EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
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S E N A T E
S. B. No. 842
*19 
JUL31 
P4 -06
Introduced by Senator SONNY ANGARA
RELEi’ /.U  L>V.
AN ACT
TO REDUCE THE COST OF DOING BUSINESS IN  LOCAL GOVERNMENT 
UNITS BY AM ENDING  CERTAIN PRO VISIO NS IN  BOOK I I  OF REPUBLIC 
ACT NO. 71 60 , OTHERW ISE KNOWN AS THE "LOCAL GOVERNMENT CODE 
OF 1 9 9 1 "
EXPLANATORY NOTE
One of the key objectives of the Local Government Code (Republic Act 7160) 
was to provide LGUs greater means to create their own revenue sources. Over the 
years and in a number of local governments, the pursuit of this objective has been in 
conflict with attracting and maintaining private investment. Many private businesses 
complain that the fees imposed by LGUs have raised the cost of doing business, 
thereby reducing their profitability and their viability.
LGUs unlikely impose high fees and charges with the intent of taxing 
businesses out of existence. But in many cases, LGUs lack the guidance on how to 
fairly and efficiently determine what should be imposed (fee or charge).
With this in mind, this bill mandates the Department of Finance (DOF) thru 
the Bureau of Local Government Finance to be the principal agency in charge of 
providing clear guidelines in the setting of local fees and charges, which LGUs should 
then incorporate in their impositions. Such reform will raise LGU competitiveness and 
strike a healthy balance between revenue generation and private business 
promotion.
In view of the foregoing, approval of this bill is earnestly requested.
SOfJNY ANGARA


EIGHTEENTH CONGRESS OF THE
)
REPUBLIC OF THE PHIUPPINES
)
First Regular Session
)
(prMf ct tijc ft'i-vutnrp
•V' '
S E N A T E
•19 
J'JI. 31 
P 4 :06
S. B. No. 
« 4 ?
Introduced by Senator SONNY ANGARA
AN ACT
TO REDUCE THE COST OF DOING BUSINESS IN  LOCAL GOVERNMENT 
U NITS BY AM ENDING  CERTAIN PRO VISIO NS IN  BOOK I I  OF REPUBLIC 
ACT NO. 7160, OTHERW ISE KNOWN AS THE "LOCAL GOVERNMENT CODE 
OF 1 9 91 "
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
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Section 1. Section 131 of Republic Act No. 7160, otherwise known as the
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Local Government Code of 1991, hereinafter referred to as the "Code", is hereby
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amended to read as follows:
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"Sec. 131. Definition o f Terms. -  When used in this Title, the term:
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(a)X X X
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XXX
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(g) [ "Charges" refer to pecuniary liability, as rents or fees against
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persons or preperty] "CHARGE" REFERS TO L IA B IL IT Y  FOR
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SERVICES RENDERED OR CONVENIENCES PROVIDED BY THE
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LOCAL GOVERNMENT U N IT, THE AMOUNT OF W H IC H  SHOULD
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BE 
COMMENSURATE 
TO 
SUCH 
SERVICES 
AND 
CAPITAL
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RECOVERY W H IC H  ENSURES CONTINUED DELIVERY;
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(h) X X X
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XXX
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(I) "Fee" [means-a-ehorge fixed by law or ordinanee-fer the regulotion
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ef^inspeet ion ■ of- a -business- er-aetivity] REFERS TO A L IA B IL IT Y


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IM POSED FOR THE 
REGULATION 
OR INSPECTIO N OF A 
BUSINESS OR A C TIV ITY  THE AM OUNT OF W H IC H  SHOULD BE 
COMMENSURATE 
TO 
THE 
A D M IN IS TR A TIV E  
COST 
OF 
REGULATION AND SURVEILLANCE;
(m) XXX
XXX."
Sec. 2. Section 147 of the Code is hereby amended to read as follows: 
"Sec. 147. MUNICIPAL Fees and Charges. -  The municipality may 
impose and collect such reasonable fees and charges FOR SERVICES 
RENDERED OR CONVENIENCES PROVIDED on business and 
occupation and, except as reserved to the province in Section 139 of 
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 AND SUBJECT TO GUIDELINES TO BE 
PROVIDED BY THE BUREAU OF LOCAL GOVERNMENT FINANCE 
OF THE DEPARTMENT OF FINANCE, IN  CONSULTATION W ITH  
THE LEAGUE OF M U N IC IP A LIT IE S  OF THE P H ILIP P IN E S , ON 
THE SETTING OF LOCAL FEES TAKING  IN TO  CONSIDERATION 
THE RECOVERY OF A D M IN IS TR A TIV E  COSTS."
Sec. 3. Section 149 of the Code is hereby amended to read as follows: 
"Sec. 149. Fishery [Rentals ;] LICENSE Fees and RENTAL 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, mussel, or 
other aquatic beds or bangus fry areas, within a definite zone of the 
municipal waters, as determined by it AND LEVY RENTAL CHARGES 
FOR S AID  
PRIVILEGE 
SUBJECT TO 
G UIDELINES TO 
BE 
PROVIDED BY THE BUREAU OF LOCAL GOVERNMENT FINANCE 
OF THE DEPARTMENT OF FINANCE, THE DEPARTMENT OF THE


