Book4: Updated Local Treasury Operations Manual (Ltom)

UPDATED
LOCAL TREASURY OPERATIONS

MANUAL (LTOM)
Book4
Detailed Procedures, Reports and Forms on

Real Property Tax Business Tax, Fees and
Charges and Other Fund Sources
Updated Local Treasury Operations Manual (LTOM)
Bureau of Local Government Finance
Department of Finance
Copyright © Bureau of Local Government Finance, 2016

Telefax: (+632) - 522 - 8770 or 71
Wed: www.blgf.gov.ph
E-mail: blgf@blgf.gov.ph
Published by:
Bureau of Local Government Finance

Department of Finance
8th Floor, EDPC Bldg., BSP Complex
Roxas Blvd., Metro Manila
Philippines 1004
First Printing, 2008.

PHALTRA
2016 Revised Edition
All rights reserved.
No part of this book may be reproduced in any form or by any means without express permission
of the copyright owner and the publisher.
ISBN: 978-971-94098-8-5
Printed in the Philippines
Updated Local Treasury Operations Manual (LTOM) 2

ACRONYMS
ACR - Abstract of Collection Report

ADB - Asian Development Bank
ADP - Authority for Debit Payment
AGDB - Authorized Government Depository Bank
AJE - Adjusting Journal Entry
AO - Accountable Officer
AOM - Audit Observation Memorandum
APP - Annual Procurement Plan
ARMM - Autonomous Region in Muslim Mindanao
ARO - Allotment Release Order
BAC - Bids and Awards Committee
BEI - Board of Election Inspectors
BIR - Bureau of Internal Revenue
BLGF - Bureau of Local Government Finance
BLT - Build-Lease-and Transfer
BMBE - Barangay Micro Business Enterprises
BOO - Build-Own-and Operate
BOT - Build-Operate-and Transfer
BRK - Barangay Record Keeper
BSP - Bangko Sentral ng Pilipinas
BT - Barangay Treasurer
BT - Build-and Transfer
BTO - Build-Transfer-and Operate
BTr - Bureau of the Treasury
CA - Certificate of Authority
CAO - Contract-Add-and Operate
CAMELS - Capital Adequacy, Asset Quality, Management, Earnings,
Liquidity and Sensitivity
CDF - Cash Disbursement Forecast
CFA - Cash Flow Analysis
CFF - Cash Flow Forecast
CHBReg - Cash On Hand and in Bank Register
CM - Credit Memo
CN - Credit Notice
CO - Capital Outlay
COA - Commission on Audit
COE - Current Operating Expenses
COMELEC - Commission on Elections
CRAAF - Consolidated Report of Accountability for Accountable Forms
CRDReg - Cash Receipts and Deposits Register
CRF - Cash Receipts Forecast
CSB - Certificate of Settlement and Balances
CSC - Civil Service Commission
CT - Community Tax
CTC - Community Tax Certificate
DBC - Deputized Barangay Collector
DBM - Department of Budget and Management
DBP - Development Bank of the Philippines
DepEd - Department of Education
DM - Debit Memo
DOF - Department of Finance
DOH - Department of Health
DOJ - Department of Justice
DOST - Department of Science and Technology
DOTC - Department of Transportation and Communication

DV - Disbursement Voucher
EO - Executive Order
EU - European Union
eOR - Electronic Official Receipt
FE - Financial Expenses
GAAM - Government Accounting and Auditing Manual
GAO - General Auditing Office
GDF - Gender and Development Fund
GF - General Fund
GOCC - Government Owned and Controlled Corporation
GSIS - Government Service Insurance System
HLURB - Housing and Land Use Regulatory Board
ICO - In-Charge of Office
ICS - Inventory Custodian Slip
IRA - Internal Revenue Allotment
IRR - Implementing Rules and Regulations
IT - Itinerary of Travel
IUEEU - Irregular, Unnecessary, Excessive, Extravagant or
Unconscionable
JEV - Journal Entry Voucher
JMC - Joint Memorandum Circular
LBM - Local Budget Matrix
LBP - Land Bank of the Philippines
LCE - Local Chief Executive
LDP - Local Development Plan
LDRRMF - Local Disaster Risk Reduction and Management Fund
LFC - Local Finance Committee
LGC - Local Government Code
LGU - Local Government Unit
LMB - Land Management Bureau
LO - Liquidating Officer
LOA - Letter of Authority
LR - Liquidation Report
LTO - Local Treasury Operations
MB - Monetary Board
MC - Memorandum Circular
MDF - Municipal Development Office
MDFO - Municipal Development Fund Office
MMA - Metro Manila Area
MMDA - Metro Manila Development Authority
MOA - Memorandum of Agreement
MOOE - Maintenance and Other Operating Expenses
MOU - Memorandum of Understanding
MRPAAO - Manual on Real property Appraisal and Assessment Operations
MTOP - Motorized Tricycle Operators Permit
NC - Notice of Charge
NCA - Notice of Cash Allocation
ND - Notice of Disallowance
NEDA - National Economic and Development Authority
NGAS - New Government Accounting System
NIRC - National Internal Revenue Code
NPC - National Power Corporation
NPO - National Printing Officer
NPV - Net Present Value
NS - Notice of Suspension
NSO - National Statistics Office
ObR - Obligation Request

