTAL RELATIONS 
Chapter 1 
National Government and Local Governments 
SEC. 23. National Supervision Over Local Governments. Consistent with 
the policy on local autonomy, the Pre8ident of the Philippines shall, through 
either the appropriate executive department or Regional Government, exercise 
general supervision over local governments to ensure that their acts are within 
the scope of their prescribed powers and functions. 
Chapter 2 
Relations with the Philippine National Police 
SEC. 24. Powers of Local Chief Executives Over the Units of the 
Pllilippine National Police. The extent of operational supervision and control of 
local chief executives over the police force, fire protection unit, and jail 
management personnel assigned in their respective jurisdictions shall be 
governed by the proviSions of Republic Act Numbered Sixty-nine seventy-five 
(R.A. No. 6975), as amended by Republic Act 8551. in addition to the powers 
hereinafter provided, the city or municipal mayor shall have the power to choose 
the chief of police, recommend the transfer, reassignment or detail of members 
of the Philippine National Police. He shall also exercise control and supervision 
over anti-gambling activities. 


In case the city or municipality police force is not adequate to meet or 
cope with the danger posed to public order or safety, the city or municipal mayor 
shall augment the same by constituting a special force unit in his jurisdiction, to 
be composed of persons who possess qualifications similar to those of regular 
members of the police force, to be appointed by him and whose salaries and 
benefits shall be paid out of his discretionary fund or funds available in the local 
treasury. 
As a deputy of the national police commission, the city or municipal mayor 
shall have administrative supervision and control over the special police force 
unit, which shall continue to be maintained until the cessation of the danger for 
which it was constituted or upon resumption of peace and order in the 
community. 
Chapter 3 
Inter-Local Government Relations 
SEC. 25. Provincial Relations with Component Cities and Municipalities. 
The province, through the governor, shall ensure that every component city and 
municipality within its territorial jurisdiction acts within the scope of its prescribed 
powers and functions. Highly urbanized cities and independent component cities 
shall be independent of the province. 
SEC. 26. Submission of MuniCipal Questions to the Provincial Legal 
Officer. In the absence of a municipal legal officer, the municipal government 
may secure the opinion of the provincial legal officer, and in the absence of the 
latter, that of the provincial prosecutor on any legal question affecting the 
municipality. 
SEC. 27. 
City and Municipal Supervision Over their Respective 
Barangays. The city or municipality, through the city or municipal mayor 
concerned, shall exercise general supervision over component barangays to 
ensure that said barangays act within the scope of their prescribed functions and 
powers. 
SEC. 28. Corporate Undertakings Among Local Governments. Local 
governments may, through appropriate ordinances, exercise their joint powers to 
group themselves, consolidate, or coordinate their efforts, services and 
resources for 
purpose~; commonly beneficial to them. In support of such 
undertakings, the local governments involved may, upon approval by the 
sanggunian concerned after a public hearing conducted for the purpose, 
contribute funds, real estate, equipment, and other kinds of property and appoint 
or assign personnel under such terms and conditions as may be agreed upon by 
the participating local units through· memoranda of agreement. 
TITLE THREE-
REGIONAL GOVERNMENTS 
Chapter 1 
Creation, Structure, and Members 


SEC. 29. Creation of Regional Government. There shall be established in 
each administrative region except in the Autonomous Region in Muslim 
Mindanao, a Regional Government, which shall be a body politic and corporate, 
comprising of all provinces, cities, municipalities, and barangays within each of 
the administrative region, subject to the approval of the majority votes cast in a 
plebiscite in all political units directly affected. 
SEC. 30. Organizational Structure. The Regional Government shall have a 
legislative council, the chairman of which shall b() elected from among its 
members. It shall also have a Regional Administrator and a Secretary to the 
Council. The regional administrator and the secretary to the council shall' be 
appointed by the chairman of the Regional Government subject to the two-thirds 
(2/3) concurrent votes of the members of the legislative council. 
The Regional GOl/ernment shall create such other offices and positions, 
which it may deem necessary to perform its mandates based on the principles of 
economy, efficiency and simplicity. Its annual budgetary appropriation for 
personal services shall not exceed forty-five percent (45%) of its regular and 
recurring income. 
SEC. 31. Legislative Councils. The legislative council of every Regional 
Government shall be composed of Members who are or shall be elected at large 
region-wide, the number of which shall be based on the congressional district 
representation existing within their geographic area of an administrative region as 
defined in Presidential Decree No. 1 and its subsequent amendments 
reorganizing other administrative regions in the country. 
SEC. 32. Presiding Officer. The chairman shall preside over the sessions 
or meetings of the council and exercise supervision over the work of the Regional 
Administrator and those of other public officials of the Regional Government. 
SEC. 33. Terms of Office. A member of the council shall have a term of 
office of three years and shall receive a salary in an amount no higher than the 
monthly salary of Members of the House of Representatives. He shall also be 
entitled to travel allowance in attending sessions of the regional legislative 
council. 
SEC. 34. Internal Rules and Regulations. The chairman shall initiate the 
formulation and adoption of the internal rules and regulations governing the 
business of the regional legislative council. 
Chapter 2 
Functions and Powers 
SEC. 35. Functions and Powers. The Regional Government shall have 
and through appropriate bodies exercise the following functions and powers: 
(a) Organize its administrative ·offices or services in support of the 
operations of the Regional Government; 


(b) Provide 
policy 
directions 
und 
program 
strategies 
in 
regional 
development administration; 
(c) Perform 
management 
responsibilities 
of 
region-wide 
public 
infrastructures; 
(d) Establish standard of performance as guide in local government 
organization; 
(e) Allocate the internal revenue allotments (IRA) to local governments; 
(f) Exercise taxing and revenue raising powers; 
(g) Promote regional investments; 
(h) Provide region-wide public services; 
(i) Review the valuation of lands or real properties for tax purpose as 
these are assessed by local governments; 
0) Ensure that the acts of component provinces, highly urbanized and 
independent component cities are within their prescribed functions and 
powers including administrative questions involving their legality and 
constitutionality; and 
(k) Such powers and functions in the furtherance of local autonomy, inter-
local and interregional cooperation, which shall include the power of 
the Regional Governments to enlist the assistance of the Regional 
Councils in planning the economic and social development of the 
regions. 
Chapter 3 
Sources of Revenues 
SEC. 
36. 
Share of National Government 
Taxes.' The Regional 
Government shall be entitled to a five percent (5%) share of National 
Government taxes based on the collections of the third fiscal year preceding the 
current fiscal year; Provided, however, That the share of each Regional 
Government shall be determined on the bases of the following formula: 
(1) Population - Fifty percent (50%) 
(2) Land Area - Twenty-five percent (25%) 
(3) Equal Sharing - Twenty-five percent (25%) 
Provided, finally, That the aforementioned five percent (5%) share shall be 
released automatically and without any unnecessary pre-release action, directly 
to the Regional Government on a quarterly basis within five (5) days after the end 
of each quarter, and shall not be subject to any lien or holdback that may be 
imposed by the National Government. 


SEC. 37. Tax on Business. The Regional Governrnents are hereby 
empowered to impose tax on business at rates not exceeding one percent (1%) 
of the gross sales or receipt of the business concerned in the preceding Calendar 
Year, subject to the provisions of Section 273 Article Four, Chapter 1, Title Nine 
of This Code. 
SEC. 38. Real Property Tax. Subject to the provisions of Chapter 2, Title 
Nine of this Code, the RE!gional Governments may levy an annual ad valorem tax 
on real property such as land, building, machinery, and other improvements not 
specifically exempted, at a uniform basic tax rate applied to the Fair Market 
Value of the real property as follows: 
Residential- ten percent (10%) of one percent (1 %) to one percent (1 %) 
Commercial - twenty percent (20%) of one percent (1 %) to two percent 
(2%) 
Agricultural - ten percent (10%) of one percent (1 %) to one percent (1 %) 
Others - ten percent (10%) of one percent (1%) to one percent (1%) 
SEC. 39. Service Fees and Charges. Regional Governments may impose 
and collect reasonable fees and charges for the following: 
(a) 
Rendition of services in relation to its authorized functions; 
(b) 
Management 
and 
operation 
of joint ventures, 
cooperative 
programs, and similar undertaking with any of the component local 
governments; 
(c) 
Undertaking in behalf of, and by authority from, any of its 
component local governments, the administration and collection of 
tax and other revenues; development of local enterprises, including 
land use planning; 
. 
(d) 
Initiating similar undertaking as the above, with a view to enhance 
the economic and social well-being of the communities within the 
region; and, 
(e) 
Use of any public road, pier, or wharf, waterway, bridge, ferry or 
telecommunication system funded, constructed, and maintained by 
the Regional Government concerned; Provided, That no charges or 
toll fees shall be collected form government vehicles and vehicles 
exclusively carrying officers and enlisted men of the Armed Forces 
of the Philippines and member of the Philippine National Police, on 
miSSion, 
post 
office 
personnel 
delivering 
mail, 
physically 
handicapped, disabled persons and senior citizens. 
SEC. 40. Effectivity. The share of national government taxes and the 
taxing and revenue-raising powers herein granted shall lake effect upon approval 
of the Regional Government concerned in the plebiscite held for the purpose: 
Provided, however, That any revenue or income accruing to said Regional 
Government shall be held in trust for it by the Bureau of Treasury until the 
assumption to office of the Members of its Legislative Council. 


Chapter 4 
Plebiscite and Election of Legislative Council Members 
SEC. 41. Plebiscite. The Commission on Elections (Comelec) shall initiate 
and supervise the conduct of the plebiscite herein provided in each 
administrative region, which shall be undertaken within one hundred twenty (120) 
days after the effectivity of this Act (New Code on Local Govemment). 
In case the majority of the voters fail to approve the creation of the 
Regional Government in the plebiscite conducted, the Commission on Elections, 
may, upon petition of at least twenty-five percent (25%) of the registered voters in 
the region, conduct another plebiscite to consider the questions qr proposition at 
any time within one year thereafter. 
SEC. 42. Election of Members. The first election of Members of the 
Legislative Council to be conducted shall by synchronized with the presidential 
elections scheduled in the month of May Year 2007. 
SEC. 43. Beginning of Existence. The Regional Government shall come 
into existence upon approval of its creation in the plebiscite conducted for the 
purpose and qualification of members of the Legislative C()uncil. 
TITLE FOUR 
PROVINCIAL GOVERNMENTS 
Chapter 1 
Creation of the Province 
SEC. 44. Creation and Function of a Province. The province is a territorial 
and political subdivision of the Philippines, comprising of several component 
cities and municipalities situated within its territorial limits. It serves as a general 
purpose government for the coordination and delivery of basic, province-wide 
services for the benefit of the inhabitants and for effective governance of the 
province. 
SEC. 45. Manner of Creation. A province may be created, divided, 
merged, abolished, or its boundary substantially altered, only by an Act of 
Congress and subject to approval by a majority of the votes cast in a plebiscite to 
be conducted for the purpose in the local governments directly affected. The 
plebiscite shall be held within one hundred twenty (120) days from the date of 
effectivity of said Act, unless otherwise provided herein. 
SEC. 46. Requisites for Creation. (a) In the creation of a province, 
Congress may be guided by the following: 
(1) An average annual income, as certified by the Department of 
Finance, of not less than two hundred million pesos (Php 
200,000,000.00); 
(2) A contiguous territory of at least two thousand (2,000) square 
kilometers, as certified by the Lands Management Bureau; and 


(3) A population of not less than five hundred fifty thousand (550,000) 
inhabitants as certified by the National Statistics Office. 
Provided, That, the creation thereof shall not reduce the land area, 
population, and income of the original unit or units at the time of said creation to 
less than the minimum requirements prescribed herein. 
(b) The territory need not be contiguous if it comprises of two (2) or more 
islands or is separated by a city or cities, which do not contribute to the 
income of the province. 
(c) The average annual income shall include the income accruing to the 
general fund. Exclusive of special funds, trust funds, transfers, and non-
recurring income. 
Chapter 2 
Provincial Officials in General 
SEC. 47. Officials ofthe Provincial Government. (a) There shall be in each 
province 
a 
governor, 
a 
vice-governor, 
members 
of the 
sangguniang 
panlalawigan, a secretary to the sangguniang panlalawigan, a provincial 
treasurer, a provincial assessor, a provincial accountant, a provincial engineer, a 
provincial budget officer, a provincial planning and development coordinator, a 
provincial social welfare and development officer, a provincial agriculturist, and a 
provincial veterinarian. 
(b) In addition thereto, the·governor may appoint other offiCials, which the 
provincial government may find necessary in the performance of its 
mandate, except those officials and employees of the sanggunian. 
(c) The Sangguniang Panlalawigan may: 
(1) Maintain existing offices not mentioned in subsections 9a) and (b) 
hereof; 
(2) Create such other offices as may be necessary to carry out the 
purposes of the provincial govemment; or 
(3) Consolidate the functions of any office with those of another in the 
interest of efficiency, economy, and simplicity. 
(d) Unless otherwise provided herein, heads of departments and offices 
shall be appointed by the governor with the concurrence of the majority 
of all the sangguniang panlalawigan members. The sangguniang 
panlalawigan shall act on the appointmentwithin fiftee'n (15) days from 
the date of its submission, if no action is taken after expiration of 
period, it shall be deem approved. 
(e) Elective and 
appointive provincial officials shall receive such 
compensation, allowances, and other emoluments as may be 
determined b'l law or ordinance, Provided, That, no increase in 
compensation shall take effect until after the expiration of the full term 
of all the elective officials approving such increase. 


SEC. 48. Residence and Office. During the incumbency of the governor, 
he shall have his official residence in the capital of the province. All elective and 
appointive provincial officials shall hold office in the provincial capital: Provided, 
That, upon resolution of the sangguniang panlalawigan, elective and appointive 
provincial officials may hold office in any component city or municipality within the 
province for a period of not more than seven (7) days for any given month. 
Chapter 3 
Sangguniang Panlalawigan 
, 
SEC. 49. Composition. (a) The sangguniang panlalawigan, the legislative 
body of the province, shall be composed of the provincial vice-governor as 
presiding officer, the regular sanggunian members, the president of the provincial 
chapter of the liga ng mga barangay, the president of the panlalawigang 
pederasyon ng mga sangguniang kabataan, the rpesident of the provincial 
federation of sanggunian members of municipalities and component cities, and 
the sectoral representatives, as members. 
(b) In addition thereto, there shall be three (3) sectoral representatives: 
one (1) from the women; and as shall be determined by the sanggunian 
concerned within ninety (90) days prior to the holding of the local 
elections, one (1) from the agricultural or industrial workers; and one (1) 
from the other sectors, including the urban poor, indigenous cultural 
communities, or disabled persons. 
(c) The regular members of the sangguniang panlalawigan and the 
sectoral representatives shall be elected in the manner as may be 
provided for by law. 
TITLE FIVE. 
CITY GOVERNMENTS 
Chapter 1 
Role and Creation of the City 
SEC. 50. Creation and Function of the City. The city, consisting of more 
urbanized and developed barangays, serves as a general-purpose government 
for the coordination and delivery of baSIC, city-wide services for the benefits of 
the inhabitants and for e'ffective city governance. 
SEC. 51. Manner of Creation. A city may be created, diVided, merged, 
abolished, or its boundary substantially altered, only by an Act of Congress, 
subject to approval by a majority of the votes cast in a plebiscite to be conducted 
by the Comelec in the local government(s) directly affected. Except as may 
otherwise be provided in such Act, the plebiscite shall be held within one hundred 
twenty (120) days from the date of its effectivity. 
SEC. 52. ReqUisites for Creation. (a) A municipality may be converted into 
a component city if it has a locally generated average annual income, of at least 
one hundred million pesos (Php 100,000,000.00) for the last two (2) consecutive 


years based on constant prices, as certified to by the Provincial Treasurer, an 
average real property tax colledion efficiency of, at least, eighty percent (80%) to 
be based on the three (3) years collection immediately preceding the current 
calendar year and meets the following additional requirements: 
(1) A contiguous territory of at least one hundred (100) square 
kilometers as certified by the Lands Management bureau; or, 
(2) A population of not less than one hundred fifty thousand (150,000) 
inhabitants, as certified by the National Statistics Office; 
Provided, That, the creation thereof shall not reduce the land area, 
population, and income of the original unit or units at the time of said creation to 
less than the minimum requirements prescribed herein. 
(b) The territorial jurisdiction of a newly created city shall be properly 
identified by metes and bounds. The requirement on contiguous territory 
and land area shall not apply where the city propose to be created is 
composed of one (1) or more islands. The territory need not be contiguous 
if it comprises two (2) or more islands. 
SEC. 53. Cities, Classified. A city may either be component or highly 
urbanized: Provided, however, that the criteria established in this, Code shall not 
affect the classification and corporate status of existing cities. 
Independent component cities are those component cities whose charters 
prohibit their voters from voting for provincial elective officials. Independent 
component cities shall be independent of the province. 
SEC. 54. Highly Urbanized Cities. (a) Cities with a minimum population of 
two hundred fifty thousand (250,000) inhabitants, as certified by the National 
Statistics Office, and with the latest locally generated income of at least two 
hundred fifty million pesos (Php 250,000,000.00), as certified by the Department 
of Finance, and with a tax collection efficiency of 80% shall be classified as 
highly urbanized cities. 
(b) Cities, which clo not meet the above requirements, shall be considered 
component cities of the province in which they are geographically located. If a 
component city is located within the boundaries of two (2) or more provinces, 
such city shall be considered a component of the province of which it used to be 
a municipality. 
(c) Qualified voters of highly urbanized cities shall remain excluded from 
voting for elective provincial officials. 
Unless otherwise provided in the Constitution or this Code, qualified voters 
or independent component cities shall participate in the election of the provincial 
officials. 
Qualified voters of cities who acquired the right to vote for elective 
provincial officials prior to the classification of said cities as highly urbanized after 
the ratification of the Constitution and before the effectivity of this Code, shall 
continue to exercise such right. 


SEC. 55. Duty to Declare Highly Urbanized Status. It shall be the duty of 
the Regional Government to declare a city as highly urbanized within thirty (30) 
days after it shall met the minimum requirements prescribed in the immediately 
preceding section, UpOIl proper application therefore' and ratification in a 
plebiscite by the qualified voters therein. 
Chapter 2 
City Officials in General 
SEC. 56. Officials of the City Government. (a) There shall be in each city, 
a mayor, a vice-mayor; sangguniang panglungsod members, a secretary to the 
sangguniang panglungsod, a city treasurer, a city assessor, a city accountant, a 
city budget officer, a city planning and development coordinator, a city engineer, 
a city health officer, a city civil registrar, a city administrator, a city legal officer, a 
city veterinarian, a city social welfare and development officer, and a city general 
services officer. 
(b) In addition thereto,the city mayor may appoint other officials, which a 
city government may find necessary in the performance its mandates 
except those officials and employees of the sanggunian. 
(c) The sanggunian panlungsod may: 
(1) Create such other offices as may be necessary to carry out the 
purposes of the city government; or 
(2) Consolidate the functions of two or more offices in the interest of 
efficiency, economy and simplicity. 
(d) Unless otherv'Iise provided herein, heads of departments and offices 
shall be appointed by the city mayor subject to civil service law, rules and 
regulations. The sangguniang panlungsod shall act on the appointment within 
fifteen (15) days from the date of its submission, if no action is taken after the 
expiration of the period, concurrence therein shall be deemed made. 
(e) Elective and appointive city officials shall receive such compensation, 
allowances, and other emoluments as may be determined by law or ordinance, 
subject to the budgetary limitations on personal services. Provided. That, no 
increase in 
compensation of. the mayor, 
vice-mayor and 
sangguniang 
pan lung sod members shall take effect until after the expiration of the full term of 
the said local officials approving such increase. 
Chapter 3 
The Sanggulliang Panlungsod 
SEC. 57. Composition. (a) The sangguniang panlungsod, the legislative 
body of the city, shall be composed of thfJ city vice-mayor as presiding officer, the 
regular sanggunian members, the presidenfof the city chapter of the liga ng mga 
barangay, the president of the panlungsod ng pederasyon ng mga sangguniang 
kabataan, and the sectoral representatives, as members. 
(b) In addition thereto, there shall be three (3) sectoral representatives: 
one (1) from the women; and, as shall be determined by the sanggunian 


concerned within ninety (90) days prior to the holding of the local 
elections, one 91) from the agricultural or industrial workers; and one (1) 
from the other sectors, including the urban poor, indigenous cultural 
communities, or disabled persons. 
(c) The regular members of the sangguniang panlungsod and the sectoral 
representatives shall be elected in the manner as may be provided for by 
law. 
TITLE SIX. 
THE MUNICIPALITY 
Chapter 1 
Role and Creation of the Municipality 
SEC. 58. Creation and RoJe of a Municipality The municipality, consisting 
of a group of barangays, serves primarily as a general-purpose 'government for 
the coordination and delivery of basic services municipal-wide for the benefit of 
its inhabitants and for the attainment of effective governance. 
SEC. 59. Manner of Creation. A municipality may be created, divided, 
merged, abolished, or its boundary substantially altered by an Act of Congress 
and subject to the approval by a majority of the votes cast in a plebiscite to be 
conducted by the Comelec in the local government(s) directly affected. Except as 
may otherwise be provided in the said Act, the plebiscite shall be held within one 
hundred twenty (120) days from the date of its effectivity. 
SEC. 60. Requisites for Creation (a) A municipality may be created if it 
has an average annual income from locally generated revenues, exclusive of 
Internal Revenue Allotments as certified by the provincial treasurer, of at least 
twenty million pesos (Php 20,000,000.00) for the last two (2) consecutive years 
based on the 1998 constant prices; a population of at It')ast twenty-five thousand 
(25,000) inhabitants as certified by the National Statistics Office; and a 
contiguous territory of at least fifty (50) square kilometers as certified by the 
Lands Management Bureau: Provided, That the creation thereof shall not reduce 
the land area, population or income of the original municipality or municipalities 
at the time of said creation to less than the minimum requirements prescribed 
herein. 
(b) The territorial jurisdiction of a newly created municipality shall be 
properly identified by metes and bounds. The requirement on land area 
shall not apply where the municipality propose to be created is composed 
of one (1) or more islands. The territory need not be contiguous if it 
comprises two (2) or more islands. 
(c) The average annual income shall include the income accruing to the 
general fund of the municipality concerned, exclusive of special funds, 
transfer and non-recurring income. 
(d) Municipalities existing as of the date of the effectivity of this Code shall 
continue to exist and operate as such. Existing municipal districts 
organized pursuant to presidential issuances or executive orders an which 
have their respective set of elective municipal officials holding office at the 


time of the effectivity of this Code shall henceforth be considered as 
regular municipalities. 
Chapter 2 
Municipal Officials in General 
SEC. 61. Officials of the Municipal Government. (a) There shall be in each 
municipality a municipal mayor, a municipal vice-mayor, sangguniang bayan 
members, a secretary to the sangguniang bayan, a municipal treasurer, a 
municipal assessor, a municipal accountant, a municipal budget officer, a 
municipal planning and development coordinator, a municipal engineer/building 
official, a municipal healtll officer and a municipal civil registrar. 
(b) In addition thereto, the mayor may appoint other officials, which the 
municipal government may find necessary in the performance of its task or 
mandates, except those officials and employees of the sanggunian. 
(c) The sangguniang bayan may: 
(1) Create such other offices as may be necessary to carry out the 
purposes of the municipal government; or 
(2) Consolidate the functions of two or more offices in the interest of 
efficiency, Elconomy and simplicity. 
(d) Unless otherwise provided herein, the municipal mayor, subject to civil 
service law, rule and regulations, shall appoint heads of departments and 
offices. The sang!Juniang bayan, on a majority vote, shall concur with the 
appointment within fifteen (15) days from the date of the submission; if no 
action is taken after expiration of period, concurrence therein shall be 
deemed made. 
(e) Elective and appointive municipal officials shall. receive such 
compensation, allowances' and other emoluments as may be determined 
by law or ordinance, subject to the budgetary 'Iimitations on personal 
services. Provided, That no increase shall take effect until after the 
expiration of the full term of all the elective local officials approving such 
increase. 
Chapter 3 
The Sangguniang Bayan 
SEC. 62. Composition. (a) The sangguniang bayan, the legislative body of 
the municipality, shall be composed of the municipal vice-mayor as the presiding 
officer, the regular sangnuniann members, the president of the municipal chapter 
of the liga ng mga barangay, the president of the pambayang pederasyon ng 
mga sangguniang kabataan, and the sectoral representatives, as members. 
(b) In addition thereto, there shall be three (3) sectoral· representatives: 
one (1) from the women; and as shall be determined by the sanggunian 
concerned within ninety (90) days prior to the hold inn of local elections, 
one (1) from the agricultural or industrial workers; and one (1) from the 


other sectors, including the urban poor, indigenous cultural communities, 
or disabled persons. 
(c) The regular members of the sangguniang bayan and the sectoral 
representatives shall be elected in the manner as may be provided for by 
law. 
TITLE SEVEN. 
BARANGA Y GOVERNMENTS 
Chapter 1 
Role an.d Creation of the Barangay 
SEC. 63. Creation and Role of a Barangay. The barangay is a general-
purpose body politic which is a component either of a city or municipality and 
which is responsible for the delivery of basic services at the barangay level. 
SEC. 64. Manner of Creation. A barangay may be created, divided, 
merged, abolished, or its boundary substantially altered, by law or by. an 
ordinance of the sangguniang panlalawigan or sangguniang panlungsod, subject 
to approval by a majority of the votes cast in a plebiscite to be conducted by the 
Comelec in the local government(s) directly affected within such period of time as 
may be determined by the law or ordinance creating said barangay, 
SEC. 65. Requisites for Creation. (a) A barangay maybe created out of a 
contiguous territory which has a population of at least five thousand (5,000) 
inhabitants as certified by the National Statistics' Office except in cities and 
municipalities within Metro Manila and other metropolitan political subdivisions or 
in highly urbanized cities where such territory shall have a certified population of 
at least ten thousand (10,000) inhabitants: Provided, That the creation thereof 
shall not reduce the population of the original barangay(s) to less than the 
minimum requirement prescribed herein. 
(b) The territorial jurisdiction of the new barangay shall be properly 
identified by metes and bounds or by more or less permanent natural 
boundaries. The territory need not be contiguous if it comprises two (2) or more 
islands. 
Chapter 2 
Barangay Officials and Offices 
SEC. 66. Chief Officials and Offices. (a) There shall be in each barangay a 
punong barangay, seven (7) sangguniang bayan members, the sangguniang 
kabataan chairman, a barangay secretary, and a barangay treasurer. 
(b) There shall also be in every barangay a lupong tagapamayapa. The 
sangguniang baranagay may form community brigades. and create such other 
positions or offices as may be deemed necessary to carry out the purposes of 
the barangay government in accordance with the needs of public service. 


SEC. 67. Persons in Authority. For purposes of the Revised Penal Code, 
the punong barangay, snagguniang baran'gay members, and members, and 
members of the lupong tagapamayapa in each barangay shall be deemed as 
persons in authority in their jurisdictions, while other barangay officials and 
members who may be designated by law or ordinance and charged with the 
maintenance of public order, protection and security of life and property, or the 
maintenance of a desirable and balanced environment, and my barangay 
member who comes to the aid of persons in authority, shall be deemed agents of 
persons in authority, 
Chapter 3 
The Punong Barangay 
SEC. 68. Chief Executive: Duties and Powers. (a) The punong barangay, 
as the chief executive of the barangay government, shall perform such duties 
and exercise such powers as herein provided. 
(b) For efficient, effective and economical governance, the purpose of 
which is the general welfare of the barangay and its inhabitants pursuant to 
Section 14 of this Code, the punong barangay shall: 
(1) Enforce all laws and ordinances which are applicable within the 
barangay; 
(2) Negotiate, enter into, and sign contracts for and in behalf of the 
barangay, upon authorization of the sangguniang barangay; 
(3) Maintain public order in the barangay and, in pursuance thereof, 
assist the city or municipal mayor and the sanggunian members in 
the performance of their duties and functions; 
(4) Call and preside over the sessions of the sangguniang barangay 
and the barangay assembly, and vote only to break a tie; 
(5) Upon approval by a majority of all the members of the 
sangguniang barangay, appoint or replace the baranagy treasurer, 
the baran!Jay secretary, and other appointive barangay officials; 
(6) Organize and lead an emergency group whenever the same may 
be necessary for the maintenance of peace and order or on 
occasions of emergency or calamity within the barangay; 
(7) Prepare the annual executive and supplemental budgets of the 
barangay; 
(8) Approve vouchers relating to the disbursement of barangay funds; 
(9) Enforce laws and regulations relating to pollution control and 
protection of the environment; 
(10) Administer the operation of the katarungang pambarangay; 
(11) Exercise 
general 
supervision 
over 
the 
activities 
of the 
sangguniang kabataan; 


(12) Ensure the delivery of basic services; 
(13) Conduct an annual palarong barangay which shall feature 
traditional sports and disciplines included in 
national and 
international games, in coordination with the Department of 
Education; 
(14) Promote the general welfare of the barangay; and 
(15) Exercise such other powers and perform such other duties as may 
be prescribed by law or ordinance. 
(c) In the performance of his peace and order functions, the punong 
barangay shall be entitled to possess and carry the necessary firearm within his 
territorial jurisdiction, subject to appropriate rules and regulations. 
Chapter 4 
The Sangguniang Barangay 
SEC. 69. Composition. The sangguniang barangay, the legislative body of 
the barangay, shall be composed of the punong barangay as presiding officer, 
and the seven (7) regular sangguniang barangay members elected at large and 
sangguniang kabataan chairman, as members. 
SEC. 70. Functions and Powers. (a) The sangguniang baranay, as the 
legislative body of the barangay, shall, either by ordinance or resolution 
(1) Promote the general welfare of the inhabitants therein and to 
provide for the delivery of basic services; 
(2) Impose taxes, fees or charges on objects or subjects prescribed 
herein; solicit or accept monies, materials and voluntary labor for 
specific public works and cooperative enterprises of the barangay 
from residents, land owners, producers and merchants in the 
barangay; monies from grants-in-aid, subsidies, contributions, and 
revenues made available to the barangays from national, provincial, 
city or municipal funds; and monies from other private agencies and 
individuals: Provided, however, That monies or properties donated 
by private agencies and individuals for specific purposes shall 
accrue to the barangay as trust fund; Hold fundraising activities for 
barangay projects without the need of securing permits from any 
national or local offices or agency. Provided, that the proceeds from 
such activities shall. be tax-exempt and shall accrue to the general 
fund of the barangay. 
(3) AppropriatH in an annual or supplement budgets Monies for the 
operation of the barangay. 
(4) Provide for the construction, maintenance and regulations of the 
barangay facilities and other public works projects chargeable to 
the general fund of the barangay or such other funds actually 
available for the purpose and charge reasonable fees for the use 
thereof solicit or accept financial, technical and advisory assistance 
from local, national and external sources. 


(5) Submit to the sanggunian panlungsod or sangguniang bayan such 
suggestions or· recommendations as it may see fit for the 
improvement of the barangay or for the welfare of the inhabitants 
thereof; 
(6) Assist in the establishment, organization, and promotion of 
cooperative enterprises that will improve the economic condition 
and well-being of the residents; 
(7) Provide compensation, reasonable allowances or per diems as well 
as travel expenses for sangguniang barangay members and other 
barangay officials, Provide, however, That no increase in the 
compensatlion or honoraria of the sangguniang barangay members 
shall take effect until after the expiration of the full term of all 
members of the sangguniang barangay approving such increase; 
(8) Authorize the punong barangay to enter into contracts in behalf of 
the barangay; 
. 
(9) Authorize the barangay treasurer to make direct purchases in an 
amount not exceeding one thousand pesos (Php 1,000.00) at 
anyone time for the ordinary and essential administrative needs of 
the barangay; 
(10) Provide for the administrative needs of the lupong tagapamayapa 
and the pang kat ng tagapagkasundo; 
(11) Provide for the organization of community brigades, barangay 
tanod, or community service units as may be necessary; 
(12) Organize regular lectures, programs, or for a on community 
problems such as sanitation, nutrition, literacy, and drug abuse, and 
convene 
assemblies 
to 
encourage 
citizen 
participation· in 
government; 
(13) Adopt measures to prevent and control the proliferation of 
squatters and mendicants in the barangay; 
(14) Provide for the proper development and welfare of children in the 
barangay by promoting and supporting activities for the protection 
and total development of children, particularly those below seven 
(7) years of age; adopt measures towards the prevention and 
eradication of drug;, abuse, child abuse, and juvenile delinquency; 
initiate the establishment of a barangay high school, whenever 
feasible, in accordance with law; 
(15) Provide for the establishment of a non-formal education center in 
the 
barangay whenever feasible, 
in 
coordination with 
the 
Department of Education; 
(16) Exercise such other powers and perform such other functions as 
may be prescribed by law or ordinance. Provided, that penalty for 
violation of ordinances should not exceed one thousand pesos 
(Php 1,000.00) 


SEC" 71" Other Duties of Sangguniang Barangay Members" In addition to 
their duties as members of the sangguniang barangay, sanggulliang barangay 
members may: 
(d) Assist the punong barangay in the discharge of his duties; 
(e) Act as peace officer in the maintenance of public order and safety; and 
(f) Perform such other duties as the punong barangay may delegate" 
SEC" 72" Benefits of Barangay Officials" (a) Barangay officials, including 
barangay tanods and members of the lupong tagapamayapa, shall receive 
honoraria, allowances, and such other emoluments as may be authorized by law 
or barangay, municipal or city ordinances in accordance with the provisions of 
this Code, but in no case shall it be less than one thousand pesos (Php 1,000"00) 
per month for the punol1g barangay and six hundred pesos (Php 600"00) per 
month for the sangguniang barangay members, barangay treasurer, and 
barangay secretary: 
(b) The punong barangay, the sangguniang barangay members, the 
barangay treasurer, and the barangay secretary shall also: 
(1) Be entitled to Christmas bonus of at least one thousand pesos (Php 
1,000"00) Bach, the funds for which shall be taken from the general 
fund of the barangay or from such other funds appropriated by the 
national government for the purpose; 
(2) Be entitled, during their incumbency, to insurance coverage which 
shall include, but shall not be limited to temporary and permanent 
disability, double indemnity, accident insurance, death and burial 
benefits, in accordance with Republic Act Numbered Sixty-nine 
hundred forty-two (RA No" 6942), entitled "An Act Icreasing the 
Insurance Benefits of Local Government Officials and Providing 
Funds Therefor", 
(3) Be entitled to free medical care including subsistence, medicines, 
and medical attendance in any government hospital or institution: 
Provided, That such hospital care shall include surgery or surgical 
expenses, medicines, x-rays, laboratory fees, and other hospital 
expenses; 
In case of extreme urgency where there is no available government 
hospital or in:;titution, the barangay 
official concerned may submit 
himself for immediate medical attendance to the nearest private clinic, 
hospital or institution and the expenses not exceeding five thousand 
pesos (Php 5,1000"00) that may be incurred therein shall be chargeable 
against the funds of the barangay concerned; 
(4) Be exempted during their incumbency from paying tuition and 
matriculation fees for their legitimate dependent children attending 
state colleges or universities" He may likewise avail of such 
educational benefits in a state college or university located within 
the province or city to which the barangay belongs; and 


(5) Be entitled to appropriate civil service eligibility on the basis or the 
number or years of service to the barangay, pursuant to the rules 
and regulations issued by the Civil Service Commission. 
(c) Elective barangay officials shall have preference in appointments to 
any government position or in any government-owned or controlled 
corporations, including their subsidiaries, after their tenure of office, 
subject to the requisite qualifications and the provisions of the 
immediately preceding paragraph. 
(d) All duly appointed members of the barangay tanod brigades, or their 
equivalent, which shall number not more than twenty (20) in each 
baranagy, shall be granted insurance or other benefits during their 
incumbency, chargeable to the barangay or the city or municipal 
government to which the barangay belongs. 
SEC. 73. Withholding of Benefits Accorded to Barangay Officials. Willful 
and malicious withholding of any of the benefits accorded to baranagy officials 
shall be punished with suspension or dismissal from office of the official or 
employee responsible therefore. 
Chapter 5 
Appointive Barangay Officials 
SEC. 74. Barangay Secretary: Appointment, Qualifications, Duties and 
Powers. (a) The barangay secretary shall be appointed by the punong barangay 
with the concurrence of the majority of all the sangguniang barangay members. 
The appointment of the barangay secretary shall not be subject to attestation by 
the Civil Service Commission. 
(b) The barangay secretary shall be of legal age, a registered voter and an 
actual resident of the barangay concerned. 
(c) No person shall be appointed barangay secretary if he is a 
sangguniang barangay member, a government employee, or a relative 
of the punong barangay within the fourth civil degree of consanguinity 
or affinity. 
(d) The barangay secretary shall: 
(1) Keep custody of all records of the sangguniang barangay and the 
barangay assembly meetings; 
(2) Prepare and keep the minutes of all meetings of the sangguniang 
barangay and the barangay assembly; 
(3) Prepare a list of members of the barangay assembly, and have the 
same posted in conspicuous places within the barangay; 
(4) Assist in the preparation of all necessary forms for the conduct of 
barangay elections, 
initiatives, 
referenda 
or plebiscites, 
in 
coordination with the Comelec; 


(5) Assist the municipal civil registrar in the registration of births, 
deaths, and marriages; 
(6) Keep an updated record of all inhabitants of the barangay 
containing the following items of information: anme, address, place 
and date of birth, sex, civil status, citizenship, occupation, and such 
other items of information as may be prescribed by law or 
ordinances; 
(7) Submit a report on the actual number of barangay residents as 
often as m21y be required by the sangguniang barangay; and 
(8) Exercise sLich other powers and perform such other duties as may 
be prescribed by law or ordinace. 
SEC. 75. Barangay Treasurer:' Appointment, Qualifications, Duties and 
Powers. (a) The barangay treasurer shall be appointed by the punong barangay 
with the concurrence of the majority of all the sangguniang barangay members. 
The appointment of the barangay treasurer shall not be subject to attestation by 
the Civil Service Commision. 
(b) The barangay treasurer shall be of legal age, a registered voter, an 
actual resident of the barangay concerned, and possess a working 
knowledge of accounting. 
(c) No person shall be appointed barangay treasurer if he is a 
sangguniang barangay member, a government employee, or a relative 
of the punong barangay within the fourth civil degree of consanguinity 
or affinity. 
. 
(d) The barangay treasurer shall be bonded in accordance with existing 
laws in an amount to be determined by the sangguniang barangay but 
not exceedin~1 ten thpusand pesos (Php 10,000.00), premiums for 
which shall be paid by the barangay. 
(e) The barangay treasurer shall: 
(1) Keep custody of barangay funds and properties; 
(2) Collect and issue official receipts for taxes, fees, contributions, 
monies, materials, and all other resources accruing to the barangay 
treasury and deposit the same in the account of the barangay; 
(3) Disburse funds in accordance with the approved budget; 
(4) Submit to the punong barangay a statement covering the actual 
and estimates of income and expenditures for the preceding and 
ensuring calendar years, respectively; 
(5) Render a written accounting report of all barangay funds and 
property under his custody at the end of each calendar year, and 
ensure that such report shall be made available to the members of 
the barnagay assembly and other government agencies concerned; 
(6) Certify as to the availability of funds whenever necessary; 


(7) Plan and attend to the rural postal circuit within his jurisdiction; and 
(8) Exercise and perform such other powers and duties as may be 
prescribed y law or ordinance. 
SEC. 76. Other Appointive Officials. The qualifications, and duties, of all 
other barangay officials appointed by the punong barangay shall be governed by 
the provisions of barangay ordinances. 
Chapter 6 
Barangay Assembly 
SEC. 77. Composition; Meetings. (a) There shall be a barangay assembly 
composed of all persons who are actual residents of the barangay for at least six 
(6) months, fifteen (15) years of age or over, citizens of the Philippines, and duly 
registered in the list of barangay assembly members. 
shall: 
(b) The barangay assemblt shall meet at least twice a year to hear and 
discuss the semestral report of the sangguniang barangay concerning 
its activities and finances as well as problems affecting the barangay. 
Its meetings shall be held upon call of the punong barangay or of at 
least four (4) members of the sangguniang barangay, or upon written 
petition of at least five percent (5%) of the assembly members. 
(c) No meeting of the barangay assembly shall take place unless a written 
notice is given one (1) week prior to the meeting except on matters 
involving public safety or security, in which case notice within a 
reasonable time shall be sufficient. The punong barimgay, or in his 
absence, the sangguniangbarangay member acting as punong 
barangay, or any assembly member selected during the meeting, shall 
act as presiding officer in all the meetings of the assembly. The 
barangay secretary, or in his absence, any member designated by the 
presiding officer to act as secretary, shall discharge the duties of 
secretary of the barangay assembly. 
SEC. 78. Powers of tile Barangay Assembly. The barangay assembly 
(a) Initiate legislative processes by recommending to the sangguniang 
barangay the adoption of measures for the welfare of the inhabitants of 
the barangay and the city or municipality concerned; and 
(b) Hear and pass upon the semestral report of the sangguniang barangay 
concerning its activities and finances. 
Chapter 7 
Katarungang Pambarangay 
SEC. 79. Lupong Tagapamayapa. (a) There is hereby created in each 
barangay a lupong tagapamayapa, hereinafter refereed to as the lupon, 
composed of the punong barangay as chairman and ten (10) to twenty (20) 


members. The lupon shall be constituted every three (3) years in the manner 
provided here in. 
(b) Any person actually residing or working in the barangay, not otherwise 
expressly disqualified by law, and possessing integrity, impartiality, 
independence of mind, sense of fairness, and reputation for probity, 
may be appointed a member of the lupon. 
(c) A notice to constitute the lupon, which shall include the names of 
proposed members who have expressed their willingness to serve, 
shall be prepared by the punong barangay within the first fifteen (15) 
days from the start of his term of office. Such notice shall be posted in 
three (3) conspicuous places in the barangay continuously for a period 
of not less than three (3) weeks; 
(d) The punong barangay, taking into consideration any opposition to the 
proposed appointment or any recommendations for appointments as 
may have been made within the period of posting, shall within ten (10) 
days thereafter, appoint as members those whom he determines to be 
suitable therfor. Appointments shall be in writing, signed by the punong 
barangay, and attested to by the baragay secretary; 
(e) The list of apPointed members shall be posted in three (3) conspicuous 
places in the barangay for the entire duration of their term of office; and 
(f) In barangays where majority of the inhabitants are members of 
indigenous cultural communities, local systems of settling disputes 
through their councils of datus or elders shall be recognized. 
SEC. 80. Oath and Term of Office. Upon appointment, each lupon 
member shall take an oath of office before the punong barangay. He shall hold 
office until a new lupon is constituted on the third year following his appointment 
unless sooner terminated by resignation, transfer of residence or place of work, 
or withdrawal of appointment by the punong barangay with the concurrence of 
the majority of all the members of the lupon. 
SEC. 81. Vacancies. Should a vacancy occur in the lupon for any cause, 
the punong barangay shall immediately appoint a qualified person who shall hold 
office only for the unexpired portion of the term. 
SEC. 82. Functions of tile Lupon. The lupon shall: 
(a) Exercise administrative supervision over the conciliation panels 
provided herein; 
(b) Meet regularly' once a month to provide a forum for exchange of ideas 
among its members and the public on matters relevant to the amicable 
settlement of disputes, and to enable various conciliation panel 
members to share with 
one another their observations and 
experiences in effecting speedy resolution of disputes; and 
(c) Exercise such other powers and perform such other functions as may 
be prescribed by law or ordinance. 


SEC. 83. Secretary of the Lupon. The barangay secretary shall 
concurrently serve as the secretary .of the lupon. He shall record the result of 
mediation proceedings before the punong barangay and shall submit a report 
thereon to the proper city or municipal courts. He shall also receive and keep the 
records of proceedings submitted to him by the various conciliation panels. 
SEC. 84. Pangkat ng Tagapagkasundo. (a) There shall be constituted for 
each dispute brought before the lupon a conciliation panel to be known as the 
pang kat ng tagapagkasundo, hereinafter referred to as the pang kat, consisting of 
three (3) members who shall be chosen by the parties to the dispute from the list 
of members of the lupon. 
Should the parties fail to agree dn the pangkat membership, the same 
shall be determined by lots drawn by the lupon chairman. 
(b) The three (3) members constituting the pangkat shall elect from among 
themselves the chairman and the secretary. The secretary shall prepare the 
minutes of the pangkat proceedings and submit a copy duly attested to by the 
chairman to the lupon secretary and to the proper city or municipal court. He 
shall issue and cause to be served notices to the parties concemed. 
The lupon secretary shall issue certified true copies of any public record in 
his custody that is not by law otherwise declared confidential. 
SEC. 85. Vacancies in the Pangkat. Any vacancy in the pangkat shall be 
chosen by the parties to the dispute from among the other lupon members. 
Should the parties fail to agree on a common, the vacancy shall be filled by lot to 
be drawn by the lupon chairman. 
SEC. 86. Character of Office and Se/Vice of Lupon Members. (a) The 
lupon members, while' in the performance of their official duties or on the 
occasion thereof, shall be deemed as persons in authority, as defined in the 
Revised Penal Code. 
(b) The lupon or pangkat members shall serve without compensation, "but 
shall be entitled to the benefits or privileges granted to barangay officials by law 
or ordinace." The Department of the Interior and Local Government shall provide 
for a system of granting economic or other incentives to the lupon or pang kat 
members who adequately demonstrate the ability to judiciously and expeditiously 
resolve cases refered to them. While in the performance of their duties, the lupon 
or pang kat members, whether in public or private employment, shall be deemed 
to be on ifficial time, and shall not suffer from any diminution in compensation or 
allowance from said employment by reason thereof. 
SEC. 87. Legal Advice on Matters Involving Questions of Law. The 
provincial, city legal officer or prosecutor or the municipal legal officer shall 
render legal advice on matters involving questions of law to the punong barangay 
or any lupon or pang kat member whenever necessary in the exercise of his 
functions in the administration of the katarungang pambarangay. 


SEC. 88. Subject Malter for Amicable Settlement; Exception Thereto. The 
lupon of each barangay shall have authority to bring together the parties actually 
residing in the same city or municipality for amicable settlement of all disputes 
except: 
(a) Where one party is the government, or any subdivision or 
instrumentality thereof; 
(b) Where one party is a public officer or employee, and the dispute 
relates to the performance of his official functions; 
(c) Offenses punishable by imprisonment exceeding one (1) year or a fine 
exceeding five thousand pesos (Php 5,000.00); 
(d) Offenses where there is no private offended party; 
(e) Where the dispute involves real properties located in different cities or 
municipalities. unless the parties thereto agree to submit their 
differences to amicable settlement by an appropriate lupon; 
(f) Disputes involving parties who actually reside in barangays of different 
cities or municipalities, except where such barangay units adjoin each 
other and the parties thereto agree to submit their differences to 
amicable settlement by an appropriate lupon; and 
(g) Such other classes of disputes, which the President mat determine in 
the interest of justice or upon the recommendation of the secretary of 
Justice. 
The court in which non-criminal cases not falling within the authority of the 
lupon under this Code are filed may, at any time before trial, motu proprio refer 
the case to the lupon concerned for amicable settlement. 
SEC. a9. Venue. (a) Disputes between persons actually residing in the 
same barangay shall be brought for amicable settlement before the lupon of said 
barangay. 
(b) Those involving actual residents of different barangays within the same 
city or municipality shall be brought in the barangay where the 
respondent or any of the respondents actually resides, at the election 
of the complainant. 
(c) All disputes involving real property or any interest therein shall be 
brought in the barangay where the real property or the larger portion 
thereof is situated. 
(d) Those arising at the workplace where the contending parties are 
employed or at the institution where such parties are enrolled for 
study shall be brought in the barangay where such workplace or 
institution is located. 
Objections of venue shall be raised in the mediation proceedings before 
the punong barangay; otherwise, the same shall be deemed waived. Any legal 
question which may confront the punong barangay in resolving objections to 
venue herein referred to may be submitted to the secretary of Justice, or of his 
duly designated representative, whose ruling thereon shall be binding. 