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ENVIRONMENT AND NATURAL RESOURCES, AND THE BUREAU 
OF 
FISHERIES 
AND 
AQUATIC 
RESOURCES 
OF 
THE 
DEPARTMENT OF AGRICULTURE, IN  CONSULTATION W ITH  
THE LEAGUE OF M U N IC IP A LITIE S  OF THE P H ILIP P IN E S , ON 
THE 
SETTING 
OF 
LOCAL 
CHARGES 
TAKING  
INTO  
CONSIDERATION 
THE 
COSTS 
OF 
SERVICES 
FOR 
THE 
ENVIRONMENTAL MAINTENANCE AND S U S TA IN A B ILITY  OF 
THE 
M U N IC IP A L WATERS COVERED 
BY THE 
PRIVILEGE: 
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 for the 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 licenses for the operation of fishing vessels of three (3) tons
or less for which purpose the Sangguniang Bayan shall promulgate 
rules and regulations regarding the issuances of such licenses to 
qualified applicants under existing laws AND LEVY FEES SUBJECT 
TO G UIDELINES TO BE PROVIDED BY THE BUREAU OF LOCAL 
GOVERNMENT FINANCE OF THE DEPARTMENT OF FINANCE, 
IN  CONSULTATION W ITH  THE LEAGUE OF M U N IC IP A LITIE S  
OF THE P H ILIP P IN E S , ON THE SETTING OF LOCAL FEES 
TAKING  
IN TO  
CONSIDERATION 
THE 
RECOVERY 
OF 
A D M IN IS TR A TIV E  
COSTS: 
Provided, 
however. 
That 
the
sangguniang concerned shall, by appropriate ordinance, penalize the 
use of explosives, noxious or poisonous substances, electricity, muro-


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ami, and other deleterious methods of fishing and prescribe a criminal 
penalty therefor in accordance with the provisions of this Code: 
Provided, finally. That the sanggunian concerned shall have the 
authority to prosecute any violation of the provisions of applicable 
fishery laws.
Sec. 4. Section 152 of the Code is hereby amended to read as follows: 
"Sec. 152. Scope o f Taxing Powers. -  The barangays may levy taxes, 
fees and charges, as provided in this Article, which shall exclusively 
accrue to them:
(a) Taxes -  On stores or retailers with fixed business establishments 
with gross sales or receipts of the preceding calendar year of Fifty 
thousand pesos (P50,000.00) or less, in the case of cities and Thirty 
thousand pesos (P30,000.00) or less, in the case of municipalities, at a 
rate not exceeding one percent (1% ) on such gross sales or receipts.
(b) [ Service Fees or] Charges -  Barangays may collect reasonable 
[ foes Of ]  charges for [ services rendered -  in-eenneetion w ith the 
regulatie n -e r] the use of barangay-owned properties or service 
facilities such as palay, copra or tobacco dryers SUBJECT TO 
G UIDELINES TO BE PROVIDED BY THE BUREAU OF LOCAL 
GOVERNMENT FINANCE OF THE DEPARTMENT OF FINANCE, 
IN  CONSULTATION W ITH  THE LIG A NG MGA BARANGAYS SA 
P IL IP IN A S , ON THE SETTING OF LOCAL CHARGES TAKING  
IN TO  CONSIDERATION THE RECOVERY OF, MAINTENANCE 
AND CAPITAL REPLACEMENT COSTS.
(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 sanggunian barangay may 
impose a 
reasonable fee SUBJECT TO G UIDELINES TO BE 
PROVIDED BY THE BUREAU OF LOCAL GOVERNMENT FINANCE 
OF THE DEPARTMENT OF FINANCE, IN  CONSULTATION W ITH  
THE 
LIG A 
NG 
MGA 
BARANGAY SA 
P ILIP IN A S , 
ON THE