ODA - Official Development Assistance
OIC - Officer-In-Charge
OR - Official Receipt
PAR - Property Acknowledgement Receipt
PB - Punong Barangay
PCF - Petty Cash Fund
PCFReg - Petty Cash Fund Register
PCV - Petty Cash Voucher
PD - Presidential Decree
PDAF - Priority Development Assistance Fund
PI - Public Infrastructure
PNB - Philippine National Bank
PO - Purchase Order
PPE - Plant, Property and Equipment
PPSAS - Philippine Public Sector Accounting Standard
PS - Personal Services
RA - Republic Act
RAAF - Report of Accountability for Accountable Forms
RAAO - Register of Appropriation, Allotments and Obligations
RAC - Registry of Appropriation and Commitments
RATA - Representation and Transportation Allowance
RCD - Report of Collections and Deposits
RCI - Report of Checks Issued
RIS - Requisition and Issue Slip
RMIT - Revised Manual of Instructions to Treasurers
ROO - Rehabilitate-Own-and Operate
ROT - Rehabilitate-Operate-and Transfer
RPT - Real Property Tax
RPTAR - Real Property Tax Register
RPTOP - Real Property Tax Order of Payment
RRACCS - Revised Rules on Administrative Cases in the Civil Service
SAM - State Audit Manual
SB - Sangguniang Barangay
SCD - Summary of Collections and Deposits
SCkI - Summary of Checks Issued
SCP - Summary of Cash Payments
SCR - Summary of Collections and Remittance
SEF - Special Education Fund
SIE - Statement of Income and Expenditures
SKF - Sangguniang Kabataan Fund
SOE - Statement of Expenditures
SPL - Special Leave Privilege
SPPCV - Summary of Paid Petty Cash Vouchers
SRE - Statement of Receipts and Expenditures
SRS - Statement of Receipt Sources
TDAF - Tax Data and Assessment Form
TO - Travel Order
UBOM - Updated Budget Operations Manual
VAT - Value Added Tax
VDS - Validated Deposit Slip
WB - World Bank

Table of Contents
Introduction..................................................................................................................................11
Section 154. Definition of Terms...............................................................................................11
Chapter 1. REAL PROPERTY TAXATION..................................................................................21
Section 155. Power to Levy Real Property Tax.........................................................................21
Section 156. Fundamental Principles........................................................................................21
Section 157. Administration of the Real Property Tax..............................................................21
Section 158. Rates of Levy.......................................................................................................22
Section 159. Special Levies......................................................................................................22
Section 160. Exemption from Real Property Tax......................................................................24
Section 161. Withdrawal of Tax Exemption Privileges from Payment of Real Property Taxes 27
Section 162. Date of Accrual of Real Property Tax...................................................................28
Section 163. Collection of Real Property Tax............................................................................28
Section 164. Procedures for Collection of Real Property Tax...................................................29
Section 165. Tax Discount for Advanced and Prompt Payment...............................................30
Section 166. Payment under Protest.........................................................................................31
Section 167. Repayment of Excessive Collections...................................................................33
Section 168. Interest on Delinquent Real Property Tax............................................................33
Section 169. Guiding Principles in Determining Delinquency...................................................33
Section 170. Procedures in Computing Taxes, Interest and Discounts....................................34
Section 171. Acceptance of Real Property Tax Through Over-the-Counter Payment in
Accredited Banks..................................................................................................35
Section 172. Remedies for the Collection of Real Property Tax...............................................37
Section 173. Detailed Implementing Rules of Procedure in the Conduct of Administrative
Action through Levy on Real Property Tax and Court Action. –...........................37
Section 174. Fees in Registration of Papers or Documents on Sale of Delinquent Real
Property to Province, City or Municipality.............................................................47
Section 175. Periods Within Which to Collect Real Property Taxes.........................................47
Section 176. Compromise Agreement......................................................................................48
Section 177. Penal Provisions...................................................................................................50
Section 178. Distribution of Proceeds.......................................................................................50
Section 179. General Assessment Revision, Expenses Incident Thereto................................53
Section 180. Condonation or Reduction of Real Property Tax and Interest.............................53
Section 181. Condonation or Reduction of Tax by the President of the Philippines.................53
Chapter 2. BUSINESS AND OTHER LOCAL TAXES: TAXING POWERS OF PROVINCES. . .54
Section 182. Scope of Taxing Power of Provinces...................................................................54
Section 183. Tax on Transfer of Real Property Ownership. –...................................................54
Section 184. Tax on Business of Printing and Publication. –....................................................54
Section 185. Franchise Tax. –...................................................................................................55