SEC. 90. Procedure for Amicable Settlement. (a) Who may initiate 
proceeding - Upon payment of the appropriate filing fee, any individual who has 
a cause of action against another individual involving any matter within the 
authority of the lupon may complain, orally or in writing, to the lupon chairman of 
the barangay. 
(b) Mediation by lupon chairman -
Upon receipt of the complaint, the 
lupon chairman shall within the next working day summon the 
respondent(s), with notice to' the complainant(s) for them and their 
witnesses to appear before him for a mediation of their conflicting 
interests. If he fails in his mediation effort within fifteen (15) days form 
the first meeting of the parties before him, he Hhall forthwith set a sate 
for the constitution of the pang kat in accordance with the provisions of 
this Chapter. 
(c) Suspension of prescriptive period of offenses - While the dispute is 
under mediation, conciliation, or arbitration, the prescriptive periods for 
offenses and cause of action under existing laws shall be interrupted 
upon filing of the complaint with the punong barangay. The prescriptive 
periods shall resume upon receipt by the complainant of the complaint 
or the certificate of repudiation or of the certification to file action 
issued by the lupon or pang kat secretary: Provided, however, That 
such interruption shall not exceed sixty (60) days from the filing of the 
complaint with the punong barangay. 
(d) Issuance of summons; hearing; grounds for disqualification -
The 
pang kat shall convene not later than three (3) days from its 
constitution, on the day and hour set by the lupon chairman, to hear 
both parties and their witnesses, simplify issues, and explore all 
possibilities for amicable settlement. For this purpose, the pangkat may 
issue summons for the personal appearance of parties and witnesses 
before it. In the event that a party moves to disqualify any member of 
the pang kat by reason of relationship, bias interest, or any other similar 
grounds discovered after the constitution of the pangkat, the matter 
shall be resolved by the affirmative vote of the majority of the pangkat 
whose decision shall be final. Should disqualification be decided upon, 
the resulting vacancy shall be filled as herein provided for. 
(e) Period to arrive at a settlement -
The pangkat shall arrive at a 
settlement or ,resolution of the dispute within fifteen (15) days from the 
day it convenes in accordance with this section. This period shall, at 
the discretion of the pangkat, be extendible for another period, which 
shall not exceed fifteen (15) days, except, in clearly meritorious cases. 
SEC. 91. Form of Settlement. All amicable settlements shall be in writing, 
in a language or dialect known to the parties, signed by them, and attested to by 
the lupon chairman or the pangkat chairman, as the Gase may be. When the 
parties to the dispute do not use the same language or dialect, the settlement 
shall be written in the language or dialect known to them. 
SEC. 92. Conciliation. (a) Pre-condition to Filing of Complaint in Court. -
No complaint, petition, action, or proceeding involvin!} any matter within the 
authority of the lupon shall be filed or instituted directly in court or any other 
government office for adjudication, unless there has been a confrontation 
between the parties before the lupon chairman or the pangkat, and that no 


conciliation or settlement has been reached as certified by the lupon secretary or 
pangkat secretary as attested to by the lupon or pang kat chairman or unless the 
settlement has been repudiated by the parties thereto. 
(b) Where Parties May Go Directly to Court. - ThB parties may go directly 
to court in the following instances: 
(1) Where the accused is under detention; 
(2) Where a person has otherwise been deprived of personal liberty 
calling for habeas corpus proceedings; 
(3) Where actions are coupled with provisional remedies such as 
preliminary injunction, attachment, delivery of personal property, 
and support pendente lite; and 
(4) Where the action may otherwise be barred by the statute of 
limitations. 
(c) Conciliation among members of indigenous cultural communities. -
The customs and traditions of indigenous cultural communities shall be applied in 
settling disputes between members of the cultural communities. 
SEC. 93 .. Arbitration. (a) The parties may; at any stage of the proceedings, 
agree in writing that they shall abide by the arbitration award of the lupon 
chairman or the pang kat. Such agreement to arbitrate may be repudiated within 
five (5) days from the date thereof for the same grounds and in accordance with 
the procedure hereinafter prescribed. The arbitration award shall be made after 
the lapse of the period for repudiation and within ten (10) days thereafter. 
(b) The arbitration award shall be in writing in a language or dialect known 
to the parties. When the parties to the dispute do not use the same 
language or dialect, the award shall be written in the language or 
dialect known to them. 
SEC. 94. proceedings Open to the Public; Exception. All proceedings for 
settlement shall be public and informal: Provided, however, That the lupon 
chairman or the pangkat chairman, as the case may be, may motu proprio or 
upon request of a party, exclude the public from the proceedings in the interest of 
privacy, decency, or public morals. 
SEC. 95. Appearance of Parties in 
Person. 
In all katarungang 
pambarangay proceedings, the parties must appear in person without the 
assistance of counselor representative, except for minors and incompetents who 
may be assisted by their next-of-kin who are not lawyers. 
SEC. 96. Refusal or Failure of Any Party or Witness to Appear Before the 
Lupon or Pangkat. Refusal or willful failure of any party or witness to appear 
before the lupon or pangkat shall .bar the complainant from seeking judicial 
recourse for the same cause of action, and the respondent from filing any 
counterclaim arising out of, or necessarily connected with the complaint. 


SEC. 97. Effect of Amicable Settlement and Arbitration Award. The 
amicable settlement and arbitration award shall have the force and effect of a 
final judgment of a court upon the expiration of ten (10) days from the date 
thereof, unless repudiation of the settlement has been made or a petition to 
nullify the award has been filed before the proper city or municipal court. 
However, this provision shall not apply to court cases referred to and 
settled by the lupon, in which case the compromise setllement agreed upon by 
the parties before the lupon chairman or the pang kat chairman shall be submitted 
to the court and upon approval thereof, have the force and effect of a judgment of 
said court. 
SEC. 98. Execution. The amicable settlement or arbitration award may be 
enforced by execution by the lupon within six (6) months from the date of the 
settlement. After the lapse of such time, the settlement may be enforced by 
action in the appropriate city or municipal court. 
SEC. 99. Repudiation. Any party to the dispute may, within ten (10) days 
from the date of the settlement, repudiate the same by filing with the lupon 
chairman a statement to that effect sworn to before him, where the consent is 
vitiated by fraud, violence, or intimidation. Such repudiation shall be sufficient 
basis for the issuance of the certification for filing a complaint as herein above 
provided. 
SEC. 100. Transmittal of settlement and Arbitration Award to the Court. 
The secretary of the lupon shall transmit the settlement or the arbitration award 
to the appropriate city or municipal court within five (5) days from the date of the 
award or from the lapse of the ten (10) day period repudiating the settlement and 
shall furnish copies thereof to each of the parties to the settlement and the lupon 
chairman. 
SEC. 101. Power to Administer Oaths._ The punong barangay, as 
chairman of the lupong tagapamayapa, and the members of the pang kat are 
hereby authorized to administer oaths in connection with any matter relating to all 
proceedings in the implementation of the katarungang pambarangay. 
SEC. 102. Administration: Rules and Regulations. The city or municipal 
mayor, as the case may be, shaH see to the efficient and effective 
implementation and administration of the katarungang pambarangay. "The 
Secretary of Justice may recommend adoption of necessary rules and 
regulations." 
SEC. 103. Appropriation. "The local government concerned shall provide 
the amount necessary in the implementation of the katarungang pambarangay." 
Chapter 8 
Sangguniang Kabataan 


SEC. 104. Creation and Election. (a) There shall be in every barangay a 
sangguniang kabataan to be composed of a chairman, seven (7) members, a 
secretary, and a treasurer. (b) A sangguniang kabataan official who, during his 
term of office, shall have passed the age of twenty-one (21) years shall be 
allowed to serve the remaining portion of the term for which he was elected. 
SEC. 105. Katipunan ng Kabataan. The katipunan ng kabataan shall be 
composed of all citizens of the Philippines actually residing in the barangay for at 
least six (6) months, who are fifteen (15) but not more th~m twenty-one (21) years 
of age, and who are duly registered in the list of the san!J9uniang kabataan or in 
the official barangay list in the custody of the barangay secretary. 
SEC. 106. Meetings of the Katipunan ng Kaba/aan. The katipunan ng 
kabataan shall meet at least once every three (3) months, or at the call of the 
chairman of the snagguniang kabataan or upon written petition of at least one-
twentieth (1/20) of its members, to decide on important issues affecting the youth 
of the abrangay. 
SEC. 107. Function and Powers of the Sangguniang Kabataan. The 
sangguniang kabataan shall: 
(f) Promulgate resolutions necessary to carry out the objectives of the 
youth in the barangay in accordance with the applicable provisions of 
this Code; 
(g) Initiate programs designed to enhance the social, political, economic, 
cultural, intellectual, moral, spiritual, and physical development of the 
members; 
(h) Hold fund-raising activities, the proceeds of which shall be tax-exempt 
and shall accrue to the general fund of the sangguniang kabataan: 
Provided, however, That in the appropriation thereof, the specific 
purpose for which such activity has been held shall be first satisfied; 
(i) Create such bodies or committees as it may deem necessary to 
effectively carry out its programs and activities; 
G) Submit annual and end-of-term reports to the sangguniang barangay 
on their projects and activities for the survival and development of the 
youth in the barangay; 
(k) Consult and coordinate with all youth organizations in the barangay for 
policy formulation and program implementation; 
(I) Coordinate with the appropriate national agency for the implementation 
of youth development projects and programs at the national level; and 
(m)Exercise such other powers as the sangguniang barangay may 
determine or delegate or as may be prescribed by law or ordinance. 
SEC. 108. Meeting of the Sangguniang Kabataan. The sangguniang 
kabataan shall meet regularly once a month on the date, time, and place to be 
fixed by the said sanggunian. Special meetings may be called by the 
sangguniang kabataan chairman or any three (3) of its members by giving written 


notice to all members of the date, time, place, and agenda of the meeting at least 
one (1) day in advance. Notices of regular or special meE!tings shall be fumished 
the punong barangay and the sangguniang barangay. 
A majority of the members of the sangguniang kabataan shall constitute a 
quorum. 
SEC. 109. Qualifications. An elective official of the sangguniang kabataan 
be a citizen of the Philippines, a qualified voter of the katipunan ng kabataan, a 
resident of the barangay for at least one (1) year immediately prior to election, at 
least fifteen (15) years but not more than twenty-one (21) years of age on the day 
of his election, able to read and write Filipino, English, or the local dialect. 
SEC. 110. Term of Office. The sangguniang k.abataan chairman and 
members shall hold office for a period of three (3) years, unless sooner removed 
for cause as provided by law, permanently incapacitated, die or resign from 
office. 
SEC. 111. Sangguniang Kabataan Chairmal7. The registered voters of the 
katipunan ng kabataan shall elect the chairman of the sangguniang kabataan 
who shall automatically serve as an ex-officio member of the sangguniang 
barangay upon his assumption to office. As such, he shall exercise the sma 
epowers, discharge the same duties and functions, and enjoy the same 
privileges as the regular sangguniang barangay members, and shall be the 
chairman of the committee on youth and sports development in the said 
sanggunian. 
SEC. 112. Duties and Powers of the Sangguniang Kabataan Chairman. In 
addition to the duties, which may be assigned to him by the sangguniang 
barangay, the sangguniang k.abataan chairman shall: 
(a) Call and preside over all meetings of the katipunan ng kabataan and 
the sangguniang kabataan; 
(b) Implement policies, programs, and projects within his jurisdiction in 
coordination with the sangguniang barangay; 
(c) Exercise general supervision over the affairs and activities of the 
sangguniang kabataan and the official conduct of its members, and 
such other officers of the sangguniang kabataan within his jurisdiction; 
(d) With the concurrence of the sangguniang kabataan, appoint from 
among the members of the sangguniang kabataan, the secretary and 
treasurer, and such other officers as may be deemed necessary; and 
(e) Exercise such other powers and perform such other duties may be 
prescribed bY,law or ordinance. 
SEC. 113. Sangguniang Kabataan Secretary. The sangguniang kabataan 
secretary shall: 


(a) Keep all records of the katipunan ng kabataan and sangguniang 
kabataan; 
(b) Prepare and keep the minutes of all meetings of the katipunan ng 
kabataan and sangguniang kabataan; 
(c) Prepare all forms necessary for the conduct of registrations, elections, 
initiatives, referenda, or plebiscites, in coordination with the barangay 
secretary and the Comelec; and 
(d) Perform such other duties as the chairman of the sangguniang 
kabataan may prescribe or direct. 
SEC. 114. Sangguniang Kabataan Treasurer. The sangguniang kabataan 
treasurer shall: 
(a) Take custody of all sangguniang kabataan properly and funds not 
otherwise deposited with the city or municipal treasurer; 
(b) Collect and receive contributions, monies, materials, and all other 
resources intended for the sangguniang kabataan and katipunan ng 
kabataan 
(c) Disburse funds in accordance with an approved budget of the 
snagguniang·kabataan; 
(d) Certify to the availability of funds whenever neeessary; 
(e) Submit to the sangguniang kabataan and to the sangguniang barangay 
certified and detailed statements of actual income and expenditures at 
the end of every month; and 
(f) Perform such other duties as the chairman of the sangguniang 
kabataan may direct. 
SEC. 
115. 
Privileges 
of Sangguniang 
Kabataan 
Officials. 
The 
sangguniang kabataan chairman shall have the same privileges enjoyed by other 
sangguniang barangay officials. During their incumbency, sangguniang kabataan 
officials shall be exempt from payment of tuition and matriculation fees while 
enrolled in public tertiary schools, including state colleges and universities. The 
national government shall reimburse said college or university the amount of the 
tuition and matriculation fees; Provided, that, to qualify for the privilege, the said 
officials shall enroll in the state college or university within or nearest their area of 
jurisdiction. 
SEC. 116. Succession and Filing of Vacancies. (a) In case a sangguniang 
kabataan chairman refuses to assume office, fails to qualify, is convicted of a 
felony, voluntarily resigns, dies, is permanently incapacitated, is removed from 
office, or has been absent without leave for more than three (3) consecutive 
months, the sangguniang kabataan member who obtained the next highest 
number of votes in the election immediately preceding shall assume the office of 
the chairman for the unexpired portion of the term, and shall discharge the 
powers and duties, and enjoy the rights and privileges appurtenant to the office. 
In case the said member refuses to assume the position or fails to qualify, the 


sanggunian member obtaining the next highest number of votes shall assume 
the position of the chairman for the unexpired portion of the term. 
(b) Where two (2) or more sangguniang kabataan members obtained the 
same next highest number of votes, the other sangguniang kabataan 
members shall conduct an election to choose the successor to the 
chairman from among the said members. 
(c) After the vacancy shall have been filled, the sangguniang kabataan 
chairman shall call a special election to complete the membership of 
said sanggunian. Such sangguniang kabataan member shall hold 
office for the unexpired portion of the term of the vacant seat. 
(d) In case of suspension of the sangguniang kabataan chairman, the 
successor, as determined in subsections (a) and (b) of this section 
shall assume the position during the period of such suspension. 
Chapter 9 
Pederasyon ng mga Sangguniang Kabataan 
SEC. 117. Pederasyon ng mga Sangguniang Kabataan. (a) There shall be 
an organization of all the pederasyon ng mga sangguniang kabataan to be 
known as follows: 
(1) In municipalities, pambayang pederasyon ng mga sangguniang 
kabataan; 
(2) In cities, panlungsod na pederasyon ng mga sangguniang 
kabataan; 
(3) In provinces, panlalawigang pederasyon ng mga sangguniang 
kabataan; 
(4) In special metropolitan political subdivision, pangmetropolitang 
pederasyon ng mga sangguniang kabataan; and 
(5) On 
the 
national 
level, 
pambansang 
pederasyon 
ng 
mga 
sangguniang kabataan. 
(b) The pederasyon ng mga sangguniang kabataan shall, at all levels, 
elect from among themselves the president, vice-president and such 
other officers as may be necessary and shall be organized in the 
following manner: 
(1) The panlungsod and pambayang pederasyon shall be composed of 
the sangguniang kabataan chairman of barangays in the city or 
municipality, respectively; 
(2) The panlalawigang rederasyon shall be composed of presidents of 
the panlungsod and pambayang pederasyon; 
(3) The 
pangmetropolitang 
pederasyon 
shall 
be 
composed 
of 
presidents of the panlungsod and pambayang pederesyon; 


(4) The elected presidents of the pederasyon at the provincial, highly 
urbanized 'city, and metropolitan political subdivision levels shall 
constitute the pambansang katipunan ng mga sangguniang 
kabataan, 
SEC. 118. Constitution and By-Laws. The term of office, manner of 
election, removal and suspension of the officers of the pederasyon ng mga 
sangguniang kabataan at all levels shall be governed by the constitution and by-
laws of the pederesyon in conformity with the provisions of this Code and 
national policies on youth. 
SEC. 119. Membership in the Sanggunian. (a) A. sangguniang kabataan 
chairman shall, upon certification of his election by the Comelec and during his 
tenure of office is elected as pederasyon president, serve as an ex-officio 
member of the sangguniang panlalawigan, sangguniang panlungsod, and 
sangguniang bayanb, as the case may be, without need of further appointment. 
(b) The vice-president of the pederasyon whose president has been elected 
as president of a higher pederasyon shall serve as ex-officio member of 
the sanggunian concerned without need of further appointment 
(c) The pederasyon president or vicecpresident, as the case may be, shall be 
the chairman of the committee on youth and sports development of the 
sanggunian concerned. 
Chapter 10 
Linggo ng Kabalaan 
SEC. 120. Observance of Linggo ng Kabataan. (a) Every Barangay 
municipality, city and province shall, in coordination with the pederasyon ng mga 
sangguniang kabataan at all levels, conduct an annual activity to be known as 
the Hnggo ng kabataan on such date as shall be determined by the Office of the 
President. 
(b) The observance of the linggo ng kabataan shall include the election of 
the counterparts of all local elective and appointive officials, as well as 
heads of national offices or agencies stationed or assigned in the 
territorial jurisdiction of the local government, among in school and 
community youth residing in the local government concerned from 
ages thirteen (13) to seventeen (17). During said week, they shall hold 
office as boy and girl officials and shall perform such duties and 
conduct such activities as may be provided in the ordinance. 
TITLE EIGHT. 
LOCAL OFFICIALS, DUTIES, AND POWERS 
Chapter 1 
Elective Officials 
Article One. Qualifications and Election 


SEC. 121. Qualification. An elective local official must be a Filipino citizen, 
at least eighteen (18) years of age, a registered voter in the place where he 
intends to be elected a resident therein for at least one year preceding the 
election and able to read and write. 
A candidate for membership in the sangguniang kabataan must be fifteen 
(15) but not more than twenty-one (21) years of age on Election Day. 
SEC. 122. Manner of Election. Except as hereinafter provided, candidates 
for local legislative offices shall be elected at large by the registered Voters of the 
local governrnent concerned. 
SEC. 123. Date of Election. Unless 
otherwis(~ provided by law the 
elections for local officials shall be held every three (3) years on the second 
Monday of May. 
SEC. 124. Term of Office. (a) The term of office of all local elective 
officials shall be three (3) years, starting from noon of ,June thirty (30) following 
the election. 
(b) No local elective shall serve for more than three (3) consecutive terms 
in the, same position, Voluntary renunciation of the office for any length 
of time shall not be considered as an interruption in the continuity of 
service for the full term for which the electivB official concerned was 
elected. 
(c) The term of office of barangay officials and members of the 
sangguniang kabataan shall be three (3) year:;, which shall begin after 
the regular election of barangay officials. 
Article Two. Vacancies and Succession 
SEC. 125. Permanent Vacancies in the Offices of the Governor, Vice 
Governor, Mayor; and Vice-Mayor. (a) If a permanent vacancy occurs in the 
office of the governor or Mayor, the vice-governor or vice-mayor concerned shall 
become the governor or Mayor. If a permanent vacancy occurs in the offices of 
the governor, vice-governor, 
mayor, 
or vice-mayor, the highest-ranking 
sanggunian member or, in case of his permanent inability, the second highest-
ranking sanggunian member shall become the governor, vice-governor, mayor or 
vice-mayor, as the case may be. Subsequent vacancies in the said office shall be 
filled automatically by the other sanggunian members according to their ranking 
as defined herein. 
. 
(b) If a permanent vacancy occurs in the office of the punong barangay, 
the highest ranking sangguniang barangay member or, in case of his 
permanent inability, the second highest ranking sanggunian member 
shall become the punong baranqay. 
(c) A tie between or among the highest-ranking sanggunian members 
shall be resolved by the drawing of lots. 


(d) The successors as defined herein shall serve only the unexpired terms 
of their predecessors. A permanent vacancy arises when an elective 
local official fills a higher vacant office, refuses to assume office, fails 
to qualify, dies, is removed from office, voluntarily resigns, or becomes 
permanently incapacitated to discharge the functions of his office. 
SEC. 126. Permanent Vacancies in the Sanggunian. (a) Permanent 
vacancies in the sanggunian where automatic successions provided above do 
not apply shall be filled by appointment in the following manner: 
(1) The President, through the Executive Secretary, in the case of the 
sangguniang panlalawigan and the sangguniang panlungsod of 
highly urbanized cities and independent component cities; 
(2) The governor, in the case of the sangguniang panlugsod of 
component cities and the sangguniang bayan; 
(3) The city or municipal mayor, in the case of sangguniang barangay, 
upon recommendation of the sangguniang barangay concerned. 
(b) Except for the sangguniang barangay, only the nominee of the political 
party under which the sanggunian member concerned had been 
elected and whose elevation to the position next higher in rank created 
the last vacancy in the sanggunian' shall be appointed in the manner 
hereinabove provided. The appointee shall come from the same 
political party as that of the sanggunian member who caused the 
vacancy and shall serve the unexpired term of the vacant office. In the 
appointment herein mentioned, a nomination and a certificate or 
membership of the appointee from the highest official of the political 
party concerned shall be null and void ab initio and shall be a ground 
for administrative action against the official responsible therefore. 
(c) In case the permanent vacancy is caused by a sanggunian member 
who does not belong to any political party, the local chief executive 
shall, upon recommendation of the sanggunian concerned, appoint a 
qualified person to fill vacancy. 
(d) In case of vacancy in the representation of the youth and the barangay 
in the sanggunian, said vacancy shall be filled automatically by the 
official next in rank of the organization concerned. 
SEC. 127. Temporary Vacancy in the Office of the Local Chief Executive. 
(a) When the governor, city or muniCipal mayor, or punong barangay is 
temporarily incapacitated to perform his duties due physical or legal reasons 
such as, but not limited to leave of absence, travel abroad, and suspension from 
office, the Vice-governor, city or municipal vice-mayor, or the highest ranking 
sangguniang barangay member shall automatically exercise the powers and 
perform the duties of the local chief executive concerned except the power to 
appoint, suspend, or dismiss employees which can only be exercised if the 
period of temporary incapacity exceeds thirty (30) working days. 
(b) Said temporary incapacity shall terminate upon submission to the 
appropriate sanggunian of a written declaration by the local chief 
executive concerned that he has reported back to office. In cases 
where the temporary incapacity is due to legal causes, the local chief 


executive concerned shall also submit necessary documents showing 
that said legal causes no longer exist. 
(c) When the incumbent local chief executive is traveling within the country 
but outside his territorial jurisdiction for a period not exceeding three 
(3) consecutive days, he rnay designate in writing the officer-in-charge 
of the said office. Such authorization shall specify the powers and 
functions that the local official concerned shall exercise in the absence 
of the local chief executive except the power to appoint, suspend, or 
dismiss employees. 
(d) In the event, however, that the local chief executive concerned fails or 
refuses to issue such authorization, the vice-governor, the city or 
municipal vie-mayor, or the highest ranking sangguniang barangay 
member, as the case may be, shall have the right to assume the 
powers, and duties functions of the said office on the fourth (4th) day of 
absence of the said local chief executive, subject to the limitations 
provided in subsection (c) hereof. 
(e) Except as provided above, the local chief executive shall in no case 
authorize any local official to assume the powers, and duties of the 
office, other than the vice-governor, the city or municipal vice-mayor, or 
the highest ranking sangguniang barangay member, as the case may 
be. 
SEC. 128. Approval of Leave of Absence. (a) Application leaves of 
absence or local elective officials shall be approved as follows: 
(1) Leaves ot" absence of the governor and the mayor of a highly 
urbanized city or an independent componellt city shall approved by 
the President or his duly authorized representative; 
(2) Leaves of absence of a vice-governor or a city or municipal vice-
mayor shall be approved by the local chief executive concerned: 
Provided, That the leaves of absence of the members of the 
sanggunian and its employees shall be approved by the vice-
governor or city or municipal vice-mayor concerned; 
(3) Leaves of absence of the component city or municiapal mayor shall 
be approved by the governor; and 
(4) Leave of absence of a punong barangay shall be approved by the 
city or municipal mayor: Provided, That leaves of absence of 
sangguniang barangay members shall be approved by the punong 
barangay. 
(b) Whenever the application for leave of absenc:e hereinabove specifies 
is not acted upon within five (5) working days after receipt thereof, the application 
for leave of absence shall be deemed approved. 
Article Three. Local Legislation 
SEC. 129. Presiding Officer. - (a) The vice-governor shall be the presiding 
officer of the sangguniang panlalawigan; the city vice-mayor, of the sangguniang 


panlungsodl; the municipal vice-mayor, of the sangguniang bayan; and the 
punong barangay, of the sangguniang barangay. The presiding officer shall vote 
on Acts under consideration by the sanggunian only to break a tie. 
(b) In the event of the inability of the regular Presiding officer to preside 
with a sanggunian session, the members present and consulting a 
quorum shall elect from among themselves a temporary presiding 
officer. He shall certify within ten (10) day!> from the passage of 
ordinances enacted and resolutions adopted by the sanggunian in the 
session over which he temporarily presided. 
SEC. 130. Internal Rules of Procedure. - (a) On the first regular session 
following the el~ction of its members and within ninety (90) days thereafter, the 
sanggunian concerned may adopt or update its existing rules of procedure. 
(b) The rules of procedure shall provide for the following: 
(1) The organization of the sanggunian and the election of its officers 
as well as the creation of standing commiittees on appropriations, 
women and family, human rights, youth and sports development, 
environmental protection, and cooperatives.; the general jurisdiction 
of each committee; and the election of the chairman and members 
of each committee; 
(2) The order and calendar of business for each session; 
(3) The legislative process; 
(4) The parliamentary procedures which include the conduct of 
members during sessions; 
(5) Discipline of members for disorderly behavior and absences without 
justifiable cause for four (4) consecutive sessions, for which they 
may be censured, reprimanded, or excluded from the session, 
suspended for not more than sixty 960) days, or expelled; and 
(6) Such other rules as the sanggunian may adopt. 
SEC. 131. Full Disclosure' of Financial and Business Interests of 
Sanggunian Members. - (a) Every sanggunian member shall, upon assumption 
to office, make a full disclosure of his business and financial interests. He shall 
also disclose any business, financial, or profeSSional relationship or any relation 
by affinity or consanguinity within the fourth civil degree which he may have with 
any person, firm or entity affected by any ordinance or resolution under 
consideration by the sanggunian of which he is a member which relationship may 
result in conflict of interest. Such relationship shall include: 
(1) Ownership of stock or capital, or investment, in the entity of firm to 
which the ordinance or resolution may apply; and 
(2) Contracts or agreements with any person or entity which the 
ordinance or resolution under consideration may affect. In the 
absence of a specific constitutional or statutory provision applicable 
to this situation, "conflict of interest" refers in general to one where 
it may be reasonably deduced that a member of a sanggunian may 


not act in the public interest due to some private, pecuniary, or 
other personal considerations that may tend to affect his judgment 
to the prejudice of the service or the public. 
(b) The disclosure required under this Act shall be made in writing and 
submitted to the secretary of the snaggunian or the secretary of the 
committee of which he is a member. The disclosure shall, in all cases, 
form part of the record of the proceedings and shall be made in the 
following manner: 
(1) Disclosure shall be made before the member participates in the 
deliberations on the ordinance or resolution under consideration. 
Provided, That, if the member did not participate during the 
deliberations, the disclosure shall be made before voting on the 
ordinance or resolution on second and third readings; and 
(2) Disclosure shall be made when a member takes a position or 
makes a privilege speech on a matter that may affect the business 
interest, financial connection, or professional relationship described 
herein. 
SEC. 132. Sessions. - (a) On the first day of the session immediately 
following the election of its members, the sanggunian shall, by resolution, fix the 
day, time, and place of its regular sessions. The minimum number of regular 
sessions shall be once a week for the sangguniang panlalawigan, sangguniang 
panlungsod, and sangguniang bayan, and twice a month for the sangguniang 
barangay. 
(b) When public interest so demands, special sessions may be called by 
the local chief executive or by a majority of the members of the 
sanggunian. 
(c) All sanggunian sessions shall be open to the public unless a closed-
door session· is ordered by an affirmative ViJte of a majority of the 
members present, there being a quorum, in the public interest or for 
reasons of security, decency, or morality. No two 92) seSSions, regular 
or special, any be held in a single day. 
(d) In the case of special sessions of the sanggunian, a written notice to 
be the members shall be served personally at the member'S usual 
place of residence at least twenty-four (24) hours before the special 
session is held. 
Unless otherwise concurred in by two-thirds (2/3) vote of the 
sanggunian members present, there being a quorum, no other matters 
may be considered at a special session except those stated in the 
notice. 
(e) Each sanggunian shall keep a journal and record of its proceedings, 
which may be published upon resolution of thEi sanggunian concerned. 
SEC. 133. Quorum. - (a) A majority of all the members of the sanggunian 
WllO have been elected and qualified shall constitute a quorum to transact official 
business. Should a question of quorum be raised during a session, the presiding 


officer shall immediately proceed to call the roll of the members and thereafter 
announce the results. 
(b) Where there is no quorum, the presiding officer may declare a recess 
until such time as a quorum is constituted, or a majority of the 
members present may adjourn from day to day and may compel the 
immediate attendance of any member absent without justifiable cause 
by designating a member of the sanggunian, to be assisted by a 
member or members of the police force ass,igened in the territorial 
jurisdiction of the local government concerned, to arrest the absent 
member and present him at the session. 
(c) If there is still no quorum despite the enforcement of the immediately 
preceding subsection, no business shall be transacted. The presiding 
officer, upon proper motion duly approved by the members present, 
shall then declare the session adjourned for lack of quorum. 
SEC. 134. Approval of Ordinances. -
(a) Every enacted by the 
sangguniang panlalawigan, sangguniang panillngsod, or sangguniang bayan 
shall be presented to the provincial governor or city or municipal mayor, as the 
case may be. If the local chief executive concerned approves the same, he shall 
affix his signature on each and every page thereof; otherwise, he shall veto it and 
return the same with his objections to the sanggunian, which may proceed to 
reconsider the same. The sanggunian concerned may override the veto of the 
local chief executive by two-thirds (2/3)voted of all its members, thereby making 
the ordinance or resolution effective for all legal intents and purposes. 
(b) the veto shall be communicated by the local chief executive concemed 
to the sanggunian within fifteen (15) days in the case of a province, 
and ten (10) days in the case of a city and a municipality; otherwise, 
the ordinance shall be deemed approved as if he had signed it. 
(c) ordinances enacted by the sangguniang barangay shall, upon approval 
by the majority of all its members, be Signed by the punong barangay. 
SEC. 135. Veto Power of the Local Chief Executive. - (a) The local chief 
executive 
may veto 
any ordinance of the 
san~lguniang panlalawigan, 
sangguniang panlungsod, or sangguniang bayan on the ground that it is ultra 
vires or prejudicial to the public welfare, stating his reasons therefore in writing. 
(b) The local chief executive, except the punong barangay, shall have the 
power to veto any particular item or items of an appropriation 
ordinance, an ordinance or resolution adopting a local development 
plan and public investment program, or an ordinance directing of 
payment of money or creating liability. In such a case, the veto shall 
not affect the item or items, which are not objected to. The vetoed item 
or items shal.1 not take effect unless the sanggunian overrides the veto 
in the manner provided; otherwise, the item or items in the 
appropriations ordinance of the previous year corresponding to those 
vetoed, if any, shall be deemed reenacted. 
(c) The local chief executive may veto an ordinance or resolution only 
once. The sanggunian may override the veto of the local chief 
executive concerned by two-thirds (2/3) vote of all its members, 
thereby making the ordinance effective even without the approval of 
the local chief. executive concerned. 


SEC. 136. Review of Component City and Municipal Ordinances or 
Resolution by the Sangguniang Panlalawigan. - (a) Within three (3) days after 
approval, the s~cretary to the sangguniang panlungsod or sangguniang bayan 
shall forward to the sangguniang panlalawigan for review, copies of approved 
ordinances and the resolutions approving the local development plans and public 
investment programs formulated by the local development councils. 
(b) Within thirty (30) days after receipt of copies of such ordinances and 
resolutions, 
the 
sangguniang 
panlalawigan 
shall 
examine 
the 
documents or transmit them to the provincial attomey, or if there be 
none to the provincial prosecutor for prompt examination. The 
provincial attorney or provincial prosecutor shall, within a period of ten 
(10) days from receipt of the documents, inform the sangguniang 
panlalawigan in writing his comments or recommendations, which may 
be considered by the sangguniang panlalawigan in making its 
decisions. 
(c) If the sangguniang panlalawigan finds that such an ordinance or 
resolution is beyond the power conferred upon the sangguniang 
pan lung sod or sangguniang bayan concerned, it shall declare such 
ordinance or resolution invalid in whole or in part. The sangguniang 
panlalawigan shall enter its action in the minutes and shall advise the 
corresponding city or municipal authorities of the action it has take. 
(d) If no action has been taken by the sangguniang panlalawigan within 
thirty (30) days after submission of such an ordinance or resolution, the 
same shall be presumed consistent with law and thereof valid. 
SEC. 137. Review of Barangay Ordinances by the Sangguniang 
Panlungsod or Sangguniang Bayan. -
(a) Within ten (10) days after its 
enactment, the sangguniang barangay shall furnish copies of all barangay 
ordinances to the sangguniang panlungsod or sangguniamg bayan concerned for 
review as to whether the ordinance is consistent with law and city or municipal 
ordinances. 
(b) If the sangguniang panlungsod or sangguniang bayan, as the case 
may be, fails to take action oli barangay ordinances within thirty (30) 
days from receipt thereof, the same shall be deemed approved. 
(c) If the sangguniang panlungsod or sangguniang bayan, as the case 
may be, finds the barangay ordinances inconsistent with law or city or 
municipal ordinances, the sanggunian concerned shall within thirty (30) 
days from receipt thereof, return the same with its comment and 
recommendations to the sangguniang balrangay concerned for 
adjustment, amendment, or modification; in which case, the effectivity 
of the barangay ordinance is suspended until such time as the revision 
called for is affected. 
SEC. 138. Enforcement of Disapproved Ordinances or Resolutions. - Any 
attempt to enforce any ordinance or any resolution, induding the local 
development plan and public investment program, after the disapproval thereof 
by higher reviewing authorities, shall be sufficient ground for the suspension or 
dismissal of the official or employee concerned. 


SEC. 139. Effectivity of Ordinances or Resolutions. (a) Unless otherwise 
in the ordinance or the resolution, including the local development plan and 
public investment program, the same shall take effect aftHr ten (10) days from the 
date a copy thereof is posted in a bulletin board at the entrance of the provincial 
capitol or city, municipal, or barangay hall, as the case may be, and in at least 
two (2) other conspicuous places in the local government concerned. 
(b) The secretary to the sanggunian concerned shall cause the posting of 
an ordinance or resolution in the bulletin board at the entrance of the 
proVincial capitol or city, municipal, or barangay hall in at least two (2) 
conspicuous places in the local government concerned not later than 
five (5) days after approval thereof. 
The text of the ordinance or resolution shall be disseminated and 
posted in Filipino or English and in the language or dialect understood 
by the majority of the people in the local government concerned, and 
the secretary to the sanggunian shall record such fact in a book kept 
for the purpose, stating the dates of approval and posting. 
(c) All ordinances with penal sanctions shall be published in a newspaper 
of general circulation within tho province where the local legislative 
body concerned belongs. In the absence of any newspaper of general 
circulation within the province, posting of such ordinances shall be 
rnade in all .municipalities and cities of the province where the 
sanggunian of origin is situated. 
(d) In the case of highly urbanized cities, the main features of the 
ordinance or resolution duly enacted or adopted shall, in addition to 
being posted, be published once In a local newspaper of general 
circulation within the city: Provided, That in the absence thereof the 
ordinance or resolution shall be published in any newspaper of general 
circulation. 
Article Four. Disciplinary Actions 
SEC. 140. Grounds for Disciplinary Actions. - An '3lective local official may 
be disciplined, suspended, or removed from office on any of the following 
grounds: 
(a) Dishonestly, oppression, misconduct in office, gross negligence, or 
dereliction of duty; 
(b) An elective local official may be removed office on the grounds 
enumerated above by ordHr of the proper court. 
SEC. 141. Form and Filing of Administrative Complaints. -
A verified 
complaint against any local elective official shall be filed with the disciplining 
authorities, as follows: 
(a) A complaint against any elective official of a province, a highly 
urbanized city, an independent component city or component city or 
municipality in Metro Manila shall be filed before the Office of the 
President. 


(b) A complaint against any elective official of a component city or a 
municipality shall be filed before the sangguniang panlalawigan; and 
(c) A complaint against any elective barangay official shall be filed before 
the snagguniang panlungsod or sangguniang bayan concerned. 
SEC. 142. Notice of Hearing. -
(a) Within seven (7) days after the 
administrative complaint is filed, the Office of the President or the sanggunian 
concerned, as the case may be, shall require the respondent to submit his 
verified answer within fifteen (15) days from receipt thereof, and commence the 
investigation of the case within ten (10) days after receipt of such answer of the 
respondent. 
(b) When the respondent is an elective official of a province or highly 
urbanized city, such hearing and investigation shall be conducted in 
the place where he renders or holds office. For all other local elective 
officials, the venue shall be the place where the sanggunian concerned 
is located. 
(c) However, no investigation shall be held within ninety (90) days 
immediately prior to any local election, and no preventive suspension 
shall be imposed within the said period. If preventive suspension has 
been imposed prior to the ninety (90) days period immediately 
preceding local election, it shall be deemed automatically lifted upon 
the start of aforesaid period. 
(d) The sanggunian concerned shall furnish the local chief executive with 
copies of both complaint and answer of respondent local elective 
official of a province, highly organized or an independent component 
city; the provincial governor of an elective official of a component city 
or municipality; or the city or municipal mayor if an elective official of 
the barangay. 
SEC. 143. Preventive Suspension. - (a) Preventive suspension may be 
imposed: 
(1) By the President, if the respondent is an elective official of a 
province, a highly urbanized or an independent component city or 
municipality in Metro Manila. 
(2) By the governor, if the respondent is an elective official of a 
component city or municipality; or 
(3) By the mayor, if the respondent is an elective official of the 
barangay. 
(b) Preventive suspension may be imposed at anytime after the issues are 
joined, when the evidence of guilt is strong, and given the gravity of the 
offense, there is the witnesses or pose a threat to the safety and 
integrity of the records and other evidence: Provided, That, any single 
preventive suspension of IQcal elective officials shall not extend 
beyond sixty (60) days: Provided, further, That in the event that several 
administrative cases are filed against an elective official, he cannot be 
preventively suspended for more than ninety (90) days within a single 


year on the same ground or grounds existing and a known at the time 
of the first suspension. 
(c) Upon expiration of the preventive suspension, the suspended elective 
official shall be deemed reinstated in office without prejudice to the 
continuation of the proceedings against him, which shall be terminated 
within one hundred twenty (120) days from the time he was formally 
notified of the case against him. However, if the delay in the 
proceedings of the case is due to his fault, nl9glect, or request, other 
than the appeal duly filed, the duration of such delay shall not be 
counted in computing the time of termination of the case. 
SEC. 144. Salary of Respondent Pending Suspension. - The respondent 
official preventively suspended form office shall receive no salary or 
compensation during such suspension; but, upon subsequent exoneration and 
reinstatement, he shall be paid full salary or compEmsation including such 
emoluments accruing during such suspension. 
SEC. 145. Rights of Respondent. - The respondent shall accorded full 
opportunity to appear and defend himself in person or by counsel, to confront 
and cross-examine the witnesses against him, and to require the attendance of 
witnesses and the production of documentary evidence in his favor through the 
compulsory process of subpoena duces tecum. 
SEC. 146. Form and Notice of Decision. - (a) The investigation of the 
case shall be terminated within ninety (90) days from the start thereof. Within 
thirty (30) days after the end of the investigation, the Office of the President or 
the sanggunian concerned shall render a decision writing stating clearly and 
distinctly the facts and the reasons for such decision. Copies of said decision 
shall immediately be furnished the respondent and all inberested parties. 
(b) The penalty of suspension shall not exceed the unexpired term of the 
respondent or a period of six (6) months "for every administrative 
offense, nor shall said penalty be a bar to the candidacy of the 
respondent so suspended as long as he meets the qualifications 
required for the office. 
(c) The disciplining authority or jurisdiction over local elective officials 
herein provided shall be exclusive. No public authority or official shall 
give due course to an administrative complaint which has been acted 
upon or taken cognizance of by the disciplinin~1 authority concerned. 
SEC. 147. Administrative Appeals. -- Decisions in administrative cases 
may, within thirty (30) days from receipt thereof, be appealed to the following: 
(a) The sangguniang panlalawigan, in the case of decisions of the 
sangguniang panlungsod of component cities and the sangguniang 
bayan .of component municipalities; and 
(b) The Office of the President, in the case of decisions of the 
sangguniang panlalawigan and the sangguniang panlungsod of highly 
urbanized cities and independent component cities. Decisions of the 
Office of the President shall be final and executory. 


SEC. 148. Execution Pending Appeal. - An appeal shall not prevent a 
decision from becoming final or executory. The responcient shall be considered 
as having been placed under preventive suspension during the pendency of an 
appeal in the event he wins such appeal. In the event the appeal results in 
exoneration, he shall be paid his salary and such other emoluments during the 
pendency of the appeal. 
Article Five. Recall 
SEC. 149. By Whom Exercised. -
The power of recall for loss of 
confidence shall be exercised by the registered voters of a local government to 
which the local elective official subject to such recall belongs. 
. 
. 
SEC. 150. Initiation of the Recall Process. - (a) Recall of any elective 
provincial, city, municipal, or barangay official may also be validly initiated upon 
petition of at least twenty-five percent (25%) of the total number of registered 
voters in the local government concerned during the election in which the local 
official sought to be recalled was elected. 
(1) A written petition for recall duly signed before the election registrar 
or his representative, and in the presence of a representative of the 
petitioner and a representative of the official sought to be recalled, 
and in a public place in the province, city, municipality, or barangay, 
as the case may be, shall b filed with the Comelec through its office 
in the local government concerned. The Comelec or its duty 
authorized representative shall cause the publication of the petition 
in a public and conspicuouc place for a period of not less than ten 
(10) days nor more than twenty (20) days, for the purpose of 
verifying the authenticity and genuinenes~) of he petition and the 
required percentage of voters. 
(2) Upon the lapse of he aforesaid period, the Comelec or its duty 
authorized representative shall announce the acceptance of 
candidates to . the position and thereafter prepare the list of 
candidates which shall include the name of the official sought to be 
recalled. 
SEC. 151. Election on Recall. - Upon the filing of a valid resolution or 
petition for recall with the appropriate local office of the Comelec, the 
Commission or its duly authorized representative shall SElt the date of the election 
on recall, which shall not be later than thirty (30) days after the filing of the 
resolution or petition for recall in the case of the barangay, city, or municipal 
officials, and forty-five (45) days in the case of provincial officials. The official or 
officials sought to be recall automatically be considered as duly registered 
candidate or candidates to the pertinent positions and, like other candidate, shall 
be entitle t be voted upon. 
SEC. 152. Effectivity of Recall. - The recall of an elective local official 
shall be effective only upon the election and proclamation of a successor in thEl 
person of the candidate receiving the highest number of votes cast during the 
election on recall. 


Should the official sought to be recall receive the highest number of votes, 
confidence in him is thereby affirmed, and he shall continue in office. 
SEC. 153. Prohibition from Resignation. - the eleGtive local official sought 
to be recalled shall not be allowed to resign while the recall process is in 
progress. 
SEC. 154. Limitations on Recall. _. 9a) Any elective local official may be 
the subject of a recall election only once during his term of office for loss of 
confidence. 
(b) No recall shall take place within cine (1) year from the date of the 
official's assumption to office or one (1) year immediately preceding a 
regular local election. 
SEC. 155, Expenses Incident to Recall Elections. - All expenses incident 
to recall elections shall be borne by the Comelec. 
Chapter 2 
Common Duties and Powers of Elective Local Government Officials 
Article One. The Chief Executive of Provlinces, Cities and 
Municipalities 
SEC. 156. 
Tile Common Duties and Powe(s. (a) The provincials 
governor, city mayor and municipal mayor, as the chief executive of the 
provincial, city and municipal governments, shall perform such duties and 
exercise such powers as herein provided. 
(1) Exercise general supervision and ,control over all local government 
programs, projects, services, and activities, and in this connection, 
shall: 
(i) 
Determine local government policies and guidelines and be 
responsible to the sanggunian for the program of government; 
(ii) 
Direct the formulation of the development plan, and upon 
approval thereof by the sanggunian concerned, implement the 
same; 
(iii) 
Present the program of government to the sanggunian at the 
opening of its regular session. 
(iv) 
Initiate and propose an annual legislative agenda. 
(v) 
Appoint all officials and employees whose salaries and wages 
are wholly or mainly paid out of funds. 
(vi) 
Determine the time, manner and place of payment of salaries or 
wages of local government officials and employees, 
in 
accordance with law or ordinance; 
(vii) 
Represent the local government in all its business transactions 
and sign in its behalf all bonds, contracts, and obligations, and 
such other indebtedness. 