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SETTING OF LOCAL FEES TAKING  IN TO  CONSIDERATION THE 
RECOVERY OF A D M IN IS TR A TIV E  COSTS. 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 [ m d -Charges] -  SUBJECT TO G UIDELINES TO BE 
PROVIDED BY THE BUREAU OF LOCAL GOVERNMENT FINANCE 
OF THE DEPARTMENT OF FINANCE, IN  CONSULTATION W ITH  
THE 
LIG A NG 
MGA 
BARANGAY SA 
P ILIP IN A S , 
ON THE 
SETTING OF LOCAL FEES TAKING  IN TO  CONSIDERATION THE 
RECOVERY OF A D M IN IS TR A TIV E  COSTS, [T ] The barangay may 
levy reasonable fees [and charges]:
(1 ) On commercial breeding of fighting cocks, cockfights and 
cockpits;
(2) On places of recreation which charge admission fees; and
(3) On 
billboards, 
signboards, 
neon 
signs, 
and 
outdoor 
advertisements."
Sec. 5. Section 153 of the Code is hereby amended to read as follows: 
"Sec. 
153. 
[Sem ee] OTHER Fees [o r] AND Charges. -  Local 
government units may impose and collect such reasonable fees and 
charges for services rendered SUBJECT TO G UIDELINES TO BE 
PROVIDED BY THE BUREAU OF LOCAL GOVERNMENT FINANCE 
OF THE DEPARTMENT OF FINANCE, IN  CONSULTATION W ITH  
THE APPROPRIATE LEAGUE OF THE LOCAL GOVERNMENT 
U N IT, ON THE SETTING OF LOCAL FEES AND CHARGES 
TAKING  
IN TO  
CONSIDERATION 
THE 
RECOVERY 
OF 
A D M IN IS TR A TIV E , 
CAPITAL, 
MAINTENANCE 
AND 
OTHER 
SERVICE DELIVERY COSTS."
Sec. 6. Section 154 of the Code is hereby amended to read as follows: 
"Sec. 154. Public Utility Charges. ~ Local government units may fix the 
rates for the operation of public utilities owned, operated and


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maintained 
by 
them 
within 
their 
jurisdiction 
SUBJECT 
TO
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G UIDELINES TO BE PROVIDED BY THE BUREAU OF LOCAL
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GOVERNMENT FINANCE OF THE DEPARTMENT OF FINANCE,
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IN  CONSULTATION W ITH  THE APPROPRIATE LEAGUE OF THE
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LOCAL GOVERNMENT U N IT, ON THE SETTING OF LOCAL
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CHARGES TAKING  IN TO  CONSIDERATION THE RECOVERY OF
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CAPITAL, MAINTENANCE AND OTHER SERVICE DELIVERY
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COSTS."
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Sec. 7. Section 155 of the Code is hereby amended to read as follows:
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"Sec. 155 Toll [ Fees or\ Charges. -  The sanggunian concerned may
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prescribe the terms and conditions and [fix ] SET the rates [ fe r-the
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impesifien-ef-tell fees or] ON charges IM POSED for the use of any
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public 
road, 
pier, 
or 
wharf, 
waterway, 
bridge, 
ferry 
or
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telecommunication system funded and constructed 
by the local
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government unit concerned SUBJECT TO G UIDELINES TO BE
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PROVIDED BY THE BUREAU OF LOCAL GOVERNMENT FINANCE
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OF THE DEPARTMENT OF FINANCE, IN  CONSULTATION W ITH
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THE APPROPRIATE LEAGUE OF THE LOCAL GOVERNMENT
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U N IT, ON THE SETTING OF LOCAL CHARGES TAKING  IN TO
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CONSIDERATION THE RECOVERY OF CAPITAL, MAINTENANCE
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AND OTHER SERVICE DELIVERY COSTS: Provided, That no such
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toll [ fees or] charges shall be collected from officers and enlisted men
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of the Armed Forces of the Philippines and members of the Philippine
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National Police on mission, post office personnel delivering mail,
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physically-handicapped, and disabled citizens who are sixty-five (65)
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years or older.
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When public safety and welfare so requires, the sanggunian
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concerned may discontinue the collection of the tolls, and thereafter
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the said facility shall be free and open for public use."
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Sec. 8. Ordinances Imposing Fees and Charges. -  All existing ordinances on
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the imposition of fees and charges of local government units shall continue to be in
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force and effect after the effectivity of this Act: Provided, That within two (2) years


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from the effectivity of this Act, the concerned local government unit shall enact an
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ordinance in compliance with the guidelines to be issued pursuant to this Act.
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Sec. 9. Separability Clause. -  If any portion or provision of this Act is
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subsequently declared invalid or unconstitutional, other provisions hereof which are
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not affected thereby shall remain in full force and effect.
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Sec. 10. Effectivity Clause. -  This Act shall take effect fifteen (15) days after
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its publication in the Official Gazette or in a newspaper of general circulation.
Approved,