Section 186. Tax on Sand, Gravel and Other Quarry Resources. –.........................................56
Section 187. Professional Tax. –...............................................................................................56
Section 188. Amusement Tax. –...............................................................................................57
Section 189. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers, Producers
Wholesalers of, Dealers and Retailers in, Certain Products. –............................59
Chapter 3. BUSINESS AND OTHER LOCAL TAXES: TAXING POWERS OF MUNICIPALITIES
.......................................................................................................................................................59
Section 190. Scope of Taxing Powers of Municipalities. –........................................................59
Section 191. Tax on Business...................................................................................................59
Section 192. Schedule on Business Tax. –...............................................................................60
Section 193. On Peddlers Engaged in the Sale of Any Merchandise or Articles of Commerce.
–............................................................................................................................70
Section 194. On Any Business..................................................................................................70
Section 195. Taxing Powers of Municipalities within Metro Manila Area. –..............................70
Chapter 4. BUSINESS AND OTHER LOCAL TAXES: TAXING POWERS OF CITIES.............71
Section 196. Scope of Taxing Powers of Cities. –....................................................................71
Section 197. Rates for the Professional and Amusement Taxes. –..........................................71
Section 198. Sharing of Proceeds Derived from Tax on Quarry Resources in Highly Urbanized
Cities.....................................................................................................................71
Chapter 5. BUSINESS AND OTHER LOCAL TAXES: TAXING POWERS OF BARANGAYS. 71
Section 199. Scope of Taxing Powers of Barangays. –............................................................71
Chapter 6. GENERAL GUIDELINES ON THE APPLICATION OF BUSINESS AND OTHER
LOCAL TAXES.............................................................................................................................72
Section 200. Assessment of Business Taxes. – c/o Brenda/Tom.............................................72
Section 201. Related or Combined Businesses. –....................................................................72
Section 202. Situs of the Tax. –................................................................................................72
Section 203. Retirement of Business. –....................................................................................74
Chapter 7. THE COMMUNITY TAX.............................................................................................75
Section 204. Community Tax. –................................................................................................75
Chapter 8. SPECIFIC APPLICATIONS OF AUTHORITY TO TAX FRANCHISES.....................78
Section 205. Corporation is Liable for Franchise Tax notwithstanding Exemption Granted
Under its Charter. –..............................................................................................78
Section 206. Authority to Examine the Terms of Franchise. –..................................................79
Section 207. Uncollected Gross Receipts Included in Computing Franchise Tax. –................79
Chapter 9. FEES AND CHARGES...............................................................................................79
Section 208. Authority to Impose and Collect Fees and Charges.............................................79
Section 209. Common Revenue Raising Powers of LGUs. –...................................................79
Section 210. Imposition of Fees and Charges..........................................................................80
Section 211. Mayor's Permit......................................................................................................80
Section 212. Fees for Sealing and Licensing Weights and Measures. –..................................84