(viii) 
Carry out such emergency measures as may be necessary 
(Juring and immediately after mancmade and natural disasters 
and calamities; 
(ix) 
Ensure that all local government officials and employees 
faithfully discharge their duties and functions as provided by law 
and 
this Code, 
and 
institutes administrative or judicial 
proceedings against any violation thereof. 
(x) 
Examine the books, records and other documents of all local 
government offices, officials, agents or employees and, in aid of 
his executive powers and authority, require all national officials 
and employees stationed in or aS8igned to his political 
jurisdiction, to make available to him such books, records, and 
other documents in their custody, except those classified by law 
as confidential; 
(xi) 
Furnish copies of executive orders issued by him, to the 
provincial governor in the case of component city mayors and 
municipal mayor, to the Office of the President in the case of 
highly-urbanized city mayors, and in the case of provincial 
governors, as well as to others as provided by law, within 
. seventy two (72) hours after their issuance; 
(xii) 
Visit at least once in every six (0) months, component 
barangays, in the case of the provincial governor, to deepen his 
understanding of problems and conditions, listen and give 
appropriate counsel to local officials and inhabitants, inform the 
respective local officials and inhabitants of general laws and 
ordinances which especially concern them, and otherwise 
conduct visits and inspections to ensure that the governance of 
his political jurisdiction will improve the quality of life of the 
inhabitants; 
(xiii) 
Act on leave applications of officials and employees appointed 
by him and the commutation of the monetary value of their leave 
credits in accordance with law; 
(xiv) 
Authorize official trips of local government officials and 
employees outside their official stations for a period not 
exceeding thirty (30) days; 
(xv) 
Call upon any national official or employee stationed in or 
assigned to his local government to advise him on matters 
affecting 
his 
territorial 
jurisdiction 
and 
to 
make 
recommendations thereon; coordinate with said official or 
employee in the formulation and implementation of plans, 
programs and projects, and, when appropriate, initiate an 
administrative or judiCial action against a national government 
official or employee who may have committed an offense in the 
performance of his official duties while stationed in or assigned 
to the concerned local government; 
(xvi) 
Authorize payment for medical care, necessary transportation, 
subsistence, hospital or medical 
fe~is of local government 
officials and 
employees who are 
injured 
while in 
the 
performance of their official duties and functions, subject to 
availability of funds; 
(xvii) 
Solemnize marriage in the case of the city or municipal mayor; 
(xviii) 
Submit to immediate higher authorities concerned, an annual 
report which should contain a comprehensive summary of all 
matters pertinent to local government administration and 
describing therein the prevailing political, social and economic 
conditions; and in addition thereto, submit supplemental reports 
at any. time during the year when unexpected events and 


situations arise that affect the general welfare of the people and 
the community. 
(2) Enforce all laws and ordinances and implement all approved 
policies, programs, projects, services and activities relative to local 
governance in the exercise of the appropriBlte corporate powers, as 
herein above provided, and in addition to th(9 foregoing, shall: 
(i) Ensure that the acts of local government officials and 
employees are within the scope of their prescribed duties and 
powers; 
(ii) Call conventions, conferences, seminars, or meetings of any 
elective and appointive officials 
worl~ing under such local 
government; including officials from other local governments; as 
well as those national officials and employees stationed in or 
assigned in or assigned within such political unit, at such time 
and place and on such subject as may be deemed important for 
the promotion of the general welfare of the affected inhabitants 
therein; 
(iii) Issue such executive orders for the faithful and appropriate 
enforcement and execution of laws and ordinances; 
(iv) Be entitled to carry the necessary firearm within his territorial 
jurisdiction; 
(v) With specific application to municipal and city mayors, formulate 
and implement a peace and order plan; and act as the 
deputized representative of the National Police Commission and 
as 
such 
exercise 
general and 
operational control 
and 
supervision over the local police forces in accordance with R.A. 
No. 6975; and with specific reference to provincial governors, 
formulate a local· government peace and order plan in 
coordination with the mayors of municipalities and component 
cities, and upon its approval, implement the same; 
(vi) Call upon the appropriate law enforcement agencies to 
suppress disorder, riot, lawless Violence, rebellion or sedition, or 
to apprehend violators of the law when public interest so 
requires and when the assigned police forces are inadequate to 
cope with the situation or the violators; 
(3) Initiate and optimize the generation of resources and revenues, for 
the implementation of development plans, program objectives and 
priorities, . particularly 
those 
programmed 
for 
agro-industrial 
development and countryside growth and progress and, relative 
thereto, shall: 
(i) Require each head of an office or department to prepare and 
submit an estimate of appropriations for the ensuing calendar 
year, in accordance with the budget preparations process as 
provided by law; 
(ii) Prepare and submit to the sanggunian for approval the 
executive and supplemental local government budgets for the 
ensuing calendar year in the manner as provided by law; 
(iii) Ensure that all local government taxes and other revenues are 
collected, and that local government funds are applied to the 
payment of corresponding 
expenses and 
settlement of 
obligations, in accordance with law or ordinance; 


(iv) Issue licenses and permits and suspend or revoke the same for 
any violation of the conditions upon which said licenses or 
permits had been issued, pursuant to law or ordinance; 
(v) Issue permit, without need of approval therefore from any 
national agency, for the holding of activities for any charitable or 
welfare purpose, excluding prohibitecl games of chance or 
shows contrary to law, public policy and public morals; 
(vi) Require owners of illegally constructE!d houses, buildings or 
other structures to obtain the necessary permit, subject to such 
fines and penalties as may be imposed by law or ordinance, or 
to make necessary changes in the construction of the same 
when said construction violates any law or ordinance, or to 
order the demolition or removal of said house, building or 
structures within the period prescribed by law or ordinance; 
(vii) 
Adopt adequate measures to safeguard and conserve land, 
mineral, marine, forest, and other r'esources of the local 
government; provide efficient and effective property and supply 
management in the concerned local Qlovemment; and protect 
the funds, credits, rights and other properties of such local 
government; and 
(viii) 
Institutes or cause to be instituted administrative or judicial 
proceedings for violation of ordinances in the collection of taxes, 
fees or charges, and for the recovery of funds and property; and 
cause the defense of the local government against all suits to 
ensure that its interests, resources and rights shall be 
, adequately protected. 
' 
(4) Ensure the delivery of basic services and the provision of adequate 
facilities as provided for under Section 15 of this Code and, in 
addition thereto, shall: 
(i) Ensure that the construction and repair' of roads and highways 
funded by the national government shall be, as far as 
practicable, carried out in a spatially contiguous manner and in 
coordination with the construction and repair of the roads and 
bridges in contiguous local governments, and 
(ii) Coordinate the implementation of technical services, including 
public works and infrastructure programs that are undertaken by 
national government agencies; 
(5) Exercise such other powers and perform such other duties as may 
be prescribed by law or ordinance. 
(b) During his incumbency, the local chief executive shall hold office in the 
prOVincial capitol, in the case of the province; at the city or municipal 
hall in the case of the city or municipality. 
Article Two, - The Vice Governor, City and Municipal Vice-Mayor 
SEC. 157. Common Duties and Powers. - (a) The vice governor of a 
province, or the vice-mayor of a city or municipality shall: 
(1) Act as presiding officer of the corresponding sanggunian, as the 
case 
may 
be, 
and 
sign 
all 
warrants 
drawn 
on 
the 


province/city/municipal treasury for all expenditures appropriated 
for the operation of the sanggunian; 
(2) Assume the office of the local chief exeGutive for the unexpired 
term of the latter in case of permanent vacancy as provided for in 
Section 125 of this Code; 
(3) Exercise the powers and perform the duties of the local chief 
executive in cases of temporary vacancy as provided for in Section 
127 ofthis'Code; and 
(4) Appoint officials and employees of :the sanglgunian concerned, 
(5) Exercise and perform such other powers and duties as may be 
prescribed by law or ordinance, 
SEC, 158. Local Legislative Power. - Local legislative power shall be 
exercised by the sanggunaing panlalawigan for the province; the sangguniang 
panlungsod for the city; the sangguniang bayan for the municipality; and the 
sangguniang barangay for the barangay, 
Acts of the sanggunian shall assume the shape or form of ordinance, 
resolutions or order and be enforceable in the local government concerned, 
Article Three. - The Members of the Sanggunian 
SEC. 159. Duties and Powers, - Members of the sanggunian shall have 
the following duties and powers: 
(1) Act as either chairman or member of a standing committee, 
(2) Introduce 
or 
propose 
legislative 
measures, 
ordinances 
or 
resolutions supportive to program of province, city or municipality 
as to the case may be, 
(3) Assist the local chief executive in the performance of his duties and 
powers, 
(4) Discharge his duties as a person in authority whenever necessary, 
(5) Articulate the needs and aspiration of his constituents in the 
sanggunian, 
(6) Perform other related duties that will enhance the effectivity of the 
sanggunian as the law and policy making body, 
Chapter 3 
Common Provisions Applicable to the Sanggunian 
Article One, - The San,gguniang Sayan; The Sangguniang Panlungsod; and 
the Sangguniang Panlalawigan 
SEC. 160. - Common Functions and Powers, - (a) The sanggunian, as 
the legislative body, shall enact ordinances, approve resolutions and appropriate 
funds for the general welfare of the local government and its inhabitants pursuant 
to Section 14 of this Code and in the proper exercise of its corporate powers as 
provided for under Section 20 of this Code, The sanggunian shall: 
(1) Approve/Enact ordinances and adopt resolutions designed to 
promote efficient and effective local governance: 


(i) It shall formulate an annual Legislative agenda in support of the 
government program. 
(ii) Require all offices to formulate their respective performance 
indicators. 
(iii) Monitor the Implementation of respective office mandates. 
(iv) Sangguniang bayan and sangguniang panlungsod shall review 
all ordinances approved by. the san£lguniang barangay and 
executive orders issued by the punong barangay; and with 
specific application to the sangguniang panlalawigan, review all 
ordinances approved by the sanggunian of component cities 
and municipalities as well as executive orders issued by the 
mayors of component cities and municipalities; 
(v) Enact measures to prevent and suppress lawlessness, disorder, 
riot, and violence; 
(vi) Impose penalties for the violation of said ordinances; 
(aa) Violation of provincial ordinance - An imprisonment not 
exceeding one (1) year. 
(bb) Violation of city ordinance -
An imprisonment not 
exceeding one (1) year. 
(cc) Violation of municipal ordinance - An imprisonment not 
exceeding one (1) year. 
(vii) 
Adopt measures to protect the inhabitants of the local 
government concerned from the harmful effects of man-made or 
natural disaster and calamities, and to provide relief services 
and assistance for victims during and in the aftermath of said 
disasters or calamities and their return to productive livelihood 
following said events; 
(viii) 
Enact ordinances intended to prevent, suppress and impose 
appropriate penalties for habitual drunkenness in public places, 
, vagrancy, 
mendicancy, 
prostitution, 
establishment 
and 
maintenance of houses of ill repute, gambling and other 
prohibited games of chance, fraudulent devices and ways to 
obtain money or property, drug addiction, maintenance of drug 
dens, 
drug 
pushing, 
juvenile 
delinquency, 
the 
printing, 
distribution or exhibition of obscene or pornographic materials or 
publications, and such other activities inimical to the welfare and 
morals of the inhabitants of the concerned local government; 
(ix) Protect the environment and impose appropriate penalties for 
ads which endanger the environment, such as dynamite fishing 
and other forms of destructive fishing, illegal logging and 
smuggling of logs, smuggling of natural resources products and 
of endangered species of flora and fauna, slash and burn 
farming, and such other activities which result in pollution, 
acceleration of eutrophication of rivers and lakes, or of 
ecological imbalance; 
(x) Determine the powers and duties of officials and employees of 
the local government concerned; 
(xi) Determine the positions and the salaries, wages, allowance and 
other emoluments and benefits of officials and employees paid 
wholly or mainly from city funds and provide for expenditures 
necessary for the proper conduct of programs, projects, 
services, and activities of the local government concerned; 
(xii) 
Authorize the payment of compensation to a qualified person 
not in the government service who fills up a temporary vacancy 
or grant honorarium to any qualified official or employee 


designated to fill a temporary vacancy in concurrent capacity, at 
the rate authorized by law; 
(xiii) 
Provide a mechanism and the appropriate funds therefore, to 
ensure the safety· and protection ot all local government 
property, public documents, or records such as those relating to 
property inventory, land ownership, records of birth, marriages, 
deaths, assessments, taxation, accounts, business permits, and 
such other records and documents of public interest in the 
offices and departments of the local government; 
(xiv) 
When the finances of the local government allow, provide for 
additional allowances and other benefib; to judges, prosecutors, 
public elementary and high school teachers, and other national 
goverl1l;nent officials stationed in or assigned to the territorial 
jurisdiction of the local government; 
(xv) 
Provide legal assistance to barangay officials who, in the 
performance of their official duties or on the occasion thereof, 
have to initiate judicial proceedings or defend themselves 
against legal action; and provide for group insurance or 
additional insurance coverage for all barangay officials, 
including members of barangay tanod brigades and other 
service units, with public or private insurance companies, when 
the finances of the local government allow said coverage. 
(2) Generate and optimize the use of resources and revenues for the 
development plans, program objectives and priorities of the local 
government with particular attention to agro-industrial development 
and local government-wide growth and progress, and relative 
thereto, and shall: 
(i) Approve the annual and supplemental budgets of the local 
government and appropriate funds for specific programs, 
projects, services and activities, or for other purposes not 
contrary to law, in order to promote the general welfare of the 
local government and its inhabitants; 
(ii) Enact ordinances levying taxes, fees and charges, prescribing 
the rates thereof for general and specific purposes, and granting 
tax exemptions, incentives or reliefs; 
(iii) Authorize the local chief executive to negotiate and contract 
loans and other forms of indebtedness; 
(iv) Enact ordinances authorizing the floating of bonds or other 
instruments of indebtedness, for the purpose of raising funds to 
finance development projects; 
(v) Appropriate funds for the construction and maintenance or the 
rental of buildings for the use of the local government unit; and, 
upon the majority vote of all the members of the sanggunian, 
authorize the local chief executive to lease to private parties 
such public buildings held in propriety capacity, subject to 
existing laws, rules and regulations; 
(vi) Prescribe reasonable limits and restraints on the use of 
property within the jurisdiction of the local government; 
(vii) Adopt a comprehensive land use plan for the local government: 
Provided, 
that 
in 
the 
case 
of component cities 
and 
municipalities, the formulation, adoption or modification of said 
plan shall be in coordinati()n with the approved provincial 
comprehensive land use plan; Provided further, that the 
comprehensive land use plans of component cities and 
municipalities 
shall 
be 
reviewed 
by 
the 
sangguniang 
panlalawigan; 


(viii) Sangguniang bayan and sangguniang panlungsod shall 
reclassify land within the jurisdiction of the local government, 
subject to the pertinent provisions of this Code; 
(ix) Sanguniang bayan and sangguniang panglungsod, enact 
integrated zoning ordinances in consonance with the approved 
comprehensive land use plan, and s,ubject to existing laws, 
rules and regulations; establish fire limits or zones, particularly 
in populous centers; and regulate thH construction, repair or 
modification of buildings within said fire limits or zones, 
provided that zoning ordinances of component cities and 
municipalities 
shall 
be 
reviewed 
by 
the 
sangguniang 
panlalawigan; 
(x) Sangguniang bayan and sanggunian~1 panlungsod subject to 
national law, process and approve subdivision plans for 
residential, commercial, or industrial purposes and other 
development purposes, and to collect processing fees and 
other charges, the proceeds of which shall accrue entirely to 
the local government: Provided, however, That where approval 
, of a national agency or office is required, said approval shall 
not be withheld for more than thirty (:30) days from receipt of 
the application, Failure to act on the application within the 
period stated above shall be deemed as approved thereof; 
(xi) Sangguniang bayan and sanggunian(l panlungsod subject to 
the provisions of Title Nine of this Code, grant the exclusive 
privilege of constructing fish corrals or fish pens, or the taking 
or catching of bang us flY, prawn fry, kawag-kawag, or fry of 
any species or fish within the territorial waters of the local 
government 
(xii) Sangguniang bayan, sangguniang palnglungsod and with the 
concurrence of at least two-thirds (2/:3) of all the members of 
the sanggunian, grant tax exemption, incentives or reliefd to 
entities engaged in community growth-inducing industries, 
subject to the provisions of Title Nine of this Code; 
(xiii) Sangguniang bayan ang sanggunianlJ panglunsod shall grant 
loans or provide grant to the other local governments or to 
national, 
provincial, 
and 
city 
charitable, 
benevolent or 
educational institutions: Provided, That, said institutions are 
operated and maintained within the territorial jurisdiction of the 
local government; 
(xiv) Sangguniang bayan and sangguniang panlungsod shall 
regulate the numbering of residential, commercial and other 
buildings; 
arid, 
regulate 
the 
inspection, 
weighing 
and 
measuring of articles of commerce, 
(3) Enact ordinances granting franchises and authorizing the issuance 
of permits or licenses, upon such conditions and for such purposes 
intended to promote the general welfare of the inhabitants of the 
local government and pursuant to this legislative authority shall: 
(i) 
Fix and impose reasonable fees and charges for all services 
rendered by the local government to private persons or 
entities; 
(ii) In the case of the city and municipality, regulate or fix license 
fees for any business or practice of profession within the local 
government and the conditions under which the local 
government and the conditions under which the license for said 
business or practice of profession may be revoked and enact 


ordinances levying taxes thereon; and in the case of the 
province, regulate and fix license fees as provided for in this 
. Code; 
(iii) The city or municipality shall provide for and set the terms and 
conditions under which public utilities owned by the local 
government shall be operated by the said local government, 
and prescribe the conditions under which the same may be 
leased to private persons or entities, preferably cooperatives; 
(iv) A city or municipality shall regulate the display of and fix the 
license fees for signs, signboards, or billboards at the place or 
places where the profession or business advertised thereby is, 
in whole or in part, conducted; 
(v) A city or municipality shall any law to the contrary 
notwithstanding, authorize and license the establishment, 
operation, 
and 
maintenance of eockpits, 
and 
regulate 
coekfighting 
and 
commercial 
breeding 
of 
gamecocks: 
Provided, That existing rights should not be prejudiced; 
(vi) A city or municipality shall regulate the operation of tricycles 
and grant franchises for the opemtion thereof within the 
, territorial jurisdiction of the local government concerned; 
(vii) A city or municipality shall grant a fmnchise to any person, 
partnership, corporation, or cooperative to do business; 
establish, construct, operate and maintain ferries, wharves, 
markets or slaughterhouses; or undertake such other activities 
within the local government: Provided, That, cooperatives shall 
be given preferences in the grant of such a franchise. 
(4) A city and a municipality mayor shall regulate activities relative to 
the use of land, buildings and structures wilhin the jurisdiction of the 
local government in order to promote the general welfare and for 
said purpose shall: 
(i) 
Declare, prevent, or abate any nuisance; 
(ii) Require that buildings' and the premises thereof and any land 
within the territorial jurisdiction of the local government, be kept 
and maintained in a sanitary condition; impose penalties for 
any violation thereof; . or, upon failure to comply with said 
requirement, have the work done at thie expense of the owner, 
administrator or tenant concerned; or require the filing up of 
any land or premises to a grade necessary for proper 
sanitation; . 
(iii) A city and municipality mayor shall regulate the disposal of 
clinical and other wastes from hospitals, clinics ad other similar 
establishments; 
(iv) A 
city 
and 
a 
municipality 
mayor 
shall 
regulate 
the 
establishment, operation and cafes, restaurant, beerhouses, 
hotels, motels, inns, pension houses, lodging houses, and 
other similar establishments including tourist guides and 
transports; 
(v) A city and a municipality mayor shall regulate the sale, giving 
away or dispensing of any intOXicating malt, vino, and mixed or 
fermented liquors at any retail outlet; 
(vi) A 
city 
and 
a municipality 
mayor 
shall 
regulate 
the 
establishment and provide for the inspection of steam boilers 
or any heating device in buildings and the storage of 
inflammable and highly combustible materials within the 
territorial jurisdiction of the government; 


(vii) A 
city 
and 
a 
municipality 
mayos 
shall 
regulate 
the 
establishment, 
operation, 
and 
maintenance 
of 
any 
entertainment or amusement facilities, including theatrical 
performances, circuses, billiard pools, public dancing schools, 
public dance halls, sauna baths, massage parlors, and other 
places for entertainment or amusement; regulate such other 
events 
or 
activities 
for 
amusement 
or 
entertainment, 
particularly those which tend to disturb the community or annoy 
the inhabitants, or require the suspension or suppression of the 
same; or, prohibit certain forms of amusement or entertainment 
in order to protect the social and moral welfare of the 
community; 
(viii) A city and a municipality mayor shall provide for the 
impounding of stray animals; regulate the keeping of animals in 
homes or as part of a business, and the slaughter, sale or 
disposition of the same; and adopt measures to prevent and 
penalize cruelty to animals; and, 
(ix) A 
city 
and 
a 
municipality 
mayor shall 
regulate 
the 
establishment, operation, and maintenance of funeral parlors 
and the burial or cremation of the dead, subject to existing 
laws, rules, and regulations. 
(5) Approve ordinances which shall ensure the efficient and effective 
delivery of the basic services and facilities as, provided for under 
Section 15 of this Code, and in addition to said services and 
facilities, shall: 
(i) 
Provide for the establishment, maintenance, protection, and 
conservation of communal forests and watersheds, tree parks, 
greenbelts, mangroves, and other similar forest development 
projects; 
(ii) Establish markets, slaughterhouses or animal corrals and 
authorize the operation thereof by the city government; and 
regulate the construction and operation of private markets, 
talipapas or other similar buildings and structures; 
(iii) Authorize the establishment, maintenance and operation by 
the local government of ferries, wharves, and other structures 
intended to accelerate productivity related to marine and 
seashore or offshore activities; 
(iv) Regulate the preparation and sale of meat, poultry, fish, 
vegetables, fruits, fresh dairy products, and other foodstuffs for 
public consumption; 
(v) Regulate the use of streets, avenues, alleys, sidewalks, 
bridges, parks and other public places and approve the 
construction, improvement, repair and maintenance of the 
same; establishment bus and vehicle stops and terminals or 
regulate the use of the same by privately-owned vehicles 
which serve the public; regulate garages and the operation of 
conveyances for hire; designate stands to be occupied by 
public vehicles When not in use; regulate the putting up of 
signs, signposts, awnings and awning posts on the streets; and 
provide for the lighting, cleaning and sprinkling of streets and 
public places; 
(vi) Regulate 
traffic 
on 
all 
streets 
and 
bridges; 
prohibit 
encroachments or obstacles thereon and, when necessary in 
the interest of public welfare, authorize the removal of 
encroachments and illegal constructions in public places; 


(vii) Subject to existing laws, establish and provide for the 
maintenance, repair and operation of an efficient waterworks 
system to supply water for the inhabitants and to purify the 
source of the water supply; regulate the construction, 
maintenance, repair and use of hydrants, pumps, cisterns and 
reservoirs; protect thE) purity and quantity of the water supply of 
the local government and, for this purpose, extend the 
coverage of appropriate ordinances over all territory within the 
drainage area of said water supply and within one hundred 
(100) meters of the reservoir, conduit, canal, aqueduct, 
pumping station, or watershed used in Gonnection with the 
water service; and regulate the consumption, use or wastage 
of water and fix and collect charges therefore; 
(viii) Regulate the drilling and excavation of the ground for the 
laying of water, gas, sewer, and other pipes and the 
construction, repair and maintenance of public drains, sewers, 
cesspools, tunnels and similar structures; regulate the placing 
of poles and the use of crosswalks, curbs, and gutters; adopt 
measures to ensure public safety against open canals, 
manholes, live wires and other similar Ihazards to life and 
property; and regulate the construction and use of private 
water closets, privies and other similar stl'uctures in buildings 
and homes; 
(ix) Regulate the placing, stringing, attaching, installing, repair and 
construction of all gas mains, electric, telewaph and telephone 
wires, conduits, meters and other apparatus; and provide for 
the correction , condemnation or removal of the same when 
found to be dangerous, defective, or othBrwise hazardous to 
the welfare of the inhabitants; 
(x) Subject to the availability of funds and to existing laws, rules 
and regulations, establish and provide for the operation of 
vocational and technical schools and similar post-Secondary 
institutions and, with the approval of the Department of 
Education, Culture and Sports and subjeGt to existing law on 
tuition fees, fix and collect reasonable tuition fees and other 
school charges in educational institutions supported by the 
local government; 
(xi) Establish a scholarship . fund for the poor but deserving 
students in schools located within its jurisdiction or for stUdents 
residing within therein; 
(xii) Approve measures and adopt quarantine regulations to 
prevent the introduction and spread of diseases; 
(xiii) Provide for an efficient and effective system of ,solid waste and 
garbage collection and disposal; prohibit littering and the 
placing or throwing of garbage, refu'se and other filth and 
wastes; 
(xiv) Provide for the care of disabled persons, paupers, the aged, 
the sick, persons of unsound mind, abandoned minors, juvenile 
delinquents, drug dependents, abused children and youth 
below eighteen (18) years of age; and subject to availability of 
funds, establish and provide for the operation of centers and 
facilities for said needy and disadvantaged persons; 
(xv) Establish and provide for the maintenance and improvement of 
jails and detention centers, institute a sound jail management, 
and appropriate funds for the subsistenGe of detainees and 
convicted prisoners I the said jails and det13ntion centers; 


(xvi) Establish, as the need arises, different councils, in coordination 
with concerned government agencies and non-governmental 
organizations and, subject to the availability of funds, 
appropriate funds, for purposes such as: 
(aa) The support; development and promotion of culture and 
the arts; 
(bb) The elderly through the formulation of policies and the 
adoption of measures mutually beneficial to the elderly 
and to the community; 
(cc) The provision of incentives for non-governmental agencies 
and entities and, subject to the availability of funds, 
appropriate funds to support programs and projects for the 
benefit of the elderly. 
(6) The sanggunian shall approve proposals and appropriate the 
school board funds for the needs in the operations and 
maintenance of public schools, taking into account the priorities 
listed in Section 209 subparagraph c. 
(7) Exercise such other powers and perform such other duties as may 
be prescribed by law or ordinance. 
Chapter 4 
Appointive Local Officials Common to All Provinces, Cities and 
Municipalities 
Article One. Secretary to the Sanggunian 
SEC. 161. Qualifications, Duties and Powers. -
(a) There shall be a 
secretary to the sanggunian who shall have the rank of and salary equal to 
ahead of department or office. 
(b) The Secretary to the sanggunian must be a citizen of the Philippines, a 
resident of the local government concerned, of good moral character, a 
holder of a college degree preferably in law, commerce or public 
administration conferred by a recognized college or university, and a 
first grade civil service eligible or its equivalent. 
The appointment of a Secretary shall be mandatory for provincial, city 
and municipal governments. 
(c) The Secetary to the sanggunian shall take charge of the office and 
shall: 
(1) Attend meetings of the sanggunian and keep a journal of its 
proceedings; 
(2) Sign and affix the seal of the local government 0 all ordinances, 
resolutions, and other official acts of the sanggunian and present 
the same to the presiding officer for his signature; 
(3) Forward to the governor or mayor, as thEl case may be, for 
approval, copies of ordinances enacted by the sanggunian and 
duly certified by the presiding .officer; 
(4) Forward to the sangguniang panlungsod or bayan concerned, in 
the case of the sangguniang barangay, and tio the sangguniang 
panlalawigan concerned, 
in the case of the sangguniang 


panlungsod of component cities or sanggunial1g bayan, copies of 
duly approved ordinances; 
(5) Furnish, upon request of any interested party, certified copies of 
records of public character in his custody, upon payment to the 
treasurer of such fees as may be prescribed by ordinance; 
(6) Record all ordinances and resolutions enacted or adopted by the 
sanggunian in a book kept for the purpose, with the dates of 
passage and publication thereof; 
(7) Keep his office and all non-confidential records therein open to the 
public during the usual business hours; 
(8) Translate into the dialect used by the majority of the inhabitants all 
ordinances and resolutions immediately after their approval, and 
cause the publication of the same together with the original 
version in the manner provided under this Code; and 
(9) Take custody of the local archives and, where applicable, the local 
library and annually account for the same; and 
(d) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance relative to his position. 
SEC. 162. Posting and Publication of Ordinances with Penal Sanctions. -
(a) Within ten (10) days after approval on review, ordinances with penal 
sanctions shall be posted at prominent places in the provincial capitol, city, 
municipal or barangay hall, as the case may be, for a minimum period of three 
(3) consecutive weeks. Such ordinances shall also be published in a newspaper 
of general circulation, where available, within the territorial jurisdiction of the local 
government concerned, except in the case of barangay ordinances. Unless 
otherwise provided therein, said ordinaces shall take effect on the day following 
its publication, or at the end of the period of posting, whichever occurs later. 
Article Two. The Treasurer 
SEC. 163. Appointment, Qualifications, Duties, and Powers. -
(a) The 
treasurer shall be appointed by the Secretary of Finance from a list of at least 
three (3) ranking, eligible recommendees, of the governor 01' mayor, as the case 
may be, 
' 
(b) The treasurer shall be under the administrative supervision of the 
governor or mayor, as the case may be, to whom he shall report 
regularly on the tax collection efforts in the local government; 
(c) The treasurer shall be a citizen of the Philippines, a resident of the 
local government concerned, of good moral character, a holder of a 
college degree preferably in commerce, public administration or law 
conferred by a recognized college or university, and a first grade civil 
service eligible or its equivalent. He must have acquired experience in 
treasury or accounting service for at least five (5) years in the case of 
the city or provincial treasurer, and three (3) years in the case of the 
municipal treasurer. The appointment of a treasurer shall be 
mandatory for provincial, city and municipal governments. (d) The 
treasurer shall take charge of the treasury office, perform the duties, 
and shall: 
(1) Advise the governor or mayor, as the case may be, the 
sanggunian, and other local government and national officials 
concerned regarding disposition of local government funds, and on 
such other matters relative to public finance; 


(2) Take custody of and exercise proper management of the funds of 
the local government concerned; 
(3) Take charge of the disbursement of all local government funds and 
such other funds the custody of which may be entrusted to him by 
law or other competent authority; 
(4) Inspect private commercial and industrial establishments within the 
jurisdiction of the local government concerned in relation to the 
implementation of tax ordinances; 
(5) Maintain and update the tax information system of the local 
government; 
(6) In the case of the provincial treasurer, exercise technical 
supervision over all treasury offices of component cities and 
municipalities; and 
(d) Exercise such other powers and perform such other duties as may be 
prescribed by law r ordinance. 
SEC. 164. Assistant Treasurer. -
(a) An assistant treasurer shall be 
appointed by the Secretary of Finance form a list of at least three (3) ranking, 
eligible recommendees of the governor or mayor, 
(b) The assistant treasurer must be a citizen of the Philippines, a resident 
of the local government concerned, of good moral character, a holder 
of a college degree preferably in commerce, pub1lic administration, or 
law conferred by a recognized college or university, and a first grade 
civil service eligible or its equivalent. He must have acquired at least fie 
(5) years experience in the treasury or accountin{;1 service in the case 
of the city or provincial assistant treasurer, and three (3) years in the 
case of the municipal assistant treasurer. 
The appointment of an assistant treasurer shall be optional for 
provincial, city and muniCipal governments. 
(c) The assistant treasurer shall assist the treasurer and perform such 
duties as the latter may assign to him. He shall have authority to 
administer oaths concerning notifications to those delinquents in the 
payment of the real property tax and concerning official matters 
relating to the accounts of the treasurer or otherwise arising in the 
offices of the treasurer and the assessor. 
Article Three. The Assessor 
SEC. 165. Qualifications, Duties and Powers. - (a) The assessor must be 
a citizen of the Philippines, a resident of the local government concerned, of 
good moral character, a holder of a college degree preferably in civil or 
mechanical engineering, commerce, or any other related course conferred by a 
recognized college or university, and a first grade civil service eligible or its 
equivalent. He must have acquired experience in real property assessment work 
or in any related field for at least five (5) years in the case of the city or provincial 
assessor, and three (3) years in the case of the municipal assessor. 
The appointment of assessor shall be mandatory for provincial, city and 
municipal governments. 
. 


(b) The assessor shall take charge of the assessor's, office, perform the 
duties: 
(1) Ensure that all laws and policies governing the appraisal and 
assessment of real properties for taxation pUl"poses are properly 
executed; 
(2) initiate, review, and recommend changes in polilCies and objectives, 
plans and programs, techniques, procedures and practices in the 
valuation and assessment of real properties for taxation purposes; 
(3) Establish a systematic method of real property assessment; 
(4) Install and maintain a real property identification and accounting 
system; 
(5) Prepare, install and maintain a system of tax mapping, showing 
graphically all property subject to assessment and gather all data 
concerning the same; 
(6) Conduct frequent physical surveys to verify and determine whether 
all real properties within the local government are property listed in 
the assessment rolls; 
(7) Exercise the functions of appraisal and asse:,sment primarily for 
taxation purposes of all real properties in the local government 
concerned; 
(8) Prepare a schedule of the fair market value for the different classes 
of real properties, in accordance with Chapter 2 of Title Nine of this 
Code; 
(9) Issue, upon request of any interested party, certified copies of 
assessment records of real property and all other records relative to 
its assessment, upon payment ofa service charge or fee to the 
treasurer; 
. 
(10) Submit every semester a report of all assessments, as well as 
cancellations and modifications of assessment to the local chief 
executive and the sanggunian concerned; 
(11) In the case of the assessor of a componenlt city or municipality 
attend, personally or through an authorized representative, all 
sessions of the local board or assessment appeals whenever his 
assessment is the subject of the appeal, arid present or submit any 
information or record in his possession as may be required by the 
board; and 
(12) In the case of the provincial assessor, exercise technical 
supervision and visitorial functions over all Gomponent city and 
municipal assessors, coordinate with component city or municipal 
assessors in the conduct of tax mapping operations and all other 
assessment activities, and provide all forms of assistance thereofor; 
and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance. 
SEC. 166. Assistant Assessor: - (a) The assistant assessor must be a 
citizen of the Philippines, a resident of the local governmenl concerned, of good 
moral character, a holder of a college degree preferably in civil or mechanical 
engineering, commerce, or any related course conferred by a recognized college 
or university, and a first grade civil service eligible or its equivalent. He must have 
acquired experience in assessment or in any related field for at least three (3) 
years in the case of the city or provincial assistant assessor, and one (1) year in 
the case of the city or provincial assistant assessor. 
The appointment of an assistant assessor is optional for provincial, city 
and municipal governments. 


(b) The assistant assessor shall assist the asseSSOlf and perform such 
other duties as the lalter may assign to him. He shall have the authority 
to administer oaths on all declarations of real property for purposes of 
assessment. 
Article Four. The Accountant 
SEC. 167. Qualifications, Duties and Powers. -
(<;I) The accountant must 
be a citizen of the Philippines, a resident of the local government concerned, of 
good moral character, and a certified public accountant. He must have acquired 
experience in the treasury or accounting service for at least five (5) years in the 
case of the provincial or city accountant, and three (3) years in the case of the 
municipal accountant. 
The appointment of accountant shall be mandatory for provincial, city and 
municipal governments. 
(b) The accountant shall take charge of both the accounting and internal 
audit services of the local government concerned Sind shall: 
(1) Install and maintain an internal audit system in the local 
government concerned; 
(2) Prepare and submit financial statements to the governor or mayor, 
as the case may be, and to the sanggunian concerned; 
(3) Apprise the sanggunian and other local government officials on the 
financial condiiion and operations· of· the lo·cal government 
concerned; 
(4) Certify to the availability of budgetary allotment to which 
expenditures and obligations may be properly charged; 
(5) Review supporting documents before preparation of vouchers to 
determine completeness of requirements; 
(6) Prepare statements allowances, of cash advances, liquidation, 
salaries, reimbursements and remittances pertaining to the local 
government; 
(7) Prepare statements of journal vouchers and liquidation of the same 
and other adjustments related thereto; 
(8) Post-individual disbursements to the subsidislry ledger and index 
cards; 
(9) Maintain individual ledgers for officials and employees of the local 
government pertaining to payrolls and deductions; 
(10) Record and post in index cards details of purchased furniture, 
fixtures, and equipment, including disposal thereof, if any; 
(11) Account for all issued requests for obligations and maintain and 
keep all records and reports related thereto; 
(12) Prepare journals and the analysis of obligations and maintain and 
keep all records and reports related thereto; and 
(13) Exercise such other powers and perform such other duties as may 
be provided by law or ordinance. 
(c) The incumbent chief accountant in the office of tile treasurer shall be 
given preference in the appointment to position of accountant. 
Article Five. The Budget Officelf 


SEC. 168. Qualifications, Duties and Powers. - (a) The budget officer 
must be a citizen of the Philippines, a resident of thE! local government 
concerned, of good moral character, a holder of a college degree preferably in 
accounting, economics, public administrator or any related course conferred by a 
recognized college or university, and a first grade civil sE~rvice eligible or its 
equivalent. He must have acquired experience in government budgeting or in any 
related field for at least five (5) years in the case of the provincial or city budget 
officer, and at least three (3) in the case of the municipal buduet officer. 
The appointment of a budget officer shall be mandatory for provincial, city 
and municipal governments. 
(b) The budget officer shall take charge of the budget office and shall: 
(1) Prepare forms, orders, and circulars embodying instructions on 
budgetary and appropriation matters for thle signature of the 
governor or mayor, as the case may be; 
(2) Review and consolidate the budget proposals of different 
departments and offices of the local government; 
(3) Assist the governor or mayor, as the ca8e may be, in the 
preparation of the budget and during budget hearings; 
(4) Study and evaluate budgetary implications of proposed legislation 
and submit comments and recommendations thereon; 
(5) When so requested Submit periodic budgetary reports to the 
Department of Budget and Management; 
(6) Coordinate with the treasurer, accountant, and the planning and 
development coordinator for the purpose of budlgeting; 
(7) Assist the sanggllnian concerned in reviewing' the approved 
budgets of component local governments; . 
(8) Coordinate with the planning and development coordinator in the 
formulation of the local government development plan; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance. 
Article Six. The Planning and Development Coordinator 
SEC. 169. Qualifications, Duties and Powers. -
(a) The planning and 
development coordinator must be a citizen' of the Philippines, a resident of the 
local government concerned, of good moral character, a holder of a college 
degree preferably. in urban planning, development studies, economics, public 
administration, or any relation course conferred by a reGognized college or 
university, and a first grade civil service eligible or its equivalent. He must have 
acquired experience in development planning and development. coordinator, and 
three (3) years in the case of the municipal planninn and development 
coordinator. 
The appointment of a planning and development GOordinator shall be 
mandatory for provincial, city and municipal governments. 
(b) The planning and development coordinator shall take charge of the 
planning and development office and shall: 
(1) Formulate integrated economic, social, physical, and other 
development plans and policies for consideration of the local 
government development council; 
(2) Conduct continuing studies, researches, and training programs 
necessary to evolve plas and programs for implementation; 


(3) Integrate and coordinate all sectoral plans and studies undertaken 
by the different functional groups or agencies; 
(4) Monitor and evaluate the implementation of the different 
development programs, 
project, 
and activities, in 
the local 
government 
concerned 
in 
accordance 
with 
the 
approved 
development council; 
(5) Prepare comprehensive plans and other development planning 
documents for the consideration of the local development council; 
(6) Analyze the income and expenditure patterns, and formulates and 
recommends fiscal plans and policies for consideration of the 
finance committee of the local government; 
(7) Promote people participation in development planning within the 
local government concerned; and 
(8) Exercise supervision and control over the Secretariat of the local 
development council; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance. 
Article Seven. The Engineer 
SEC. 170. Qualifications, Duties and Powers. - (a) The engineer must be 
a citizen of the Philippines, a resident of the local government concerned, of 
good moral character, and a licensed civil engineer. He must have acquired 
experience in the practice of his pr.ofession for at least five (5) years in the case 
of the provincial or city engineer, and three (3) years in the case of the municipal 
engineer. 
The appointment of engineer shall be mandatory for provincial, city and 
municipal governments. The city and municipal engineer shall also act as the 
local building official. 
(b) The engineer shall take charue of the engineering office and shall: 
(1) Initiate, review and recommend changes in policies and objectives, 
plans and programs, techniques, procedures and practices in 
infrastructure development and public works in general of the local 
government concerned; 
(2) Advise the governor or mayor, as the case may be, on 
infrastructure, public works, and other engineering matters; 
(3) Administer, coordinate, supervise, and control the construction, 
maintenance, impro.vement, and repair of roads, bridges, and other 
engineering and public works projects of the local government 
concerned; 
. 
(4) Provide engineering services to the local government concerned, 
including investigation and survey, engineering designs, feasibility 
studies, and project management; 
(5) In the Gase of the provincial engineer, exercise technical 
supervision over all engineering offices of component cities and 
municipalities; and 
(c) Exercise such other powers and perform such other duties as rnay be 
prescribed by law or ordinance. 
Article Eight. The Health Officer 


SEC. 171. Qualifications, Duties and Power.- (a) The health officer must 
be a citizen of the Philippines, a resident of the local government concerned, of 
good moral character, and a licensed medical practitioner. He must have 
acquired experience in the practice of his profession for at least five (5) years in 
the case of the provincial or city health officer, and three (3) years in the case of 
the municipal health officer. 
The appointment of a health officer shall be mandatory for provincial, city 
and muniCipal governments. 
(b) The health officer shall take charge of the office on health and shall: 
(1) Take charge of the office on health services, supervise the 
personnel 
and 
staff 
of 
said 
office, 
formulate 
program 
implementation guidelines and rules and or mayor, as the case may 
be, in order to assist him in the efficient, effective and economical 
implementation 
of a 
health 
services 
program 
geared 
to 
implementation of health related projects and activities; 
(2) Formulate measures for the consideration of the sanggunian and 
provide technical assistance and support to the governor or mayor, 
as the case may be, in carrying out activitieS to ensure the delivery 
of basic services and provision of adequate facilities relative to 
health services; 
(3) Develop plans and strategies and upon approval thereof by the 
governor or mayor as the case may be, implement the same, 
particularly those which have to do with health programs and 
projects which the governor or mayor, is empowered to implement 
and which the sanggunian is empowered to provide for under this 
Code; 
(4) In addition to the forgoing duties and finctions, the health officer 
shall: 
.. 
(i) Formulate and implement policies, plans, programs and projects 
to promote the health of the people in the local government 
concerned; 
(ii) Advise the governor or mayor, as the case may be, and the 
sanggunian on matters pertaining to health; 
(iii) Execute and enforce all laws, ordinances. and regulations 
relating to public health; 
(iv) Recommend to the sanggunian, through the local health board, 
the enactment of such ordinances, a she may deem necessary 
for the preservation of public health; 
(v) Recommend the prosecution of any violation of sanitary laws, 
ordinances or regulations; 
(vi) Direct the sanitary inspection of all business establishments 
selling food items or providing accommodations such as hotels, 
motels, lodging houses, penSion houses, and the like; 
(viii) 
Conduct health information campaigns and render health 
intelligence services; 
. 
(ix) In the case of the provincial health officer, exercise general 
supervision over health officers of component cities and 
municipalities; and 
(5) Be in the frontline of health services delivery and calamities; and 
(6) Exercise such other powers and perform such other duties as may 
be prescribed by law or ordinance. 


Article Nine. The Civil Registrar 
SEC. 172. Qualifications, Duties and Powers. -- (a) The civil registrar must 
be a citizen of the Philippines, a resident of the local government concerned, of 
good moral character, a holder of a college degree conferred by a recognized 
college or university, and first grade civil service eligible or its equivalent. He 
must have acquired experience in civil registry work for at least five (5) years in 
the case of the city civil registrar and three (3) years in the case of the municipal 
civil registrar. 
The appointment of a civil registrar shall be mandatory for provincial, city 
and municipal governments. 
(b) The civil registrar shall be responsible for the civil registration program 
in the local government concerned, 
(c) The civil registrar shall take charge of the office of the ,civil registry and 
shall: 
(1) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particularly those which have to do with civil registry programs and 
projects which mayor is empowered to implement and which the 
sanggunian is empowered to provide under this Code; 
(2) In addition to the foregoing duties and functions, the civil registrar 
shall: 
(i) Accept all registrable documents and judiCial decrees affecting 
the civil status of persons; 
(ii) File, keep and preserve in a secure place the books required by 
law; 
(iii) Transcribe and enter immediately upon receipt all registrable 
documl3nts and judicial decrees affecting the civil status of 
persons in the appropriate civil registry books; 
(iv) Transmit to the Office of the Civil Registar- General, within the 
prescribed period, duplicate copies of registered documents 
required by law; 
(v) Issue certified transcripts or copies of any certificate or 
registel:ed documents upon payment of the prescribed fees to 
the treasurer; 
(vi) Receive applications for the issuance of a marriage license and, 
after determining that the 
requirements 
and 
supporting 
certificates and publication thereof for the prescribed period 
have been complied with, issue the license upon payment of the 
authorized fee to the treasurer; 
(vii) Coordinate with the National Statistics Office in conducting 
educational campaign for vital registration and assist in the 
preparation of demographic and other statistics for the local 
government concerned; and· 
(3) Exercise such other powers and perform such other duties as 
may be prescribed by law or ordinance. 
Article Ten. The Administrator 
SEC. 173. Qualifications, Terms, Duties and Powers. -
(a) The 
administrator must be citizen of the Philippines, a resident of the local 


government concerned, of good moral character, a holder of a college degree 
preferably in public administration, law or any other related course a recognized 
college or university, and s first grade civil service eligible or its equivalent. He 
must have acquired experience in management and administration work at least 
five (5) years in the case of the provincial or city administrator, and three (3) 
years in the case of the municipal administrator. 
The appointment of the administrator shall be mandatory for the provincial 
and city governments and optional for the municipal government. 
The term of administrator is coterminous with that of the appointing 
authority. 
(b) The administrator shall take charge of the office of the administrator 
and shall: 
(1) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same 
particularly those which have to do with the ma,nagement and 
administration-related programs and projects which the governor or 
mayor is empowered to implement and which the sanggunian is 
empowered to provide for under this Code; 
(2) In addition to the foregoing duties and functions, the administrator 
shall: 
(i) Assist in the coordination of the work of all the officials of the 
local government, under the supervision, direction and control of 
the governor or mayor, and for this purpose, he may convene 
the chiefs of offices and other officials of the local government; 
(ii) Establish and maintain a sound personnel program for the local 
government designed to· promote career development and 
uphold the merit principle in the local government service; 
(iii) Conduct a continuing organizational development of the local 
government with the end in view of instituting effective 
administrative reforms; 
(3) Be in the frontline of the delivery of administrative support services, 
particularly those related·· to the sillJations during and in the 
aftermath of man-ade and natural disasters and calamities; 
(4) Recommend to the sanggunian and advise the governor and 
mayor, as the case may be, on all other matters relative to the 
management and administration of the local government; and 
(5) Exercise such other powers and perform such other duties as may 
be prescribed by law or ordinance. 
Article Eleven. The Legal Officer 
SEC. 174. Qualifications, Terms, Duties, and Powers. -
(a) The legal 
officer must be a citizen of the Philippines, a resident of the local government 
concerned, of good moral character, and a member of the Philippine Bar. He 
must have practiced his profession for at l€last five (5) years in the case of the 
provincial and city legal officer, and three (3) years in the case of the municipal 
legal officer. The term of the legal officer shall be coterminous with that of his 
appointing authority. 
The appointment of the legal officer shall be mandatory for provincial and 
city governments and optional for the municipal government. 
(b) The legal officer, as the chief legal counsel cif the local government, 
shall take charge of the office of legal services and shall: 


(1) Formulate measures for the consideration of the sanggunian and 
provide legal assistance and support to thegovemor or mayor, as 
the case may be, in carrying outhis duties and functions. 
(2) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particularly those which have to do with programs and projects 
related to legal services which the governor or mayor is empowered 
to implement and which the sanggunian is empowered to provide 
(3) In addition to the foregoing duties and functions, the legal officer 
shall: 
(i) Represent the local government in all civil actions and special 
proceedings wherein the local government or any official 
thereof, in his official capacity, is a party: Provided, That, in 
actions or proceedings where a component city or municipality 
is a party adverse to the provincial government or to another 
component city or municipality, a special legal officer may be 
employed to represent the adverse party; 
(ii) When required by the governor, mayor or sanggunian, draft 
ordinances, contracts, bonds, Lases and other instruments, 
involving any interest of the local government; provide 
comments and recommendations on any instruments already 
drawn; 
(iii) Render his opinion in writing on any questions of law when 
requested to do so by "the governor, mayor, or sanggunian; 
(iv) Investigate or cause to be investigated any local official or 
employee for administrative neglect or misconduct in office, and 
recommend appropriate action to the governor, mayor or 
sanggunian, as the case may be; 
(v) Investigate or cause to be investigated any person, firm or 
corporEltion holding any franchise or exercising any public 
privilege for failure to comply with any term or condition in the 
grant of such franchise or privilege, and recommending 
appropriate action to the governor, mayor or sanggunian, as the 
case may be; 
(vi) When directed by the governor, mayor or sanggunian, initiate 
and prosecute in the interest of the local government concerned 
any civil action on any bond, lease or other contract upon any 
breach or violation thereof; and 
(vii) Review and submit recommendations on ordinances approved 
and executive orders issued by component units; 
(3) Recommend measures to the 'sanggunian and advise the governor 
or mayor as the case may be on all other matters related to 
upholding the rule of law; 
(4) Be in the frontline of protecting human rights and prosecuting any 
violations Ithereof, particularly those which occur during and in the 
aftermath of man-made or natural disasters or calamities; and 
(5) Exercise such other powers and perform such other duties as may 
be prescribed by law or ordinance.' 
. 
Article Twelve. The Agriculturist 
SEC. 175. Qualifications, Duties and Powers. - (a) The agriculturist must 
be a citizen of the Philippines, a resident of the local government concemed, of 
, 


good moral character, a holder of a college degree in agriculture or any related 
course conferred by a recognized college or university, and a first grade civil 
service eligible or its equivalent. He must have practiced his profession in 
agriculture or acquired experience in a related field for at least five (5) years in 
the case of the provincial and city agriculturist, and three (3) years in the case of 
the municipal agriculturist. 
The appointment of agriculturist shall be mandatory for provincial, and 
optional for the city and municipal governments, 
(b) The agriculturist shall take charge of the office for agricultural services, 
and shall: 
(1) Formulate measures for the approval of the sanggunian and 
provide technical assistance and support to the governor or mayor, 
as the case may be, in carrying out said measures to ensure the 
delivery of basic services and provision of adequate facilities 
relative to agricultural services 
(2) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particularly those which have to do with agricultural programs and 
projects which the governor or mayor is empowered to implement 
and which the sanggunian is empowered to provide 
(3) In addition to the foregoing duties and functions, the agriculturist 
shall: 
(i) Ensure that maximum assistance and access to resources in the 
production, processing and marketing of agricultural and aqua-
cultural and marine products are extended to farmers, fishermen 
and local entrepreneurs; 
(ii) Conduct or cause to be conducted location-specific agricultural 
researches and assist in making available the appropriate 
technology arising out of and disseminating information on basic 
research on crops, preventive and control of plant diseases and 
pests, and other agricultural matters which will maximize 
productivity; 
(iii) Assist the governor or mayor, as the case may be, in the 
establishment and extension services of demonstration farms or 
aquaculture and marine products; 
(iv) Enforce rules and regulations relating to agriculture and 
aquaculture; 
(v) Coordinate with government agencies and non-governmental 
organizations, which promote agricultural productivity through 
appropriate technology compatible with environmental integrity; 
(4) Be in the frontline of delivery of basic agricultural services, 
particularly those needed for the survival of the inhabitants during 
and in the aftermath of man-made and natural disasters; 
(5) Recommend to the sanggunian and advise the governor or mayor, 
as the case may be, on all other matters related to agriculture and 
aqua-culture which will improve the livelihood and I,iving conditions 
of the inhabitants; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance, 
Article Thirteen. The Social Welfare and Development Officer 


SEC. 176. Qualifications, Duties and Powers. - (a) The social welfare and 
development officer must be a citizen of the Philippines, a resident of the local 
government concerned, of good moral character, a duly licensed social worker or 
a holder of a college degree preferably in sociology or any other related course 
conferred by a recognized college or university, and a first grade civil service 
eligible or its equivalent. He must have acquired experience in the practice of 
social work for at least five (5) years in the case of the provincial or city social 
welfare and development officer, and three (3) years in the case of the municipal 
social welfare and development officer. 
The appointment of a social welfare and development officer shall be 
mandatory for provincial and city governments and optional for municipal 
governments. 
(b) The social welfare and development officer shall take charge of the 
office on social welfare and development services and shall: 
(1) Formulate measures for the approval of the sanggunian and 
provide technical assistance and support to the governor or mayor, 
as the case may be, in carrying out measures to ensure the 
delivery of basic services and provision of adequate facilities 
relative to social welfare and development services 
(2) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same 
particularly those which have to do with social welfare programs 
and projects which the governor or mayor is ,empowered to 
implement and which the sanggunian is empowered to provide 
(3) In addition to the foregoing duties, tne social welfare and 
development officer shall: 
(i) Identify the basic needs of the needy, the disadvantaged and 
the impoverished and develop and implement appropriate 
measures to alleviate their problems and improve their living 
conditions; 
(ii) Provide relief and appropriate crisis intervention for victims of 
abuse and exploitation and recommend appropriate measures 
to detel' further abuse and exploitation; 
(iii) Assist the governor or mayor, as the case may be, in 
implementing the barangay level 
program for the total 
development and protection of children up to six (6) years of 
age; 
(iv) Facilitate the implementation of welfare programs for the 
disabled, elderly, and victims of drug addiction, the rehabilitation 
of prisoners 
and 
parolees, 
the 
prevention 
of juvenile 
delinquency and such other activities which would eliminate or 
minimize the ill-effects of poverty; 
(v) Initiate and support youth welfare programs that will enhance 
the role of the youth in nation-building; 
(vi) Coordinate with government agencies and non-governmental 
organizations which have for their purpose the promotion and 
the protection of all needy, disadvantaged, underprivileged or 
impoverished groups or individuals, particularly those identified 
to be vulnerable and high-risk to exploitation, abuse and 
neglect; 
(4) Be in the frontline of service delivery, particularly those that have to 
do with immediate relief during and assistance in the aftermath of 
man-made and natural disaster and natural calamities; 