Section 213. Fishery Rentals, Fees and Charges.....................................................................85
Section 214. Fees and Charges that May Be Imposed by Barangays.....................................86
Section 215. Fees and Charges that may be Imposed by Local Government Units................87
Section 216. Fees and Charges Collected by Local Government Units for the National
Government..........................................................................................................88
Section 217. Building Permit.....................................................................................................89
Section 218. Permit Fee for Zoning and Locational Clearance Permit.....................................90
Section 219. Motorized Tricycle Operator's Permit...................................................................93
Section 220. Registration and Transfer of Large Cattle............................................................95
Section 221. Permit Fee for Excavation on Streets..................................................................96
Section 222. Permit Fee for Sealing and Licensing of Weights and Measures........................97
Section 231. Permit Fee on Film-Making within the Territory of the Local Government Unit. 100
Section 232. Permit Fee on Agricultural Machinery and Other Heavy Equipment for Rent. . .100
Section 233. Permit Fee on Occupation or Calling not Requiring Government Examination. 100
Section 234. Permit Fee for the Storage of Flammable and Combustible Materials..............103
Section 235. Permit Fee on Certain Types of Machineries and Engines................................103
Section 236. Permit Fee for Temporary Use of Roads, Streets, Sidewalks, Alleys, Patios,
Plaza and Playgrounds.......................................................................................104
Section 237. Permit Fee for the Conduct of Group Activities..................................................104
Section 238. Secretary's Fees.................................................................................................104
Section 239. Local Civil Registry Fees....................................................................................105
Section 240. Police Clearance................................................................................................105
Section 241. Sanitary Inspection Fee......................................................................................106
Section 242. Service Fees for Health Examinations...............................................................106
Section 243. Dog Registration and Vaccination Fees.............................................................107
Section 244. Fishery Rentals, Fees and Charges...................................................................107
Section 245. Service Charge for Garbage Collection.............................................................109
Section 246. Charges for Parking...........................................................................................110
Section 247. Cemetery Charges.............................................................................................110
Section 248. Slaughter and Corral Fees.................................................................................110
Section 249. Toll Fees or Charges..........................................................................................110
Section 250. Permit for Cockpit Owners/Operators/Licensees/Promoters and Personnel.....111
Chapter 10. LOCAL GOVERNMENT ENTERPRISE OPERATIONS........................................112
Section 251. Political and Corporate Nature of Local Government Units...............................112
Section 252. Nature of Government Enterprise......................................................................112
Section 253. Ordinance Establishing and Governing the Enterprise......................................112
Section 254. Basic Services and Facilities..............................................................................113
Section 255. Examples of Government Enterprises...............................................................116
Section 256. Role of Treasurers in Local Government Enterprise Operations.......................116

Section 257. Private Sector Participation in the Operation and Management of Local
Government Unit Enterprises.............................................................................117
Section 258. Common Modes of Contracting for Local Government Units............................117
Section 259. Barangay Micro-Business Enterprise (BMBE)...................................................119
Section 260. Registration of Barangay Micro-Business Enterpris...........................................119
Section 261. When is a Business Enterprise "Barangay-Based"............................................119
Section 262. Meaning of Micro-Business in Nature and Scope..............................................120
Section 263. Registration of Barangay Micro-Business Enterprises.......................................120
Section 264. Exemption of Barangay Micro-Business Enterprises from Taxes and Fees......120
Section 265. Submission of Documents for Registration as Barangay Micro-Business
Enterprise............................................................................................................120
Section 266. Verification of Qualifications...............................................................................121
Section 267. Issuance of the Certificate of Authority..............................................................121
Section 268. Registration Fee.................................................................................................121
Section 269. List of Registered Barangay Micro-Business Enterprises to be Furnished the
Bureau of Internal Revenue................................................................................122
Section 270. Periodic Evaluation by the Local Treasurer.......................................................122
Section 271. Cancellation of Registration...............................................................................122
Section 272. Exemption of Barangay Micro-Business Enterprises from Income Tax.............123
Section 273. Determination of the Value of Assets of the Barangay Micro-Business Enterprise
for Income Tax Exemption Purposes..................................................................123
Section 274. Procedures in Availing Tax Incentives...............................................................123
Section 275. Filing of Annual Information Return....................................................................124
Section 276. Where and When to File the Annual Information Return...................................124
Section 277. Revocation of Income Tax Exemption Privilege.................................................124
Chapter 11. CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS....................125
Section 278. General Policy....................................................................................................125
Section 279. Credit and Other Sources of Funds Available to Local Government Units........125
Section 280. Other Build-Operate Transfer Arrangements.....................................................125
Section 281. Duties and Responsibilities of Local Treasurers................................................126
Section 282. Provisions for the Servicing of Contractual Obligations of Local Government
Units....................................................................................................................127
Section 283. Enforceability of Loan Obligations notwithstanding the Expiration of the Terms of
the Elective Contracting Officials........................................................................127
Section 284. Guidelines on the Use of Funds Raised by Indebtedness.................................128
Section 285. Tax Exemption Privileges of Local Government Units.......................................128
Section 286. Limitations on the Use of Credit Lines to Stabilize Local Finance.....................129
Section 287. Common Requirements for Credit Financing of Local Development Projects...129
Section 288. Acceptable Collateral.........................................................................................130