(5) Recommend to the sanggunian and advise the governor or mayor, 
as the case may be, on all other matters related to social welfare 
and development services which will improve the livelihood and 
living conditions of the inhabitants; and 
(c) Exercise such other powers and perform such 'other duties as may be 
prescribed by law or ordinance. 
Article Fourteen. The Environment and Natural Resources Officer 
SEC. 177. Qualifications, Duties and Powers. - (a) The environment and 
natural resources officer must be a citizen of the Philippines, a resident of the 
local government concerned, of good moral character, a holder of a college 
degree preferably in environment, forestry, agriculture or any related courses 
conferred by a recognized college or university, and a first grade civil service 
eligible or its equivalent. He must have acquired experience in environmental and 
natural resources management, conservation, and utilization, of at least five (5) 
years in the case of the provincial or city environment and natural resource 
officer, and three (3) years in the case of the municipal environment and natural 
resources officer. 
The appOintment of an environment and natural resources officer is 
optional for provincial, city and municipal govemments. 
(b) The environment and natural resources management officer shall take 
charge of the office on environment and natural resources and shall: 
(1) Formulate measures for the consideration of the sanggunian and 
provide technical assistance and support to the governor or mayor, 
as the case may be, in carrying out measures to ensure the 
delivery of basic services and provision of adequate facilities 
relative to .environment and natural resources services 
(2) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particularly those which have to do with environment and natural 
resources programs and projects which the governor or mayor is 
empowered to implement and which the sanggunian is empowered 
to provide 
(3) In addition to the foregoing duties and powers, the environment and 
natural resources officer shall: 
(i) Establish, maintain, protect and preserve communal forests, 
watersheds, tree parks, mangroves, greenbelts and similar 
forest projects and commercial forest, like industrial tree farms 
and agro-forestry projects; 
(ii) 
Provide 
extension 
services 
to 
beneficiaries 
of forest 
development projects and technical, financial and infrastructure 
assistance; 
(iii) Mana~le and maintain seed banks and produce seedlings for 
forests and tree parks; 
(iv) 
Provide 
extension 
services 
to 
beneficiaries 
of forest 
development projects and 
render assistance for natural 
resources-related 
conservation 
and 
utilization 
activities 
consistent with ecological balance; 
(v) Promote the small-scale mining and utilization of mineral 
resources, particularly mining of gold; 


(vi) Coordinate with government agencies and non-governmental 
organizations in the implementation of measures to prevent and 
control land, air and water pollution; 
(4) Be in the frontline of the delivery of services concerning the 
environment and natural resources, particularly in the renewal and 
rehabilitation of the environment during and in the aftermath of 
man-made and natural calamities and disasters; 
(5) Recommend to the sanggunian and advise the governor or mayor 
as the calle may be on all matters relative to the protection, 
conservation, maximum utilization, application of appropriate 
technology and other matters related to the environment and 
natural resources; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance. 
Article Fifteen. The Architect 
SEC. 178. Qualifications, Duties and Powers. - (a) The architect a citizen 
of the Philippines, a resident of the local government concerned, of good moral 
character, a duly licensed architect. He must have practiced his profession for at 
least five (5) years in the case of the provincial or city architect, and three (3) 
years in the case of the municipal architect. 
The appointment of an architect is optional for provincial, city and 
municipal governments. 
(b) The architect shall take charge of the office on architectural planning 
and design and shall: 
(1) Formulate measures for the consideration of the sanggunian and 
provide teGhnical assistance and support to the governor or mayor, 
as the case may be, in carrying out measures to ensure the 
delivery of basic services and provision of adequate facilities 
relative to architectural planning and design 
(2) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particularly those which have to do with architectural planning and 
design programs and projects which the governor or mayor is 
empowered to implement and which the sanggunian is empowered 
to provide 
(3) In addition to foregoing duties and functions, the architect shall: 
(i) Prepare and recommend for consideration of the sanggunian 
the architectural plan and design for the local government or a 
part thereof, including the renewal of slums and blighted areas, 
land reclamation activities, the greening of land, and appropriate 
planning of marine and foreshore areas; 
(ii) Review and 
recommend for appropriate action 
of the 
sanggunian, governor or mayor, as the case may be, the 
architectural plans and design submitted by governmental and 
non-governmental entities or individuals, particularly those 
undeveloped, underdeveloped, and poorly-designed areas; and 


(iii) Coordinate with government and non-government entities and 
individuals involved in the aesthetics and the maximum 
utilization of the land and water within the jurisdiction of the local 
government, compatible with 
environmental integrity and 
ecological balance. 
(4) Be in the frontline of the delivery of services involving architectural 
planning and design, particularly those related to the redesigning of 
spatial distribution of basic facilities and physical structures during 
and in the aftermath of man-made and natural calamities and 
disasters; 
(5) Recommend to the sanggunian and advise the governor or mayor, 
as the case may be, on all matters relative to the architectural 
planning and design as it relates to the total socioeconomic 
development of the local government; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by I:aw or ordinance. 
Article Sixteen. The Information Officer 
SEC. 179. Qualifications, Duties and Powers. - (a) The information officer 
must be a citizen of the Philippines, a resident of the local government 
concerned, of good moral character, a holder.of a college degree preferably in 
journalism, mass communication or any related course conferred by a 
recognized college or university, and a first grade civil service eligible or its 
equivalent. He must have experience in writing articles and research papers, or 
in writing for print, television or broadcast media of at least three (3) years in the 
case of the provincial or city information officer, and at least one (1) year in the 
case of municipal information officer. 
. 
The appointment of an information officer is optional for provincial, city and 
municipal governments. 
The term of the information officer is co-terminus wi,th that of the 
appointing authority. 
(b) The information officer shall take charge of the office on public 
information and shall: 
(1) Formulate measures for the consideration of the sanggunian and 
provide technical assistance and support to the governor or mayor, 
as the case may be, in providing the information and research data 
required for the delivery of basic services and provision of adequate 
facilities so that the public becomes aware of said services and 
may fully avail of the same; 
(2) Develop plans and strategies and, upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particularly those which have to do with public information and 
research data to support programs and projects which the governor 
or mayor is empowered to implement and which the sanggunian is 
empowered to provide. 
(3) In addition to the foregoing duties and functions, the information 
officer shall: 


(i) Provide relevant, adequate, and timely information to the local 
government and its residents; 
(ii) Furnish 
information and 
data on 
local governments to 
government agencies or offices as may be required by law or 
ordinance; and non-governmental organizations to be furnished 
to said agencies and organizations; 
(iii) Maintain effective liaison with the various sectors of the 
community on matters and issues that affect the livelihood and 
the quality of life of the inhabitants and encourage support for 
programs of the local and national government; 
(4) Be in the frontline in providing information during and in the 
aftermath of manmade and natural calamities and disasters, with 
special attention to the victims thereof, to help minimize injuries and 
casualties during alld after the emergency, and to accelerate relief 
and rehabilitation; 
(5) Recommend to the sanggunian and advise'the governor or mayor, 
as the case may be, on all other matters relative to public 
information and 
research data as it relates to the total 
socioeconomic development of the local government; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance, 
Article Seventeen. The Cooperatives Officer 
SEC. 180. Qualifications, Duties and Powers, - (a) The cooperative officer 
must be a citizen of the Philippines, a resident of the local government 
concerned, of good moral character, a holder of a college degree preferably in 
business administration with special training in cooperatives or any related 
course conferred by a recognized college or university, and a first grade civil 
service eligible or its 13quivalent He must have experience in cooperatives 
organization and management of at least five (5) years in the case of the 
provincial or city cooperatives officer, and three (3) years in the case of municipal 
cooperatives officer. 
The appointment of the cooperatives officer is optional for the provincial 
and city governments, 
(b) The cooperatives shall take charge of the office for the development of 
cooperatives and shall: 
(1) Formulate measures for the consideration of the sanggunian, and 
provide technical assistance and support to the governor or mayor, 
as the case may be, in carrying out measures to ensure the 
delivery of basic services. and provision of facilities through the 
development of cooperatives, and in providing access to such 
services and facilities; 
(2) Develop plans and strategies and, upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particularly those which have to do with the integration of 
cooperatives principles and methods in' programs and projects 
which the 90vernor or mayor is empowered,to implement and which 
the sanggunian is empowered to provide 


(3) In addition to the foregoing duties and powers, the cooperatives 
officer shall: 
(i) Assist in the organization of cooperatives; 
(ii) Provide technical and other forms of assistance to existing 
cooperatives to enhance their viability as an economic 
enterprise and social organization; 
(iii) Assist cooperatives in establishing linkages with government 
agencies and non-government organizations involved in the 
promotion and integration of the concept of cooperatives in the 
livelihood of the people and other community activities; 
(4) Be in the frontline of cooperatives organization, rehabilitation of 
viability enhancement, particularly during and in the aftermath of 
man-made and natural calamities and disasters, to aid in their 
survival and, if necessary subsequent rehabilitation; 
(5) Recommend to the sanggunian, and advise the governor or mayor, 
as the case may be, on all other matters relative to cooperatives 
development and viability enhancement which will improve the 
livelihood and quality of life of the inhabitants; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance. 
Article Eighteen. The Population Officer 
SEC. 181. Qualifications, Duties and Powers. - (a) The population officer 
must be a citizen of the Philippines, a resident of the local government 
concerned, of good moral character, a holder of a college degree with 
specialized training in population development conferred by a recognized college 
or university, and a first qrade civil service eligible or its equivalent. He must have 
experience in the implementation of programs on population development or 
responsible parenthood for at least five (5) years in the case of the provincial or 
city population officer and three (3) years in the case of the municipal population 
officer. 
The appointment of the population officer is optional in the local 
governments: Provided, however, that provinces and cities which have existing 
population offices shall continue to maintain such offices for a period of five (5) 
years from date of effectivity of this Code, after which said offices shall become 
optional. 
(b) The population officer shall take charge of the office on population 
development and shall: 
(1) Formulate measures for the consideration of the sanggunian and 
provide technical assistance and support to the governor or mayor, 
as the case may be, in carrying out measures to ensure the 
delivery of basic services and provision of adequate facilities 
relative to the integration of the population development principles 
and in providing access to said services and facilities; 
(2) Develop plans and strategies and upon approval thereof by the 
governor Dr mayor, as the case may be, implement the same, 
particularly those which have to do with the integration of 
population development principles and methods in programs and 


projects which the governor or mayor is empowered to implement 
and which the sanggunian is empowered to provide for under this 
Code; 
(3) In addition to the foregoing duties and powers, the population 
officer shall: 
(i) Assist the governor or mayor, as the case may be, in the 
implementation of the Constitutional provisions relative to 
population development and the promotion .of responsible 
parenthood; 
(ii) Establis.h and maintain an updated data bank for program 
operations, development planning and an educational program 
to ensure the people's participation in and understanding of 
population development; 
(iii) Implement appropriate training programs responsive to the 
cultural heritage of the inhabitants; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance. 
Article Nineteen. The Veterinarian 
SEC. 182. Qualifications, Duties and Powers. - (a) The veterinarian must 
be a citizen of the Philippines, a resident of the local government concerned, of 
good moral character, a licensed doctor of veterinary medicine. He must have 
practiced his profession for at least three (3) years in the case of the provincial or 
city veterinarian and at least one (1) year in the case of the municipal 
veterinarian. 
The appointment of the veterinarian officer is mandatory for the provincial 
and city governments. 
(b) The veterinarian shall take charge of the office for veterinary services 
and shall: 
(1) Formulate measures for the consideration of the sanggunian, and 
provide technical assistance and support to the governor or mayor, 
as the case may be, in carrying out measures to ensure the 
delivery of basic services. 
(2) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particularly those which have to do with the veterinary-related 
activities which the governor or mayor is empowered to implement 
and which the sanggunian is empowered to provide in this Code; 
(3) In addition to the foregoing duties and powers, the veterinarian 
shall: 
(i) Advise the governor or the mayor, as the case may be, on all 
rnatters pertaining to the slaughter of animals for human 
consumption and the regulation of slaughterhouses; 
(ii) Regulate enforce laws or ordinance relative to the keeping of 
domestic animals; including the inspection of 
(iii) Poultry, milk and dairy products for public consumption; 
(iv) Enforce all laws and regulations for the prevention of cruelty to 
animals; and 


(v) Take the necessary measures to eradicate, prevent or cure all 
forms of animal diseases; 
(4) Be in the frontline of veterinary related activities, such as in the 
outbreak of highly contagious and deadly diseases, and in 
situations resulting in the depletion of animals for work and human 
consumption, particularly those arising from and in the aftermath of 
man-made and natural calamities and disasters; 
(5) Recommend to the sanggunian and advise the governor or mayor, 
as the case may be, on all matters relative to veterinary services 
which will increase the number and improve the quality of livestock, 
poultry and other domestic animals used for work or human 
consumption; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by I:aw or ordinance. 
Article Twenty. The General Services Officer 
SEC. 183. QualifIcations, Duties and Powers. - (a) The general services 
officer must be a citizen of the Philippines, a resident of the local government 
concerned, of good moral character, a holder of a college degree on public 
administration, business administration and management conferred by a 
recognized college or university, and a first grade civil service eligible or its 
equivalent. He must have acquired experience in general services, including 
management of supply, property, solid waste disposal, and general sanitation, of 
at least five (5) years in the case of the provincial or city general services officer, 
and at least three (3) years in the case of the municipal general services officer. 
The appointment of the general services officer shall be mandatory for the 
provincial and city governments. 
(b) The general services officer shall take charge of the office on general 
services and shall: 
(1) Formulate measures for the consideration of the sanggunian 
and provide technical assistance and support to the governor or 
mayor, as the case may be, in carrying out measures to ensure 
the delivery of basic services and provision of adequate facilities 
which require general services expertise and technical support 
services; 
(2) Develop plans and strategies and upon approval thereof by the 
governor or mayor, as the case may be, implement the same, 
particullarly those which have to do with the general services 
supportive of the welfare of the inhabitants which the governor 
or mayor is empowered to implement and which the sanggunian 
is empowered to provide for under this Code; 
(3) In addition to the forgoing duties and powers, the general 
services officer shall: 
(i) Take custody of and be accountable for all properties, real or 
pen30nal, owned by the local government and those granted 
to i,t in the form of donation, reparation, assistance and 
counterpart of joint projects; 


(ii) With the approval of the governor or mayor, as the case may 
be, assign building or land space to local officials or other 
public officials, who by law, are entitled to such space; 
(iii) Recommend .to the governor or mayor, as the case may be, 
the reasonable rental rates for local,governrnent properties, 
whether real or personal, which will be leased to public or 
private entities by the local government; 
(iv) Recommend to the governor or mayor, as the case may be, 
reasonable rental rates of private properties, which may be 
leased for the official use of the local government; 
(v) Maintain and supervise janitorial, security, landscaping and 
other related services in all local government public buildings 
and other real property, whether owned or leased by the 
local government; 
(vi) Collate and dissemble information regarding prices, shipping 
and other costs of supplies and other items commonly used 
by the local government; 
(vii) 
Perform archival 
and 
record 
management with 
respect to records of offices and departments of the local 
government; and 
(viii) 
Perform all other functions pertaining to supply and 
property management heretofore performed by the local 
government treasurer; and enforce pOlicies on records 
creation, maintenance, and disposal. 
(4) Be in the frontline of general services related activities, such as 
the possible or imminent destruction or damage to records, 
supplies, properties, and structures and the orderly and sanitary 
clearing up of waste materials or debris, particularly during and 
in the aftermath of man-made and natural calamities and 
disasters; 
(5) Recommend to the sanggunian and advise the governor or 
mayor, as the case may be, on all other matters relative to 
general services; and 
(c) Exercise such other powers and perform such other duties as may be 
prescribed by law or ordinance·. 
Chapter 5 
Human Resources and Development 
SEC. 184. Organizational Structure and Staffing Pattern. - Every local 
government shall desi~ln and implement its own organizational structure and 
staffing pattern taking into consideration its service requirements and financial 
capability, subject to the minimum standards and guidelines prescribed by the 
Civil Service Commission. 
SEC. 185. Responsibility for Human Resources and Oevelopment. - The 
chief executive of every local government shall be responsible for human 
resources and development in his unit and shall take all personnel actions in 
accordance with the Constitutional provisions on civil service, pertinent laws, and 
rules and regulations thereon, including such policies, guidelines and standards 
as the Civil Service Commission may establish: Provided, that the local chief 
executive may employ emergency or casual employees or laborers paid on a 


daily wage or piecework basis and hired through job orders for local projects 
authorized by the sanggunian concerned, without need of approval or attestation 
by the Civil Service Commission: Provided, further, That the period of 
employment of emergency or casual laborers as provided in this Section shall not 
exceed six (6) months. 
SEC. 186. Civil SelVice Law, Rules and Regulations, and Other Related 
Issuances. -
The civil service law and such rules shall govern all matters 
pertinent to human resources and development in local governments and 
regulations and other issuances promulgated pursuant thereto, unless otherwise 
specified in this Code. 
SEC. 187. Limitation on Appointments. - No person shall be appointed in 
the career service of the local government if he is related within the fourth civil 
degree of consanguinity or affinity to the appointing or recommending authority. 
SEC. 188. Public Notice of Vacancy; Personnel Selection Board. -
(a) 
Whenever a local chief executive decides to fill a vacant career position, there 
shall be posted notices of the vacancy in at least three' (3) conspicuous public 
places in the local government concerned for a period of not less than fifteen (15) 
days, 
(b) There shall be established in every province, city or municipality a 
personnel selection board to assist the local chief executive in the 
judicious and objective selection of personnel for employment as well 
as for promolion, and in the formulation of such policies as would 
contribute to employee welfare, 
(c) The local chief executive shall head the personnel selection board, and 
its members shall be determined by resolution of the sanggunain 
concerned, a representative of the Civil Service Commission, if any, 
and the personnel officer of the local government concerned shall be 
ex-officio members of the board, 
SEC. 189. Resignation of Elective Local Officials, - (a) Resignations by 
elective local officials shall be deemed effective only upon acceptance by the 
following authorities: 
(1) The President, in the case of governors; vice-governors, and 
mayors and vice-mayors of highly urbanized cities and 
independent component cities; 
(2) The governor, in the case of municipal mayors, municipal vice-
mayors, city mayors and city vice-mayors of component cities; 
(3) The sanggunian concerned, 
in the case of sanggunian 
members; and 
(4) The city or municipal mayor, in the case of barangay officials, 
(b) Copies of the resignation letters of elective local officials, together with 
the action taken by the aforesaid authorities, shall be furnished the 
Department of Interior and Local Government. 
(c) The resignation shall be deemed accepted if not acted upon by the 
authority concerned within fifteen (15) working days from receipt 
thereof. 
(d) Irrevocable resignations by sanggunian members shall be deemed 
accepted upon presentation before an open session of the sanggunian 


concerned and duly entered in its records: Provided, however, That 
this subsection does not apply to sanggunian members who are 
subject to recall elections or to cases where existing laws prescribe the 
manner of acting upon such resignations. 
SEC. 190. Grievance Procedure. - In every local government, the local 
chief executive shall establish a procedure to inquire into, act upon, resolve or 
settle complaints and grievances presented by local government employees. 
SEC. 191. Administrative Discipline. - Investigation and adjudication of 
administrative complaints against appointive local officials and employees as well 
as their suspension and removal shall be in accordance with the civil service law 
and rules and other pertinent laws. The results of such administrative 
investigations shall be reported to the Civil Service Commission .. 
SEC. 192. Preventive Suspension of Appointive Local Officials and 
Employees. -
(a) The local chief executives may preventively suspend for a 
period not exceeding si)(ty (60) days any subordinate official or employee under 
his authority pending investigation if the charge against such official or employee 
involves dishonestly, oppression or grave misconduct or neglect in the 
performance of duty, or if there is reason t believe that the respondent is guilty of 
the charges which would warrant his removal from the service. 
(b) Upon expiration of the preventive suspension, the suspended official or 
employee shall be automatically reinstated in office without prejudice to 
the continuation of the administrative proceedings against hum until its 
termination. If the delay in the proceedings of the case is due to the 
fault, neglect Dr request of the respondent, the time of the delay shall 
not be counted in computing the period of suspension herein provided. 
SEC. 193. Administrative Investigation. -
In any local government, 
administrative investigation may be conducted by a person or a committee duly 
authorized by the local chief executive. Said person or committee shall conduct 
hearings on the cases brought against appointive local officials and employees 
and submit their findings and recommendations to the local chief executive 
concerned within fifteen (15) days from the conclusion of the hearings. The 
administrative cases herein mentioned shall be decided within ninety (90) days 
from the time the respondent is formally notified of the charges. 
SEC. 194. Disciplinary Jurisdiction. -
Except as otherwise provided by 
law, the local chief executive may impose the penalty of removal from service, 
demotion in rank, suspension for not more than one (1) year without pay, fine in 
an amount not exceed,ing six (6) months' salary, or reprimand and otherwise 
discipline subordinate oificials and employees under his jurisdiction. If the penalty 
imposed is suspension without pay for not more than thirty (30) days, his 
decision shall be final. If the penalty imposed is heavier than suspension of thirty 
(30) days, the decision shall be appealable to the Civil Service Commission, 
which shall decide the appeal within thirty (30) days from receipt thereof. 
SEC. 195. Execution Pending Appeal. - An appeal shall not prevent the 
execution of a decision of removal or suspension of a respondent-appellant. In 


case the respondent-appellant is exonerated, he shall be reinstated to his osition 
with all the rights and privileges appurtenant thereto from the time he had been 
deprived thereof. 
SEC. 196. Prohibited Business and Pecuniary Interest. - (a) it shall be 
unlawful for any local government official or employee, directly or indirectly, to: 
(1) Engage in any business trilnsaction with the local government in 
which he is an official or employee or over which he has the power 
of supervision, or with any of its authorized boards, officials, agents, 
or attorneys, whereby money is to be paid, or property or any other 
thing of value is to be transferred, directly or indirectly, out of the 
resources of the local government to such person or firm; 
(2) Hold such interests in any cockpit or other games licensed by a 
local government;' 
, 
(3) Purchase any real estate or other property forfeited in favor of such 
local government for unpaid taxes or assessment, or by virtue of a 
legal process at the instance of the said local government; 
(4) Be a surety for any person contracting or doing business with the 
local government for which a surety is required; and 
(5) Possess or use any public property of the local government for 
private purposes. 
(b) All other prohibitions governing the conduct of nation ill public officers 
relating to prohibited business arid pecuniary interest so provided for 
under Republic Act Numbered Sixty-Seven Thirteen (RA No. 6713) 
otherwise known as the "Code of Conduct and Ethical Standards for 
Public Officials and Employees" and other laws shall also be applicable 
to local government officials and employees. 
SEC. 197. Practice of Profess ion. - (a) All governors, city and municipal 
mayors are prohibited from practicing their profession or engaging in any 
occupation other than the exercise of their duties and responsibilities as local 
chief executives, 
(b) Sanggunian members may practice their professions, engage in any 
occupation, or teach in schools except during session hours: Provided, 
That sanggunian members who are also members of the Bar shall not: 
(1) Appear as counsel before any court in any civil case wherein a 
local government or any office, agency, or instrumentality of the 
government is the adverse party; 
(2) Appear a8 counsel in any criminal case wherein an officer or 
employee of the national or local government is accused of an 
offense committed in relation to his office; 
(3) Collect any fee for their appearance in administrative proceedings 
involving the local government of which he is an official; and 
(4) Use property and personnel of the government except when the 
sanggunian member concerned is defending the interest of the 
government. 
(c) Doctors of medicine may practice their profession eveh during official 
hours of work only on occasions of emergency: Provided, that the 
officials concerned do not derive monetary compensation there from. 


SEC.19B. Statement of Assets and Liabilities. -
(a) Officials and 
employees of local governments shall file l?worn statements of asset, liabilities 
and networth, lists of relatives within the fourth civil degree of consanguinity or 
affinity in government service, financial and business interests, and personnel 
data sheets as required by law. 
SEC. 199. Oath of Office. - (a) All elective and appointive local officials 
and employees shall, upon assumption to office, subscribe. to an oath or 
affirmation of office in the prescribed form. The oath or affirmation of office shall 
be filed with the office of the local chief executive concerned. A copy of the oath 
or affirmation of office of all elective and appointive local officials and employees 
shall be preserved in the indiVidual personal records file under the custody of the 
personnel office, diviSion, or section of the local government concerned. 
SEC. 200. Partisan Political Activity. - No local official or employee in the 
career civil service shall engage directly or indirectly in any partisan political 
activity or take part in any election, initiative, referendum, plebiscite, or recall, 
except to vote, nor shall he use his official authority or influence to cause the 
performance of any political activity by any person or body. He may, however, 
express his views on current issues, or mention the names of certain candidates 
for public office that he supports. Elective local officials may take part in partisan 
political and electoral activities, but it shall be unlawful for them to solicit 
contributions from their subordinates or subject these subordinates to any of the 
prohibited acts under thH Omnibus Election Code. 
SEC. 201. Appointment of Elective and Appointive Local Officials; 
Candidates Who Lost in Election. - (a) No elective or appointiye local official 
shall be eligible for appointment or designation in any capacity to any public 
office or position during his tenure. 
Unless otherwise allowed by law or by the primary functions of his 
position, no elective or appointive local official shall hold any other office or 
employment in the government or any subdivision, agency or instrumentality 
thereof, including government-owned or -controlled corporations or their 
subsidiaries. 
(b) Except for losing candidates in barangay elections, no candidate who 
lost in any election shall, within one (1) year after such election, be 
appointed to any office in the government or any government-owned or 
-controlled corporations or in ,my bf their subsidiaries. 
SEC. 202. Additional or Double Compensation. - No elective or appointive 
local official or employee shall receive additional, 
double, 
or indirect 
compensation, unless specifically authorized by law, nor accept. without the 
consent of Congress, any present, emoluments, office, or title of any kind from 
any foreign government. Pensions or gratuities shall not be considered as 
additional, double, or indirect compensation. 
SEC. 203. Permission to Leave Station. (a) Provincial, city, municipal, and 
barangay appointive officials going on official travel shall apply and secure 
written permission from their respective local chief executives before departure. 


The application shall specify the reasons for such travel, and the permission shall 
be given or withheld based on considerations of public interest, financial 
capability of the local gOl/ernment coneerned and urgency of the travel. 
Should the local chief executive concerned fail to act upon such 
application within four (4) working days from receipt thereof, it shall be deemed 
approved. 
(b) Mayors of component cities and municipalities sh,all secure the 
permission of the governor concerned for any travel outside the 
province. 
(c) Local government officials traveling abroad shall notify their respective 
sanggunian: Provided, That when the period of travel extends to more 
than three (3) months, during periods of emergency or crisis or when 
the travel involves the use of public funds, permission from the Office 
of the President shall be secured. 
(d) Field officers of national agencies or offices assigned in provinces, 
cities, and municipalities shall not leave their official stations without 
giving prior written notice to the local chief executive concerned. Such 
notice shall state the duration of travel and the name of the officer 
whom he shall deSignate to act for and in his behalf during his 
absence, 
SEC. 204. Annual Report. - On or before March thirty-first (31 st) of each 
year, every local chief executive shall submit an annual report to the sanggunian 
concerned on the socioeconomic, political and peace and order conditions, and 
other matters concerning the local' government, which shall 
cover the 
immediately preceding ealendar year. A copy of the report shall be forwarded to 
the Department of Interior and. Local Government. Component cities and 
municipalities shall likewise provide the sangguniang panlalawigan copies of their 
respective annual reports. Likewise the Regional Government shall be furnished 
copies of the annual reports of all local governments. 
Chapter 6 
Local Government Compensation 
SEC. 205. Local Salary and Position' Council. -
The Civil Service 
Commission together with all the chaimien of the Leagues of Provinces, Cities 
and Municipalities shall be constituted as the Local Salary and Position Council 
which shall design and formulate a new salary structure for all elective and 
appointive officials in all levels of local government following the prinCiples of 
equal pay for comparatively equal work and based on the affordability principle in 
accordance with the following guipelines: 
(a) Forty-five 
to 
fifty-five 
percent 
(45-55%) 
personnel 
services 
strictly/absolutely complied with by local governments; 
(b) Any salary increases should 'only be done once in every three (3) 
years: Provided, that this limitation shall not apply to merit promotions; 
and 


(c) Effectivity of the new salary increases for elective local officials shall 
take effect until after the expiration of the full term of all local elective 
officials approving such increases. 
SEC. 206. Application of Existing Salary Laws in the Interim Period. - In 
the interim period, while the new salary structure is not yet installed, the 
provisions of existing salary laws (RA 6758) shall apply. 
Chapter 7 
local School Boards 
SEC. 207. Creation, Composition and Compensation. - (a) There shall be 
established in every province, city, or muniCipality a provincial, city or municipal 
school board, respective!iy 
(b) The composition of local school boards shall be as follows: 
(1) The provincial school boards shall be composed of the governor 
and the division superintendent of schools as co-chairmen; the 
chairman 
of the education committee of the sangguniang 
panlalawigan, the provincial treasurer, the representative of the 
pederasyoll ng mga sangguniang kabataan in the sangguniang 
panlalawigan, the duly elected president of the provincial federation 
of parents·teachers association, the duly elected representative of 
the teacher's organization in the province, and the duly elected 
representative of the non-academic personnel of public schools in 
the province, as members; 
(2) The city school board shall be composed of the city mayor and the 
city superintendent of schools as co-chairmen; the chairman of the 
education committee of the sangguniang panlungsod, the city 
treasurer, 
the 
representative 
of the 
pederasyon 
ng 
mga 
sangguniang kabataan in the sangguniang panlungsod, the duly 
elected p[resident of the City federation of parents-teachers 
associations, the duly elected representative of the teachers' 
organizations in the city, and the duly elected representative of the 
non-academic personnel of public schools in the city, as members; 
and 
(3) The municipal school board shall be composed of the municipal 
mayor and the district supervisor of sch()ols as co-chairmen; the 
chairman of the education committee of the sangguniang bayan, 
the municlipal treasurer, the representative of the pederasyon ng 
mga sangguniang kabataan in the sangguniang bayan, the duly 
elected representative of the teachers' organizations in the 
municipality, and the duly elected representative of the non-
academic personnel of public schools in the city, as members. 
(c) In the event that a province or city has two (2) or more school 
superintendents, and in the event that a municipality has two (2) or 
more district supervisors, the co-chairman of the local school board 
shall be determined as follows: 


(1) The Department of Education shall designate the co-chairman for 
the provincial and city school boards; and 
(2) The division superintendent of schools shall designate the district 
supervisor who shall serve as co-chairman of the municipal school 
board. 
(d) The performance of the duties and responsibilities of the above 
mentioned officials in their respective local school boards shall not be 
delegated to any official. 
SEC. 208. Functions of Local School Boards. - the provincial, city or 
municipal school board shall: 
(a) Propose to the sanggunian concerned, in accordance with the criteria 
set by the Department of Education, the annual supplementary 
budgetary needs for the operation and maintenance of public schools 
within the province, city or municipality, as the case may be, and the 
supplementary local cost of meeting such needs, which shall be 
reflected in the form of an annual school board budget corresponding 
to its share in the proceeds of the special levy on real property 
constituting the Special Education Fund and such other sources of 
revenue as this Code and other laws or ordinances may provide; 
(b) Upon recommendation of the School Board and after the approval of 
the Sanggunian concerned the provincial, city or municipal treasurer, 
as the case may be, shall disburse funds from the Special Education 
Fund pursuant to the budget prepared; 
(c) Serve as an advisory committee to the sanggunian concerned on 
educational matters such as, but not limited to, the necessity for and 
the uses of local appropriations for educational purposes; and 
(d) Recommend changes in the names of public schools within the 
territorial jurisdiction of the local government for enactment by the 
sanggunian concerned. 
The Department of Education shall consult the local school board on the 
appointment of division superintendents, district supervisors, school principals, 
and other school official8. 
SEC. 209. Meeting and Quorum; Budget. - (a) 'The local school board 
shall meet at least once a month or as often as may be necessary. 
(b) Any of the Go-chairmen may call a meeting. A majority of all its 
members shall constitute a quorum. However, when both co-chairmen 
are present in a meeting, the local chief executive concerned, as a 
matter of protocol, shall be given preference to preside over the 
meeting. The division superintendent, city superintendent or district 
supervisor, an the case may be, shall prepare the budget proposal of 
the school board concerned. Such budget shall be supported by 
programs, projects, and activities of the school board for the ensuing 
fiscal year. 


(c) The annual school board budget proposal, which shall be submitted to 
the sanggunian for its approval, shall give priority to the following: 
(1) Construction, repair, and maintenance of school buildings and other 
facilities of public elementary and secondary schools; 
(2) Establishment and maintenance of extension classes where 
necessary; and 
(3) Sports activities at the dicision, district, municipal, or barangay 
levels. 
SEC. 210. Compensation and Remuneration. -
The co-chairman and 
members of the provinGial, city or municipal school board shall perform their 
duties as such without compensation or remuneration. Members thereof who are 
not government officials, or employees shall be entitled to necessary traveling 
expenses and allowances chargeable against funds of the local school board 
concerned, subject to existing accounting and auditing rules and regulations. 
Chapter 8 
Local Health Boards 
SEC. 211. Creation and Composition. - (a) There shall be established a 
local health board in every province, city or municipality, The composition of the 
local health boards shall be as follows: 
(1) The provincial health board shall be headed by the provincial 
governor as chairman, the provincial health officer as vice-
chairman, and the chairman of the committee on health of the 
sangguniang panlalawigan, a representative from the private sector 
or non-governmental organizations involved in health services, and 
a representative of the Department of Health in the province, as 
members; 
(2) The city health board shall be headed by the city mayor as 
chairman, the city health officer as vice-chairman, and the chairman 
of the committee on health of the sangguniang panlungsod, a 
representative from the private sector or non-governmental 
organizations involved in health services, and a representative of 
the Department of Health in the city, as members; and 
"'. 
(3) The municipal health board shall headed by the municipal mayor as 
chairman, the municipal health officer as vice-chairman, and the 
chairman of the committee on health of the sangguniang bayan, a 
representative from the private sector or non governmental 
organizations involved in health services, and a representative of 
the Department of Health in the municipality, as members; 
(b) The functions of the local health board shall be: 
(1) To propose to the sanggunian concerned, in accordance with 
standards and criteria set by the Department of Health, annual 
budgetary allocations for the operation and maintenance of health 


facilities and services within the municipality, city or province, as 
the case may be. 
(2) To serve as an advisory committee to the sanggunian concerned 
on health matters such as, but not limited to, the necessary for, and 
application of, local appropriations for public health purposes; and 
(3) Consistent with the techni,cal and administrative standards of the 
Department of Health, create committees which shall advise local 
health agencies on matters such as, but no limited to, personnel 
selection and promotion, bids and awards, grievances and 
complaints, personnel discipline, budget review, operations review 
and similar functions. 
' 
SEC. 212. Meetings and Quorum. - (a) the board shall meet at least once 
a month or as often as may be necessary. 
(b) A majority of the members of the board shall constitute a quorum, but 
the chairman or the vice-chairman must be present during meetings 
where budgetary proposals are being prepared or considered. The 
affirmative vote of all the majority of the members shall be necessary 
to approve SUGh proposals. 
SEC. 213. Compensation and Remuneration. -
The chairman, vice-
chairman, and members of the provincial, city or municipal health board shall 
perform their duties as such without compensation or remuneration. Members 
thereof who are not government officials or employees shall be entitled to 
necessary traveling expenses and allowances chargeable against the funds of 
the local health board concerned, subject to existing accounting and auditing 
rules and regulations. 
SEC. 214. Direct National Supervision and Control by the Secretary of 
Health. - In cases of epidemics, pestilence, and other widespread public health 
dangers, the Secretary of Health may, upon recommendation of the health board 
concerned and in consultation with the local government concerned, temporarily 
assume direct supervision and control over health operations in any local 
government for the duration supervision and control over health operations in any 
local government for thl~ duration of the emergency, but in no case exceeding a 
cumulative period of six (6) months. With the concurrence of the local 
government concerned, the period for such direct national control and 
supervision may be further extended. 
Chapter 9 
Local D(.velopment Strategy and Local Councils 
SEC. 215. Local Development Strategy. - It shall be a nat,ional policy and 
local development strategy the iriter local, interregional cooperation among local 
authorities shall be enGouraged as a preferred mode of development strategy. 
The institutional requirements that will facilitate the effective implementation of an 
integrated local development programs shall be given priority consideration. 


SEC. 216. Local Development Councils. - (a) Each local government shall 
have a comprehensive multi-sectoral development plan to be initiated by its 
development council at the provincial city, municipal, or barangay level, shall 
assist the corresponding sanggunian in setting the direction of economic and 
social development, and coordinating development efforts within its territorial 
jurisdiction. 
SEC. 217. 
Composition of Local Development Councils. -
The 
composition of the local development council shall be as follows: 
(a) The barangay development council shall be headed by the punong 
barangay and shall be composed of the following members: 
(1) Members of the sangguniang barangay; 
(2) Representatives of non-governmental organizations operating in 
the barangay, who shall constitute not less than one-fourth (1/4) of 
the members of the fully organized council; 
(3) A representative of the congressman. 
(b) The city or municipal development council shall be headed by the 
mayor and shall be composed of the following members: 
(1) All punong barangay in the city or municipality; 
(2) The chairman of the committee on 
appropriations of the 
sangguniang panlullgsod or sangguniang bayan concerned; 
(3) The congressman or his representative; and 
(4) Representatives of non-governmental organizations operating in 
the city or municipality, as the acse may be, who shall constitute 
not less than one-fourth (1/4) of the members of the fully organized 
council. 
(c) The provincial development council shall be headed by the governor 
and shall be composed of the following members: 
. 
(1) All mayors of component cities and municipalities; 
(2) The chairman of the committee on 
appropriations of the 
sangguniang panlalawigan; 
(3) The congressman or his representative; and 
(4) Representatives of nongovernmental organization operating in the 
province, who shall constitute not less than one-fourth (1/4) of the 
members of the fully organized council. 
(d) The local development councils may call upon any local official 
concerned or any official of national agencies or offices in the local 
government to assist in the formulation of their respective development 
plans and public investment programs. 


SEC. 218. Representation of Non-Governmental Organizations. - Local 
governments shall promote the establishment operation of people's and 
nongovernmental organizations to become active partners in the pursuit of local 
autonomy. 
Within a period of sixty (60) days from the start of organizations shall 
choose from among themselves their representatives to said councils. The local 
sanggunian concerned Bhall accredit nongovernmental 9rganizations subject to 
such criteria as may be provided by law. 
Local governments may enter into joint ventures and such other 
cooperative arrangements with people's and nongovernmental organizations to 
engage in the delivery of certain basic services, capability-building and livelihood 
projects, and to develop local enterprises deSigned to improve productivity and 
income, diversify agriculture, spur rural industrialization, promote ecological 
balance, and enhance the economic and social well-being of the people. 
SEC. 219. Functions of Local Development Councils. - (a) The provincial, 
city, and municipal development councils shall exercise the following functions: 
(1) Formulate long-term, medium-term, and annual socioeconomic 
development plans and policies; 
(2) Formulate the medium-term 
and . annual 
pLiblic 
investment 
programs; 
(3) Appraise and prioritize socioeconomic development programs and 
projects; 
(4) Formulate local investment incentives to promote the inflow and 
direction of private investment capital; 
(5) Coordinate, 
monitor, 
and 
evaluate 
the 
implementation 
of 
development programs and projects; and 
(6) Perform 
~;uch other functions as may be provided by law or 
competent authority. 
(b) The barangay development council shall exercise the following 
functions; 
(1) Mobilize people's participation in local development efforts; 
(2) Prepare barangay development plans based on local requirements; 
(3) Monitor and evaluate the implementation of national or local 
programs and projects; and 
(4) Perform such other functions as may be provided by law or 
competent authority. 
SEC. 220. Executive Committee. -
(a) Each local development council 
shall create an executive committee to represent it and act in its behalf when it is 
not in session. The composition of the executive committee shall be as follows: 


(1) The executive committee of the provincial development council 
shall be composed of the governor as chairrnan, the representative 
of component city and municipal mayors to be chosen from among 
themselves, the chairman of the committee on appropriations of the 
sangguniang panlalawigan, the president of the provincial league of 
barangays, and a representative of nongovernmental organizations 
that are represented in the council, as members; 
(2) The executive committee of the city or municipal development 
council shall be composed of the mayors as chairman, the 
chairman of the committee on appropriations of the sangguniang 
panlalawigan, the president of the city or municipal league of 
baranagys, and representative of nongovernmental organizations 
that are represented in the council, as members; and 
(3) The executive committee of the barangay development council 
shall be composed of the punong barangay as chairman, a 
representative of the sangguniang baranagy to be chosen from 
among its members, and, a representative of nongovernmental 
organizations that are represented in the council, as members. 
(b) The executive committee shall exercise the following powers and 
functions: 
(1) Ensure that the decision of the council are faithfully 'carried out and 
implemented; 
(2) Act on matters requiring immediate attention or action by the 
council; 
(3) Formulate policies, plans, and programs based on the general 
principles laid down by the council; and 
(4) Act on other matters that may be authorized by the council. 
SEC. 221. Sectoral or Functional Committees. - The local development 
councils may form sectoral or functional committees to assist them in the 
performance of their functions. 
SEC. 222. Secretariat. -
There is hereby constituted for each local 
development council 
81 secretariat which shall be responsible for providing 
technical support, documentation of proceedings, preparation of reports and such 
other assistance as may be required in the discharge of its functions. The local 
development council may avail of the services of any nongovernmental 
organization or educational or research institution for this purpose. 
The secretariats of the provincial, city, and municipal development council 
shall be headed by their respective planning and development coordinators. The 
secretariat of the barangay development council shall be headed by the 
barangay secretary who shall be assisted by the city or municipal planning and 
development coordinator concerned. 
SEC. 223. Relation of Local Development Councils to the Sanggunian and 
the Regional Development Councils, _. (a) The policies, programs, and projects 
proposed by local development councils shall be submitted to the sanggunian 


concerned for appropriate action. The local development plans approved by their 
respective sanggunian may be integrated with the development plans of the next 
higher level of local development councils. 
SEC. 224. Budget Information. -
The Department of Budget and 
Management shall furnish the various local development councils information on 
financial resources and budgetary allocations applicable to their respective 
jurisdictions to guide them in their planning functions. 
Chapter 10 
Local Peace and Order Council 
SEC. 225. Organization. - The existing Local Peace and Order Council in 
every province, city and municipality shall consider and approve the peace and 
order plan formulated by the local chief executive concerned. 
The Local Peace and Order Council shall be reorganized as follows: 
(a) Provincial peace and order council shall be composed of the provincial 
governor as chairman, vice-governor as vice-chairman, a member of 
the sangguniang panlalawigan, and a representative of the veteran 
group and three (3) of the private sector who shall be designated or 
appointed by the chairman of the National Police Commission; 
(b) City Peace and Order Council shall be composed of the City Mayor as 
Chairman, Vice Mayor as Vice Chairman, a member of the 
sangguniang panlungsod, a representative of the Veterans Group, the 
Chief of Police, and three (3) of the private sector who shall be 
designated or appointed as members by the chairman of the National 
Police Commission. 
(c) Municipal Peace and Order Council shall be composed of the 
Municipal Mayor as Chairman, Vice Mayor as Vice Chairman, a 
member of the sangguniang bayan, the Chief of Police, and a 
representative of the Veterans Group and three (3) of the private 
sectors who shall be designated or appointed as members by the 
Chairman of the Nationi31 Police Commission. 
The Provincial Peace and Order Council shafl consolidate the duly 
approved Peace and Order Plans of cities and municipalities, which are 
components of the province. 
Chapter 11 
Autonomous Special Economic Zone 
SEC. 226. Establishment of Autonomous Special Economic Zones. - The 
establishment by law of autonomous special economic zones in selected areas 
of the country shall be subject to concurrence by the local government included 
therein. 


Chapter 12 
Other Provjsions Application to Local Governments 
Article One. Settlement of Boundary Disputes 
SEC. 227. Jurisdictional Responsibility for Settlement of Boundary 
Dispute. - Boundary disputes between and among local governments shall, as 
much as possible, be settled amicably. To this end: 
(a) Boundary disputes involving two (2) or more barangays in the same 
city or municipality shall be referred for settlement to the sangguniang 
panlungsod or sangguniang bayan concerned. 
(b) Boundary disputes involving two (2) or more municipalities within the 
same province shall be referred for settlement to the sanggunian 
panlalawigan concerned. 
(c) Boundary diBputes involving municipalities or component cities of 
different provinces shall be jointly referred' for settlement to the 
sanggunian of the provinces concerned. 
(d) Boundary disputes involving a component city or municipality on the 
one hand and a highly urbanized city on the other, or two (2) or more 
highly urbanized cities, shall be jointly referred for settlement to the 
respective sanggunian of the parties. 
(e) In the event the sanggunian fails to effect an amicable settlement 
within sixty (60) days from the date the dispute was referred thereto, it 
shall issue a certification to that effect. Thereafter, the dispute shall be 
formally tried by the sanggunian concerned, which shall decide the 
issue within sixty (60) days from the date of the certification referred to 
above. 
SEC. 228. Appea/. - Within the time and manager prescribed by the Rules 
of Court, any party may elevate the decision of the sanggunian concerned to the 
proper Regional Trial Court having jurisdiction over the area in dispute. 
Art,icle Two. Local Initiative and Referendum 
SEC. 229. Loca'! Initiative Defined. - Local initiative is the political legal 
process whereby the registered voters of a local government may directly 
propose, enact, or amend any ordinance. 
SEC. 230. Who May Exercise. -
The power of local initiative and 
referendum may be exercised by all registered voters of the provinces, cities, and 
municipalities. 
SEC. 231. Procedure in Local Initiative. - (a) Not less than one thousand 
(1,000) registered voters in case of provinces and cities, one hundred (100) in 
case of municipalities, may file a petition with the sanggunian concerned 
proposing the adoption, enactment, repeal, or amendment of an ordinance. 


(b) If no favorable action thereon is taken by the sanggunan concerned 
within thirty (30) days from its presentation, the proponents, through 
their duly authorized and thereof to the sanggunian concerned. 
(c) The propositilon shall be numbered serially. stating from Roman 
numeral 1. The Comelec or its designated representative shall extend 
assistance in the formulation of the proposition. 
(d) Two (2) or more propositions may be submitted in an initiative. 
(e) Proponents shall have ninety (90) days in case of provinces and cities, 
sixty (60) days in case of municipalities, form notice mentioned in 
subsection (b) hereof to collect the required number of signatures. 
(f) The petition shall be signed before the election registrar, or his 
designated representatives, in the presence of a representative of the 
proponent, and a representative of the sanggunian concerned in a 
public place in the local government, as the case may be. Stations for 
collecting signatures may be established in as many places as may be 
warranted. 
(g) Upon the lapse of the period herein provided, the Comelec, through its 
office in the local government concerned, shall certify as to whether or 
not the required number of signatures has been obtained. Failure to 
obtaib the required number defeats the proposition. 
(h) If the required number of signatures is obtained, the Comelec shall 
then set a date for the initiative during which the proposition shall be 
submitted to the registered voters in the local government concerned 
for their approval within sixty (60) days from the date of certification by 
the Comelec, as provided in subsection (g) hereof, in case of provinces 
and cities, fmty-five (45) days in case of municipalities. The initiatve 
shall then be held on the dale set, after which the results thereof shall 
be certified and proclaimed by the Comelec. 
' 
SEC. 232. Effect,ivity of Local Propositions. - If the proposition is approved 
by a majority of the votes cast, it shall take effect fifteen (15) days after 
certification by the Comelec as if affirmative action thereon had been made by 
the sanggunian and local chief executive concerned. If it fails to obtain said 
number of votes, the proposition is considered defeated. 
SEC. 233. LimHations on Local Initiatives. -
(a) The power of local 
initiative shall not be ex'~rcised more than once a year. 
(b) Initiative shall extend only to subjects or matters, which are within the 
legal powers of the sanggunian to enact. 
(c) If at any time before the initiative is held, the sanggunian concerned 
adopts into the proposition presented and .the local chief executive 
approves the same, the initiative shall be conceled. However, those 
against such action may, if they so desire, apply for initiative in the 
manner herein provided. 


SEC. 234. Limitations Upon Sanggunian. - Any proposition or ordinance 
approved through the system of initiative and referendum as herein provided 
shall not be repealed, modified or amended by the sanggunian concerned within 
six (6) months from the date of the approval thereof, and may be amended, 
modified or repeated by the sanggunian within three (3) years thereafter by a 
vote of three-fourths (3/4) of all its members. 
SEC. 235. Local Referendum Defined. -
Local referendum is the legal 
process whereby the registered voters of the local governments may approve, 
amend or reject any ordinance enacted by the sanggunian. 
The local referendum shall be held under the control and 'direction of the 
Comelec within sixty (60) days in case of provinces and cities, forty-five (45) days 
in case of municipalities and thirty (30) days in case of barangays. 
The Comelec shall certify and proclaim the results of the said referendum. 
SEC. 236. Authority of Courts. - Nothing in this Chapter shall prevent or 
preclude the proper courts from null and void any proposition approved pursuant 
to this Chapter for violation of the Constitution or want of capacity of the 
sanggunian concerned to enact the said mec;lsure. 
Chapter 13 
Leagues of Local Governments 
Article One. Uga ng Mga Barangay 
SEC. 237. Purpose of Organization. - There shall be an organization of all 
barangays to be known as the liga ng mga barangay for the primary purpose of 
determining the representation of the lia in the sanggunian, and for ventilating, 
articulating and crystallizing issues affecting barangay government administration 
and securing, through proper and legal means, solutions thereto. 
SEC. 238. Representation, Chapters, National Uga. -
Every barangay 
shall be represented in said liga by the punong barangay, or in his absence or 
incapacity, by a sanggunian member duly elected for the purpose among its 
members, who shall attend all meetings or deliberations called by the different 
chapters of the liga. The liga shall have chapters at the municipal, city, provincial 
and metropolitan political subdivision levels. The municipal and city barangays, 
respectively. The duly elected presidents of highly urbanized cities, provincial 
chapters, the Metropolitan Manila chapter and metropolitan political subdivision 
chapters shall constitute the National Liga ng mga barangay. 
SEC. 239. Organization. -
The liga at the municipal, city, provincial, 
metropolitan political subdivision, and national levels directly eleyt a president, a 
vice-president, and five (5) members of the board of directors. The board shall 
appoint its Secretary and treasurer and create such other positions, as may 
deem necessary for the management of the chapter. A Secretary general shall 
be elected from among the members of the national liga and shall be charged 
with the overall operation of the /iga on the national level. The board shall 
coordinate the activities of the chapters of the liga. 