Section 289. Special Account for Loans, Interests, Bonds, and Contributions for Specific
Purposes.............................................................................................................131
Section 290. Other Requirement for Loans, Deferred Payments and Other Financial Schemes
............................................................................................................................131
Section 291. Inter-Local Government Units Loans, Grants and Subsidies.............................131
Section 292. Joint and Several Local Government Unit Loan Arrangements.........................131
Section 293. Loans from wands Secured by the National Government from Foreign Sources
............................................................................................................................132
Section 294. Deferred Payments and Other Financial Schemes............................................132
Section 295. Bonds and Other Long Term Securities.............................................................132
Section 296. Private Sector Financing Under the Build-Operate-Transfer Arrangement.......134
Section 297. Authority to Negotiate and Secure Grants.........................................................136
Section 298. Prohibited Acts Related to the Awards of Contracts Under the Provisions on
Credit Financing..................................................................................................137
Chapter 12. THE STATEMENT OF RECEIPTS AND EXPENDITURES (SRE) AND
ELECTRONIC STATEMENT OF RECEIPTS AND EXPENDITURES (eSRE) FINANCIAL
MANGEMENT REPORTING SYSTEM.......................................................................................137
Section 299. Statement of Receipts Expenditures (SRE) Financial Report System: Definition,
Composition and Legal Basis. –.........................................................................137
Section 300. Statement of Receipts and Expenditures (SRE): Purpose and Use. –..............139
Section 301. Electronic Statement of Receipts and Expenditures (eSRE). –.........................140
Section 302. Guidelines and Manuals for the Preparation of the SRE and Submission of the
eSRE Reports. –.................................................................................................141
Section 303. Submission of SRE Reports. –...........................................................................141
Section 304. Responsibilities and Sanctions. –......................................................................142
Forms and Annexes..................................................................................................................144
LTO Form 89 – Real Property Tax Bill....................................................................................144
LTO Form 90 – Certified List Of All Real Property Tax Delinquencies...................................146
LTO Form 91 – Notice Of Realty Tax Delinquency.................................................................148
LTO Form 92 –Warrant Of Levy..............................................................................................149
LTO Form 93 – Notice Of Levy...............................................................................................150
LTO Form 94 – Notice Of Publication and Auction Sale.........................................................151
LTO Form 95 – Proof Of Service.............................................................................................152
LTO Form 96 – Certificate Of Sale Of Delinquent Property....................................................153
LTO Form 97 – Certificate of Redemption..............................................................................154
LTO Form 98 – Notice of Redemption....................................................................................155
LTO Form 99 – Final Deed of Sale.........................................................................................156
LTO Form 100 – Compromise Agreement..............................................................................158
LTO Form 101 – Certificate of Tax Credit...............................................................................159
LTO Annex 102 – Sample Cases of the Allocation of Gross Sales for the Situs of Tax.........160

Introduction
Section 154. Definition of Terms. –
1) 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 at the present site. (Sec.
199 (a), LGC)
2) Actual use – refers to the principal purpose for which the property is principally or
predominantly utilized by the person in possession thereof. (Sec. 199 (b), LGC)
3) Ad Valorem Tax –is a levy on real property determined on the basis of a fixed proportion
of the value of the property. (Sec. 199 (c), LGC)
4) Agricultural 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. (Sec. 199 (d), LGC)
5) Agricultural Product –includes the yield of the soil, such as corn, rice, wheat, rye, hay,
coconuts, sugarcane, tobacco, root crops, vegetables, fruits, flowers and their by-
products; ordinary salt; all kinds of fish; poultry; and livestock and animal products,
whether in their original form or not.
a) 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 the said products for the market
such as freezing, drying, salting, smoking, or stripping for purposes of preserving or
otherwise preparing the said products for the market. (Sec. 131 (a), LGC)
b) To be considered an agricultural product whether in its original form or not, its