SEC. 240. Ex-Officio Membersllip in Sanggunian. -
The duly elected 
presidents of the liga at the municipal, city and provincial levels, including the 
component cities and municipalities of Metropolitan Manila, shall serve as ex-
officio members of the 
sangguniang 
bayan, 
sangguniang 
panlungsod, 
sangguniang panlalawigan, respectively. They shall serve as such only during 
their term of office as presidents of the liga chapters, which in no case shall be 
beyond the term of office of the sanggunian concemed. 
SEC. 241. Functions and Powers oftlle Liga. - The liga shall: 
(a) Give priority to programs designed for the total development of the 
barangay and in consonance with the policies, programs and projects 
of the national government; 
(b) Assist in the education of barangay residents for people's participation 
in local government administration in order to promote united and 
concerted action to achieve country-wide developrnent goals; 
(c) Supplement the efforts of government in creating gainful employment 
within the barangay; 
(d) Adopt measures to promote the welfare of barangay officials; 
(e) Serve as a forum of the barangays on order to forge linkages with 
government and non !]overnmental organizations and thereby promote 
the social, economic and political well being of the barangays; and 
(f) Exercise such other powers and perform such other duties and 
functions, which will bring about stringer ties between barangays and 
promote the welfare of the barangay inhabitants. 
Article Two. League of Municipalities 
SEC. 242. Purpose of Organization. - There shall be an organization of all 
municipalities to be known as league of municipalities for the primary purposes of 
ventilating, articulating and crystallizing issues affecting municipal government 
administration, and securing, through proper and legal means, solutions thereto. 
The league shall be form provincial chapters composed of the league presidents 
for all component municipalities of the province. 
SEC. 243. Representations. - Every municipality shall be represented in 
the league by the municipal mayor or in his absence; by the'vice-mayor or a 
sanggunian member duly elected for the purpose by the members, who shall 
. attend all meetings and participate in the deliberations of the league. 
SEC. 244. Functions and Powers of tile League of Municipalities. - The 
league of municipalities shall: 
(a) Assist the national government in the formulation and implementation 
of the policies, programs and projects affecting municipalities as a 
whole; 


(b) Promote local autonomy at the municipal level; 
(c) Adopt measures for the promotion of the welfare of all municipalities 
and its officials and employees; 
(d) Encourage people's participation in local government administration in 
order to promote united and concerted action for the attainment of 
country-wide development goals; 
(e) Supplement the efforts of the national government in creating 
opportunities for gainful employment within the municipalities; 
(f) Give priority to programs designed for the total development of the 
municipalities in consonance with the policies, programs and projects 
of the national government; 
(g) Serve as a forum for crystallizing and expressing ideas, seeking the 
necessary assistance of the national government, and providing the 
private sector avenues for cooperation in the promotion of the welfare 
of the municipalities; and 
(h) Exercise such other powers and perform such other functions as the 
league may prescribe for the welfare of the municipalities. 
Article Three. League of Cities 
SEC. 245. Purpose of Organizations. - There shall be an organization of 
all cities to be known as the League of Cities for the primary purpose of 
ventilating, articulating and crystallizing issues affecting city government 
administration, and securing, through proper and legal means, solutions thereto. 
The League may form chapters at the provincial level for the component 
cities of a province. Highly urbanized cities may also form a chapter of the 
League. The National League shall be composed of the presidents of the league 
of highly urbanized cities and the presidents of the provincial chapters of the 
league of component cities. 
SEC. 246. Representation. - Every city shall be represented in the league 
by the city major or in his absence, by the city vice-mayor or a sanggunian 
member duly elected for the purpose by the members, who shall attend all 
meetings and participate in the deliberations of the league. 
SEC. 247. Functions and Powers ofthe League of Cities. - The league of 
cities shall: 
(a) Assist the national government in the formulation and implementation 
of the policies, programs and projects affecting the cities as a whole; 
(b) Promote local autonomy at the city level; 
(c) Adopt measures for the promotion of the welfare of all cities and its 
officials and employees; 
. 


(d) Encourage people's participation in local government administration in 
order to promote united and concerted action for the attainment of 
country-wide development goals; 
(e) Supplement the efforts of the national government in creating 
opportunities for gainful employment within the cities; 
(f) Give priority to programs designed for the total development of the 
municipalities in consonance with the policies, programs and projects 
of the national government; 
(g) Serve as a forum for crystallizing and expressing ideas, seeking the 
necessary assistance of the national government, and providing the 
private sector avenues for cooperation in the promotion of the welfare 
of the cities; and 
(h) Exercise such other powers and perform such other functions as the 
league may prescribe for the welfare of the cities. 
Article Four. League of Provinces 
SEC. 248. Purpose of Organization. - There shall be an organization of all 
province to be known as the League of Provinces for the primary purpose of 
ventilating, 
articulating 
and 
crystallizing 
issues 
affecting 
provincial 
and 
metropolitan political subdivision government administration, and securing, 
through proper and legal means, solutions thereto. For this purpose, the 
Metropolitan Manila Area and any metropolitan political subdivision shall be 
considered as separate provincial units of the league. 
SEC. 249. Representation. - Every province shall be represented in the 
league by the provincial governor or in his absence, by the provincial vice-
governor or a sanggunian member duly elected for the purpose by the members, 
who shall attend all meetings and participate in the deliberations of the league. 
SEC. 250. Functions and Powers of the League of Provinces. -
The 
league of provinces shall: 
(a) Assist the national government in the formulation and implementation 
of the policies, programs and projects affecting provinces as a whole; 
(b) Promote local autonomy at the provincial level; 
(c) Adopt measures for the promotion of the welfare of all provinces and 
its officials and employees; 
(d) Encourage people's participation in local government administration in 
order to promote united and concerted action for the attainment of 
country-wide development goals; 
(e) Supplement the efforts of the national government in creating 
opportunities for gainful employment within the province; 


(f) Give priority to programs designed for the total development of the 
provinces in consonance with the policies, programs and projects of 
the national government; 
(g) Serve as a forum for crystalli;dng and expressing ideas, seeking the 
necessary assistance of the national government, and providing the 
private sector avenues for cooperation in the promotion of the welfare 
of the provinces; and 
(h) Exercise such other powers and perform such other functions as the 
league may prescribe for the welfare of the provinces and metropolitan 
political subdivisions. 
Article Five. Provisions Common to All Leagues 
SEC. 251. Funding. (a) All leagues shall derive its funds from contribution 
of member local governments and from fund-raising projects and activities 
without the necessity of securing permits therefore: Provided, That the proceeds 
from said fund-raising projects and activities shall be used primarily to fund the 
projects for which the said proceeds have been raised, subject to the pertinent 
provisions of this Code and the pertinent provisions of the Omnibus Election 
Code. 
(b) All funds of leagues shall be deposited as trust funds with its treasurer 
and shall be disbursed in accordance with the board of director's 
resolutions, subject to pertinent accounting and auditing rules and 
regUlations: Provided, That the treasurer shall be bound in an amount 
to be determined by the board of directors. The funds of a Structure. -
To ensure the effective and efficient administration, the leagues for 
municipalities, cities and provinces shall elect chapter-level and 
national-level boards of directors and a set of officers headed by the 
president. A chapter shall be deposited as chapter funds and funds of 
the national league shall be deposited as national funds. 
SEC. 252. Organizational Structure. To ensure the effective and efficient 
administration, the leagues for municipalities, cities and provinces shall elected 
chapter-level and national-level boards of directors and a set of officers headed 
by the president. A secretary-general shall be chosen from among the national 
league members to manage the day-to-day operation and activities of the 
national league. The board of directors on the chapter or national level may 
create such other pOSitions as may be deemed necessary for the management of 
the chapters and other national league. The national board of directors of the 
leagues for municipalities, cities or provinces shall coordinate programs, projects 
and activities of chapter and national-level degree. 
SEC. 253. Consiitution and By-laws of the Liga and Leagues. - All other 
matters not herein otherwise provided for affecting the international organization 
of the leagues of local governments shall be governed by their respective 
constitution and by-laws which are hereby made suppletory to the provisions of 
this Chapter. Provided, That said Constitution and By-Laws shall always conform 
to the provisions in the Constitution and existing laws. 


Article Six. Leagues and Federations of Local Elective Officials 
SEC. 254. Organization. - (a) Vice-governors, vice-mayors, sanggunian 
members of barangays, municipalities, component cities, high urbanized cities 
and provinces, and other elective local officials of local governments, including 
those of the Metropolitan Manila area and any metropolitan political subdivisions, 
may form their respective leagues or federation, subject to applicable provisions 
of this Title and pertinent provisions of this Code. 
(b) Sanggunian members of component cities and municipalities shall 
form a provincial federation and elect a board of directors and a set of 
officers headed by the president. The duly elected president of the 
prOVincial federation of sangguniang members of component cities and 
municipalities shall be an ex-officio member of the sangguniang 
panlalawigan concerned and shall serve as such only during his term 
of office as president of the provincial federation of sanggunian 
members of component cities and municipalities, which in no case 
shall be beyond the term of office of the sangguniang panlalawigan 
concerned. 
. 
SEC. 255. Constitution and By-laws. - the leagues or federations shall 
adopt a Constitution and by-laws, which shall govern their internal organization 
and operation: Provided, that said Constitution and by-laws shall always conform 
to the provision of the Constitution and eXisting laws. 
SEC. 256. -Funding. The leagues and federations may derive their funds 
form contributions of individual league or. federation members or from fund-
raising projects or activities. 
TITLE NINE 
LOCAL TAXATION AND FISCAL MATTERS 
Chapter 1 
Local Government Taxation 
Article One. General Provisions 
SEC. 257. -
Scope - The provisions of this Chapter shall govern the 
exercise by provinces, cities, municipalities, and barangay of their taxing and 
other revenue-raising powers. 
SEC. 258. -
Power to Create Source of Revenue. -
Each local 
government shall exercise its power to create its own sources of revenue and to 
levy taxes, fees, and charges and subject as provided herein, consistent with the 
basic policy of local autonomy. 
Such taxes, fees, and charges shall accrue 
exclusively to the local 90vernments imposing the same. 
SEC. 259. -
Fundamental Principles. - The following fundamental 
principles shall govern the exercise of the taxing and other revenue raising 
powers of local governments: 


(a) Taxation shall be uniform in each local government; 
(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; 
(3) Not be unjust, excessivH, oppressive, or confiscatory; 
(4) Not be contrary to law; public policy, national economic policy, 
or in restraint of trade; 
(c) The collection of local taxes, gees, charges and other impositions shall 
in no case be let to any private person; 
(d) The revenue collected pursuant to the provisions of this Code shall 
insure solely to the benefit of, and be subject to disposition by, the 
local government levying the tax, free, charge or other imposition 
unless otherwise specifically provided herein; and 
(e) Each local government shall, as far as practicable, evolve a 
progressive system of taxation. 
SEC. 260. - Definition of Terms. - When used in this Chapter, the term: 
(a) "Agricultural product" includes the yield of the soil, such as corn, rice 
wheat, 
rye, 
hay, 
coconuts, 
sugar cane tobacco, 
root crops, 
vegetables, fruits, flowers, and their by-products; ordinary salt; ali 
kinds of fish; poultry and livestock and animal products, whether in 
their original form of not. 
The phrase "whether in their original form or not" refers to the 
transformation of said products by the farmer, fisherman, producer or owner 
through the application of processes to preserve or otherwise to prepare said 
products for the market such as freezing, drying, salting, smoking, or stripping for 
the purposes of preserving or otherwise preparing said products f?r market. 
(b) "Amusement" is a pleasurable diversion and entertainment. 
It is 
synonymous to relaxation, avocation, pastime, or fun; 
(c) "Amusement Places" include theaters, cinemas, concert hails, 
circuses and other places of amusement where one seeks admission 
to entertain oneself by seeing or viewing the show or performances; 
(d) "Business" means trade or commercial activity regUlarly engaged in 
as a means of livelihood or with a view to profit; 
(e) "Capital Investment" is the capital which a person employees in any 
undertaking, or which he contributes to the capital of a partnership, 
corporation, or any other juridical entity or association in a particular 
taxing jurisdiction. 
(f) 
"Charges" refer to pecuniary liability, as rents or fees against person 
to property; 
(g) "Fee" means a charge fixed by laws or ordinance for the regulation or 
inspection of a business or activity; 
(h) 
"Franchise" is a right or privilege, affected with public interest which is 
conferred upon private persons or corporations, under such terms and 
conditions as the government and its political subdivisions may 
impose in the interest of public welfare, security, and safety; 
(i) 
"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 for the services performed or to be 
performed for another person excluding discounts if determinable at 
the time of sales, sales retum, excise tax, and value-added tax (VAT); 
OJ 
"Marginal Farmer or Fisherman" 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; 
(k) "Motor Vehicle" means any vehicle propelled by any power other than 
muscular power using the public roads, but excluding road rollers, 
trolley cars, street-sweepers, sprinklers, lawn mowers, bulldozers, 
graders, folk-lifts, amphibian trucks and cranes if not used on public 
roads, vehicles which run only on rail tracks, and tractors, trailers, and 
traction engines of all kinds used exclusively for agricultural purposes; 
(I) 
"Municipal Waters" includes not only streams, lakes, and tidal waters 
within the municipality, 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 third line parallel with the general coastline and 
fifteen (15) kilometers from it. When two (2) municipalities are so 
situated on the opposite shoes. that there is less than fifteen (15) 
kilometers of marine waters between them, the third line shall be 
equally distant from opposite shoes of the perspective municipalities; 
(m) "Operator" includes the owner, manager, administrator, or any other 
person who operates or is responsible for the operation of a business 
establishment or undertaking; 
(n) "Peddler" means any person which, either for himself or on 
commission, travels from place to place and sells his goods or offers 
to sell and deliver the same; 
(0) "Persons" means every natural or juridical being, susceptible of rights 
and obligations or of being the subject of legal relations; 
(p) "Vessel" includes every type of boat, craft, or other artificial 
contrivance used, or. capable of being used, as a means of 
transportation on water; and 
(q) "Wharfage" means a free against the cargo of a vessel engaged in 
foreign or domestic trade based on quantity, weight, or measure 
received and/or discharged by vessel. 
SEC. 261. - Local Taxing Authority - The power to impose a tax, fee or 
charge or to generate revenue under this Code shall be exercised by the 
sanggunian of the local government concerned through an appropriate 
ordinance. 
SEC. 262. -
Common Limitations on the Taxing Powers of Local 
Governments. Unless otherwise provided herein, the exercise of the taxing 
powers of Regional Government, provinces, cities, municipalities, and barangays 
shall not extend to the levy of the following: 
(a) 
Income tax, except when levied on banks and other financial 
institutions; 
(b) 
Documentary stamp tax: 
(c) 
Taxes on estates, inheritance, gifts, legacies and other acquisitions 
mortis causa, except as otherwise provided herein; 


(d) 
Customs duties and registration fees of vessel with tonnage of five 
(5) tons and above, wharfage on wharves constructed, maintained 
or operated by the local govemment concerned or by a private 
person or entity; 
(e) 
Taxes, fee and charges and other impositions upon goods carried 
into or out of , or passing through, the territorial jurisdictions of local 
governments in the guise of charges for wharfage, tolls for bridges 
or otherwise, or other taxes, fees or charges in any form whatsoever 
upon such goods or merchandise; 
(f) 
Taxes, fees, or charges on agricultural and aquatic products when 
sold by marginal farmers or fishermen; 
(g) 
Taxes on business enterprises certified to. by the Board of 
Investments as pioneer non-pioneer for a period of six (6) and four 
(4) years, respectively from the date of registration; 
(h) 
Excise taxes and other taxes, fees or charges on petroleum 
products; 
(i) 
Percentage or value added tax (VAT) on sales, barters or 
exchanges or similar transactions on goods or services except as 
otherwise provided herein; 
0) 
Taxes on the gross receipts of transportation contractors and 
persons engaged in the transportation of passengers or freight by 
hire and common carriers by air, land or water, except as provided 
in this Code; 
(k) 
Taxes on premium paid by way of reinsurance or retrocession; 
(I) 
Taxes for the registration of motor vehicles and for the issuance of 
all kinds of licenses or permits for the driving thereof except tricycles 
and public utility vehicles operating within the province. 
(m) 
Taxes, fees or charges on Philippine products actually exported 
except as otherwise provided therein; 
(n) 
Taxes, fees or other charges, on cooperatives duly registered under 
Republic Act Numbered Sixty-Nine Hundred Thirty-Eight (R.A. 6938) 
otherwise known as the "Cooperative Code of the Philippines", and 
(0) 
Taxes of any kind on the national government, its agencies and 
instrumentalities, 
and 
local 
governments except 
quasi-public 
corporations, 
government 
banks, 
financing 
and 
investment 
institutions, gambling and gaming enterprises operated by the 
national government or its agents or instrumentalities, or contracted 
out by it to foreign or domestic corporations, individuals or entities, 
which have been given permits by the local governments. 
Article Two - Provinces 
SEC. 263. - Scope of Taxing Powers - Except as otherwise provided in 
this Code, the province may levy only the taxes, fees, and charges as provided in 
this Article. 
SEC, 264. -
Tax on Transfer of Real Property Ownership. -
(a) The 
province may impose a tax on the sale, donation, barter, or any other mode of 
transferring ownership or title of real property at the rate of nor more than fifty 
percent (50%) of one percent (1%) of the total consideration involved in the 
acquisition 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. No. 6657 shall 
be exempt from this tax. 


(c) For this purpose, the Register of Deeds of the province concerned 
shall, before registering any deed, require the presentation of the evidence of 
payment of this tax. 
The provincial assessor shall likewise make the same 
requirement before canceling an old tax declaration and issuing a new one in 
place thereof. Notaries public shall furnish the provincial treasurer with a copy of 
any deed transferring ownership or title to any real property within ,thirty (30) days 
from the date of notarization. 
It shall be the duty of the seller, donor, transferor, executor or 
administrator to pay the tax herein, imposed within sixty (60) days from the date 
of execution of the deed from the date of the decedent's death. 
SEC. 265. - Tax on Business of Printing and Publication. - The province 
may impose tax on the business of persons engaged in the printing and/or 
publication of books, cards, posters, leaflets, handbills, certificates, receipts, 
pamphlets, and other similar nature, at a rate not exceeding fifty percent (50%) of 
one percent (1 %) of the gross annual receipts for the preceding calendar year. 
In the case of a newly started business, the tax shall not exceed one-
twentieth (1/20Ih) of one percent (1 %) of the capital investment. 
In the 
succeeding calendar year, regardless of when the business started to operate, 
the tax shall be based on the gross receipts for the preceding calendar year, or 
any fraction thereof, as provided herein. 
. 
. 
The receipts from the printing and/or publishing of books or other reading 
materials prescribed by the Department of Education, Culture and Sports as 
school texts or reference shall be exempt from the tax herein imposed. 
Provided, that seventy percent (70%) of the proceeds of the tax mentioned 
in this section shall accrue to the province and thirty percent (30%) shall accrue 
to the municipality where the business is located. 
SEC. 266. - Franchise Tax. - Notwithstanding any exemption granted by 
any law or other special laws, the province may impose a tax on any business 
enjoying a franchise granted by Congress, a national government agency or a 
local government, including 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 the 
territorial jurisdiction, at a rate not exceeding fifty percent (50%) of one percent 
(1%) of the gross annual receipt for the preceding year. 
SEC. 267. -
Tax on Sand, Gravel and Other Quarry Resources - The 
province may levy and collect not more than ten percent (10%) of fair rnarket 
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 the territorial jurisdiction. 
The permit to extract sand, gravel and other quarry resources shall 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%) 
3) 
Barangay where the sand, gravel and other quarry resources are 
extracted - forty percent (40%) 
SEC. 268. - ProfHssionai Tax-
(a) 
(b) 
(c) 
(d) 
(e) 
The province may levy an annual professional tax on each 
person engaged in the exercise or practice of his profession 
requiring government examination as such reasonable amount 
and classification as the sangguniang panlalawigan may 
provide but shall in no case exceed one thousand pesos 
(1,000.00). 
Every person legally authorized to practice his profession shall 
pay the professional tax to the province where he practices his 
profession or where he maintains his principal office in case 
he practices his profession in several places: Provided, 
however, That such person who has paid the corresponding 
professional tax shall be entitled to practice his profession in 
any of the Philippines without being subjected to any other 
national or local tax, license or fee for the practice of such 
profession. 
, 
Any individual or corporation employing a person subject to 
professional tax shall require payment by that person of the 
tax on his profession before employment annually thereafter. 
The professional tax shall be payable annually on or before 
the thirty-first (31st) day of January. 
Any person, first 
beginning to practice a profession after the month of January, 
must, however, pay the full tax before engaging therein. A line 
of profession does not become exempt from the payment of 
this tax. 
Any person, subject to the professional tax shall write in 
deeds, receipts, prescriptions, reports, books of account, 
plans and deSigns. Surveys and maps, as the case may be, 
the number of the official receipt issued to him. 
SEC. 269 - Amusement Tax-
(a) The province may levy an amusement tax to be collected from the 
proprietors, lessees, or operators of theaters, cinemas, concert halls, 
circuses, boxing stadia, and other places of amusement at a rate of 
not more than thirty percent (30%) of the gross receipts from 
admission fees. 
(b) In the case of theaters of cinemas, the tax shall first be deducted and 
withheld their proprietors, lessees or operators and paid to the 
provincial treasurer before the gross receipts are divided between 
said proprietors, lessees, or operators and the distributors of the 
cinematographic films. 
(c) The holding of operas, concerts, dramas, recitals, painting and art 
exhibitions, flower shows, musical programs, literary and oratorical 
presentations, except pop, rock or similar concerts shall be exempt 
from the payment of the tax herein imposed. 
(d) The sanggunian panlalawigan may prescribe the time, manner, terms 
and conditions for the payment of tax. In case of fraud or failure to 


pay the tax, the sangguniang panlalawigan may, impose such 
surcharges, interests and penalties as it may deemed necessary. 
(e) The proceeds from the amusement tax shall be shared equally by 
province the municipality where such amusement places are located. 
SEC. 270. -
Annual Fixed Tax for Every Oelivery 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 an cigarettes, and other products as may be 
determined by the sangguniang panlalawigan, to sales outlets, 
consumers, whether directly, within the province. 
(b) The manufacturers, producers, wholesalers, dealers, and retailers 
referred to in the immediately foregoing paragraph shall be exempt 
from the tax on peddlers prescribed elsewhere in this Code. 
Article Three - Cities 
SEC. 271. - Scope of Taxing Powers - Except as otherwise provided in 
this Code, the city, may levy the taxes, fees, and charges which the province of 
municipality may impose: Provided, however, That the taxes, fees and charges 
levied and collected by a highly urbanized and independent component cities 
shall accrue to them and distributed in accordance with the proviSions of this 
Code. 
The rates of taxes that the city may levy may exceed the maximum rates 
allowed for the province or municipality by not more than fifty percent (50%) 
except the rates of professional and amusement taxes. 
Article Four. - Municipalities 
SEC. 272. -- Scope of Taxing Powers. - Except as otherwise provided in 
this Code, municipalities may levy taxes, fees, and charges not otherwise levied 
by provinces. 
SEC. 273. - Tax on Business. - The municipality may impose taxes on 
any business as rates not exceeding two percent (2%) based on the gross sales 
or receipts in the preceding calendar year. 
In the case of manufacturers, millers, producers, wholesalers, distributors, 
dealers, or retailers of essential commodities enumerated hereunder the rate 
shall not exceed one-half (1/2) of tile rates imposed by the municipality in 
accordance with the preceding paragraph. 
(1) Rice and corn; 
(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) Cooking oil and cooking gas; 
(4) Laundry soap, detergents, and medicine 
(5) Agricultural implements, equipment and post harvest facilities, 
fertilizers, pesticides, herbicides and other farm inputs; 
(6) Poultry "feeds and other animal feeds; 
(7) School supplies; and 
(8) Cement 
In the case of transportation contractors, exporters, indirect exporters and 
export subcontractors, the rate of business taxes shall not exceed one percent 
(1 %) of gross sales or receipts of the preceding year. 
SEC. 274. -
Rules of Tax within the Metropolitan Manila Area. - The 
municipalities within the Metropolitan Manila Area may levy taxes at rates, which 
shall not exceed by fifty percent (50%) the maximum rates prescribed in the 
preceding section. 
SEC. 275. - Retirement of Business - A business subject to tax pursuant 
to the preceding sections shall, upon termination thereof, submit a sworn 
statement of its gross sales or receipts for the current year. If the tax paid during 
the year is less than the tax due on said gross sales or receipts of the current 
year, the difference shall be paid before the business concemed is officially 
retired. 
SEC. 276 - Payment of Business Taxes-
(a) 
The taxes imposed under Section 273 of this Code shall be payable 
for every separate or distinct establishment of place where 
business subject to the tax is conducted and one line of business 
does not become exempt by being conducted and one line of 
business does not become exempt by being conducted with some 
other business 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 
businesses, the tax shall be computed on the combined total gross 
sales or receipt of the said two (2) or more businesses. 
(c) 
In cases where a person conducts or operates two (2) or more 
businesses mentioned in Section 273 of this Code which are 
subject to different rates of tax, the gross sales or receipt of each 
business shall be separately reported for the purpose of computing 
the tax due from each business. 
SEC. 277. -
Fees and Charges . - The municipality may impose and 
collect such reasonable fees and charges on business and occupation and, 
except as reserved to the province in this Code, on the practice of any profession 
or calling, commensurate with the cost of regulation, inspection and licensing 
before any person may engage in such business or occupation, or practice such 
profession or calling. 
SEC. 278 - Fees for Sealing and Licensing of Weights and Measures. -


(a) 
The municipality may levy fees for the sealing and licensing of 
weights and measures at such reasonable rates as shall be 
prescribed by the sangguniang bayan. 
(b) 
The sangguniang bayan shall prescribe the necessary regulations 
for the use of such weights and measures. 
The sanggunian 
concerned shall, by appropriate ordinance penalize fraudulent 
practices and unlawful possession or use of instruments of weights 
and measllres and prescribe the criminal penalty therefore in 
accordance with the provisions of the Code. Provided, however, 
that the sanggunian concerned may authorize the municipal 
treasurer to settle as offense not involving the commission of fraud 
before a case therefore is filed in court, upon payment of a 
compromise penalty of not less than one thousand pesos (PhP 
1,000.00) 
SEC. 279. - 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. 
(b) The sangguniang bayan may: 
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or 
other aquatic beds or bang us fry areas, within a definite zone of 
the municipal waters, as determined by it: Provided, however, 
that duly registered organizations and cooperatives of marginal 
fishermen shall have the preferential right to such fishery 
privileges; Provided further, That the sangguniang bayan may 
require a public bidding in conformity with and pursuant to an 
ordinance grant of such privileges: Provided, finally, That in the 
absence of such organizations and cooperatives or their failure 
to exercise their preferential right, other parties may participate 
in the public bidding in conformity with the above cited 
procedure. 
(2) Grant the privilege to gather, take or catch bangus fry, prawn fry 
or kawag-kawag or fry of other species and fish from the 
municipal waters by nets, traps or other fishing gears to 
marginal fishermen free of any rental, fee charge or any other 
imposition Whatsoever. 
(3) Issue 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 issuance of such licenses to 
qualified applicants under existing laws; Provided, however, 
That the sanggunian concerned shall, by appropriate ordinance, 
penalize the 
use of explosives, 
noxious or puissance 
substances, 
electricity, 
muro-ami 
and 
other 
deleterious 
methods of fishing and prescribe a criminal penalty therefore in 
accordance with the provisions of this Code: Provided, finally, 
That the sanggunian concerned shall be the authority to 
proseeute any violation of the provisions of applicable fishery 
laws. 
SEC. 280. - Suits of the Tax-
(a) For the purpose of collection of the taxes under this Code 
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 municipality where such branch or 
sales outlet in the city or municipality where the sale or 
transac!ion 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 businesses with 
factories project plants and plantation 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 mUt;1icipality where 
the principal office is located, and 
(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. 
In case of a plantation located at a place other than the p 
lace where the factory is located said seventy percent (70%) 
mentioned in subparagraph (b) of subsection (2) above shall be 
divided as follows: 
(3) Sixty percent (60%) to the city or municipality where the 
factory is located; and 
(4) Forty percent (40%) to the city or municipality where the 
factory plantation is located. 
(c) In case where a business has two (2) or more factories, project 
offices, plants, or plantations located in different localities, the 
seventy percent (70%) 
mentioned 
in 
subparagraph 
(b) 
subsection (2) above shall be prorated among the localities 
where the factories,project offices, and plantations are located 
in proportion to their respective volume or production during the 
period from which the tax is due. 
(d) The foregoing sales allocations shall be applied irrespective of 
whether or not sales are made in the locality where the factory, 
project offices, plant or plantation is located. 
Article Five - Barangays 
SEC. 281. - Scope of Taxing Powers. - The barangay may levy taxes, 
fees and charges, as provided in this Article, that shall exclusively accrue to 
them: 
(a) Taxes. -
On stores or retailers with fixed business establishments 
having gross sales or receipts in. the preceding calendar year of one 
hundred thousand (PhP 100,000.00) or less, in the case of barangays 
in cities and municipalities within the Metropolitan manila Area and 
sixty thousand pesos (PhP 60,000.00) or less, in the case of 
barangays in other municipalities, at a rate not exceeding one percent 
(1%) on such gross sales or receipts. 
(b) Service Fee of Charges - barangays may collect reasonable fees or 
charges for services rendered in connection with the regulation or the 
use of barangay-owned property or service facilities such as palay, 
copra, or tobacco dryers. 
(c) Barangay Clearance - No city or municipality may issue any license or 
permit for any business or activity unless a clearance is first obtained 
from the barangay where such business or activity is located or 


conducted. 
For such clearance, the sangguniang barangay may 
impose a reasonable fee. The application for clearance shall be acted 
upon within seven (7) working days from the filing thereof. 
In the 
event that the clearance is not issued within the said period, the city or 
municipality may issue the said license or permit. 
(d) Other Fees and Charges. - The barangay may levy reasonable fees 
and charges: 
(1) On commercial breeding of fighting cocks, cockfighting and 
cockpits; 
(2) On places of recreation which charge admission fees; and 
(3) On 
billboards, 
signboards, 
neon 
signs 
and 
outdoor 
advertisements. 
Article Six. Common Revenue-Raising Powers 
SEC. 282. -
Service Fees and Charges. -
Local governments may 
impose and collect such reasonable fees and charges for services rendered. 
SEC. 283. - Public Utility Charges. - Local governments may fix the rates 
for the operation of public utilities owned, operated and maintained by them 
within their jurisdiction. 
SEC. 284. -
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 
concerned: Provided, That no such toll fees or charges shall be collected from 
government vehicles and vehicles exclusively carrying officers and enlisted men 
of the Armed Forces of the Philippines or members of the Philippine National 
Police on mission, post office personnel delivering mail, physically-handicapped, 
disabled persons and senior citizens. 
Article Seven. - Community Tax 
SEC. 285 - Community Tax ... Cities or municipalities may levy a 
community tax in accordance of this Article. 
SEC. 286. - Individuals Liable to Community Tax - Every inhabitant of the 
Philippines eighteen (113) years or over who has been regularly employed on a 
wage or salary basis for at 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 assessed value of one thousand pesos (PhP 
1,000.00) or more, or who owns real property with an aggregate assessed value 
of one thousand pesos (PhP 1,000.00) or more, or who is required by law ato file 
an income tax return shall pay an annual community tax of five pesos (Php 5.00) 
and an annual additional tax of one peso (PhP 1.00) for every one thousand 
pesos (PhP 1,000.00) of income regardless of whether from business, exercise 
of profession, employment or from property which in no case shall exceed five 
thousand pesos (PhP 5,000.00). 


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 
eaming derived by them. 
SEC. 287. -
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 pesos (PHP 500.00) and an annual additional tax, 
which, on no case, shall exceed ten thousand pesos (PhP 10,000.00) in 
accordance with the following schedule. 
(1) For every five thousand pesos (PhP 5,000.00) worth or real 
property in the Philippines owned by the during the preceding 
year based on the valuation used for the payment for the real 
property tax under existing laws, found ini the assessment rolls 
of the city or municipality where the real property is situated-two 
pesos (phP 2.00); and 
(2) For every five thousand pesos (PhP 5,000.00) of gross receipts 
or earnings derived it frOm its business in the Philippines during 
the preceding year-two, pesos (PhP 2.00). 
The dividend 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 earnings of said corporation. 
SEC. 288. - Exemptions. - The following are exempt from the community 
tax: 
(1) Diplomatic and consular representatives; 
(2) Transient visitors and consular representatives; 
(3) Disabled persons; and 
(4) Senior citizens unless gainfully employed or engaged in businesses 
and earning more than sixty thousand pesos (PhP 60,000.00) 
annually. 
SEC. 289. - Place of Payment. - The community tax shall be paid in the 
place of residence of the individual, or in the place where the principal office of 
the juridical entity is located. 
I 
SEC. 290. - Time for Payment; Ifenalties for Delinquency-
(a) The community tax shall accr~Rl on the first (1 st) day of January of each 
year which shall be paid .not later than the last day of February of each 
year. If a person reaches the age of eighteen (18) years of otherwise 
loses the benefit of exemption on or before the last day of June, he 
shall be liable for the community tax on the day he reaches such age 
or upon the day the exemption ends. However, if a person reaches the 
age of eighteen (18) years or loses the benefit of exemption on or 
before the Imit day of March, he shall have twenty (20) days to pay the 
community tax without being delinquent. 
Persons who come to reside in the Philippines or reach the age of 
eighteen years on or after the first (1 st) day of July of any year, or who 
cease to belong to an exempt class on or after the same date, shall not 
be subject to the community tax for that year. 


(b) The corporation established and organized on or before the last day of 
June shall be liable for the community tax for that year. 
But 
corporations established and organized on or before the last day of 
March shall have twenty (20) days within which to pay the community 
tax without becoming delinquent. 
Corporations established and 
organized on or after the first day of July shall be subject to the 
community tax for that year. 
If the tax is not paid within the time prescribed above, there shall be 
added to the unpaid amount an interest of twenty-four percent (24%) 
per annum from the due date until it is paid. 
SEC. 291. ~ Community Tax Cettificate. - 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 peso (PhP 1.00). 
SEC. 
292. -
Presentation of Community Tax Cettificate on Cettain 
Occasions. -
(a) 
When 
an 
individual 
subject to 
the 
community 
tax 
acknowledged any document before a notary public, takes 
the oath of office upon election or appointment to any 
position in the government service, receives any license, 
certificate, or permit from any public authority; pays any tax 
or flge; receives any money from any public fund; transacts 
other official business; or receives any salary wage from any 
person or corporation, it shall be the duty of any person, 
officer, or corporation with whom such transaction is made or 
business done or from whom any salary or wage is received 
to require such individual to exhibit the community tax 
certificate. 
The presentation of community tax certificate shall not be 
required in connection with the registration of a voter. 
(b) 
The city or municipal treasurer shall deputize the barangay 
treasurer to collect the community tax in their respective 
jurisdictions. 
Provided, however, that said barangay 
treasurer shall be bonded in accordance with existing laws. 
(c) 
The proceeds of the community tax actually and directly 
collected by the city or municipal treasurer shall accrue 
entirely to the general fund of the city or municipality 
concerned. 
However, proceeds of the community tax 
collected 
through 
the 
barangay 
treasurers shall. be 
apportioned as follows: 
(1) Fifty percent (50%) shall accrue to the general fund of 
the city of municipality concerned; and 
(2) Fifty percent (50%) shall accrue to the barangay where 
the tax is collected. 
Article Eight. Collection of Taxes 


SEC. 293. -
Tax Period and Manner of Payment. -
Unless otherwise 
provided in this Code, the tax period of all local taxes, fees and charges shall be 
the calendar year. 
Such taxes, fees and charges may be paid in quarterly 
installments. 
SEC. 294. - Accrual of Tax - Unless otherwise provided in this Code, all 
local taxes, fees and charges shall accrue on the first (1st) day of January of each 
year. However, new taxes, fees or churches, or charges in the rates thereof, 
shall accrue on the first (rt) day of the quarter next following the effectivity of the 
ordinance imposing such new levies or rate. 
SEC. 295. - TimH of Payment .- Unless otherwise provided in this Code, 
of local taxes, fees and charges shall be paid within the first twenty (20) days of 
January or of each subsequent quarter, as the case may be. The sanggunian 
concerned may, for a justifiable reason or cause, extend the time of payment of 
such taxes, fees, or charges without surcharges or penalties, but only for a 
period not exceeding six (6) months. 
SEC. 296. - Surcharges and Penalties on Unpaid Taxes or Charges. -
The Sanggunian may impose a surcharge not exceeding twenty-five percent 
(25%) of the amount of taxes, fees or charges not paid on time and an interest at 
the rate not exceeding two percent (2%) per month of the unpaid taxes, fees or 
charges including surcharges, until such amount is fully paid but in no cause 
shall the total interest on the unpaid amount or portion thereof exceed thirty-six 
(36) months. 
SEC. 297. - Interest on Other Unpaid Revenues - Where the amount of 
any other revenue due a local government, except voluntary contributions or 
donations, is not paid on the date fixed in the ordinance, or in contract, 
expressed or implied, or upon the occurrence of the event which has given rise to 
its collection, there shall be collected as part of that amount an interest thereon at 
the rate not exceeding two percent (2%) per month from date it is due until it is 
paid, but in no case shall the total interest on the unpaid amount or a portion 
thereof exceed thirty-six (36) months. 
SEC. 298. - Collection of Local Revenues by Treasurer - All taxes, fees 
and charges shall be collected by the provincial, city, municipal, or barangay 
treasurer, or their duly authorized deputies. 
The provincial, city or municipal treasurer may designate the barangay 
treasurer as his deputy to collect local taxes, fees or charges. In case a bond is 
required for the purpose, the provincial, city or municipal government shall pay 
the premiums of bond that may be required under this Code. 
SEC. 299. - Examination of Book of Accounts and Pertinent Business 
Records by Local Tmasurer -
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 current amount of the tax, fee or 
charge. Such examination shall be made during regular business hours, only 


once for every tax period, and 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 taxpayers 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 represElntative. 
Such business records shall be treated as 
confidential unless otherwise ordered by the Court. 
Article Nine. Civil Remedies for Collection of Revenues 
SEC. 300. - Application of Chapter - The provisions of this Article and the 
remedies provided herein may be availed of for the collection of any delinquent 
local tax, fee, charge or other revenue. 
SEC. 301. - Local Government's Lien - Local taxes, fees, charges and 
other revenue constitute a lien, superior to all liens, charges or encumbrances in 
favor of any person, enforceable by appropriate administrative or judicial action, 
not only upon any property or rights therein which may be subject to the lien but 
also upon property used in business, occupation, practice of profession or 
calling, or exercise of privilege with respect to which the lien is imposed. The lien 
may only be extinguished upon full payment of the delinquent local taxes fees 
and charges including related surcharges and interest. 
SEC. 302. - Civil Remedies - The civil remedies for the collection of local 
taxes, fees or, and surcharges and interest resulting from delinquency shall be: 
(a) By administrative action through distraint of goods, chattels, or effects, 
and other personal of whatever character, including stocks and other 
securities, debts, credits, bank accounts, and interest in and rights to 
personal property, and by levy upon real property and interest in or 
rights to real property; and 
(b) By judicial aelion. Either of the local government concerned. 
SEC. 303. - Distraint of Personal Property - The remedy by distraint shall 
proceed as follows: 
(a) Seizure- UpOI1 failure of the person owing any local tax, fee, or charge 
to pay the same at the same time required,the local treasurer or his 
deputy may, upon written notice, seize, or confiscate any personal 
property belonging to the person or any personal property subject to 
the 1gen in sufficient quantity to satisfy the tax, fee or charge in 
question, together with any increment thereto incident to delinquency 
and the expenses of seizure. In such case, the local treasurer or his 
deputy shall issue a duly authenticated certificate based upon the 
records of his office showing the fact of delinquency and the amounts 


of the tax, fee or charges and penalty due. Such certificate shall serve 
as 
sufficient 
warrant 
for 
the 
distraint 
of 
personal 
property 
aforementioned, subject to the taxpayer's right to claim exemption 
under the provision of existing laws. Distrained personal property shall 
be sold at a public auction in the manner herein provided for. 
(b) Accounting of distrained goods - The officer executing the distraint 
shall make or cause to be made an account of the goods, chattels or 
effects distrained, a copy of which signed by himself shall be either 
with the owner or person from whose possession the goods, chattels 
or effects are taken, or at the dwelling or place of business of that 
person and with someone of suitable age and. or place of business of 
that person and with someone of suitable age and discretion, to which 
list shall be added a statement of the sum demanded and a note of the 
time and place of sale. 
(c) Publication -
The officer shall forthwith cause a notification to be 
exhibited in not less than three (3) public and conspicuous places in 
the territory of the local government where the distraint is made, 
specifying the time and place of sale, and the articles distrained. The 
time of the sale shall not be less than twenty (20) days after the notice 
to the owner or possessor of the property as above specified and the 
publication or posting of the notice. One place for the posting of notice 
shall be at the office of the chief executive of the local government in 
which the property is distrained. 
(d) Release of distrained property upon payment prior to sale - If at any 
item prior to the sale, all the proper charges are paid to the officer 
conducting the sale, the goods or effected distrained shall be restored 
to the owner. 
(e) Procedure of Sale -
At the time and place fixed in the notice, the 
officer conducting the sale sell the goods or effects so distrained at 
public auction to the highest bidder for cash. Within five (5) days after 
the sale, the local treasurer shall make a report of the proceedings in 
writing to the local chief executive concerned. 
Should the property distrained be not disposed of within one hundred 
twenty (120) days from the date of distrained, the same shall be considered as 
sold to the local government concerned for the amount of the assessment made 
thereon by the Committee on Appraisal and to the extent of the same amount, 
the tax delinquencies shall be cancelled. Said committee on Appraisal shall be 
composed of the city or municipal cancelled. Said committee on Appraisal shall 
be composed of the city or mUnicipal treasurer as chairman, with a 
representative of the Commission on Audit and the city of muniCipal assessor as 
members. 
(f) Disposition of Proceeds - The proceeds of the sale shall be applied to 
satisfy the tax, including the surcharges, interest, and other penalties 
incident or delinquency, and the expenses of the distraint and sale. 
The balance over and above what is required to pay the entire claim 
shall be returned to the owner of the property sold. 
The expenses 
chargeable upon seizure and sale shall embrace only the actual 
expenses of seizure and preservation of the pmperty pending the sale, 
and no charge shall be imposed for the services of the local officer or 
his deputy. Where the proceeds of the sale are insufficient to satisfy 
the claim, other property may, in like manner, be distrained until the full 
amount due, including all expenses, collected. 


SEC. 304. - Levy on Real Property - After the expiration of the time 
required paying the tax, fee, or charge, real property may be levied on before, 
simultaneously, or after the distraint of personal property belonging to the 
delinquent taxpayer. To this end, the provincial, city or municipal treasurer, as 
the case maybe, shall prepare a duly authenticated certificate showing the name 
of the taxpayer and the amount of the tax, fee or charge, and penalty due from 
him. Said certificate shall operate with the force of a legal execution throughout 
the Philippines. 
Levy shall be effected by writing upon said certificate the 
description of the property upon which levy is made. At the same time, written 
notice of the levy shall be mailed to or served upon the assessor and the 
Register of Deeds of thE! province or city where the property is located who shall 
annotate the levy on the tax declaration and certificate of title of the property, 
respectively, and the delinquent taxpayer, or, if he be absent from the 
Philippines, to his agent or the manager of the business in respect to which the 
liability arose, or if there be none, to the occupant of the property in question. 
In case the levy on real property is not issued before or simultaneously 
with the warrant of distraint on personal property, and the personal property of 
the taxpayer is not sufficient to satisfy his delinquency, the provincial, city or 
municipal treasurer, as the case may be, shall within thirty (30) days after 
execution of the distraint, proceed with the levy on the taxpayer's real property. 
SEC. 305. - Penalty for Fai/ure to Issue and Execute Warrant - Without 
prejudice to criminal under the Revised Penal Code and other applicable laws, 
any local treasurer who fails to issue or execute the warrant of distraint or levy 
after the expiration of the time prescribed, or who is found guilty of abusing the 
exercise thereof by competent authority shall be automatically dismissed from 
the service after due nolice and hearin~l. 
SEC. 306. - Advertisement and Sale - Within thirty (30) days after levy, 
the local treasurer proceed to publicly advertise for sale or auction the property or 
a usable portion thereof as may be necessary to satisfy the claim and cost of 
sale; and such advertisement shall cover a period of at least thirty (30) days. It 
shall be effected by posting a notice at the main entrance of the municipal 
building or city hall, and in a public and conspicuous place in the barangay where 
the real property is located, and by publication once a week for three (3) weeks in 
a newspaper of general circulation in the province, city or municipality where the 
property is located. The advertisement shall contain the amount of taxes, fees, 
or charges, and penalties due thereon, and the time and place of sale, the name 
of the taxpayer against whom the taxes, fees, or charges are levied, and a short 
description of the property to be sold. At any time before the date fixed for the 
sale, the taxpayer may stay proceedings by paying the taxes, fees,charge!'), 
penalties and interests. If he fails to do so, the sale shall proceed and shall be 
held either at the main entrance of the provincial, city, or municipal building, or on 
the property to be sold, or at any other place as determined by the local treasurer 
conducting the sale and specified in the notice of sale. 
Within thirty (30) days after the sale, the local treasurer or his deputy shall 
make a report of the sale to the sanggunian concerned, and which shall form part 
of his records. After consultation with the sanggunian, the local treasurer shall 
make and deliver to the purchase a certificate of sale, showing the proceedings 
of the sale, describing the property Sold, stating the name of the purchase and 
setting out the exact amount of all taxes, fees, charges, and related surcharges, 
interests, or penalties. Provided, however, That any excess in the proceeds of 


the sale over the claim and cost of sales shall be turned over to the owner of the 
property_ 
Provided, however, that any excess in the proceeds of the sale over the 
claim and cost of sales shall be turned over to the owner of the property. 
The local treasurer may, by ordinance duly approved, advance an amount 
sufficient to defray the costs of collection by means of the remedies provided for 
in this Title, including the preservation or transportation incase of personal 
property including improvements thereon. 
SEC. 307. - Red,9mption of Property Sold - Within one (1) year from the 
date of sale, the delinquent taxpayer or his representative shall have right to 
redeem the property upon payment to the local treasurer of the total amount of 
taxes, fees, or charges, and related surcharges, interests or penalties from the 
date of delinquency to the date of sale, plus interest of not more than two percent 
(2%) per month on the purchase price from the date of purchase to the date of 
redemption. Such payment shall invalidate the certificate of sale issued to the 
purchaser and the owner shall be entitled to a certificate of redemption from the 
provincial, city, or municipal treasurer or his deputy. 
The provincial, city, or municipal treasurer or his deputy, upon surrender 
by the purchaser of the certificate of sale previously issued to him, shall forthwith 
return to the lalter the entire purchase price paid by him plus the interest of not 
more than two legitimate expenses incurred by him, and said property thereafter 
shall be free from the lien of such taxes, frees,or charges, related surcharges, 
interests, and penalties. 
The owner shall not, however, be deprived of the possession of said 
property and shall be entitled to the rentals and other income thereof until the 
expiration of the time allowed for its redemption. 
SEC. 308. -
Final Deed to Purchase. -
In case the taxpayer fails to 
redeem the property as provided herein, the local treasurer shall execute a deed 
conveying to the purchaser so much the property as has been sold, free from 
liens of any taxes, fees, charges, related surcharges, interests and penalties. 
The deed shall succinctly recite all the proceedings upon which the validity of the 
sale depends. 
SEC. 309. - Purchase of Property by the Local Governments for Want of 
Bidder. - In case there is no bidder for the real property advertised for sale as 
provided herein, or if the highest bid is for an amount in'sufficient pay the taxes, 
fees or charges, related surcharges, interests, penalties and costs, the local 
treasurer conducting the sale shall purchase the property in behalf of the local 
government concerned to satisfy the claim and within two (2) days thereafter 
shall make a report of his proceedings which shall be reflected upon the records 
of his office. 
It shall be the duty of the Register of Deeds concerned upon 
registration with his office of any such declaration of forfeiture to transfer the title 
of the forfeited property to the local government concerned without the necessity 
of an order from a competent court. 
Within one (1) YElar from the datB of such forfeiture, the taxpayer or any of 
his representatives may redeem the property by paying to the local treasurer the 
full amount of taxes, fees, charges, and related surcharges, interests or 


penalties, and the costs of sale. 
If the property is not redeemed as provided 
herein, the ownership thereof shall be fully vested of the local government 
concerned. 
SEC. 310. - Resale of Real Estate Taken for Taxes, Fees, or Charges. -
The sanggunian may, by ordinance duly approved, and upon notice of not less 
than twenty (20) days, sell and dispose of the real property acquired under the 
preceding section at public auction. The proceeds of the sale shall accrue to the 
general fund of the local government concerned. 
SEC. 311. -
Collection of Delinquent Taxes, Fees, Charges or Other 
Revenues through Judicial Action. ." The local government concerned may 
enforce the collection 0:( delinquent taxes, fees, charges, or other revenues by 
civil action in any court of competent jurisdiction. The civil action shall be filed by 
the local treasurer within the period prescribed in this Code. 
SEC. 312. - Further Distraint or Levy - The remedies by distraint and levy 
may be repeated if necessary until the full amount due, including all expenses, is 
collected. 
SEC. 313. -
Personal Property Exempt from Distraint or Levy. -
The 
following property shall be exempt from distraint and the levy, attachment or 
execution thereof for delinquency in the payment of any local tax, fee or charge, 
including the related surcharge and interest: 
(i) Tools and the implements necessarily used by the delinquent 
taxpayer in his trade or employment; 
(ii) One (1) horse, cow, carabao, or other beast of burden, such as 
the delinquent taxpayer may select, and necessarily used by 
him in his ordinary occupation; 
(iii) His necessary clothing, and that of all his family; 
(iv) Household furniture and utensils necessary for housekeeping 
and used for that purpose by the delinquent taxpayer, such as 
he may select, of a value not exceeding ten thousand pesos 
(PhP 10,000.00). 
(v) Provisions, including crops, actually provided for individual or 
family are sufficient for four (4) months; 
(vi) The profeSSional libraries of doctors, engineers lawyers and 
judges; One fishing boat and net, not exceeding the total value 
of ten thousand pesos (PhP 10,000.00) by the lawful use of 
which a fisherman earns his livelihood; and 
(vii)Any material or article forming part of a use of improvement of 
any real property. 
Article Ten. Miscellaneous Provisions 
SEC. 314. -
Power to Levy Other Taxes, Fees or Charges. -
Local 
governments may exerGise the power to .Ievy taxes, fees or charges on any base 
of subject not otherwise specifically enumerated herein or taxed under the 
provisions of the National Internal Revenue Code, as amended or other 
applicable laws; Provided, That the taxes fees, or charges shall not be unjust 


excessive, oppressive, confiscatory of contrary to declared national policy. 
Provided, further, That the ordinance levying such taxes, fees or charges shall be 
entitled without any prior public hearing conducted for the purpose. 
SEC. 315. -
Procedure for Approval Effectivity of Tax Ordinances and 
Revenue Measures; Mandatory Public Hearings. - The procedure for approval of 
local tax ordinances and revenue measures shall be in accordance with the 
provisions of this Code; Provided That public hearings shall be concluded for the 
purpose prior to the enactment thereof: Provided, however, that such appeal 
shall not have the effect of suspending the effectivity of the ordinance and the 
actual and payment of the tax, fee, or charge levied therein: Provided finally, that 
thirty (30) days after receipt upon the appeal, the aggrieved party may file 
appropriate proceedings a court of competent jurisdiction. 
SEC. 316. - Pu/)/ication of Tax Ordinances and Revenue Measures. ,;,.. 
Within ten (10) days after the approval certified true copies of all provincial, city 
and municipal tax ordinances revenues shall be published in full for three (3) 
consecutive days in a newspaper published and circulated or once a week for 
three (3) consecutive weeks in the case of a weekly newspaper published and 
circulated locally, the same shall instead be posted for at least one (1) month in 
provincial capitols, city or municipal halls, all barangay halls and other 
conspicuous and publicly accessible places. 
SEC. 317. -
Furnishing of Copies of Tax Ordinances and Revenue 
Measures. -
Copies of all provincial, city and municipal and barangay tax 
ordinances and revenue measures shall be furnished the respective local 
treasurers for public dissemination. 
SEC. 318. - Attempt to Enforce Void or Suspended Tax Ordinances and 
Revenue Measures. -
The enforcement of any tax ordinance or revenue 
measure after due notice of the disapproval or suspension thereof made by 
Secretary of Justice shall be sufficient ground for administrative disciplinary 
action against the local officials and employees responsible therefor. 
SEC. 319. -
Authority of Local Governments to Adjust Rates of Tax 
Ordinances. - Local governments shall have the authority to adjust the tax rates 
as prescribed herein not oftener than one every five (5) years, but in no case 
shall such adjustment exceed ten percent (10%) of the rates fixed under this 
Code. 
SEC. 320. -
Authority to Grant 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, except local water districts, 
cooperatives duly registered under R.A. 6938, non-stock and non-profit hospitals 
and educational institutions, are hereby withdrawn upon the effectivity of this 
Code. 
SEC. 321. - Withdrawal of Tax Exemption Privileges. - Unless otherwise 
provided in this Code, tax exemptions of incentives granted to, or presently 


enjoyed by all persons, whether natural or juridical, including government-owned-
or controlled corporations, except local water districts, cooperatives, duly 
registered under R.A. 6938, upon non-stock and non-profit hospitals and 
educational institutions are hereby withdrawn upon effectivity of this Code. 
Article Eleven, Taxpayer's Remedies 
SEC. 322. - Periods of Assessments and Col/ection.-
(a) 
Local taxes, fees, or charges shall be assessed within five (5) 
years from the date they became due. 
No action for the 
collection 
of 
such 
taxes, 
fees, 
or 
charges, 
whether 
administrative or judicial, shall be instituted after the expiration 
or such period: ' Provided, That taxes, fees, or charges which 
have accrued before the effectivity of this Code may be 
assessed within a period of three (3) years from the date they 
become due. 
(b) 
In case of fraud or intent to evade the payment of taxes, fees or 
charges, the same maybe assessed within "10" years from 
discovery of the fraud or intent to evade payment. 
(c) 
Local taxes, fees, or charges may be collected within five (5) 
years from the date of by or judicial action. No such action shall 
be instituted after the expiration of said period: 
Provided, 
however That taxes, fees or charges assessed before the 
effectivity of this Code may be collected within a period of three 
(3) years from the date of assessment: 
(d) 
The running of the periods of prescription provided in the 
preceding paragraphs shall be for the time during which: 
(1) The treasurer is legally prevented from making the assessment 
of collection; 
(2) The taxpayer requests for a reinvestigation ,and executes a 
waiver in writing before expiration of the period within which to 
assess or collect; and 
(3) The taxpayer is out of the country or otherwise cannot be 
located, 
SEC. 323. - Protest of Assessment. - When the local treasurer or his duly 
authorized representative finds that correct taxes, fees, or charges have not been 
paid, he shall issue a notice of assessment stating the nature of the tax, fee or 
charge, the amount of deficiency, the surcharges, interests, and penalties. 
Within (60) days from the receipt of the notice of assessment, the taxpayer may 
file a written protest with the local treasurer contesting the assessment, the 
taxpayer may file a written protest with the local treasurer contesting the 
assessment; otherwise, the assessment shall become final and executory. The 
local treasurer shall decide the protest within thirty (30) days from the time of its 
filing. If the local treasurer finds the protest to be wholly or partly meritorious, he 
shall issue a notice canceling wholly or partly correct, he shall deny the protest 
wholly or partly with notice to the taxpayer. The taxpayer shall have thirty (30) 
days from the receipt of the denial of the protest or from the lapse of the thirty 
(30) days period preseribed herein, within which to appeal with the court of 
eompetent jurisdiction otherwise the assessment become conclusive and 
unappealable. 


SEC. 324. - Claim for Refund of Tax Credit. - No case or proceeding shall 
be maintained in any court for the recovery or any tax, fee, or charge erroneously 
or illegally collected until a written claim for refund or credit has been filed with 
the local treasurer. No case or preceding shall be entertained in any court after 
the expiration of two (2) years from the date of the payment of such tax, fee, or 
charge, or from the date the taxpayer is entitled to a refund or credit. 
Chapter 2 
Real Property Taxation 
Article One: General Provisions 
SEC. 325. - Scope - This title shall govern the administration, appraisal, 
assessment, levy and collection of the real property tax: 
SEC. 326. - Fundamental Principles. - The appraisal, assessment, levy 
and collection of real property tax shall be guided by the following fundamental 
principles. 
(a) Real Property shall be appraised at its current and fair market value. 
(b) Real Property shall be classified for assessment purposes on the basis 
of its actual use; 
(c) Real property shall be assessed on the basis of a uniform classification 
within each local government; . 
(d) The appraisal and assessment of real property shall be equitable. 
SEC. 327. - Definition of Terms. - When used in this Chapter. 
(a) "Acquisition Cost" for newly acquired machinery not yet depreciated 
and appraised within the year of its purchase, 'refers to the actual cost 
of the machinery to its present owner, plus the cost of transportation, 
handling, and installation of the present site; 
(b) "Actual Use" refers to the purpose for which the property is principally 
predominantly utilized by the person in possession thereof; 
(c) "Ad Valorem Tax" is a levy on real property determined on the basis of 
a fixed proportion of the value of the property; 
(d) "Agriculture land" is land devoted principally to the planting of trees, 
raising of crops, livestock and poultry, dairying, salt making, inland 
fishing and similar aquacultural· activities, and other agricultural 
activities, and is not classified as mineral, timber, residential, 
commercial or industrial land; 
(e) "Appraisal" is the act or process of determining the value of property 
as of a specific date for a specific purpose; 
(I) "Assessment" the act or process of determining the value of a 
property, or proportion thereof subject to tax, including the discovery, 
listing, classification and appraisal of properties; 
(g) "Commercial land" is land devoted principally for the object of profits 
and is not classified as agricultural, industrial, mineral, timber, or 
residential land; 
(h) "Depreciated 
Value" 
is 
the 
value 
remaining 
after deducting 
depreciation from the acquisition cost; 
(i) "Economic life" is the estimated period over which it is anticipated that 
a machinery or eqUipment may be profitably utilized; 


U) "Fair Market Value" is the price at which a property may be sold by a 
seller who is not compelled to sell and bought by a buyer who is not 
compelled to buy; it is synonymous to taxable value; 
(k) "Improvement is a valuable. addition made to a property or an 
amelioration in its condition, amounting to more than a mere repair or 
replacement of parts involving capital expenditures and labor, which is 
intended to enhance its valuE', beauty or utility or to adapt it for new or 
further purposes; 
(I) "Industrial land" is land devoted principally to industrial activity as 
capital investment and is not classified as agricultural commercial, 
timber, minen,,1 or residential land; 
(m)"Machinery" 
embraces 
machines, 
equipment, 
mechanical 
contrivances, instruments, or apparatus, which mayor may not be 
attached, permanently or temporarily, to the real property. It includes 
the physical facilities for production, installations and appurtenant 
service facilities, tllose which are mobile, self-powered or self-
propelled, and those not permanently attached to the real property 
which are actually, directly, and exclusively used to meet the needs of 
the particular industry, business, or activity and which by their very 
nature 
and 
purpose are designed for, 
or necessary to 
its 
manufacturin~" mining, logging, commercial, industrial or agricultural 
purposes. 
(n) "Mineral Lands" are lands in which minerals, metallic or non-metallic, 
exist in sufficient quantity or grade to justify the necessary 
expenditures to extract and utilize each material; 
(0) "Reassessment" is the assigning of new assessed values to property, 
particularly real estate, as the result of a general partial, or individual 
reappraisal of the property; 
. 
(p) "Remaining Economic Life" is the period of time expressed in years 
from the date of appraisal to the date when the machinery becomes 
valueless; 
(q) "Remaining Value" is the value corresponding to the remaining useful 
life of the machinery; 
(r) "Replacement or Reproduction Cost" is the cost that would be 
incurred on the basis of current prices, in acquiring an equally 
desirable substitute property, or the cost of reproducing a new replica 
of the property on the basis of current prices with the same or closely 
similar material; and 
(s) "Residential land" is land principally devoted to habitation. 
SEC. 328. - Administration of the Real Properly Tax. - The provinces and 
cities, including the municipalities within Metropolitan Manila Area, shall be 
primarily responsible for the proper, efficient and effective administration of the 
real property tax, subject to the supervision and control of the respective 
Regional Government: Provided, however, That when the average real property 
tax collection efficiency of the entire province or city or of a municipality in 
Metropolitan Manila within any three (3) consecutive fiscal years is less than 
seventy percent (70%), real· property tax administration particularly the 
assessment and collection aspects thereof shall be transferred to the Regional 
Government concerned, in accordance with implementing and operational details 
promulgated pursuant to Section 531 of this Code: Provided, finally, That the 
proceed of the real property tax shall continue to accrue to the province, city or 
municipality involved as prescribed in this Code which in no case shall suffer any 
decrease or diminution of income from said tax as a consequence of this 
provision. 


Article Two - Appraisal and Assessment of Real Property 
SEC. 329. -
Appraisal of Real Property. -
All real property, whether 
taxable or exempt, shall be' appraised and assessed at the current and fair 
market value prevailing in the locality where the property is situated. Within one 
(1) year after the effectivity of this Act, the Department of Finance, jointly with the 
Leagues of Provinces, Cities and Municipalities and Liga ng mga barangay, shall 
promulgate the rules and regulations necessary for the installation of an efficient, 
effective, and transparent system of classification, appraisal and assessment of 
real property pursuant to the provisions of this Code: Provided, That until such 
rules and regulations are promulgated, the applicable law, rules and regulations 
shall continue to apply. 
SEC. 330. Real Property Identification System. - All declarations of real 
property made under thE~ provisions of this Chapter shall be kept and filed under 
a uniform classification system to be established by the provincial, city or 
municipal assessor. 
SEC. 331. Duty of Registrar of Deeds to Apprise Assessor of Real 
PlOperty listed in Registry. -
(a) 
To ascertain whether or not any real properly entered in the 
Registry of Property has escaped discovery and listing for the 
purpose of taxation, The Register of Deeds sh'all prepare and 
submit to the provincial, city or municipal assessor, within six (6) 
months from the date of effectivity of this Code and every year 
thereafter, an abstract of his registry, which shall include brief 
but sufficient description of the real properties entered therein, 
their present owners, and the dates of their most recent transfer 
or alienation accompanied by copies of corresponding deeds of 
sale, donation or partition or other forms of alienation. 
(b) 
It shall also be the duty of the Registrar of Deeds to require 
every person who shall present for registration a document of 
transfer, alienation, or encumbrance of real property to 
accompany the same with a certificate to the effect that the real 
property subject of the transfer, alienation, or encumbrance, as 
the case may be, has been fully paid of all real property taxes 
due thereon. Failure to provide such certificate shall be a valid 
cause for the Registrar of Deeds to refuse the registration of the 
document 
Any Registrar of Deeds who intentionally and 
deliberately fails to perform such duties and who is. found guilty 
in an administrative proceeding shall be dismissed from the 
serviCE!, without prejudice to criminal prosecution under the 
Revised Penal Code and other applicable laws. 
SEC. 332. 
Duty of OffiCial Issuing Building Permit or Certificate of 
Registration of Machirwry to Transmit Copy to Assessor. - Any public official or 
employee who may now or hereafter be required by law or regulation to issue to 
any person a permit for the construction, addition, repair, or renovation of a 
building, permanent improvement on land, or a certificate of registration for any 
machinery, including machines, mechanical contrivances, and apparatus 
attached or affixed on land or to another property, shall transmit a copy of such 


permit or certificate within thirty (30) days of its issuance, to the assessor of the 
province, city or municipality where the property is situated. 
Any building official who intentionally and deliberately fails ~o perform such 
duties and who is found guilty in an administrative proceeding shall be dismissed 
from the service, without prejudice to criminal prosecution under the Revised 
Penal Code and other applicable laws. 
SEC. 333. -
Duty of Geodetic Engineers to Furnish Copy of Plan to 
Assessor. - It shall be the duty of all geodetic engineers, public or private, to 
furnish free of charge to the assessor of the province, city or municipality where 
the land is located with a white or blue print copy of each of all approved original 
or subdivision plans or maps of surveys executed by them within thirty (30) days 
from receipt of such plans from the Lands Management Bureau, the Land 
Registration Authority, or the Housing and Land Regulatory Board, as the case 
may be. 
Any geodetic engineer, who intentionally and deliberately fails to perform 
such duties shall, upon conviction, be punished by a fine of not less than five 
hundred pesos (PhP 5000.00) nor more than five thousand pesos (PhP 
5,000.00) or imprisonment of not less than one (1) month of more than six (6) 
months, or both such fine and imprisonment, at the discretion of the court. 
SEC. 334. Preparation of Schedule of Fair Market Values - Before any 
general revision of property assessment is made pursuant to the provisions of 
this Chapter, there shall be prepared a scheduled of fair market values by the 
provincial, city and the municipal assessors of the municipalities within the 
Metropolitan Manila Area for the different classes of real property situated in their 
respective local governments. 
The schedule of the fair market values shall be published in a newspaper 
of general circulation in the province, city of municipality concerned, or in the 
absence thereof, shall be posted in the provincial capitol, city or municipal hall 
and in two other conspicuous public places therein,. 
SEC. 335. -
Creation of a Rogional Tech Valuation Committee. -
For 
purposes of Section 335 and Section 337 of this Code, there shall be created a 
Regional Technical Valuation Committee attached to the Regional Government, 
which shall review and approve the prepared scheduled of Fair Market Values. 
Said Committee shall be composed of all Provincial and City Assessors, and one 
Representative each from the Bankers Association of the Philippines, Bureau of 
Internal Revenue and The Association of Realtors within the Region. 
SEC. 336. General Revision of Assessments and Property Classification. 
- The provincial, city and municipal assessor shall undertake a general revision 
of real property assessments within three (3) years after the effectivity of this Act 
and every five (5) years thereafter. 
SEC. 337. Valuation of Real Property. - In cases where (a) real property 
is declared and listed for taxation purposes for the first time; (b) there is an 
ongoing general revision of property classification and assessment; or (c) a 
request is made by the person in whose name the property is declared, the 


provincial, city or municipal assessor or his duly authorized deputy shall, in 
accordance with the provisions of this Chapter, make a classification, appraisal 
and assessment of the real property listed and described in the declaration 
irrespective of any previous assessment or taxpayer's valuation thereon: 
Provided, however, That the assessment of real property shall not be increased 
oftener than once a year every three (3) years except in case of new 
improvements substantially increasing the value of said property or of any 
change in its actual size. 
SEC. 338. - Date of Effectivity of Assessment or Reassessment. - All 
assessments or reassessments made after the first (1St) day of January of any 
year shall take effect on the first (1St) day of January of the succeeding year. 
Provided, however, That the reassessment of real property due to its partial or 
total destruction, or to a major change in .its actual use, or to any great and 
sudden inflation or deflation of real property values, or to the gross illegality of the 
assessment when made or to any other abnormal cause, shall be made within 
ninety (90) days from the date any such cause or causes occurred, and shall 
take effect at the beginning of the quartm next following the reassessment. 
SEC. 339. 
Assessment of Property Subject to Back Taxes. -
Real 
property declared for the first time shall be assessed for taxes for the period 
during which it would have been liable but in no case for more than ten (10) 
years prior to the date of initial assessment: Provided, however, That such taxes 
shall be computed on the basis of the applicable schedule of values in force 
during the corresponding period. If such taxes are paid on or before the end of 
the quarter following the date the notice of assessment was received by the 
owner or his representative, no interest for delinquency shall be imposed 
thereon; otherwise, such taxes shall be subject to an interest at the rate of two 
percent (2%) per month or a fraction thereof from the date of the receipt of the 
assessment until such taxes are fully paid. 
SEC. 340. Notification of New or Revised Assessment. -
When real 
property is assessed for the first time or when an existing assessment is 
increased of decreased, the provincial, city or municipal assessor shall within 
thirty (30) days given written notice of such new or revised assessment to the 
person in whose name the property is declared. The notice may be delivered 
personality or by registered mail or through the assistance of the punong 
barangay to the last known address of the person to be served. 
SEC. 341. Appraisal and Assessment of Machinery. -
(a) 
The fair market value of a brand new machinery shall be the 
acquisition cost. In all other cases, the fair market shall be the 
acquisition cost. In all other cases, the fair market value shall 
be determined by dividing the remaining economic life of the 
machinery by its estimated economic life and multiplied by the 
replacement or reproduction cost. 
(b) 
If the machinery is imported, the acquisition cost includes 
freight, insurance, bank and other charges, brokerage, arrastre 
and 
handling, 
duties and 
taxes, 
plus 
cost of inland 
transportation, handling and installation charges at the present 
site. The cost in foreign currency of imported machinery shall 


be converted to peso cost on the basis of foreign currency 
exchange rates as tixed by the Banko Sentral ng Pilipinas. 
SEC. 342. Depreciation Allowance for Machinery. -
For purposes of 
assessment, allowance shall be made for machinery at a rate not exceeding five 
percent (5%) of its original cost or its replacement or reproduction cost, as the 
case may be, for each year of use: Provided, however, That the remaining value 
for all kinds of machinery shall be fixed at not less than twenty percent (20%) of 
such original, replacement, or reproduction 'cost for so long as the machinery is 
useful and in operation. 
Article Three. Assessment Appeals 
SEC. 343. Regional Board of Assessment Appeals. .:.. Any owner or 
person having legal interest in the property who is not satisfied with the action of 
the provincial, city or municipal assessor in the assessment of his property may, 
within sixty (60) days from the date of receipt of the written notice of assessment, 
appeal to the Regional Board of Assessment Appeals, which is hereby created in 
lieu of Central Board of Assessment, by filing a petition under oath in the form 
prescribed for the purpose, together with copies of the tax declarations and such 
affidavits or documents submitted in support of the appeal. 
The Board 
concerned shall decide the appeal within one hundred twenty (120) days from 
the date of Receipt of such appeal. 
SEC. 344. Organization, Functions and Powers of the Regional Board of 
Assessment Appeals. -
(a) The Board of Assessment Appeals shall be composed of the 
Chairman of the Regional Government as Chair; the Regional 
Director of the Bureau of Internal Revenue and the Governor or 
Mayor of the province or city, as the case may be, where the 
property is located. 
SEC. 345. - Action by the Regional Board of Assessment Appeals. 
(a) 
The Board shall decide the appeal within one hundred 
twenty (120) days from the date of receipt of such 
appeal. 
The Board, after hearing, shall render its 
decision based on substantial evidence or such relevant 
evidence on record as a reasonable mind might accept 
as adequate to support the conclusion. 
(b) 
In the exercise of its appellate jurisdiction, the Board 
shall have the power to summon witnesses, administer 
oaths, conduct ocular inspection, take deposition, and 
issue subpoena aild subpoena duces tecum. 
The 
proceedings of the Board shall be conducted solely for 
the purpose of ascertaining the facts without necessarily 
adhering 
to technical 
rules 
applicable 
in 
judicial 
proceedings. 
(c) 
The secretary of the Board shall furnish. the owner of the 
property or the person having legal interest therein and 
the provincial or city assessor with a copy of the decision 


of the Board. The decision of the Board shall be final 
and executory. 
SEC. 346. Authority to Grant Roal Property Tax Incentives. - Provinces 
and cities may, through an Ordinance, Grant Real Property Tax Incentives for the 
purpose of promoting or encouraging investments in their jurisdictions, subject to 
such Terms and Conditions as such Ordinance may prescribe: Provided, That 
the duration of such incentives shall not exceed five (5) years from the date of 
the effectivity of the approved Ordinance granting said incentive: 
Provided, 
further, That such incentive shall be availed only once. 
SEC. 347. 
Effect of Appeal on the Payment of Real Property Tax. -
Appeals on assessments of real property made under the provisi~ns of this Code 
shall, in no case, suspend the collection of the corresponding realty taxes on the 
property involved as assessed by the provincial or city assessor, without 
prejudice to subsequent adjustment depending upon the final outcome of the 
appeal. 
Article Four. Imposition of Real Property Tax 
SEC. 348. Power to Levy Rea! Property Tax. - A province or city or a 
municipality within the Metropolitan Manila Area may levy an annual ad valorem 
tax on real property such as land, building, machinery, and other improvement 
not hereinafter specifically exempted. 
. 
SEC. 349. Rates of Levy. - A province or city or a municipality within the 
Metropolitan Manila Area shall fix a uniform basic tax rate applied to the fair 
market value of the real property as follows: 
(1) Residential - Ten percent (10%) of one percent (1 %) 
(2) Commercial- Twenty percent (20%) of one percent (1%) 
to two percent (2%) 
(3) Agricultural- Fifteen percent (15%) of one percent (1%) 
to one and one-half percent (1.5%); and 
(4) Others - ten percent (10%) of one percent (1%) to one 
and one-half percent (1.5%). 
SEC. 350. 
Exemptions from Real Property Tax. -
The following are 
exempted from payment of the real property tax: 
(a) 
Real property owned by the Republic of the Philippines or any 
of its political subdivisions except when the beneficial use 
thereof has been granted, for consideration or otherwise, to a 
taxable person; 
(b) 
Charitable institutions, churches, parsonages or convents 
appurtenant thereto, mosques, nonprofit or religious cemeteries 
and all lands, buildings, and improvements actually, directly, 
and exclusive .used for religious, charitable. or educational 
purposes; 
(c) 
All machineries and equipment that a're actually, directly and 
exclusively used by local water districts and government-owned 


or controlled 
corporations engaged 
in 
the supply and 
distribution of water and/or generation and transmission of 
electric power; and 
Machinery and equipment used for pollution control and environmental 
protection. 
Except as provided herein, any exemption from payment of real 
property tax previously granted to, or presently enjoyed by, all persons, whether 
natural or juridical including all government owned or controlled corporations are 
hereby withdrawn upon the effectivity of this Code. 
Article Five. Special Levies on Real Property 
SEC. 351. Additional Levy on Real Property for the Special Education 
Fund. - A province or city, or a municipality within the Metropolitan Manila Area, 
shall levy and collect an additional annual tax on the Fair Market Value of real 
property based on the following rates: 
(1) Residential - Ten percent (10%) of one percent (1%) to one percent 
(1%); 
(2) Commercial -
Twenty percent (20%) of one percent (1%) to two 
percent (2%); 
(3) Agricultural - Fifteen percent (15%) of one percent (1 %) to one and 
one-half percent (1.5%); and 
(4) Others - Ten percent (10%) of one percent (1%) to one and one-half 
percent (1.5%) 
SEC. 352. Additional Ad Valorem Tax on Idle Lands. - A province or city, 
or a municipality the Metropolitan Manila Area, may levy an annual tax on idle 
lands at the rate not exceeding three percent (3%) of the fair market value of the 
property, which shall be in addition to ttle basic real property tax. 
SEC. 353. Idle Lands, Coverage. - For purposes of real property taxation, 
idle lands shall consist of the following: 
a) 
"Agricultural lands, more than one (1) hectare in area, suitable for 
cultivation, dairying, inland fishery, and other agricultural uses, one-
half (1/2) of which remain uncultivated or unimproved by the owner 
of the property or person having legal interest therein. "Agricultural 
lands planted to permanent or"perennial crops with at least fifty (50) 
trees to a hectare shall not be considered idle lands. 
Lands 
actually used for grazing purposes shall likewise not be considered 
idle lands. 
b) 
Lands, other than agricultural, located in a city or municipality, more 
than one thousand (1,000) square meters in area one-half (1/2) of 
which remain unutilized or unimproved by the owner of the property 
or person having legal interest therein. 
Regardless of land area, this Section shall likewise apply to residential lots 
in subdivisions duly approved by proper authorities, the ownership of which has 
been transferred to individual owners, who shall be liable for the additional tax: 
Provided, however, That individual lots of such subdivisions, the ownership of 
which has not been transferred to the buyer shall be considered as part of the 


subdivision, and shall be subject to the additional tax payable by subdivision 
owner or operator. 
SEC. 354. 
Idle Lands Exempt from Tax. -
A province or city or a 
municipality within the Metropolitan Manila Area may exempt idle lands from the 
additional levy by reason of force majeure, civil disturbance, natural calamity or 
any cause or circumstance which physically or legally prevents the owner of the 
property or person having legal interest therein from improving, utilizing or 
cultivating the same. 
. 
SEC. 355. 
Special Levy by Local Governments. - A province, city or 
municipality may in addition to the basic tax impose a special levy on the lands 
comprised within its territorial jurisdiction specially benefited by public works 
projects or improvements funded by the local government concerned: Provided, 
however, That the special levy shall not apply to lands exempt from basic real 
property tax and the remainder of the land portions of which have been donated 
to the local government concerned for the construction of such projects or 
improvements. 
SEC. 356. 
Ordinance Imposing a Special Levy. -
A tax ordinance 
imposing a special levy shall describe with reasonable accuracy the nature, 
extent, and location of the public works projects or improvements to be 
undertaken, state the estimated cost thereof, specify the metes and bounds by 
monuments and lines and the number of annual installments for the payment of 
the special levy. 
SEC. 357. Publication of Proposed Ordinance Imposing a Special Levy. -
Before the enactment of an imposing a special levy, the sanggunian concerned 
shall conduct a public hearing thereon; notify in writing the owners of the real 
property to be affected or the persons having legal interest therein as to the date 
and place thereof and afford the latter the opportunity to express their positions 
or objections relative to the proposed ordinance. 
SEC. 358. Taxpayers' Remedies Against Special Levy. - Any owner of 
real property affected a special levy or any person having a legal interest therein 
may, upon receipt of the written notice of assessment of the special levy, avail of 
the remedies provided in Chapter 2, Article Three, Title Nine of this Code. 
SEC. 359. Accrual of Special Levy. - The special levy shall accrue on the 
first day of the next following the effectivity of the ordinance imposing such levy. 
Article Six. Collection of Real Property Tax 
SEC. 360. Date of Accrual of Tax. - The real property tax for any year 
shall accrue on the first (151) day of January and from the date it shall constitute 
a lien on the property which shall be superior to any other lien, mortgage, or 
encumbrance of any kind whatsoever, and shall be extinguished only upon the 
payment of the delinquent tax or after the expiration of the period of prescription 
provided for in the Section 382 of this Code. 


SEC. 361. Collection of Tax. - The collections of the real property tax with 
interest thereon and related expenses shall be the responsibility of the city or 
municipal treasurer concerned. 
The city or municipal treasurer may deputize the barangay treasurer to 
collect all taxes on real property located in the barangay: Provided, That the 
barangay treasurer is properly bonded for the purpose: Provided, further, That 
the premium on the bond shall be paid by the city or municipal government 
concerned. 
SEC. 362. Payment of Real Properly Taxes in Installments. - The owner 
of the real property or the person having legal interest therein may pay the basic 
real property tax and the additional tax for Special Education Fund (SEF) due 
thereon without interest in four (4) equal installments; the first installment to be 
due and payable on or before March thirty-first (3151); the second installment on 
or before June thirty (30); the third installment, on or before September thirty 
(30); and the last installment on or before December thirty-first (3151), except the 
special levy the payment of which shall be governed by ordinance of the 
sanggunian concerned. 
Payments of real property taxes shall first be applied to prior years 
delinquencies, interests, and penalties, if any, and only after said delinquencies 
are settled may tax payments be credited for the current period. , 
SEC. 363. Tax Discount for Advanced Prompt Payment.- if the basic real 
property tax and the additional tax accruing to the Special Education Fund (SEF) 
are paid in full on or before December thirty-first (3151) of the preceding taxable 
year, a discount of twenty percent (20%) of the annual tax is hereby granted. 
If the basic real property tax and the additional tax accruing to the Special 
Education Fund (SEF) are paid on or before the end of the first month of the 
quarter, a discount of ten percent (10%) of the tax due for the quarter is hereby 
granted. 
SEC. 364. Payment Under Pro/est. - (a) No protest shall be entertained 
unless the taxpayer first pays the tax. There shall be annotated on the tax 
receipts the words "paid under protest". The protest in writing must be filed within 
thirty (30) days form payment of the tax to the provincial, city treasurer or 
muniCipal treasurer, in the case of a municipality within Metropolitan Manila Area, 
who shall decide the protest within sixty (60) days from receipt. 
(b) The tax or a portion thereof paid under protest, shall be held in 
trust by the treasurer concerned. 
(c) In the event that the protest is finally decided in favor of the 
taxpayer, the arY)ount or portion of the tax protested shall be 
refunded to the protestant, or applied as tax credit against his 
existing or future tax liability. 
(d) In the event that the protest is denied or upon the lapse of the 
sixty (60) day period prescribed in subparagraph (a) , the 
taxpayer may appeal in a manner provided for in Section 344 of 
this Code. 


SEC. 365. Repayment of Excessive Collections. - When an assessment 
of basic real property tax, of any other tax levied under this Title, is found to be 
illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer 
may file a written claim for refund or credit for taxes. and interests with the 
provincial or city treasurer within two (2) years from the date the taxpayer is 
entitled to such reduction or adjustment. The provincial or city treasurer shall 
decide the claim for tax refund or credit within sixty (60) days from receipt 
thereof. In case the claim for tax refund or credit is denied, the taxpayer may 
avail of the remedies as provided in this title. 
SEC. 366. Interests on Unpaid Real Property Tax. - incase of failure to 
pay the basic real property tax or nay other tax levied under this Title upon the 
expiration of the periods as provided in Section 363, hereof, or when due, as the 
case may be, shall subject the taxpayer to the payment of interest at the rate of 
two percent (2%) per month on the unpaid amount or a fraction thereof, until the 
delinquent tax shall have been fully paid, Provided, however, that in no case shall 
the total interest on the unpaid tax or portion thereof exceed sixty (60) months. 
SEC. 367. Remedies for the Collection of Real Property Tax. - For the 
collection of the basic real property tax and any other tax levied under this Title, 
the local government concerned may avail of the remedies by administrative 
action thru levy on real property or by judicial action. 
SEC. 368. Local Govemments Lien. - The basic real property tax and any 
other tax levied under this tile constitutes a lien on the property subject to tax, 
superior to all liens, charges or encumbrances in favor of any person, 
irrespective of the of the owner or possessor thereof, enforceable by 
administrative or judicial action, and may only be extinguished upon payment of 
the tax and the related interests and expenses. 
SEC. 369. Levy on Real Property. -
After the expiration of the time 
required to pay the basic real property tax or any other tax levied under this Title, 
real property subject to such tax may be levied upon through the issuance of a 
warrant on or before, or simultaneously with, the institution of the civil action for 
the collection of the delinquent tax. The provincial or city treasurer, or a treasurer 
of a municipality within the Metropolitan Manila Area, as the case may be, when 
issuing a warrant of levy shall prepare a duly authenticated certificate showing 
the name of the delinquent owner of the property or person having legal interest 
therein, the description of the property, the amount of the tax due· and the interest 
thereon. The warrant shall operate with the force of a legal execution through the 
province, city or a municipality within the Metropolitan Manila Area. The warrant 
shall be mailed to or served upon thE) delinquent owner of the real property or 
person having legal interest therein, or in case he is out of the country or cannot 
be located, to the administrator of occupant of the property. At the same time, 
written notice of the levy with the attached warrant shall be mailed to or served 
upon the assessor and the Registrar of Deeds of the province, city or a 
municipality within the Metropolitan Manila Area where the property is located, 
who shall annotate the levy on the tax declaration and certificate of title of the 
property respectively. 
The levying officer shall submit a report on the levy to the sanggunian 
concerned within ten (10) days after receipt of the warrant by the owner of the 
property or person giving legal interest therein. 


SEC. 370. Advertisement and Sale. - Within thirty (30) days after service 
of the warrant of levy, the local treasw'er shall proceed to publicly advertise for 
sale or auction the property or a usable portion thereof as may be necessary to 
satisfy the tax delinquency and expenses of sale. The advertisement shall be 
effected by posting a 'notice at the main entrance of the provincial, city or 
municipal building, and in a publicly accessible and conspicuous place in the 
barangay where the real property is located, and by publication once a week for 
two (2) weeks in a newspaper of general circulation in the province, city or 
municipality where the property is located. The advertisement shall specify the 
amount of the delinquent tax, the interest due thereon and expenses of sale, the 
date and place of sale, the name of the owner of the real property or person 
having legal interest therein, and a description of the property to be sold. At any 
time before the date fixed for the sale, the owner of the real property or person 
having legal interest therein may stay the proceedings by playing the delinquent 
tax, the interest due thereon and the expenses of sale. The sale shall be held 
either at the main entrance of the provincial, city or municipal building, or on the 
property to be sold, or at any other place as specified in the notice ofthe sale. 
Within thirty (30) days after the sale, the local treasurer or his deputy shall 
make a report of the sale to the sanggunian concerned and whicH shall form part 
of his records. The local treasurer shall likewise prepare and deliver to the 
purchaser a certificate of sale which shall contain the name of the purchaser, a 
description of the property sold, the amount of the delinquent tax, the interest due 
thereon, the expenses of sale and a brief description of the proceedings: 
Provided, however, that proceeds of the sale in excess of the delinquent tax, the 
interest thereon, and the expenses of sale shall be remitted to the owner of the 
real property or person having legal interest therein. 
The local treasure may, by ordinance duly approved, advance an amount 
sufficient to defray the costs of collection thru the remedies provided for in this 
Title, including the expenses of advertisement and sale. 
SEC. 371. Redemption of Property Sold. - Within one (1) year form the 
date of sale, the owner of the delinquent real property or person having legal 
interest therein, or his representative, shall have the right to redeem the property 
upon payment to the local treasurer of the amount of the delinquent tax, including 
the interest due thereon, and the expenses of sale from the date of delinquency 
to the date of sale, plus interest of not more than two percent (2%) per month on 
the purchase price from the date of sale to the date of redemption. Such payment 
shall invalidate the certificate of sale issued to the purchaser and the owner of 
the delinquent real property or person having legal interest therein shall be 
entitled to a certificate of redemption, which shall be issued, by the local 
treasurer or his deputy. From the date of sale until the expiration of the period of 
redemption, the delinquent real property shall remain in the possession of the 
owner or person having legal interest therein who shall be entitled to the income 
and other fruits thereof. The local treai:;urer or his deputy, upon receipt from the 
purchaser of the certificate of sale, shall forthwith return to the latter the entire 
amount paid by him plus interest of not more than two percent (2%) per month. 
Thereafter, the property shall be free form the lien of such delinquent tax, interest 
due thereon and expenses of sale. 
SEC. 372. Final Deed to Purchaser. - In case the owner or person having 
legal interest fails to redeem the delinquent property as provided herein, the local 
treasurer shall execute a deed conveying tot eh purchaser said property, free 


from lien of the delinquent tax, interest due thereon and expenses of sale. The 
deed shall briefly state the proceedings upon which the validity of the sale rests. 
SEC. 373. Purchase of Property by the Local Government for Want of 
Bidder. - In case there is no bidder for the real property advertised for sale as 
provided herein, of if the highest bid is for an amount insufficient to pay the real 
property tax and the related interest and costs of sale the local treasurer 
conducting the sale shall purchase the property in behalf of the local government 
concerned to satisfy the claim and within two (2) days thereafter shall make a 
report of his proceedings which shall be reflected upon the records of his office. It 
shall be the duty of the Registrar of Deeds concerned upon registration with his 
office of any such declaration of forfeiture to transfer the tile of the forfeited 
property to the local government concerned without the necessity of an order 
from a competent court. 
Within one (1) year from the date of such forfeiture, the taxpayer or any of 
his representative, may redeem the property by paying to the local treasurer the 
full amount of the real property tax and the related interest and the costs of sale. 
If the property is not redeemed as provided herein, the ownership thereof shall 
be fully vested on the local government concerned. 
SEC. 374. Resale of Real Estate Taken for Taxes, Fees, or Charges. -
The sanggunian concerned may, by ordinance duly approved, and upon notice of 
not less than twenty (20) days, sell and dispose of the real property acquired 
under the preceding section at the public auction at a price not prejudicial to the 
government. The proceeds of the sale shall be distributed in accordance with the 
provisions of Section 383 of this Code. 
SEC. 375. Further Levy. - Levy may be repeated if necessary until the full 
due, including all expenses, is collected. 
SEC. 376. Collection of Real Property Tax Through the Courts. - The 
local government concerned may enforce the collection of the bal1ic real property 
tax or any other tax levied under this Title by civil action in any court of 
competent jurisdiction. The civil action shall be filed by the local treasurer within 
the prescribed in Section 382 of this Code. 
SEC. 377. Action Assailing Validity of Tax Sale. - NO court shall entertain 
any action assailing the validity of any sale at public auction of real property or 
rights therein under this Title until the taxpayer shall have deposited with the 
court the amount for which the real property was sold, together with interest of 
two percent (2%) per month form the date of sale to the time of the institution of 
the action. The amount so deposited shall be paid to the purchaser at the auction 
sale if the deed is declared invalid but it shall be returned to the depositor if the 
action fails. Neither shall any court declare a sale at public auction invalid by 
reason of irregularities or informalities in the proceedings unless the SUbstantive 
rights of the delinquent owner of the real property or the person having legal 
interest therein have been impaired. 
SEC. 378. Payment of Delinquent Taxes on Property Subject of 
Controversy. -
In any action involving the ownership or possession of, or 


succession to, real property, the court may, motu propio or upon representation 
of the provincial city, or municipal treasurer or his deputy, award such ownership, 
possession, or succession to any party toO the action upon payment to the court 
of the taxes with interest due on the property and all other costs that may have 
accrued, subject to the final outcome of the action. 
SEC. 379. Treasurer to Certify Delinquencies Remaining Uncollected. -
The provincial, city or municipal treasurer or their deputies shall prepare a 
certified list of all real property tax delinquencies which remained uncollected or 
unpaid for at least one (1) year in his jurisdiction, and a statement of the reason 
or reasons for such non-collection or non-payment, and shall submit the same to 
the sanggunian concerned on or before December thirty-first (31 SI) if the year 
immediately succeeding the year in which delinquencies were incurred, with a 
request for assistance in the enforcement of the remedies for collection provided 
herein. 
SEC. 380. Periods Within Which to Collect Real Property Taxes. - The 
basic real property tax and any other tax levied under this Title shall be collected 
within five (5) years from the date they become due. No action for the collection 
of the tax, whether administrative or judicial, shall be instituted after the 
expiration of such period. If no effort to collect such tax within said period of 
prescription has been conducted. in case of fraud or intent to evade payment of 
the tax, such action may be instituted for the collection of the same within ten 
(10) years from the discovery of such fraud or intent to evade payment. The 
period of prescription within which to collect shall be suspended for the time 
during which: 
(1) The local treasurer is legally prevented from collecting the tax; 
(2) The owner of the property or the person having legal interest therein 
requests for reinvestigation and executes a waiver in writing before the 
expiration of the period within which to collect; and 
(3) The owner of the property of the person having legal interest therein is 
out of the country or otherwi»e cannot be located. 
Article Seven. Disposition of Proceeds 
SEC. 381. Distribution of Proceeds. - The proceeds of the basic real 
property tax, including interest thereon, and proceeds from the use, lease or 
disposition, sale or redemption of property acquired at a public auction in 
accordance with the provisions of this Title by the provisions of this Title by the 
province or city or a municipality within the Metropolitan Manila Area shall be 
distributed as follows: 
(a) In the case of provinces: 
(1) Province- Thirty-five (35%) shall accrue to the general fund; 
(2) Municipality- Forty five percent (45%) to the general fund of the 
(3) Municipality where the property is located; and 
(4) Barangay- Twenty percent (20%) shall accrue to the barangay where 
the property is located. 
(b) In the case of cities: 
(a) City- Seventy percent (70%) shall accrue to the general fund of the 
city; and 
(a) Thirty percent (30%) shall be distributed among the component 
barangays of the cities where the property is located in the following 
manner: 


a. Fifty percent (50%) shall accrue to the barangay where the 
property is located; 
b. Fifty percent (50%) shall accrue equally to all competent 
barangays of the city; and 
(c) In the case of a municipality within the Metropolitan Manila Area: 
(1) Metropolitan Manila Authority- Thirty-five percent (35%) shall accrue to 
the general fund of the authority; 
(2) Municipality- Thirty-five percent (35%) shall accrue to the general fund 
of the municipality where the property is located; 
(3) Barangays- Thirty percent (30%) shall be distributed among the 
component barangays of the municipality where the property is located 
in the following manner: 
a. Fifty percent (50%) shall accrue to the barangay where the 
property is located; 
b. Fifty percent (50%) shall accrue to all component barangays of 
the municipality 
(d) The share of each barangay shall be released, without need of any 
further action, directly to the barangay treasurer on a quarterly basis 
within five (5) days after the end of each quarter and shall not be 
subject to any lien or holdback for whatever purpose. 
SEC. 382. Distribution and Application of Proceeds of the Additional SEF 
Tax. - (a) The proceeds from the additional tax on real property accruing to the 
Special Education Fund (SEF) shall be distributed as follows: forty percent (40%) 
to the Provincial School Board, forty percent (40%) to the Municipal School 
Board and twenty percent (20%) to the General Fund of the Municipality where 
the property is located Provided, that in the case of a city, the proceeds of the 
SEF tax shall be distributed as follows: Eighty percent (80%) to the City School 
Board and twenty percent (20%) to the General Fund of the city. 
(b) The proceeds of the SEF Tax accruing to the School Board shall be 
allocated for the operation and maintenance of public sChools, construction and 
repair of school buildings, facilities and equipment,. educational research, 
purchase of books and periodicals, and as determined and approved by the 
Local School Board. 
SEC. 383. Proceeds of the TDx on Idle Lands. - The proceeds of the 
additional real property tax on idle lands shall accrue to the respective general 
fund of the province of city where the land is located. In the case of a municipality 
within the Metropolitan Manila Area, the proceeds shall accrue equally to the 
Metropolitan Manila Authority and the municipality where the land is located. 
SEC. 384. Proceeds of the Special Levy. - The proceeds of the special 
levy on lands benefited by public works, projects and other improvements shall 
accrue to the general fund of the local government, which financed such public 
works, projects or other improvements. 
Article Eight. Special Provisions 
SEC. 385. General Assessment Revision; Expenses Incident Thereto. -
The sanggunian of provinces, cities and municipalities within the Metropolitan 
Manila Area shall provide the necessary appropriations to defray the expenses 
incident to the general revision of real property assessment. 
All expenses 


incident to a general revision of real property assessments shall, by ordinance of 
the sangguniang panlalawigan, be apportioned between the province and the 
municipality on the basis of the taxable area of the municipality concerned. 
SEC. 386. Condonation or Reduction of Real Property Tax and Interest. -
In case of a general failure of crops or substantial decrease in the price of 
agricultural or agri-based products, or calamity in any province, city, or 
municipality, the sanggunian concerned, by ordinance passed prior to the first 
(15t) day of January of any year and upon recommendation of the Local Disaster 
Coordinating Council, may condone or reduce, wholly or· partially, the taxes and 
interest thereon for the succeeding year or years in the city or municipality 
affected by the calamity. 
SEC. 387. Condonation or Reduction of Tax by the President of the 
Philippines. -
The of the Philippines may, when public interest so requires, 
condone or reduce the real property tax and interest for any year in any province 
or city or a municipality within the Metropolitan Manila Area. 
SEC. 388. Duty of Registrar of Deeds and Notaries Public to Assist the 
Provincial, City or Municipal Assessor. - It shall be the duty of the Registrar of 
Deeds and notaries public to furnish the provincial, city or municipal assessor 
with copies of all contracts selling, transferring, or otherwise conveying, leasing, 
or mortgaging real property received by, or acknowledged before them. 
SEC. 389. Insurance Companies to Furnish Information. -
Insurance 
companies are hereby required to furnish the prOVincial, city, or municipal 
assessor copies of any contract or policy insurance on buildings, structures, and 
improvements insured by them or such other documents which may be 
necessary for the proper assessment thereof. 
SEC. 390. Fees in Court Actions. - All court actions, criminal or civil, 
instituted at the instance of the provincial, city or municipal treasurer or assessor 
under the provisions of this Code, shall be exempt from the payment of court and 
sheriff's fees. 
SEC. 391. Fees in Registration of Papers or Documents on Sal of 
Delinquent Real Property to Province, City or Municipality. -
All certificates, 
documents, and papers covering the sale of delinquent property to the province, 
city, or municipality, if registered in the Registry of Property, shall be exempt from 
the documentary stamp tax and registration fees. 
SEC. 392. Real Property Assessment Notices or Owner's Copies of Tax 
Declarations to be Exempt from Postal Charges or Fees. - All real property 
assessment notices or owner's copies of tax declaration sent through the mails 
by the assessor shall be exempt from the payment of postal charges or fees. 
SEC. 393. Sale and Forfeiture Before Effectivity of Code. -
Tax 
delinquencies incurred, and sales and forfeitures of delinquent real property 


effected, before the effectivity of this Code shall be governed by the provisions of 
applicable laws then in force. 
Chapter 3 
Shares of Local Governments in the Proceeds of National Taxes 
Article One. Allotment of Internal Revenue 
SEC. 394. Share of National Government Taxes. - Upon approval of this 
Code, local governments are entitled to a fifty percent (50%) share of national 
government taxes based on the collection of the third fiscal year preceding the 
current fiscal year. 
SEC. 395. 
Allocation to Local Governments. -
The share of local 
governments from national government taxes, less the five percent (5%) share of 
Regional Governments allocated in Chapter 3, Title Three, Title Nine of this 
Code, which is automatically appropriated and obliged, shall be allocated in the 
following manner: 
(a) 
(b) 
(c) 
(d) 
Provinces - Twenty-three percent (23%) 
Cities - Twenty-two percent (22%); and 
Municipalities - Thirty percent (30%); and 
Barangay-Twenty percent (20%) 
Provided, however, That the share of each barangay with a population of 
not less than one hundred (100) inhabitants shall not be less than eight thousand 
pesos (PhP 80,000.00) per annum chargeable against the twenty percent (20%) 
share of the barangay from the internal revenue allotment, and the balance to be 
allocated on the basis of the following formula: 
(a) On the first year of the effectivity of this Code: 
(1) Population - Forty percent (40%); and 
(2) Equal Sharing - Sixty percent (60%) 
(b) On the second year: 
(1) Population - Fifty percent (50%); and 
(2) Equal Sharing - Fifty percent (50%) 
(c) Ion the third year and thereafter: 
(1) Population - Sixty percent (60%); and 
(2) Equal Sharing - Forty percent (40%). Provided, finally, that the 
financial 
requirements 
of 
barangay 
created 
by 
local 
governments after the effectivity of this Code shall be the 
responsibility of the local government concerned. 
Provided, finally, that the financial requirements of barangay created by 
local governrnents after the effectivity of this Code shall be the responsibility of 
the local government concerned. 
SEC. 396. Automatic Release of Shares. -
(a) 
The share of each local government shall be released without 
need of any further action, directly to the provincial, city 
municipal or barangay treasurer, as the case may be, on a 
monthly or quarterly basis within five (5) days after the end of 
each month of quarter; 
(b) 
Said share shall not be subject to any lien, or holdback that may 
be imposed by the national government for whatever purpose. 


(c) 
Nothing in this Chapter shall be understood to diminish the 
share of local governments under existing laws. 
In the event that the National Government incurs an manageable public 
sector deficit, the President of the Philippines is hereby authorized, upon the 
recommendation of the Secretary of Finance, Secretary of Department of the of 
the Interior and Local Government, and Secretary of Budget and Management, 
and subject to consultations with the presiding officers of both Houses of the 
Congress and the Presidents of the Liga, to make the necessary adjustments in 
the internal revenue allotment of local governments, but in no case shall the 
allotment be less than thirty percent (30%) of the collection of the internal 
revenue taxes the third fiscal year preceding the current fiscal year. Provided, 
further, That in the first year of the effectivity of this Code, the local governments 
shall, in addition to the thirty percent (0%) internal revenue allotment which shall 
include the cost of devolved functions for eSsential public services, be entitled to 
receive the amount equivalent to the cost of devolved personal services. 
SEC. 397. 
Local Development Projects. - Each local government shall 
appropriate in its annual budget no less than twenty percent (20%), of its annual 
national government tax share for development projects in accordance with the 
annual investment program embodied in the local development plan prepared by 
the local development council and approved by the sanggunian concerned. 
SEC. 39B. 
Rules and Regulations. -
The Secretary of Finance, in 
consultation with the Department of Budget and Management, shall promulgate 
the necessary rules and regulations for a simplified disbursement scheme 
designed for the speedy and effective enforcement of the provisions of this 
Chapter. 
Article Two. Share of Local Governments in the National Wealth 
SEC. 399. Share in the Proceeds from the Development and Utilization of 
the National Wealth. - Local governments 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. 
National wealth shall be defined as all natural resources situated within 
the territorial jurisdiction of the republic including but notlimited to lands of public 
domain, waters, minerals, potential energy sources, gas and oil deposits, forests 
products, flora and fauna, fishery and aquatic resources, all quarry products, and 
other resources which can be extracted or utilized. 
SEC. 400. Amount of Share of Local Govemments. - In addition to their 
share of the national government taxe~;, local governments shall have a share of 
sixty percent (60%), of the gross collection derived by the national government in 
the preceding fiscal year from mining taxes, royalties, forestry and fishery 
charges, and such other taxes, fees, or charges, including related surcharges, 
interests or fines, and from its share in any co-production, jOint venture or 
production sharing agreement in the utilization and development of the national 
wealth within their territorial jurisdiction. 


SEC. 401. 
Share of the Loca/ Governments from any Government 
Agency or-owned and - Controlled Corporation. - Local governments shall have 
a share based on the preceding fiscal year from the proceeds derived by any 
government agency or government-owned or controlled corporation engaged in 
the utilization and development of the national wealth based on the following 
whichever will produce a higher share for the local government: 
(a) One percent (1 %) of thG gross sales or receipts of the preceding 
calendar year; or 
(b) Forty percent (40%) of the mining taxes, royalties, forestry and 
fishery charges and such other taxes, fees or charges, including 
related surcharges, interests, or fines the government -owned or -
controlled corporation would have paid it were not otherwise 
exempt. 
SEC. 402. Allocation of Shares. - The share in the preceding Section 
shall be distributed in the following manner: 
(a) Where the natural resources are located in the province 
(1) Province - Twenty percent (20%) 
(2) Component city/municipality - Forty-five percent (45"/0); and 
(3) Barangay - Thirty-five percent (35%) 
Provided, however, That where the natural resources are located in two 
(2) or more provinces, or in two (2) or more component cities or municipalities or 
in two (2) or more barangays, their respective shares shall be computed on the 
basis of: 
(1) Population - Seventy percent (70%); and 
(2) Land Area - Thirty percent (30%). 
(b) Where the natural resources are located in a highly urbanized or 
independent component city: 
(1) City- Sixty-five percent (65%); and 
(2) Barangay - Thirty-five percent (35%) 
Provided, however, That where the natural resources are located in such 
two (2) or more cities, the allocation of shares shall be based on the formula on 
population and land area as specified in paragraph (a) of this Section. 
SEC. 403. Remittance of the Share of Local Governments. - The share of 
local governments from the utilization and development of national wealth shall 
be remitted in accordance with Section 398 of this Code: Provided, however, 
that in the case of any government agency or government-owned or -controlled 
corporation engaged in the utilization and development of the national wealth, 
such share shall be directly remitted to the provincial, city, muniCipal or barangay 
treasurer concerned within five (5) days after the end of each quarter. 
SEC. 404. Development of the Livelihood Projects. - The proceeds from 
the share of local governments pursuant to this chapter shall be appropriated by 
their respective sanggunian to finam:e development and livelihood projects. 
Eighty percent (80%) of the proce8ds derived from the development and 
utilization of hydro-thermal, geothermal' and other sources of energy shall be 
applied to lower the cost of electricity and to finance development projects in the 
local government where the source of energy is located. 


Chapter 4 
Credit Financing 
SEC. 405. -
Scope. -
The Chapter shall govern the power of local 
governments to create indebtedness and to enter into credit and other financial 
transactions. 
SEC. 406. General Policy. -
(a) 
It shall be the basic policy that any local government may 
create indebtedness, and avail of credit facilities to finance 
local infrastructure and other socia-economic developrnent 
projects in accordance with the approved local development 
plan and public investment program. 
(b) 
A local government may avail of credit lines from any bank 
and other lending institutions authorized by the Bangko 
Sentral ng Pilipinas, for the purpose of stabilizing local 
finances. 
SEC. 407. Loans, Credits, and Other Forms of Indebtedness of Local 
Governments. -
(a) A local government may secure loans, credits, guarantees and other 
forms of indebtedness with any government or domestic private bank 
and other lending institutions, to finance the construction, installation, 
improvement, expansion, operation, or maintenance of public facilities, 
infrastructure facilities, housing projects, acquisition of real property, 
and implementation of other capital investment projects. Subject to 
such terms and conditions as may be agreed upon by the local 
government and the lender. 
The proceeds from such transactions 
shall accrue directly to the local government concerned. 
(b) A local government may likewise secure from any government bank 
and lending short, medium and long-term loans and advances against 
security of real estate Qr other acceptable assets for the establishment, 
development, or expansion or agricultural, industrial commercial, 
house financing projects, livelihood projects, and other economic 
enterprises. 
(c) Government financial and other lending institutions are hereby 
authorized to grant loans, and other forms of indebtedness out of their 
loanable funds to local governments for purposes specified above. 
Government financing institutions shall, open appropriate lending windows 
for local governments. These financial institutions shall lend to fourth, fifth and 
sixth class municipalities, cities and provinces at concessional rates. 
. 
(d) The local government concerned shall publish all loans applied for, 
specifying the amount to be borrowed, the project to be funded, the 
security Offered, and the terms of payment in a newspaper of local 
circulation, if any or it there is none, in a newspaper of general 
circulation in the province, city, municipality or barangay concerned. 
The publication shall be done in three (3) consecutive issues of a daily 
newspaper. 


Upon filing of the loan, the provincial government concerned shall cause 
the posting of the loan application in all the city or municipal halls of the province. 
In the case of a city or municipality, the loan application shall be posted in all 
barangay halls and in the municipal hall concerned. 
In the case of the barangay, the loan application shall be posted in the 
barangay hall and in conspicuous and publicly accessible places. 
SEC. 406. Deferred-Payment and Other Financial Schemes. - Provincial, 
city and municipal governments may likewise acquire property, plant, machinery, 
equipment, and such necessary accessories under a supplier's credit, deferred 
payment plan, or other financial schemR. 
SEC. 409. Bonds and Other Long-Term Securities. Subject to rules and 
regulations of the Central Bank and the Securities and Exchange Commission, 
provinces, cities and municipalities are hereby authorized to issue bonds, 
debentures, securities, collateral notes and other obligations to finance self-
liquidating, income-producing development or livelihood project pursuant to the 
priorities established in the approved local development plan or the public 
investment program. The sanggunian concerned shall, through an ordinance 
approved by a majority of all its members, declare and state the terms and 
conditions of the bonds and the purpose for which the proposed indebtedness is 
to be incurred. 
Said bonds, debentures, securities, collateral, notes and other obligations 
shall be exempted from all taxes. 
SEC. 410. 
Inter-Local Government Loan, Grants, and Subsidies. -
Provinces, cities and municipalities may, upon approval of the majority of all 
members of the sanggunian concerned and in amounts not· exceeding their 
surplus funds, extend loans, grants or subsidies to other local governments 
under such terms and conditions as may be agreed upon by the contracting 
parties. 
Local governments may, upon approval of their respective sanggunian, 
jointly or severally contracted loans, credits, and other forms of indebtedness for 
purpose mutually beneficial to them. 
SEC. 411. Loan from Funds Secured by the National Government from 
Foreign Sources. -
(a) 
The President, or his duly authorized representative may, through 
any government financial or other lending institution, relend to any 
province, city, municipality, or barangay, the proceeds of loans 
contracted with foreign fin,mcial institutions or other international 
funding agencies for the purpose of financing the construction, 
installation, improvement, expansion, operation, or maintenance of 
public utilities and facilities, infrastructure facilities, or housing 
projects, the acquisition of real property, and the implementation of 
other capital investment projects, subject to such terms and 
conditions as may be agreed upon by the President and the local 
government. The proceeds from such loans shall accrue directly to 
the local government concerned. 


(b) 
The President may likewise authorize the relending to local 
govemments the proceeds of grants secured from foreign sources, 
subject to the provisions of existing laws and the applicable grant 
agreements. 
(c) 
Repayment or amortization of loans including accrued interest 
thereon, may be financed from the income of the projects or 
services and from the regular income of the local government, 
which must be provided for and appropriated regularly in its annual 
budget until the loan and the interest thereon shall have been fully 
paid. 
SEC. 412. 
Financing, 
Construction, 
Maintenance, 
Operation and 
Management of Infrastructure and Other Development Projects by the Private 
Sector. -
(a) 
Local governments may enter into contracts with any qualified 
project proponent including operatives and non government 
organizations 
for 
the 
financing, 
construction, 
operation, 
management, provisionin(l and/or maintenance of any financially 
viable development project under the build-operate-and transfer 
agreement and/or its variants, or under contract of management, 
service, lease, concession, joint venture, or combination thereof, or 
under any other private sector participation arrangement, as 
provided for under R.A. 6957 as amended. 
All projects implemented under· this Section shall be subject to the 
following terms and conditions: 
(1) No approval by any national government agency, office or 
instrumentality is 
required for implementation of the project, 
regardless of its costs, under whatever private sector participation 
agreement, or whether involving one or more local governments, 
Where the project involves two or more locai governments, the 
approval by its respective sanggunian is required. 
For projects jointly pursued by one or more local governments and the 
national government, or its agencies or instrumentalities, the approval by the 
Investment Coordinating Committee (ICC) of the National Economic and 
Development Authority (NEDA) shall be required. 
(2) Only the approval of the sanggunian concerned is required for locally 
funded projects implemented through competitive public bidding, 
including tolls, charges, rentals or fees, and adjustments thereon,for 
the use of said projects or facilities. The agreement of the parties 
implementing the projects may define the nature and extent of said 
adjustments. 
(3) Tolls, charges, rentals or fees, including adjustments thereon, for the 
use of projects or facilities subject to negotiated contracts shall 
require approval by the sanggunian concerned. 
(4) Local governments importing heavy equipment and machinery are 
exempt from payment of duties, taxes, or charges for implementing 
development projects. 
(b) 
Local 
governments 
hall 
include 
in 
their 
respective 
local 
development plans and public investment programs priority projects 
that may be financed, constructed, operated and maintained by the 
private sector under this Section. It shall be the duty of the local 
government concerned to disclose to the public all projects eligible 
for financing under this Section, including official notification of duly 


registered contractors and suppliers of goods and services and 
publication in newspapers of general or local circulation, in 
conspicuous and accessible public places. 
Local projects under 
the build-operate-transfer agreement shall be approved by the 
Regional Government. 
(c) 
Projects implemented under this Section shall be subject to the 
following terms and conditions: 
(1) The provincial, city, or municipal engineer, as the case may be, 
upon formal request in writing by the local chief executive, shall 
prepare the plans and specifications for the proposed project, 
which shall be submitted to the sanggunian for approval. 
(2) Upon approval by the sanggunian of the project plans and 
specifications, the provincial, city, or municipal engineer shall, 
as the case may be, cal,lse to be published once every week for 
two (2) consecutive weeks in at least one (1) local newspaper 
which iscirculated in the ,region, province, city or municipality in 
which the project is to be implemented, a notice inviting all duly 
qualified contractors to participate in a public bidding for the 
projects so approved. The conduct of public bidding and award 
of contracts for local government projects under this Section 
shall be in accordance with this Code and other applicable laws, 
rules and regulations. 
In the case of a build-operate-and 
transfer agreement, the contract shall be awarded to the lowest 
complying bidder whose offer is deemed most advantageous to 
the local government and based on the present value of its 
proposed tolls, fees, rentals, and charges over a fixed term for 
the facility to be constructed, operated, and maintained 
according to the prescribed minimum design and performance 
standards, plans and specifications. 
For this purpose, the 
winning contractor shall be automatically granted by the local 
government concerned the franchise to operate and maintain 
the facility, the collection of tolls, fees, rentals, and charges in 
accordance with subjection (c-4) hereof. 
In the case of a build-operate-and-transfer agreement, the 
contract shall be awarded to the lowest complying bidder based 
on the present value of its proposed schedule of amortization 
payments for the facility to be constructed according to the 
prescribed minimum design and performance standards, plans 
and specifications. 
(3) Any contractor who shall undertake the prosecution of any 
project under this Section shall post the required bonds to 
protect the interest of the province, city, or municipality, in such 
amounts as may be fixed by the sanggunian concerned and the 
provincial, city, or municipal engineer shall not, as the case may 
be, allow any contractor to initiate the prosecution or projects 
under this Section unless such contractor presents proof or 
evidence that he has posted the required bond. 
(4) The contractor shall be entitled to a reasonable return of its 
investment in accordance with its bid proposal as accepted by 
the local government concerned. 
In the case of a build-operate-and-transfer agreement, the 
repayment shall be made authorizing the contractor to charge 
and collect reasonable tolls, fees, rentals, and charges for the 
use of the project facility not exceeding those proposed in the 


bid and incorporated in the contract: Provided, That the local 
government concerned shall, based on reasonableness and 
equity, approve the tolls, fees, rentals and charges: Provided, 
further, That the imposition and collection of tolls, fees, rentals 
and charges shall be fro a fixed period as proposed in the bid 
and incorporated in the contract which shall in no case exceed 
fifty (50) years: Provided, finally, That during the lifetime of the 
contract, 
the 
contractor shall 
undertake 
the 
necessary 
maintenance and repair of the facility in accordance with 
standards prescribed in the bidding documents and in the 
contract. 
In the case of a build-operate-and-transfer agreement, the 
repayment shall be made through amortization payments in 
accordance with the schedule proposed in the bid and 
incorporated in the contract. 
In case of land reclamation or 
construction of industrial estC)tes, the repayment plan may 
, consist of the grant of a portion or percentage of the reclaimed 
land or the industrial estate constructed. 
(5) Every infrastructure project undertaken under this Section shall 
be constructed, operated, and maintained by the contractor 
under the technical supervision of the local government and in 
accordance with the plans, specifications, standards, and costs 
approved by it. 
(d) 
The provincial, city or municipal legal officer shall, as the case may 
be, review the contracts executed pursuant to this Section to 
determine their legality, validity, enforceability and correctness of 
form. 
SEC. 4123 
Remedies and Sanctions. -
Local government shall 
appropriate in their respective annual budgets such amounts as are sufficient to 
pay the loans and other indebtedness incurred or redeem or retire bonds, 
debentures, securities, notes and other obligations issued under this Title: 
Provided, That failure to provide the appropriations herein required shall render 
annual budgets inoperative. 
Chapter 5 
Local Fiscal Administration 
Article One. Glmeral Provisions 
SEC. 414. Scope. -
This chapter shall govern the conduct and 
management of the financial affairs, transactions, and operations of Regional 
Government, provinces, cities, municipalities, and barangays. 
SEC. 415. Fundamental Principles. - The financial affairs, transactions, 
and operations of local governments shall be governed by the following 
fundamental principles: 
(a) 
No money shall be paid out of the local treasury except in pursuant 
of an appropriations ordinance or law; 


(b) 
Local government funds and monies shall be spent solely for public 
purposes; 
(c) 
Local revenue is generated only from sources expressly authorized 
by law or ordinance, and collection thereof shall at all times be 
acknowledged properly; 
(d) 
All monies officially received by a local government officer in any 
capacity or on any occasion shall be accounted for as local funds, 
unless otherwise provided by law; 
(e) 
Trust funds in the local treasury shall not be paid out of except in 
fulfillment of the purpose for which the trust was created or the 
funds received; 
(f) 
Every officer of the local government whose duties permit or require 
the possession or custody of local funds shall be properly bonded 
equivalent to the amount he/she is authorized to keep or hold, and 
such officer shall be accountable and responsible for said funds 
and for the safekeeping thereof in conformity with the provisions of 
law. 
(g) 
Local governments shall formulate sound financial plans, and the 
local budgets shall be based on programs, projects, and activities, 
in terms of expected results; 
(h) 
Local budget plans and goals shall, as far as practicable, be 
harmonized with national development plans, goals, and strategies 
in order to optimize the utilization of resources and to avoid 
duplication in the use of fiscal and physical resources; 
(i) 
Local budgets shall operationalize approved local development 
plans; 
G) 
Local government shall ensure that their respective budgets 
incorporate the requirements of their component units and provide 
for equitable allocation of resources among these component units; 
(k) 
National planning shall be based on local planning to ensure that 
the needs and aspirations of the people as articulated by the local 
governments in their respective local development plans are 
considered in the formulation of budgets of national line agencies or 
offices; 
(I) 
Fiscal responsibility, accountability, and liability shall be shared by 
all those exercising authority over the financial affairs, transactions, 
and operations of the local governments; and 
(m) 
The local government shall endeavor to have a balanced budget in 
each fiscal year of operation. 
SEC. 416. Definition of Terms. - The term 
(a) 
"Annual Budget" refers to a financial plan embodying the 
estimates of income and expenditures for one (1) fiscal year; 
(b) 
"Appropriation" refers to an authorization made by ordinance, 
directing the payment of goods and services from local 
government funds under specified conditions or for specific 
purposes; 
(c) 
"Budget Document" refers to the instrument used by the local 
chief executive to present a comprehensive financial plant 0 the 
sanggunian concerned; 
(d) 
"Capital Outlays" refers to appropriations for the purchase of 
goods and services, the benefits of which extend beyond the 
fiscal year and which add to the assets of the local government 
concerned, including investments in public utilities such as 
public markets and slaughterhouses; 


(e) 
"Continuing Appropriation" refers to an appropriation available 
to support obligations for a physical structures or for the 
acquisition of real property or equipment, even when these 
obligations are incurred beyond the budget year; 
(f) 
':Current Operating expenditures" refers to appropriations for the 
purchase of goods and services for the conduct of normal local 
government operations within the fiscal year, including goods 
and services that will be used or consumed during the budget 
year; 
(g) 
"Expected Results" refers to the services, products, or benefits 
that will accrue to the public, estimated in terms of performance 
measures or physical targets; 
(h) 
"Fund" refers to a sum of money, or other assets convertible to 
cash, set aside for the purpose of carrying out specific activities 
or attaining certain objectives in accordance with special 
regulations, restrictions, or limitations, and constitutes an 
independent fiscal and accounting entity; 
(i) 
"Income" refers to all revenues and receipt collected or received 
forming the gross accretions of funds of the local government; 
0) 
"Obligations" refers to an amount committed to be paid by the 
local government for any lawful act made by an accountable 
officer for and in behalf of the local unit concerned; 
(k) 
, "Personal Services" refers to appropriations for the payment of 
salaries, wages and other compensation of permanent, 
temporary, contractual, and casual employees of the local 
government; 
(I) 
"Receipts" refers to income realized from operations and 
activities of the local government or are received by it in the 
exercise of its corporate functions, consisting of charges for 
services rendered, conveniences furnished, or the price of a 
commodity sold, as well as loans, contributions or aids from 
other entities, except provisional advances for budgetary 
purposes; and 
(m) 
"Revenue" refers to income derived the regular system of 
taxation enforced under authority of law or ordinance, and, as 
such, accrues more or less regularly every year. 
Article Two. Receipts, Safekeeping and Disposition of Local Funds 
SEC. 417. Remittance of Government Monies to the Local Treasury. -
Officers of the local authorized to receive and collect monies arising from taxes, 
revenues, or receipts of any kind shall remit the full amount received and 
collected to the treasury of such local government which shall be credited to the 
particular account or accounts to which the monies in question property belong. 
SEC. 418. Local Funds. - Every local government shall maintain a General 
Fund which shall be used to account for such monies and resources as may be 
received by and disbursed from the local treasury. 
The General Fund shall 
consist of monies and resources of the local government, which are available for 
the payment of expenditures, obligations or purposes not specifically declared by 
law as accruing and chargeable to, or payable from, any other fund. 


SEC. 419. Special Funds. - There shall be maintained in every provincial, 
city, or municipal treasury the following special funds: 
(a) 
Special Education Fund (SEF) shall consist of the 
respective shares fo provinces, cities and barangays in 
the proceeds of the additional tax on real property to be 
appropriated for purposes prescribed in Section 384 of 
this Code; and 
(b) 
Trust Funds shall consist of private and public monies 
which have officially come into the possession of the 
local government or of a local government official as 
trustee, agent or administrator, or which have been 
received as. a guarantee for the fulfillment of some 
obligation. A trust fund shall only be used for the specific 
purpose for which it was created or for which it came into 
the possession of the local government. 
SEC. 420. Separation of Books and Depository Accounts. -
Local 
accountants and treasurers shall maintain separate books and depository 
accounts, respectively, for each fund in their custody or under such rules and 
regulations as the Commission on Audit may prescribe. 
SEC. 421. Depository Account. -
Local treasurers shall maintain 
depository accounts, respectively, for each fund in their custody or under such 
rules and regulations as the Commission on Audit may prescribe. 
SEC. 422. Separation of Personal Money from Public Fund -
Local 
treasurers and other accountable officers shall keep personal monies separate 
and distinct from local public funds in their custody and shall not make profit out 
of public money or other wise apply the sarne to any use not authorized by law or 
ordinance. 
Article Three. Special Accounts 
SEC. 423. Special Accounts to be Maintained in the Tile General Fund. -
Local governments shall maintain special accounts in the general fund for the 
following: 
(a) Public utilities and other economic enterprises; 
(b) Loans,' interests, bond issues, and other contributions for 
, special purposes; 
(c) Development projects funded from the share of the local 
government concerned in the internal revenue allotment and 
such other special accounts, which may be created by law or 
ordinance. 
Receipts, transfers, and expenditures involving the foregoing special 
accounts shall be property taken up thereunder. 
Profits or income derived from the operation of public utilities and other 
economic enterprises, after deduction for the cost of improvement, repair and 
other related expenses of the public utility or economic enterprises concerned, 


shall first be applied for the return of the advances or loans made therefore. Any 
excess shall form part of the general fund of the local government concerned. 
Article Four. Local Government Budgeting 
SEC. 424. The Local Budget- Form and Content-
(a) Local government budgets shall primarily consist of two (2) parts: 
(1) The estimates of income; and 
(2) The total 
appropriations covering 
the current operating 
expenditures and capital outlays 
(b) The budget document shall contain: 
(1) The budget message of the local chief executive setting forth 
the significance of the executive budget, particularly in relation 
to the approved local development plan which shall form part of 
the budget document. 
(2) A brief summary of the programs, projects and activities to be 
accomplished in pursuit of the goals and objectives of the local 
government for the ensuing fiscal year, specifically the delivery 
of basic services of facilities adverted to by Section 15 of this 
Code. 
(3) Summary of financial statements setting forth: 
SEC. 425. 
Expenditures. -
(i) The actual incorne and expenditures during the 
immediately preceding' year; 
(ii) The actual income and expenditures of the first two (2) 
quarters 
and 
the 
estimates 
of 
income 
and 
expenditures for the last two (2) quarters of the current 
fiscal year; 
The estimates of income for the ensuing fiscal year 
from ordinances and laws existing 
at the time the 
proposed budget is transmitted, together with other 
revenue-raising proposals; 
(iii) The estimated expenditures necessary to carry out the 
programs, 
projects 
and 
activities 
of the 
local 
government for the ensuing fiscal year; 
(iv) All essential facts regarding the bonded and other long-
term 
obligations and 
indebtedness of the local 
government, if any; 
(v) Summary statement of all statutory and contractual 
obligations due; and 
(vi) Such other financial statements and data as are 
deemed necessary or desirable in order to disclose in 
all practicable detail the financial condition of the local 
government. 
Submission of Detailed Statement of Income and 


(a) On or before the fifteenth (15th) day of July of each year, local 
treasurers shall submit to their respective local chief executives a 
certified statement covering the income and expenditures of the 
preceding fiscal year, the actual income and expenditures of the first 
two (2) quarters of the current year and the estimated income and 
expenditures for the last two (2) quarters of the current year. 
SEC. 426. Local Finance Commt1tee. - There is hereby created in every 
province, city or municipality a local finance committee to be composed of the 
local planning and development officer, the local budget officer, and the local 
treasurer. It shall exercise the following functions: 
(a) Determine the income reasonably projected as collectible for the 
ensuing fiscal year; 
(b) Recommend the appropriate tax and other revenue measures or 
borrowings, which may be appropriate to support the budget; 
(c) Recommend to the local chief executive concerned the level of the 
annual expenditures and the ceilings of spending for economic, social 
and general services based on the approved local development plans; 
(d) Recommend to the local chief executive concerned the proper 
allocation of expenditures for each development activity between cum 
not operating expenditures and capital outlays; 
(e) Recommend to the local chief executive COJ) concerned the amount 
to be allocated for capital under each development activity or 
infrastructure project; 
(f) Assist the sangguniang panlalawigan in the review and evaluation of 
budget of component cities and municipalities in the case of provincial 
finance committee, the barangay budgets in the case of city or 
muniCipal finance committee, the barangay budgets in the case of city 
or municipal finance committee, and recommend the appropriate 
action thereon; 
(g) Assist ,the sanggul)ian concerned in the analysis and review of annual 
regular and budgets of the respective local government to determine 
compliance with statutory and administrative requirements; and 
(h) Conduct semi-annual review and general examination of cost and 
accomplishments 
against 
performance 
standards 
applied 
in 
undertaking development projects. 
A copy of this report shall be .furnished the local chief executive and the 
sanggunian concerned, and shall be posted in conspicuous and publicly 
accessible places in the provinces, cities, municipalities and barangays. 
SEC. 427. Submission of Budget Proposals by Head of Departments or 
Offices. 
(a) 
Each head of department or office shall submit a budget proposal 
for his department or office shall submit a budget proposal for his 
department or office to the local chief executive on or before the 
fifteenth (15th) of July of each year: 
Provided, that the budget 
proposal of each department or office shall be categorized under 
either economic, social or general services: Provided, further, that 
each service shall be covered by the budget of at least one (1) 
department or office of the local government concerned. 


The said budget proposal shall. be prepared in accordance with such 
policy and program as the local chief executive concerned may issue in 
conformity with the local development plan, the budgetary ceilings prescribed by 
the local finance committee and the general requirements prescribed in this Title. 
(b) 
Budget proposals of department or offices shall be divided into two 
(2) Primary categories, namely: the current operating expenditures 
and the capital outlays. 8U(;h budget proposals shall contain the 
following information: 
(1) Programs, projects and activities showing the general character 
and relative importance of the work to be accomplished or the 
services to be ordered, and the cost thereof; 
(2) Organizational charts and staffing patterns indicating the list of 
plantilla positions with their corresponding salaries, and 
proposals for reclassification of positions and salary changes, 
as well as the creation of new positions with their proposed 
salary grade, duly supported by proper justification; 
(3) Brief description of the prograrns, projects and activity, and the 
nature of work to be performed, including the objects of 
expenditure for each program; project and activity; 
(4) Relation of the work and financial proposals to approve local 
plans; 
(5) Estimated current operating expenditures and capital outlays 
with comparative data for the last two (2) preceding current and 
ensuing fiscal years; and 
(6) Accomplishment reports for the last two (2) preceding and 
current fiscal years. 
SEC. 428. 
Preparation of the Budget by the Local Chief Executive. -
Upon receipt of the statements of income and expenditures from the treasurer, 
the budget proposals of the heads of departments and offices, and the estimates 
of the regular ir)come and budgetary ceilings from the local finance committee, 
the local chief executive shall prepare the executive budget for the ensuing fiscal 
year in accordance with the provisions of this Title. 
The local chief executive shall submit the said executive budget to the 
sanggunian concerned not later than the sixteenth (16th) of October of the current 
fiscal year. Failure to submit such budget on the date prescribed herein shall 
subject the local chief executive to such crirninal and administrative penalties as 
provided for under this Code and other applicable laws. 
SEC. 429. Legislative Authorization of the Budget. - On or before the end 
of the current fiscal year, the sanggunian concerned shall enact, through an 
ordinance, the annual budget of the local government for the ensuing fiscal year 
on the basis of the estimates of income and expenditure submitted by the local 
chief executive. 
SEC. 430. Effectivity of Budgets. - The ordinance enacting the annual 
budget shall take effect at the beginning of the ensuing calendar year. 
An 
ordinance enacting a supplemental budget, however, shall take effect upon its 
approval or on the date fixed therein. 


The responsibility for the execution of the annual and supplemental 
budgets and the accountability therefore shall be vested primarily in the local 
chief executive concerned. 
SEC. 431. Changes in the Annual Budget. All budgetary proposals shall 
be included and considered in the budget preparation process. After the local 
chief executive concerned shall have submitted the executive budget to the 
sanggunian, no ordinance providing for the supplemental budget shall be 
enacted except when supported by funds actually available as certified by local 
treasurer or by new revenue sources. 
A supplemental budget may also be enacted in times of public calamity by 
way of budgetary realignment to set aside appropriations for the purchase of 
supplies and materials of the payment of services which are exceptionally urgent 
or absolutely indispensable to prevent imminent danger to, or loss of life and 
property, in the jurisdiction of the local government or in other areas declared in a 
state of calamity by the President. 
Such ordinance shall clearly indicate the 
sources of funds available for appropriations, as certified under oath by the local 
treasurer and local accountant and attested to by the local chief executive, and 
the various items of appropriations affected and the reasons for the change. 
SEC. 432. 
Reversion of Unexpected Balances of Appropriations 
Continuing Appropriations. - Balances of appropriations authorized in the annual 
appropriations ordinance shall revert to the surplus of the general fund at the end 
of the fiscal year and shall not thereafter be available for expenditure except by 
subsequent enactment. 
However, appropriations for capital outlays shall 
continue and remain valid until fully spent, reverted or the project is completed. 
Reversions of continuing appropriations shall not be allowed unless obligations 
therefore have been fully paid or otherwise settled. 
The balances of continuing appropriations shall be reviewed as part of the 
annual budget preparation and the sanggunian concerned may approve, upon 
recommendation of the local chief executive, the reversion of funds no longer 
needed in connection with the activities funded by said continuing appropriations 
subject to the provisions of this Section. 
SEC. 433. 
Failure to Enact the Annual Appropriations. -
In case the 
sanggunian concerned fails to pass the ordinance authorizing the annual 
appropriations at the beginning of the ensuing fiscal year, it shall continue to hold 
daily sessions, exclusive of Saturdays, Sundays and Holidays, without additional 
remuneration for its members, until such ordinance is approved, and no other 
business may be taken up during such sessions. If the sanggunian still fails to 
enact such ordinance after sixty (60) days from the beginning of the fiscal year, 
the. ordinance authorizing the appropriations of the preceding year shall be 
deemed reenacted and shall remain in force and effect until the ordinance 
authorizing the proposed appropriations is· passed by the sanngunian concerned. 
However, only the annual appropriations for salaries and wages of existing 
positions, statutory and contractual obligations, and essential operating expenses 
authorized in the annual and disbursement of funds shall be in accordance 
therewith. 
In the implementation of such reenacted ordinance, the local treasurer 
concerned shall exclude from the estimates of income of the preceding fiscal 
year those realized from nonrecurring sources, like national aids, proceeds from 


loans, sale or assets, prior year adjustments, and other analogous sources of 
income. No ordinance authorizing supplemental appropriations shall be passed 
in place of the annual appropriations. 
In case the revised income estimates be less than the aggregate 
reenacted appropriations, the local treasurer concerned shall accordingly advise 
the sanggunian concerned which shall, within ten (10) days from the receipt of 
such advice, make the necessary adjustments or reductions. 
The revised 
appropriations authorized by the sanggunian concerned shall then be the basis 
for disbursements. 
SEC. 434. Budgetary Requirements. - The budgets of local governments 
for any fiscal year shall comply with the following requirements: 
(a) 
The aggregate amount appropriated shall not exceed the estimates 
of income; 
(b) 
Full provision shall be made for all statutory and contractual 
obligations of the local government concerned: Provided, however, 
that the amount of appropriations for debt servicing shall not 
exceed twenty percent (20%) of the regular income of the local 
government concerned; 
(c) 
In the case of provinces, cities and municipalities, aid to component 
barangays shall be in amounts of not less than one thousand pesos 
(PhP 1,000.00); 
(d) 
Five percent (5%) of the estimated revenue from regular source 
shall be set aside as an annual lump sum appropriation for 
unforeseen expenditures arising from the occurrence of calamities: 
Provided, however, That such appropriation shall be used only in 
the area, or a portion thereof, of the local government declared in a 
state of calamity by the governor in the case of a province and the 
mayor in the case of a city or municipality. 
A copy of the 
declaration shall immediately be furnished the sanggunian of the 
local government concerned. Sanggunian may concur or reject the 
declaration of calamity. 
In the event of a rejection by the 
sanggunian of the declaration of calamity, no local government 
funds shall be disbursed therefore. If the sanggunian concerned 
fails to act on the declaration of calamity within twenty-four (24) 
hours from its receipt of the copy of the declaration of calamity 
mentioned above, the same shall be deemed approved. 
SEC. 435. General Limitations. - The use of provincial, city and municipal 
funds shall be subject to the following limitations: 
(a) 
The appropriations, whether annual or supplemental, for personal 
services of a local government for one (1) fiscal year shall not 
exceed forty-five percent (45%) in the case of first to third class 
provinces, cities and municipalities, and fifty-five percent (55) in the 
case of fourth class or lower, of the annual income from regular 
sources realized 
in the next preceding fiscal year. 
The 
appropriations 
for 
salaries, 
wages, 
representation 
and 
transportation allowances of officials and employees of the public 
utilities and economic enterprises owned, operated and maintained 
by the local government concerned shall not be included in the 
annual budget or in the computation of the maximum amount for 
personal services. The appropriation for the personal services of 


such economic enterprises shall be charged to their respective 
budgets. 
(b) 
No official or employee shall be entitled to a salary rate higher than 
the maximum fixed for his position or other positions of equivalent 
rank by applicable laws or rules and regulations issued thereunder; 
(c) 
No iocal fund shall be appropriated to increase or adjust salaries or 
wages of officials and employees of the national government, 
except as may be expressly authorized by law; 
(d) 
In cases of abolition of positions and the creation of new ones 
resulting from the abolition of existing positions in the career 
service, such abolition or creation shall be made in accordance with 
pertinent provisions of this Code and the civil service law, rules and 
regulations; 
(e) 
Positions in the official plantilla for career positions, which are 
occupied by incumbents holding permanent appointments, shall be 
covered by adequate appropriations; 
(f) 
No changes in designation or nomenclature of positions resulting in 
a promotion or demotion in rank or increase or decrease in 
compensation shall be allowed, except when the position is actually 
vacant, and the filling of such positions shall be strictly made in 
accordance with the civil service law, rules and regulations; 
(g) 
The creation of new positions and salary increases or adjustments 
shall in no case be made retroactive; and 
(h) 
The annual appropriations for discretionary purposes of the local 
chief executive shall not exceed two percent (2%) of the actual 
receipts derived from basic real property ax in the next preceding 
calendar year. 
Discretionary funds shall be disbursed only for 
public purposes to be supported by appropriate vouchers and 
subject to such guidelines as maybe prescribed by law. No amount 
shall be appropriated for the same purpose except as authorized 
under this Section. 
SEC. 436. 
Review of Appropriation Ordinances. -
The Regional 
Government shall review appropriation ordinances authorizing the annual or 
supplemental budget of provinces and highly urbanized cities in their respective 
regions except in the National Capital Region where the appropriation ordinances 
of municipalities shall also be reviewed by the NCR Regional Government in 
accordance with the Section immediately preceding. 
The sangguniang panlalawigan shall review the ordinance authorizing 
annual or supplemental appropriation of component cities and municipalities in 
the same manner and within the same period prescribed for the review of other 
ordinances. 
If within thirty (30) days from receipt of copies of such ordinance, the 
sanggunian panlalawigan takes no action thereon, the same shall be deemed to 
have been reviewed in accordance with law and shall continue to be in full force 
and effect. If within the same period, the sanggunian panlalawigan shall have 
ascertained that the ordinance authorizing annual or supplemental appropriations 
has not complied 
with the requirements set forth in this Chapter, the 
sangguniang panlalawigan shall, within the period, declare such ordinance 
inoperative in its entirely or in past. Items of appropriation contrary to limitations 
prescribed in this Chapter or in excess of the amounts prescribed herein shall be 
disallowed or reduced accordingly. 


The sangguniang panlalawigan shall within the same period advice the 
sangguniang panglungsod or sangguniang bayan concerned through the local 
chief executive of any action on the ordinance under review. 
Upon receipt of 
such advice, the city or municipal treasurer concerned shall not make further 
disbursement of funds. from any of the items of appropriation declared 
inoperative, discdlowed or reduced. 
SEC. 437. 
Duration of Approptiation. -
Appropriations for ordinary 
administrative purposes not duly obligated shall terminate with the fiscal year and 
all unexpended balances thereof shall be automatically reverted on the thirty-first 
(31 st) day of December of each year to the general fund of the local government. 
Article Five. Barangay Budgets 
SEC. 438. Barangay Funds. - Unless otherwise provided in this Article, 
all the income of the barangay from whatever source including its share of the 
national taxes as provided under this Code shall accrue to its general fund and 
shall, at the option of the barangay concerned, be dept hereof as trust fund in the 
custody of the city of municipal treasurer, or be released to and deposited for the 
account of the barangay in a bank, preferably government-owned, situated in or 
nearest to its area of jurisdiction. Such funds shall be disbursed pursuant to an 
approved ordinance by the barangay concerned in accordance with the 
provisions of this Article. Ten percent (10%) of the general fund of the barangay 
shall be automatically appropriated and obligated for the sangguniang kabataan, 
which shall be released and deposited to the account of the sangguniang 
kabataan in a bank preferably located within the barangay within twenty (20) 
days after the end of every quarter of the current year. 
Such funds shall be 
disbursed pursuant to an approved resolution by the sangguniang kabataan 
concerned. 
SEC. 439. Submission of Detailed Statement of Income and Expenditures 
for the Barangay Budgets. - On or before the fifteenth (15th) day of September of 
each year, the barangay treasurer shall submit to the punong barangay a 
statement covering the estimates of income and expenditures for the ensuing 
fiscal year, based on a certified statement issued by the city or municipal 
treasurer covering the estirnates of income from local sources for the barangay 
concerned. 
SEC. 440. Preparation of the Barangay Budget-
(a) Upon receipt of the statement of income and expenditures from the 
barangay treasurer, the punong barangay shall prepare the barangay 
budget for the ensuing fiscal year in the manner and within the period 
prescribed in this Article and submit the annual barangay budget to the 
sannguniang barangay for legislative enactment. 
(b) The total annual appropriations for personal services of a barangay for 
one (1) fiscal year shall not exceed fifty-five percent (55%) of the total 
annual income actually realized from local sources during the next 
preceding fiscal year. 
(c) The barangay budget shall likewise be subject to the same budgetary 
requirements and limitations hereinabove prescribed. 


SEC. 441. Effectivity of Barangay Budgets. - The ordinance enacting the 
annual budget shall take effect at the beginning of the ensuing calendar year. An 
ordinance enacting a supplemental budget, however, shall take effect upon its 
approval or on the date fixed therein. 
The responsibility for the execution of the annual and supplemental 
budgets and the accountability therefore shall be vested primarily in the punong 
barangay concerned. 
SEC. 442. Review of the Barangay Budget. -
(a) 
Within ten (10) days from its approval, copies of the barangay 
ordinance authorizing the annual appropriations shall be furnished 
the sangguniang panglungsod or the sangguniang bayan, as the 
case maybe, through the city or municipal budget officer. 
The 
sanggunian concerned shall have the power to review such 
ordinance in order to ensure that the provisions of this Article are 
complied with. 
If within sixty (60) days after the receipt of the 
ordinance, the sanggunian concerned takes no action thereon, the 
same shall continue to be in full force and effect. If within the same 
period, the sanggunian concerned shall have the power to review 
such ordinance in order to ensure that the provisions of this Article 
are complied with. If within sixty (60) days after the receipt of the 
ordinance, the sanggunian concerned takes no action thereon, the 
same shall. continue to be in full force and effect. If within the same 
period, the sanggunian concerned shall have ascertained that the 
ordinance contains appropriations 'in excess of the estimates of the 
income duly certified as collectible, or that the same has not 
complied with the budgetary requirements set forth in this Article, 
the said ordinance shall be declared inoperative in its entirety or in 
part. Items of appropriations, contrary to, or in excess of, any of the 
general limitations or the maximum amount prescribed in this Title 
shall be disallowed or reduced accordingly. 
(b) 
Within the period hereinabove fixed, the sangguniang panlungsod 
or sangguniang bayan concerned shall return the barangay 
ordinance, through the city or municipal budget officer, to the 
punong barangay with the advice of action thereon for proper 
adjustments, in which event, the barangay shall operate on the 
ordinance authorizing annual appropriations of the preceding fiscal 
year until such time that the new ordinance authorizing annual 
appropriations shall have met the objections raised. Upon receipt 
of such advice, the barangay treasurer or the city or municipal 
treasurer who has custody of the funds shall not make further 
disbursement from any item of appropriation declared inoperative, 
disallowed, or reduced. 
SEC. 443: Barangay Financial Procedures. -'-
(a) The barangay treasurer shall collect all taxes, fees, and other charges 
due and contributions accruing to the barangay for which he shall 
issue official receipts, and shall deposit all collections with the city or 
municipal treasury or in the depository account maintained in the name 
of the barangay within five (5) days after receipt thereof. 
He may 
collect real property taxes and such other taxes as may be imposed by 


a province, city or municipality that are due in his barangay only after 
being deputized by the local treasurer concerned for the purpose. 
(b) The barangay treasurer may be authorized by the sangguniang 
barangay to make direct purchases amounting to not more than one 
thousand pesos (Php 1,000.00) at any time for the ordinary and 
essential needs of the barangay. The petty cash that the barangay 
treasurer may be authorized to hold for the purpose shall not exceed 
twenty percent (20%) of the funds available and to the credit of the 
barangay treasury. 
(c) The financial records of the barangay shall be kept in the office of the 
city or municipal accountant in simplified manner as prescribed by the 
Commission on Audit. Representatives of the Commission on Audit 
shall audit such accounts annually or as often as may be necessary 
and make a report of the audit to the sangguniang panglungsod or 
sangguniang bayan, as the case may be. The Commission on Audit 
shall prescribe and put into effect-simplified procedures for barangay 
finances within six (6) months following the effectivity of this Code. 
Article Six. Expenditures, Disbursements, Accounting 
And Accountability 
SEC. 444. 
Prohibitions Against Expenditures for Religious or Private 
Purposes - No public money or property shall be appropriated or applied for 
religious or private purposes. 
SEC. 445. Use of Appropriated Funds and Savings. - Funds shall be 
available exclusively for the specific purpose for which they have been 
appropriated. 
No ordinance shall be passed authorizing any transfer of 
appropriations from one item to another, However, the local chief executive or 
the presiding officer of the sanggunian concerned may, by ordinance, be 
authorized to augment any item in the approved annual budget for their 
respective offices from savings in other items within the same expense class of 
their respective appropriations. 
SEC. 446. Restriction Upon Limit of Disbursements. - Disbursements in 
accordance with appropriations in the approved annual budget may be made 
from any local fund in the custody of the treasurer, but the total disbursements 
from any local fund shall in no case exceed fifty percent (50%) of the uncollected 
estimated revenue accruing to such local fund in addition to the actual 
collections. Provided, however, That no cash overdraft in any local fund shall be 
incurred at the end of the fiscal year, 
In case of emergency arising from a typhoon, earthquake, or any other 
calamity, the sanggunian concerned may authorize the local treasurer to 
continue making disbursements from any local fund in his possession in excess 
of the limitations herein provided, but only such purposes and amounts included 
in the approved annual budgets. 
Any overdraft, which may be incurred at the end of the year in any local 
fund by virtue of the provisions hereof, shall be covered with the first collections 
of the immediately succeeding fiscal year accruing to such local fund. 


SEC. 447. Prohibitions Against Advance Payments. - No money shall be 
paid on account of any contract under which no services have been rendered or 
goods delivered. 
SEC. 448. Cash Advances. - No cash advance shall be granted to any 
local official or employee, elective or appointive, unless made in accordance with 
rules and regulations as the COA may prescribe. 
SEC. 449. 
Persons Accountable for Local Govemment Funds. -
Any 
officer of the local government whose duty permits or requires the possession or 
custody of local government funds shall be accountable and responsible for the 
safekeeping thereof in conformity with the provisions of this Title. Other local 
officers who though not accountable by the nature of their duties, may likewise 
be similarly held accountable and responsible for local government funds through 
their participation in the use or application thereof. 
SEC. 450. Prohibition Against Pecuniary Interest. - Without prejudice to 
criminal prosecution under applicable laws, any local treasurer, accountant, 
budget officer, or other accountable local officer having any pecuniary interest, 
direct or indirect, in any contract, work or other business of the local government 
of which he is an accountable officer shall be administratively liable therefore. 
SEC. 451. Liability for Acts Done Upon Direction of Superior Officer, or 
Upon Participation of Other Department Heads or Officers of Equivalent Rank. -
Unless he registers his objection in writing, the local treasurer, accountant, 
budget officer, or other accountable officer shall not be relieved of liability for 
illegal or improper use or application or deposit of government funds or property 
by reason of his having acted upon the direction of a superior officer, elective or 
appointive, or .upon participation of other department heads or officers of 
equivalent rank. 
The superior officer directing, or the department head 
participating in such illegal or improper use or application or deposit of 
government funds or property, shall be jointly and severally liable with the local 
treasurer, accountant, budget officer, or other accountable officer for the sum or 
property so illegally or improperly used, applied or deposited. 
SEC. 
452. 
Prohibition 
Against Expenses 
for 
Reception 
and 
Entertainment. - No money shall be appropriated, used, or paid for entertainment 
or reception except to the extent of the representation allowances authorized by 
law or for the reception of visiting dignitaries of foreign governments or foreign 
missions, or when expressly authorized by the President in specific cases. 
SEC. 453. Certification on, and Approval of, Vouchers. - No money shall 
be disbursed unless the local budget officer certifies to the existence of 
appropriation that has been legally made for the purpose, the local accountant 
has obligated said appropriation, and the local treasurer certifies to the 
availability of funds for the purpose. Vouchers and payrolls shall be certified to 
an approved by the head of the department or office that has administrative 
control of the fund concerned as to validity, propriety, and legality of the claim 
involved. 
Except in cases of disbursements involving regularly recurring 
administrative expenses such as payrolls for regular or permanent employees, 
expenses for light, water, telephone and telegraph services, remittances to 


government creditor agencies such as the GSIS, SSS, LBP, DBP, National 
Printing Office Procurement Service of the DBM and others, approval of the 
disbursement voucher by the local chief executive or by the Department Heads 
of Chiefs of Hospitals duly authorized by the local chief executive concerned, 
shall be required whenever local funds are disbursed. 
In cases of special or trust funds, disbursements shall be approved by the 
administrator of the fund. 
In case of temporary absence of incapacity of the department head or 
chief of office, the officer next in rank shall automatically perform his function and 
he shall be fully responsible therefore. 
SEC. 454. 
Officials Authorized to Draw Checks in Settlement of 
Obligation - Checks in settlement of obligations shall be drawn by the treasurer 
and countersigned by the local chief executive, or in his/her absence, by an 
official designated by him in consonance with law. 
Checks in settlement of obligations duly appropriated for personal 
services, maintenance and other operating expenses and capital outlay of the 
sanggunian shall be countersigned by the Vice Governor or the Vice-Mayor for 
the province, city or municipality, as the. case may be, or in his/her absence, by 
an official duty authorized by law. 
In case of the absence of the treasurer for more than three (3) days, the 
signing of the checks above mentioned shall be done by the Assistant Treasurer 
or an official designated as officer in charge of office in accordance with law. 
Checks issued in settlement of obligations of the barangay, shall be 
signed by the barangay treasurer shall be properly bonded, and countersigned 
by the punong barangay. In the absence of either or both of them for more than 
three (3) days, the sangguniang barangay, by majority vote, shall designate from 
among themselves two (2) members who shall be Signatories of the checks. 
SEC. 455. Disbursements of Local Funds and Statement of Accounts. -
Disbursements shall be made in accordance with the ordinance authorizing the 
annual or supplemental appropriations without the prior approval of the 
sanggunian concerned. Within thirty (30) days after the close of each month, the 
local accountant shall furnish the sanggunian with such financial statements as 
may be prescribed by the Commission on Audit. In the case of the year end 
statement of accounts, the period shall be sixty (60) days after the thirty-first 
(315t) of December. 
SEC. 456. Rendition of Accounts. - Local treasurers, accountants and 
other local accountable officers shall render their accounts within such time, in 
such form, style, and content and under such regulations as the Commission on 
Audit may prescribe. 
Provincial, city and municipal auditors shall certify the balances arising in 
the accounts settled by them to the Chairman of the Commission on Audit and to 
the local treasurer, accountant, and other accountable officers. Copies of the 
certification shall be prepared and furnished other local officers who may be held 
jointly and severally liable for any loss or illegal, improper or unauthorized use or 
misappropriation of local funds or propert~'. 


SEC. 457. Auditiorial Visitation. - The books, accounts, papers, and cash 
of local treasurer, accountant, budget officer, or other accountable officers shall 
at all times be open for inspection of the Commission on Audit or its duly 
authorized representative. 
In case an examination of the accounts of a local treasurer discloses a 
shortage in cash which should be on hand, it shall be the duty of the examining 
officer to seize the office and its contents, notify the Commission on Audit, the 
local chief executive concerned, and the local accountant. 
Thereupon, the 
examining officer shall immediately turn over to the accountable officer next-in-
rank in the local treasury service, unless the said officer is likewise under 
investigation, the auditor shall take full possession of the office and its contents, 
close and render his accounts on the date of taking possession, and temporarily 
continue the public business of such office until such time that the local treasurer 
is restored or a successor has been duly designated. The local treasurer or 
accountable officer found with such shortage shall be automatically suspended 
from office. 
SEC. 458 .. Accounting for Revenues. - Estimated revenues, which remain 
unrealized at the close of the fiscal year, shall not be booked or credited to the 
unappropriated surplus or any other account. 
SEC. 459. 
Accounting for Obligations. -
All lawful expenditures and 
obligations incurred during a fiscal year shall be taken up in the accounts of that 
year. 
SEC. 460. General Liability for Unlawful Expenditures. - Expenditures of 
funds or use of property in violation of this Title and other laws shall be a 
personal liability of the official or employee responsible therefore. 
SEC. 461. Posting of the Summary of Income and Expenditures. - Local 
treasurers, accountants, budget officers and other accountable officers shall, 
within thirty (30) days from the end of each fiscal year, post in at least three (3) 
publicly accessible and conspicuous places such as plaza and main street in the 
local government concerned, and to publish said statements of income and 
expenditures in a newspaper of general circulation, where available, in the 
territorial jurisdiction of such unit, a summary of all revenues collected and funds 
received including the appropriations, and disbursements of such funds during 
the preceding fiscal year. Failure to comply with this requirement shall subject 
the officials concerned to disciplinary action in accordance with the existing laws. 
SEC. 462. 
Title Official Fiscal Year. - The official fiscal year of local 
governments shall be the period beginning with the first day of January and 
ending with the thirty-fist (31 st) day of December of the same year. 
SEC. 463. Administrative Issuances; Budget Operations Manual - The 
Secretary of Budget and Management jointly with the Chairman of the 
Commission on Audit, and the chairman of the Regional Government elected by 
a majority vote of all chairmen of Regional Governments in the entire country 


shall, within one (1) year from the effectivity of this Code, review the existing 
budget operations manual and promulgate a new Manual for local governments 
to improve and systematize methods, techniques, and procedures employed in 
budget preparation, authorization, execution, and accountability: Provided, That 
pending the promulgation of the updated manual, existing laws, rules and 
regulations shall· continue to apply; Provided, however, That said statues or 
regulations or portions thereof have not been modified, amended, rescinded, or 
repealed by this Code. 
Chapter 6 
Property and Supply Management in the Local Governments 
SEC. 464. Scope. - This Chapter shall govern the procurement, care, 
utilization, custody and disposal of supplies, as defined herein, by local 
governments and the other aspects of supply management at the local levels. 
It is mandated that local governments shall introduce computer technology 
where compatible with effective internal controls and with the aim in viewing of 
achieving efficiency, transparency and modernization of property and supply 
management therein. 
SEC. 
465. 
General Rule in ProGUrement or Disposal. 
-
Except as 
otherwise provided herein, local governments are authorized to directly acquire 
or procure supplies and equipment fro either local or foreign suppliers through 
competitive public bidding, without need of prior approval or authority from any 
agency of the government. Supplies which have become unserviceable or no 
longer needed shall be sold, whenever applicable, at public auction, subject to 
applicable, at public auction, subject to applicable rules and regulations. 
SEC. 466. Definition of Terms. - When used in this Chapter, the term -
(a) "Lowest Complying and Responsible Bid" refers to the proposal of one 
who offers the lowers price, meets all the technical speCifications and 
requirements of the supplies desired and, as a dealer in the line of 
supplies involved, maintains a regular establishments, and has 
complied conSistently with previous commitments; 
(b) "Suitable Substitute" refers to that kind of article which would serve 
substantially the same purpose or produce substantially the same 
results as he brand, type, or make or article originally desired or 
requisitioned; 
(c) "Supplies" includes everything, except real property, which may be 
needed in the transaction of public business or in the pursuit of any 
undertaking, project, or activity, whether in the nature of eqUipment, 
furniture, stationary materials for construction or personal property of 
any sort, including non-personal or contractual services such as the 
repair and maintenance of equipment and furniture, as well as trucking, 
hauling, janitorial, security, and related services; and 
(d) "Terms and Conditions" refer to other requirements not affecting the 
technical specifications and requirements of the required supplies 
desired such as bonding of the terms delivery and payment, and 
related preferences. 


SEC. 467. Requirement of Requisition. - Any order for supplies shall be 
filled by the provincial or city general services or the municipal or barangay 
treasurer concerned, as the case may be, for any office or department of a local 
government only upon written requisition as hereinafter provided. 
SEC. 468. Officers Having Authority to Draw Requisitions. - Requisitions 
shall be prepared by the head of office or department needing the supplies, 
which shall certify as to their necessity for official use and specify the project or 
activity where the supplies are to be used. 
SEC. 469. 
Certification by the Local Budget Officer, Accountant, and 
Treasurer. - Every requisition must be accompanied by a certificate signed by 
the local budget officer, the local accountant, and the local treasurer showing that 
an appropriation therefore exists, the estimated amount of such expenditure has 
been obligated, and the funds are available for the purpose respectively. 
SEC. 470. Approval of Requisitions. - Approval of the requisition by the 
head of office or department concerned who has administrative control of the 
appropriation against which the proposed expenditure is chargeable is deemed 
sufficient, except in case of requisition for supplies to be carried in stock which 
shall be approved by the local chief executive concerned: Provided, That such 
supplies are listed or included in the annual procurement plan and the maximum 
quantity thereof does not exceed the estimated consumption corresponding to a 
programmed three-month period: 
Provided, further, That nothing herein 
contained shall be held as authorizing the purchase of furniture and equipment 
for stock purposes. 
SEC. 471. 
Local Prequalification, Bids and Awards Committee (Local 
PBAC). 
(a) There is hereby created a local prequalification, bids and awards 
committee in every province, city and municipality, which shall be 
primarily responsible for the conduct of prequalification of contractors, 
bidding, evaluation of bids, and the recommendation of awards 
concerning local infrastructure projects. The governor or the city or 
municipal mayor shall act as the chairman with the following as 
members: 
(1) The chairman of the appropriations committee of the sanggunian 
concerned; 
(2) A representative of the minority party in the sanggunian concerned, 
if any, or if there be none, one (1) chosen by said sanggunian from 
among its members; 
(3) The local treasurer; 
(4) Two (2) representatives of nongovernmental organizations that are 
represented in the local development council concerned, to be 
chosen by the organizations themselves; and 
(5) Any practicing certified public accountant from the private sector, to 
be designated by the local chapter of the Philippine Institute of 
Certified Public Accountants, if any. 
Representatives of the Commission on Audit shall observe the 
proceedings of such committee and shall certify that the rules and procedures for 
prequalification, bids and awards have been complied with. 


(b) The agenda and other information relevant to the meetings of such 
committee shall be deliberated upon by the committee at least one (1) 
week before the holding of such meetings. 
(c) All meetings of the committee shall be held in the provincial capitol or 
the city or municipal hall. 
The minutes of such meetings of the 
committee and any decision made therein shall be duly recorded, 
posted at a prominent place in the provincial capitol or the city or 
municipal hall, and delivered by the most expedient means to elective 
local officials concerned. 
SEC. 472. Local Technical Committee. - (a) There is hereby created a 
local technical committee in every province, city and municipality to provide 
technical assistance to the local prequalification, bids and awards committees. It 
shall be composed of the provincial, city or municipal engineer, the local planning 
and development coordinator, and such other officials designated by the local 
prequalification, bid and awards committee. 
(c) 
The chairman of the local technical committee shall be designated 
by the local prequalification, bids and awards committee and shall 
attend 
its 
meeting 
in 
order to 
present the 
reports 
and 
recommendations of the committee. 
SEC. 473. Call for Bids. - When procurement is to be made by local 
governments, the provincial or city general services officer or the municipal or 
barangay treasurer shall call bids for open public competition. The call for bids 
shall show the complete specifications and technical descriptions of the required 
supplies and shall embody all terms and conditions of participation and award, 
terms of delivery and payment, and all other covenants affecting the transaction. 
In all call for bids, the right to waive any defect in the tender as well as the right to 
accept the bid most advantageous to the government shall be reserved. In no 
case, however, shall failure to meet the specifications or technical requirements 
of the supplies desired be waived. 
SEC. 474. Publication of Call for Bids. - the call for bids shall be given the 
widest publicity possible, sending, by mail or otherwise, any known prospective 
participant in the locality, of copies of the call and by posting copies of the same 
in at least three (3) publicly accessible and conspicuous places in the provincial 
capitol or city, municipal, or barangay hall, as the case may be. 
The notice of the bidding may likewise be published in a newspaper of 
general circulation in the territorial jurisdiction of the local government concerned 
when the provincial or city general services officer or the municipal or barangay 
treasurer, as the case may be, deems it necessary in order to obtain the lowest 
responsible and complying bid. 
The opening of bids shall only be made in the presence of the provincial or 
city auditor or his duly authorized representative who shall initial and secure 
copies of the bids and certify the abstract of the bidding. 


SEC. 475. The Committee on Awards. - There shall be in every province, 
city or municipality a Committee on Awards to decide the winning bids and 
questions of awards and procurement and disposal of property. 
The Committee on Awards shall be composed of the local chief executive 
as chairman, the local treasurer, the local accountant, the local budget officer he 
local general services officer, the head of office or department for whose use the 
supplies are being procured, one (1) representative of the Philippine Institute of 
Certified Public Accountants (PICP A), and two (2) representatives of non-
governmental organizations that are represented in the local development 
council concerned to be· chosen by the organizations themselves, as members. 
In case a head of office or department would sit: in a dual capacity, a member of 
the sanggunian elected from among its members shall sit as a member. The 
Committee on Awards at the barangay level shall be the sangguniang barangay. 
No national official shall sit as a member of the Committee on Awards. 
The results of the bidding shall be made public by posting the same in a 
conspicuous place in the provincial capitol or city, municipal, or barangay hall. 
SEC. 476. Rule on Awards. - Awards in the procurement of supplies shall 
be given to the lowest complying and responsible bid which meets all the terms 
and conditions of the contract or undertaking. 
SEC. 477. Procurement Without Public Bidding. -
Procurement of 
supplies may be made without the benefit of public bidding under any of the 
following modes: 
(a) Personal canvass of responsible merchants; 
(b) Emergency purchase; 
(c) Negotiated purchase; 
(d) Direct purchase from manufacturers or exclusive distributors; and 
(e) Purchase from other government entities. 
SEC. 478. Procurement Through Personal Canvass. - Upon approval by 
the Committee on Awards, procurement of supplies may be effected after 
personal canvass of at least three (3) responsible suppliers in the locality by a 
committee of four (4) composed of the local general services officer or the 
municipal or barangay treasurer, as the case may be, the local accountant, the 
head of office or department for whose use the supplies are being procured, and 
a representative of non-governmental organization. The awards shall be decided 
by the Committee on Awards. 
The acquisition and procurement by local 
governments of supplies, goods, equipment and services, except consultants as 
authorized by the sanggunian concerned through personal canvass. 
Purchases shall not exceed twenty-five percent (25%) of the total amount 
allocated for the purpose in anyone (1) month. The services purchased through 
personal canvass shall be performed and completed within a period of thirty (30) 
days from the date of purchase. 
SEC. 479. 
Emergency Purchase. -
In cases of emergency where the 
need for the supplies is exceptionally urgent or absolutely indispensable and only 
to prevent imminent danger to, or loss of, life or property, local governments may, 
through the local chief executive concerned, make emergency purchases or 


place repair orders, regardless of amount, without public bidding. 
Delivery of 
purchase orders or utilization of repair orders pursuant to this Section shall be 
made within ten (10) days after placement of the same. Immediately after the 
emergency purchase or repair order is made, the chief of office or department 
making the emergency purchase or repair order shall draw a regular requisition 
to cover the same, which shall contain the following: 
(a) 
A complete description of the supplies acquired or the work 
done or to be performed; 
(b) 
By whom furnished or executed; 
(c) 
Date of placing the order and the date and time of delivery or 
execution; 
(d) 
The unit prize and the total contract price; 
(e) 
A brief and concise explanation of the circumstances why 
procurement was of such urgency that the same could not be 
done through the regular course without involving danger to, or 
loss of, life or property; 
(f) 
A certification of the provincial or city general services or the 
municipal or Barangay treasurer, as the case may be, to the 
effect that the price paid or contracted for was the lowest at the 
time of procurement; and 
(g) 
A certification of the, local budget officer as to the existence of 
appropriations for the purpose, the local accountant as to the 
obligation of the amount involved, and the local treasurer as to 
the availability of funds. 
The goods or services procured under this Section must be utilized or 
availed of within fifteen (15) days from the date of delivery or availability. 
Without prejudice to criminal prosecution under applicable laws, the local 
chief executive, the head of department, or the chief of office making the 
procurement shall be administratively liable for any violation of this Section and 
shall be a ground for suspension or dismissal from service. 
SEC. 480. Negotiated Purchases. _. 
(a) 
In cases where public biddings have failed for two (2) consecutive 
times and no suppliers have qualified to participate or win in the 
biddings, local governments may, through the local chief executive 
concerned, undertake the procurement of supplies by negotiated 
purchase, regardless of amount, without public bidding: Provided, 
however, That the contract covering the negotiated purchase shall 
be approved by the sanggunian concerned. Delivery of purchase 
orders or utilization of repair orders pursuant to this Section shall be 
made within seven (7) days after placement of the same. 
Immediately after the negotiated purchase or repair order is made, 
the local chief executive concerned shall draw a regular requisition 
to cover the same, which shall contain the following: 
(1) A complete description of the supplies acquired or the work done or 
to be performed; 
(2) By whom furnished or executed; 
(3) Date of placing the order and the date and time of delivery or 
execution; 
(4) The unit price and the total contract price; 


(5) A certification of the provincial or city general services or the 
municipal or barangay treasurer, as the case may be, to the effect 
that the price paid or contracted for was the lowest at the time of 
procurement; 
(6) A certification to the effect thnt the p rice paid or contracted for was 
the lowest at the time of procurement; and 
(7) A certification of the local budget officer as to the existence of 
appropriations or the purpose, the local accountant as to the 
obligation of the amount involved, and the local treasurer as to the 
availability of funds. 
(b) 
In case of repeat orders for regular supplies, procurement may be 
made by Negotiated purchase; Provided, That the repeat order is 
made within six (6) months from the last procurement of the same 
item: Provided, further, That the same terms and conditions of sale 
are obtained for the said repeat order. 
SEC. 481. Procurement from Duly Licensed Manufacturer. - Procurement 
may be made directly from duly licensed manufacturers in cases of supplies of 
Philippine manufacture or origin and in case there are two (2) or more 
manufacturers of the required supplies, canvass of the known manufacturers 
shall be conducted to obtain the lowest price for the quality of the said supplies. 
SEC. 482. Procurement from Exclusive Philippine Agents or Distributors. 
- Procurement may, in the case of supplies of foreign origin, preferably be made 
directly from the exclusive or reputable Philippine distributors or agents, subject 
to the following cond itions: 
(a) 
That the Philippine distributor has no subdealers selling at lower 
prices; and 
(b) 
That no suitable substitutes of substantially the same quality are 
available at lower prices. 
SEC. 483. Procurement from Government Entities. - Procurement may be 
made directly from government entities producing the required supplies, including 
units or agencies of foreign governments with which the Philippines maintains 
diplomatic relations. 
In the latter case, prior authority from the Office of the 
President shall be required. 
SEC. 484. Annual Procurement Program. -
(a) 
On or before the fifteenth (15th) day of July each year, the local 
chief executive shall prepare an annual procurement program for 
the ensuing fiscal year which shall contain an itemized list of the 
estimated quantity of supplies needed for such year, a complete 
description thereof as to kind, quality, estimated cost, and balance 
on hand: Provided, however, That the total estimated cost of the 
approved annual procurement program shall not exceed the total 
appropriations authorized for the acquisition of supplies. The local 
governments may augment the supplies and equipment provided 
by the Supreme Court to the lower courts located in their respective 
jurisdictions. 


(b) 
Expept in emergency cases or where urgent indispensable needs 
could not have been reasonably anticipated, no purchase of 
supplies shall be made unless included in, or covered by, the 
approved procurement program. 
(c) 
The conversion of excess cash into supplies stock is hereby 
prohibited except to the extent of the kind and quantity specified in 
the approved annual procurement plan. 
(d) 
Every officer primarily accountable for government property shall 
keep a complete record of all properties under his charge and 
render his accounts therefore semi annually to the provincial or city 
general services officer or the rnunicipal rnayor or punong 
barangay, as the case may be. 
SEC. 485. 
Responsibility for Proper Use and Care of Government 
Property. - The person in actual physical possession of government property or 
entrusted with its custody and control shall be responsible for its proper use and 
case and shall exercise due diligence in the utilization and safekeeping thereof. 
SEC. 486. Measure of Liability of Persons Accountable for Government 
Property-
(a) 
(b) 
(c) 
The' person immediately accountable for government property shall 
be liable for its money value in case of the illegal, improper or 
unauthorized use or misapplk;ation thereof, by himself or any other 
person for whose acts he may be responsible, and he shall be 
liable for all loss, damage, or deterioration occasioned by 
negligence in the keeping or use of such property unless it is 
proved that he has exercised due diligence and care in the 
utilization and safekeeping thereof. 
Unless he registers his objection in writing, an accountable person 
shall not be relieved from liability by reason of his having acted 
under the direction of a superior officer in using property with which 
he is chargeable; but the officer directing any illegal, unauthorized 
or improper use of property shall first be required to answer 
therefore. 
In cases of loss, damage, or deterioration of government property 
arising from, or attributable to, negligence in security, the head of 
the security agency shall be held liable therefore. 
SEC. 487. 
Credit for Loss Occurring in Transit or Due to Casualty. -
When a loss of government property occurs while the same is in transit or is 
caused by fire, theft, force majeure. or other casualty. the officer accountable 
therefore or having custody thereof shall immediately notify the provincial or city 
auditor concerned within thirty (30) days from the date the loss occurred or for 
such longer period as the provincial. city, or municipal auditor. as the case may 
be. may in the particular case allow. and he shall present his application for relief, 
with the available evidence in support thereof. An officer who fails to comply with 
this requirement shall not be relieved of liability or allowed credit for any such 
loss in the settlement of his accounts. 
A provincial, city or municipal auditor shall not allow credit for these losses 
unless so expressly authorized by the Chairman of the Commission on Audit, to 
be exercised only if the loss is not in excess of fifty thousand (PhP 50,000.00). In 
any case when the allowance of credit is not within the competence of the 
provincial. city or municipal auditor, the application and evidence, with the 


recommendation of the auditor concemed, shall be forwarded to the Chairman of 
the Commission on Audit for his appropriate action. 
SEC. 488. Property Disposal. - When property of any local government 
has become unserviceable for any cause or is no longer needed, it shall, upon 
application of the officer accountable therefore, be inspected and appraised by 
the provincial, city or municipal auditor, as the case may be, or his duly 
authorized representative or that of the Commission on Audit and, if found 
valueless or unusable, shall be destroyed in the presence of the inspecting 
officer. 
If found valuable, the same shall be sold at public auction to the highest 
bidder under the supervision of the committee on awards and in the presence of 
the provincial, city or municipal auditor or his duly authorized representative. 
Notice of the public auction shall be posted in at least three (3) publicly 
accessible and conspicuous places, and if the acquisition cost exceeds one 
hundred thousand pesos (PhP 10,000.00) in the case of provinces and cities, 
and fifty thousand (PhP 50,000.00) in the case of municipalities, notice of auction 
shall be published at least two (2) timeS within a reasonable period in a 
newspaper of general circulation in the locality. 
SEC. 489. Negotiated Sale of Property - Property no longer needed may 
also be disposed of at a private sale at such price as may be determined by the 
committee on awards, subject to the approval of the Commission on Audit or its 
duly authorized representative when the acquisition or transfer cost of the 
property exceeds fifty thousand pesos (PhP 50,000.00) in the case of provinces 
and cities, and twenty five thousand (PhP 25,000.00) in the case of municipalities 
and barangays. 
In case of real property, the disposal shall be subject to the approval of the 
Commission on Audit regardless of the value or cost involved. 
SEC. 490. 
Transfer Without Cost. -
Property, which has become 
unserviceable or is no longer needed, may be transferred without cost to another 
office, agency, subdivision, or instrumentality of the national government or 
another local government at an appraised valuation determined by the local 
committee on awards. 
Such transfer shall be subject to the approval of the 
sanggunian concerned making the transfer and by the head of the office, agency, 
subdivision, instrumentality or local government receiving the property. 
SEC. 491. 
Tax Exemption Privileges of Local Governments. -
Local 
governments shall be exempt from the payment of duties and taxes for the 
importation of heavy equipment or machineries which shall be used for the 
construction, improvement, repair, and maintenance of roads, bridges and other 
infrastructure projects, as well as garbage trucks, fire trucks, and other similar 
equipment: Provided, however, that such equipment or machineries shall not be 
disposed of, either by public auction or negotiated sale as hereinabove provided, 
within five (5) years from the importation thereof. 
In case the machinery or 
eqUipment is sold within the five-year period, the purchasers or recipients shall 
be considered the importers thereof, and shall be liable for duties and taxes 
computed on the book value of such importation. 


SEC. 492. Implementing Rules and Regulations. - Within one (1) year 
after the effectivity of this act, the Chairman of the Commission on Audit, jointly 
with the chairman of the Regional Government elected by a majority vote of all 
the chairman of the Regional Governments in the entire country, shall review the 
exiting rules and regulat.ions governing property and supply management in the 
local governments and promulgate the rules and regulations necessary to 
effectively implement the provisions of this Title' and install an efficient, effective 
and transparent property and supply management system: 
Provided, That 
pending the promulgation of such rules and regulations the existing laws, rules 
and regulations shall continue to apply. 
Chapter 7 
Local Government Bank of the Philippines 
SEC. 493. Creation. - The "Local government Bank of the Philippines", 
hereinafter referred to as the Bank, is hereby established. The Bank shall be a 
body corporate and shall exist for a period of fifty (50) years. 
The primary purposes of the Bank are to provide efficient and responsive 
general banking services to local governments and to maximize the grant to them 
of loans, credits and other forms of indebtedness out of its loanable funds to 
finance local infrastructure and other socio-economic development projects as 
well as to stabilize local finances pursuant to Chapter Four, this Title: Provided, 
however, That the pursuit of these objectives shall be undertaken within the 
context of a financially viable and stable banking institution. 
The Bank's prinCipal office and place of business shall be in the national 
capital region, also known as Metro Manila. It may open and maintain branches, 
agencies, or other offices at such places in the Philippines as its Board of 
Directors may deem advisable with the approvable of the Monetary Board of the 
Bangko Sentral ng Pilipinas hereafter referred to as Bangko Sentral. 
SEC. 494. Corporate Powers. - The Bank shall have the power: 
(a) 
To adopt, amend, or change its by-laws, to determine its operating 
policies, and to issue sucil rules and regulations as may be 
necessary to achieve the main purpose for the creation of the Bank; 
(b) 
To adopt alter and use a corporate seal; 
(c) 
To acquire and own real and personal property, and to sell, 
mortgage or otherwise dispose of the same; 
(d) 
To hold, own, purchase, acquire, sell or otherwise invest or re-
invest in stocks, bonds, or other. securities capable of giving the 
bank a reasonably assured income to augment its loanable fund; 
(e) 
To act as official depository of local government funds pursuant to 
the provisions of this Code; 
(f) 
To accept savings and time deposits from the public in areas where 
facilities for such a service do not exist or can not be adequately 
provided by other deposit institutions under the supervision of the 
monetary board of the Bangko Sentral; 
(g) 
To sue and be sued, make contracts and borrow money from both 
local and foreign sources. Such loans shall be subject to approval 
by the President of the Philippines and fully guaranteed by the 
government of the Philippines. 


SEC. 495. Capital - The capital of the Bank shall be fifty billion pesos 
(PHP 50,000,000,000.00) to be fully subscribed by the government of the 
Republic of the Philippines, hereafter referred to as the government. Ten billion 
pesos (phP 10,000,000,000.00) shall be fully paid for by the government upon 
effectivity of this act and the balance to be paid for within a period of two (2) 
years from the effectivity of this action in such manner and from as the 
government, through the Secretary of Finance and the Secretary of Budget and 
Management, may thereafter determine. 
SEC. 496. Issuance of Bonds. - Tile Bank may issue all kinds of bonds, 
debentures and securities, and/or the renewal or refunding thereof (hereinafter 
called "bonds"), within and/or outside the Philippines, at such terms, rates and 
conditions as the board of directors of the Bank may determine, subject to 
compliance with the provisions of applicable law, and rules and regulations 
promulgated by the Monetary Board. 
The Bank shall provide for appropriate reserves for the redemption or 
retirement of the bonds. These bonds and other obligations shall be redeemable 
at the option of the Bank at or before maturity and in such manner as may be 
stipulated therein and shall bear such rate of interest as may be fixed by the 
Bank. 
Such obligations shall be secured by the assets of the Bank, including the 
stocks, bonds, debentures, and other securities purchased or held by it under the 
provisions of this Code, these bonds and debentures may be long-term, medium-
term, or short-term, with fixed interest rate or floating interest rate. 
SEC. 497. Board of Directors - Composition - Tenure - Per Diems. - The 
affairs and business of the bank shall be directed and it's properties managed 
and preserved and its corporate powers exercised, by a board of directors 
consisting of nine (9) members, to be appointed by the President of the 
Philippines. The term of office of the chairman, vice-chairman, and the members 
of the board of directors shall designate a temporary chairman from among its 
members. 
No person shall be elected director of the Bank unless he is a natural born 
citizen of the Philippines, not less than thirty-five (35) years of age, of good moral 
character and has attained proficiency, expertise and recognized competence in 
one or more of the following: 
banking, finance, economics, law, agriculture, 
business management, public utility or government administration. 
Except for the chairman and the vice-chairman of the board, no officer or 
employee of the Bank may be appointed as a member of the board of directors of 
the Bank; nor shall any director officer, or employee of any other Bank be eligible 
as a member of the board of directors of the Bank. Unless otherwise set by the 
board and approved by the President of the Philippines, members of the board 
shall be paid a per diem of five thousand pesos (PhP 5,000.00) for each meeting 
of the board of directors actually attended. Provided, that the total amount of per 
diems for every single month shall not exceed the sum of fifty thousand pesos 
(PhP 50,000.00). 
SEC. 498. Duties and Powers of the Board of Directors. - The board of 
directors shall have, among others the following duties, powers and authority: 


(a) To formulate policies necessary to carry out effectively the 
provisions of this Code and to prescribe, amend, and repeal by-
laws, rules and regulations for the effective operation of the 
Bank, and the manner in which the general business of the 
Bank may be conducted and the powers granted by law to the 
Bank exercised. 
(b) To approve loans, to fix rates of interest on loans and to 
prescribe such terms and conditions for loans and credits as 
may be deemed necessary, consistent with the provisions of 
this Code; Provided, that. the board may delegate the authority 
. to approve loans to such officer or officers as may be deemed 
necessary; 
(c) To adopt an annual budget for the effective operation and 
administration of the Bank; 
(d) To create and establish a "provident fund" which shall consist of 
contributors, made both by the Bank and its officers or 
employees, to a common fund for the payment of benefits to 
such officers or employees, or their heirs, under such terms 
and conditions as the board of directors may fix; 
(e) To compromise or release, in whole or in part any claim of or 
settled liability to the Bank regardless of the amount involved, 
under such terms and conditions it may impose to protect the 
interest of the bank; and 
(f) To appoint, promote or remove officers from the rank of the 
vice president or its equivalent, and other more senior officer 
positions, excluding the chairman and vice-chairman. 
SEC. 499. Chairman and Chief Executive Officer. - The chairman shall 
be the chief executive officer of the bank and, as such, shall, on behalf of the 
board have the direction and control of tho business affairs and properties of the 
bank in all matters which are not by this Code or by the by-laws of the bank 
specifically reserVed to be done by the board or other officers of the bank. For 
this purpose, he shall, among other powers and duties, execute, carry out, and 
administer the policies, measures, orders and resolutions approved by the board; 
direct and supervise the operation and administration of the Bank; Exercise such 
other powers and perform such other function or duties as may be directed or 
assigned to him by law or by the board from time to time. 
Particularly, he shall have the power and duty: 
(a) To sign and execute all contracts concluded by the Bank and other into 
all necessary obligations required or permitted by this Code, upon 
proper authorization by the board; and sign all notes, securities, 
certificates, and other major documents of the Bank; 
(b) To exercise, as chief executive officer or the Bank, the powers of 
control and supervision over decisions and actions of subordinate 
officers and all other powers that may be granted by the board; 
(c) To report to the board the main facts concerning the operations of the 
Bank. and. to recommend changes in policies which he may deem 
advisable; 
(d) To SUbmit an annual report to the President of the Philippines on the 
result of the operations of the Bank; 
(e) To recommend to the board of appointment, promotion, or removal of 
all officers of the Bank, with the rank of at least vice president or its 
equivalent; 


(f) To appoint, promote or remove employees and officers below the rank 
of vice president or its equivalent; provided, that promotions, transfers, 
assignments or reassignments of officers and personnel of the Bank 
are personnel actions deemed rnade in the interest of the service and 
not disciplinary, any provisions of the civil service law to the contrary 
notwithstanding; and 
(g) As required by circumstances, to delegate any of his powers, duties or 
functions to any officer or director of the Bank, with the approval of the 
board. 
SEC. 500. 
Vice-Chairman and Chief Operating Officer. -
The vice-
chairman shall be the chief operating officer of the Bank and shall assume and 
exercise such specific duties and responsibilities as may be delegated to him by 
the Chairman. 
SEC. 501. Auditor. - The Chairman of the Commission on Audit shall be 
the ex-officio auditor of the Bank and shall appoint a representative, who shall be 
the auditor in charge of the auditing office of the Bank. The Commission on Audit 
Chairman shall, upon the recommendation of the auditor of the Bank, appoint or 
remove the personnel of the auditing office. 
The compensation, budget and 
operating expenses of the auditing office and the salaries and traveling expenses 
of the officers and employees thereof shall be fixed by the board of trustees and 
paid by the Bank notwithstanding any provision of law to the contrary. 
SEC. 502. 
Legal Matters and Cases. - The Bank have its own legal 
department, the head of which shall be appointed by the board of directors of the 
Bank upon recommendation of the Chairman. 
In appropriate cases, the Bank may avail also of the legal services of any 
government legal office authorized to render such services to government-owned 
or controlled co~porations. 
The Bank may, upon the recommendation of its chief legal counsel, 
deputize any member of its legal staff to act as special sheriff in foreclosure 
cases, in the sale or attachment of the debtor's properties, and in the 
enforcement of court writs and processed in cases involving the Bank. 
The 
special sheriff of the Bank shall make a report to the proper court after any action 
taken by him, which shall treat such action as if it were an act of its own sheriffs 
in all respects. 
SEC. 503. Other Officers and Employees. - The board of directors shall 
provide for an organization and staff of officers and employees of the Bank and 
upon recommendation of the chairman of the board, fixes their remunerations 
and other emoluments. 
No officer or employee of the Bank subject to civil 
service law shall be dismissed except as pmvided by law. 
SEC. 504. Exemption from Attachment. - The provisions of any law to the 
contrary notwithstanding, securities on loans and/or other accommodations 
granted by the Bank or its predecessors-in-interest shall not be subject to the 
attachment, execution or any other court process, nor shall they be included in 
the property of insolvent persons or institutions, unless all debts and obligation of 
the debtor to the Bank and its predecessors-in-interest have been previously 


paid, including accrued interest, penalties, collection expenses, and other 
charges. 
SEC. 505. 
Officer to Conduct Sale. -
In case of sale of mortgaged 
properties under the provisions of existing laws or of this Code, such sale shall 
be conducted under the direction of the sheriff of the province or any special 
sheriff of the Bank, or of a municipal judge or notary public of the city or 
municipality where the sale is to be made, who shall be entitled to collect the fees 
provided for in the rules of court with respect to sale of properties under 
execution. 
SEC. 506. Right of Redemption. - Any mortgagor of the Bank whose real 
property has been extra judicially sold at public auction shall, within one(1) year 
counted from the date of registration of the certificate of sale, have the right to 
redeem the real property by paying to the Bank all of the latter's claims against 
him, as determined by the Bank. 
. 
The Bank may take possession of the foreclosed property during the 
redemption period. When the Bank takes possession during such period, it shall 
be entitled to the fruits of the property with no obligation to account for them, the 
same being considered compensation. for the interest that would otherwise 
accrue on the account. Neither shall the Bank be obliged to post a bond for the 
purpose of such possession. 
SEC. 507. 
Inhibition from Board Meeting of Member with Personal 
Interest. - Whenever any member attending a meeting of the board of directors 
has a direct personal interest in the discussion or resolution of any given matter, 
or any of his relatives within the second civil degree of consanguinity or second 
civil degree of affinity has such an interest, said member shall nor participate in 
the discussion or resolution of the matter and must retire from the meeting during 
the deliberation thereon. 
The minutes of the meeting, which shall note the 
subject matter, when resolved, the fact that a member had a personal interest in 
it, and the withdrawal of the member concerned may be made available to the 
public. 
For this purpose, the members of the board, shall at the beginning of their 
respective terms, disclose to the board any and all interests they may have in 
any corporation, partnership or association and shall, thereafter, disclose to the 
board, any changes thereto. 
SEC. 508. Prohibition on Persons With Personal Interest. - No member 
of the board, officer, attorney, agent or employee of the Bank shall in any 
manner, directly or indirectly participate in the deliberation upon or the 
determination of any question affecting his direct personal interest or the 
personal interests of his relatives within the second civil degree of consanguinity 
or second civil degree of affinity, or of any corporation, partnership, or 
association in which he has a direct interest. Any person violating the provision 
of this section shall be summarily removed from office and shall upon conviction 
be punished with a fine no less than one thousand peso (PhP 1,000.00) nor more 
than ten thousand pesos (PhP 10,000.00) or with imprisonment of not less than 
one (1) year nor more than five (5) years, or by both fine and imprisonment at the 
discretion of the court. 


SEC. 509. Borrowings by Directors, Officers and Employees-Restriction 
and Limitations. -
No director or officer or employee of the Bank or any 
corporation, partnership, or company wherein any member of the board of 
directors, officer or employee, and/or their respective immediate family is a 
controlling shareholder, or wherein he is a director or officer shall, either directly 
or indirectly, for himself or as representative or agent of others, borrow any of the 
deposits of funds from the Bank, nor shall he become a guarantor, endorser, or 
surety for loans from the Bank to others, or in any manner be an obligor for 
money borrowed from the Bank or loaned by it: Provided, That this prohibition on 
loans to directors, officers and employees shall not include loans allowed in the 
form of fringe benefits granted in accordance with rules and regulations as may 
be prescribed by the monetary board of the Bangko Sentral. 
SEC. 510. Rules and Regulations on Conflict of Interest. - The foregoing 
provisions notwithstanding and in addition thereto, the board of directors is 
hereby authorized to issue rules and regUlations for the purpose of determining 
and resolving conflict of interest questions, which rules shall, in particular, include 
the requirement on all officers and employees of the Bank to disclose any 
shareholdings they, or their relatives within the second civil degree of 
consanguinity or ,secondciviJ degree of affinity, may have in any corporation, 
partnership or company. 
SEC. 511. 
Examination of the Bank. - The Bank shall be subject to 
supervision and examination by the appropriate department of the Bangko 
Sentral. 
SEC. 512. Prohibition on Officers and Employees of the Bank. - Except 
as required by law, or upon order of a court of competent jurisdiction, or the 
express order of the president of the Philippines or written permission of the 
client, no officer or employee of the Bank shall reveal to nor allow to be 
examined, inquired, or looked into, by any third person, government official, 
bureau or office any information relative to details of individual accounts or 
specific banking transactions: Provided, That in respect to deposits of whatever 
nature, the provisions of existing law shall apply. 
This prohibition shall not apply to the :exchange of confidential credit 
information among government financial institutions or among banks, in 
accordance with established banking practices or as may be allowed by law. 
SEC. 513. 
Exaction of Fee, CommiSSion, Gifts or Charge. -
No 
unauthorized fee, commission, gift or charge of any kind shall be exacted, 
demanded or paid for obtaining loans from the Bank, and any officer, employee, 
or agent of the Bank found guilty of exacting, demanding or receiving any fee for 
services in obtaining a loan, shall be punished by a fine of not less than one 
thousand pesos (PhP 1,000.00) nor more than twenty thousand pesos (PhP 
20,000.00), imprisonment for not less than one (1) year nor more than ten (10) 
years and perpetual disqualification from public office. 
SEC. 514. General Penal Provisions. - Any officer or employee of the 
Bank who violates, or permits any of the officers, employees or agents of said 
Bank or any other person to violate, any of the provisions of this Code not 
specifically punished in the preceding sections, and any person violating any 


provIsion of this Code or aiding and abetting the violation thereof, shall be 
punished with a fine not less than one thousand pesos (PhP 1,000.00) nor more 
than ten thousand pesos (PhP 10,000.00) and with imprisonment not less than 
one (1) year nor more than five (5) years. 
SEC. 515. Other Liability of Guilty Officer or Employee. - Any member of 
the board of directors or officer or employee of the bank who willfully violates any 
of the provisions of this Code shall, in addition to the criminal and administrative 
liability resulting from such act, be held liable for any loss or injury suffered by the 
Bank as a result of such violation. 
SEC. 516. 
Liability of Directors Officers or Partners of Offending 
Corporation or Partnership. - If the violation of the provisions of this Code is 
committed by a corporation or partnership, the directors, officers or partners 
thereof who participated in the violation shall be criminally liable to such violation. 
SEC. 517. Bank Autonomy - The Bank shall not be subject to the laws 
and regulations governing banks and other financial institutions of whatever type 
except with respect to the receipt of savings and time deposits in accordance 
with Section 4!:18 of this Code, in which case the legal reserves and other 
requirements prescribed by the Bangko Sentral for such deposits apply. The 
Bank shall be operated as an autonomous body and shall be under the 
supervision of the Bangko Sentral. 
SEC. 518. 
Tax Exemption. -
The operations, as well as holdings, 
equipment, property, income and eamings of the Bank from whatever sources 
shall be exempt from taxation. 
SEC. 519. Organization of Bank. - Upon effectivity of this act, the board 
of directors of the Bank shall be constituted and its chairman appointed. The 
chairman is hereby authorized, subject to the approval of the board of directors, 
to issue such orders, rules and regulations, and undertake such actions as may 
be necessary to organize the Bank and make it necessary to organize the Bank 
and make it operational within one (1) year from the date that his Act takes effect. 
Title Ten. 
Miscellaneous and Final Provisions 
Chapter 1 
Penal Provisions 
SEC. 520. Failure to Post and Publish the Itemized Monthly Col/ections 
and Disbursements. - The itemized monthly collections and disbursements of the 
local government concerned shall be posted within ten (10) days following the 
end of every month and for at least two (2) consecutive weeks at prominent 
places in the main office building of the local government concerned, its plaza 
and main street. Said itemization shall be published in a newspaper of general 
circulation, where available, in the territorial jurisdiction of such unit in case the 
local treasurer or whoever is in-charged with the duty of posting and publishing 


the same, shall be punished by a fine not exceeding one (1) month, or both such 
fine and imprisonment, at the discretion of the court. 
SEC. 521. 
Omission of Property from Assessment or Tax Rolls by 
Officers and Other Acts. - Any officer charged with the duty of assessing real 
property who willfully fails to assess, or who intentionally omits from the 
assessment or tax roll any real property which he knows to be taxable, or who 
willfully or negligently under assesses any real property, or who intentionally 
violates or fails to perform any duty imposed upon him by law relating to the 
assessment of taxable real property shall, upon conviction, be punished by a fine 
of not less than one thousand pesos (PhP 1,000.00) nor more than five thousand 
pesos (PhP 5,000.00), or by imprisonment of not less than one (1) month nor 
more than six (6) months, or both such fine and imprisonment, at the discretion of 
the court. 
The same penalty shall be imposed upon any officer charged with the duty 
of collecting the tax due on real property who willfully or negligently fails to collect 
the tax and institute the necessary proceedings for the collection of the same. 
Any other officer required by this Law to perform acts relating to the 
administration of the real property tax or to assist the assessor or treasurer in 
such administration, who willfully fails to discharge such duties shall, upon 
conviction be punished by a fine of not less than five hundred pesos (PhP 
500.00) more than five thousand pesos (PhP 5,000.00) or imprisonment of not 
less than one (1) month nor more than six (6) months, or both such fine and 
imprisonment, at the discretion of the court. 
SEC. 522. Govemment Agents Delaying Assessment of Real Property 
and Assessment Appeals -
Any government official who intentionally and 
deliberately delays the assessment of real property or the filing of any appeal 
against its assessment shall, upon conviction, be punished by a fine of not less 
than five hundred pesos (PhP 500.00) nOI· more than five thousand pesos (PhP 
5,000.00), or by imprisonment of not less than one (1) month nor more than six 
(6) months, or both such fine and imprisonment, at the discretion of the court. 
SEC. 523. 
Failure to Dispose of Delinquent Real Property at Public 
Auction. - The local treasurer concerned who fails to dispose of delinquent real 
property at public auction in compliance with the pertinent provisions of this 
Code, and any other local government official whose acts hinder the prompt 
disposition of delinquent real property at public auction shall, upon conviction, be 
subject 0 a fine of not less than one thousand pesos (PhP 1,000.00) nor more 
than five thousand pesos (PhP 5,000.00), or imprisonment of not less than one 
(1) month nor more than six (6) months, or both such fine and imprisonment, at 
the discretion of the court. 
Chapter 2 
Provisions for Implementation 
SEC. 524. 
Personnel Retirement and/or Benefits. -
Any official or 
employee of the national government or local government who is separated from 
the service as a result or reorganization eff(;cted under this Code shall, if entitled 
under the laws then in force, receive the retirement and other benefits accruing 


hereunder. Provided, however, that such benefits shall be given funding priority 
by the Department of Budget and Management in the case of national officials 
and employees, and the local government concerned in the case of local officials 
and employees. 
Where the employee concerned is 110t eligible for retirement, he shall be 
entitled to a gratuity from the national government or the local government 
concerned, as the case may be, in an amount not lower than one (1) month 
salary for every year or service over the above the monetary value of the leave 
credits said employee is entitled to receive under the existing laws. 
SEC. 525. Inventory of Infrastructure and Other Community Facilities. -
(a) Each local government shall conduct a periodic inventory of 
infrastructure and other community facilities and undertake the 
maintenance, repair, and improvement, or reconstruction of these 
facilities through a closer cooperation among the various agencies of 
the national govemment operating within the province, city or 
municipality concerned. 
(b) No infrastructure or community project within the territorial jurisdiction 
of any local government shall be undertaken without informing the 
local chief executive and the sanggunian concerned. 
SEC. 526. Records and Properties. - All records, equipment, buildings, 
facilities, and other properties of any office or body of a local government 
abolished or reorganize'd under this Code shall be transferred to the office or 
body to which· its powers, functions, and responsibilities are substantially 
devolved. 
SEC. 527. Implementing Rules and Regulations of this Code. - To carry 
out the purpose or purposes of this act, the President of the Philippines shall 
issue such rules and regulations as may be necessary. 
In doing so, the 
President may constitute and avail of the services of a committee, which will 
assist in the formulation of the rules and regulations to be known as the National 
Decentralization Committee (NDC). It shall be composed of the secretaries or 
heads of the Department or the Interior and Local Government, Department of 
Budget and Management, Department of Finance, and the respective presidents 
of the Leagues of Provinces, Cities and Municipalities as well as Barangays. The 
committee may seek the assistance of government agencies, academe and other 
institutions in the performance of their task which can promote effective local 
governance. 
Chapter 3 
Transitory Provisions 
SEC. 528. 
Deconcentration of Requisite Authority and Power. -
The 
national government shall, immediately, effect the deconcentration of requisite 
authority and power to the appropriate Reqional Governments. 
SEC. 529. Debt Relief for Local Governments. -


(a) Unremitted national collections and statutory contributions. - All debts 
owned by local governments to the national government in unremitted 
contributions to the integrated National Police Fund, the Special 
Education Fund, and other statutory contributions as well as in 
unremitted national government shares of taxes, charges, and fees 
collected by the local governments, are hereby written off in full. 
(b) Program loans. -
(1) Program loans secured by local governments which were relent 
to private persons, natural or juridical, shall likewise be written 
off from the books of the local governments concerned: 
Provided, however, that the national government agency tasked 
. with the implementation of these programs shall continue to 
collect from the debtors belonging to the private sector 
concerned. 
(2) Program loans granted to local governments by national 
government agencies and which were utilized by the local units 
for community written off in full. 
(c) Settlement of debts due to government financing institutions (GFls), 
government-owned and controlled corporation (GOCCs), or contracted 
by local governments frorn GFls, GOCCs, and private utilities that are 
outstanding as of December 31, 1988, in accordance with the following 
schemes: 
(1) Debts due GFls. -
The national government may buy 
outstanding obligations incurred by local governments from 
government financing institutions at a discounted rate. 
(2) Debts due GOCCs. - The national government may settle such 
obligations at discounted rate through offsetting, only to the 
extent of the obligations of local governments against the 
outstanding advances made by the National Treasury in behalf 
of the government-owned and controlled corporation concerned. 
(3) Debts due Private utilities. -
The national government may 
settle these obligations at a discounted rate by offsetting against 
the 
outstanding 
obligations 
of such 
private 
utilities to 
government-owned corporations. 
GOCCs may in turn offset 
these obligations against the outstanding advances made by 
the National Treasury in their behalf. 
In the case of obligations owed by the local governments to private 
utilities, which are not indebted to any GOCC or national government agency, the 
national government may instead buy the obligations of the local governments 
from the private utilities at a discounted rate, upon concurrence by the private 
utilities concerned. 
(d) Limitations. - Obligations to the Home Development and Mutual Fund 
(PAG-IBIG), Medicare, and those pertaining to premium contributions 
and amortization payments of salary and policy loans to the 
Government Service Insurance System are excluded from the 
coverage of this Section. 
(e) Recovery schemes for the national government. - Local governments 
shall pay back the national government whatever amounts were 
advanced or offset by the national governmeot to settle their 
obligations to GFls, GOCCs, and private utilities. 
The national 
government shall not charge interest or penalties on the outstanding 
balance owed by the local governments. 


These outstanding obligations shall be restructured and an amortization 
schedule prepared, based on the capability of the local government to pay, taking 
into consideration the amount owed to the national government. 
The national government is hereby authorized to deduct from the quarterly 
share of each local government in the internal revenue collections an amount to 
be determined on the basis of the amortization schedule of the local unit 
concerned: Provided, That such amount shall not exceed five percent (5%) of 
the monthly internal revenue allotment of the local government concerned. 
As incentive to debtor-local governments to increase the efficiency of their 
fiscal administration, the national government shall write off the debt of the local 
government concerned at the rate of five percent (5%0 for every one percent 
(1%) increase in revenues generated by such local government over that of the 
preceding year. For this purpose, the annual increase in local revenue collection 
shall be computed starting from the year 1988. 
(f) Appropriations. - Such arnount as may be necessary to implement the 
provisions of this Section shall be included in the annual General 
Appropriations Act. 
Chapter 4 
Final' Provisions 
SEC. 530. Repealing Clause. - Except as otherwise herein provided, all 
laws, acts, city charters, decrees, executive orders, proclamations and 
administrative rules and regulations or part or parts thereof which are in conflict 
or inconsistent with this Act (Code) are hereby repealed or modified accordingly. 
Until otherwise provided by law, nothing in this Act (code) shall be 
understood to amend or repeal the provisions of Republic Act No. 6734, as 
amended, otherwise known as the Organic Act for Autonomous Region in Muslim 
Mindanao. 
' 
SEC. 531. Separability Clause. - If, for any reason or reasons, any part or 
provisions of this Act shall be held invalid or unconstitutional, other parts or 
provisions hereof which are not affected shall continue to be in full force and 
effect. 
SEC. 532. 
Effectivity Clause. - Tilis Act (Code) shall take effect one 
month after the approval and its publication in the Official Gazette. 
It shall 
likewise be published in two newspapers of general circulation. 
Approved,