transformation must have been undertaken by the farmer, fisherman, producer or
owner.
c) Agricultural products as defined include those that have undergone not only simple
but even sophisticated processes employing advanced technological means in
packaging like dressed chicken or ground coffee in plastic bags or styropor or other
packaging materials intended to process and prepare the products for the market.
d) The term "by-products" shall mean those materials which in the cultivation or
processing of an article remain over, and which are still of value and marketable,
like copra cake from copra or molasses from sugar cane. (Art. 220 (a), IRR,
implementing Sec. 131 (a), LGC)
6) Amusement –a pleasurable diversion and entertainment. It is synonymous to relaxation,

avocation, pastime, or fun. (Sec. 131 (b), LGC)
7) Amusement Places –include theaters, cinemas, concert halls, circuses and other places
of amusement where one seeks admission to entertain oneself by seeing or viewing the
show or performance. (Sec. 131 (c), LGC)
8) Appraisal –is the act or process of determining the value of property as of a specific date
for a specific purpose (Sec. 199 (e), LGC). It may also be defined as the act of estimating
the value of a property. It is an estimate or opinion of value, usually market value or value
as defined by the appraiser. It is made as of a specific date and is a conclusion which

results from a logical and orderly analysis of facts. (Manual on Real Property Appraisal
And Assessment (MRPAAO)
9) Assignment –a transfer or making over to another of the whole of any property, real or
personal, in possession or in action, of any estate or right therein. It includes transfers of
all kinds of property (Higgins V. Morckton, 28 Cal. App. 2d 723, 83 P. 2d 516, 519),
including negotiable instruments.(Black's Law Dictionary, 5th ed., (1979)
10) Assessment –is 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. (Sec. 199 (f), LGC)
11) Assessment Level –is the percentage applied to the fair market value to determine the
taxable value of the property. (Sec. 199 (g), LGC)
12) Assessed Value –is the fair market value of the real property multiplied by the
assessment level. It is synonymous to taxable value. (Sec. 199 (h), LGC)
13) Banks and other financial institutions –include non-bank financial intermediaries,
lending investors, finance and investment companies, pawnshops, money shops,
insurance companies, stock markets, stock brokers and dealers in securities and foreign
exchange, as defined under applicable law, or rules and regulations thereunder. (Sec. 131
(e), LGC)
14) Branch or Sales Office –a fixed place in a locality which conducts the operations of the
business as an extension of the principal office. However, offices used only as display
areas of the products where no stocks or items are stored for sale, although orders for
the products may be received thereat, are not branch or sales offices as herein
contemplated. A warehouse which accepts orders and/or issues sales invoices
independent of a branch with sales office shall be considered as a sales office. (Art. 243
(a) (2), IRR implementing Sec. 150, LGC)
15) Bond –a certificate or evidence of a debt on which the issuing company or governmental
body promises to pay the bondholders a specified amount of interest for a specified
length of time, and to repay the loan on the expiration date. In every case, a bond
represents debt. (Philippine Law Dictionary, 3rd edition, Federico B. Moreno)
16) Build-Operate-and Transfer–strictly construed, Build-Operate-Transfer is a contractual

arrangement under which the project proponent is authorized to finance, construct, and
subsequently operate and maintain an infrastructure facility. However, the term is often
also used to refer to other types of private participation in the financing and management
of public sector projects. (Sec. 302, LGC)
Under the Build-Operate-Transfer, in its original sense, ownership of the facility is vested
in the project sponsor, but the project proponent operates the facility for a contractually
set fixed term during which it is allowed to charge facility users tolls, fees, rentals, or
other appropriate charges based on the approved contract. These charges are the
means by which the project proponent recovers its investments, covers the costs of
maintenance and operation of the project, and realizes a reasonable return. At the end of
the contracted period, which by law should not exceed fifty (50) years, the project
proponent transfers the facility to the sponsor agency or local government unit.
Also classified as Build-Operate-Transfer are supply-and-operate contracts under which

the government finds it in its interest to allow the supplier of equipment and machinery for
a given facility to operate these: Provided, that the process involves technology transfer
and training of Filipino nationals.

17) Business –mean trade or commercial activity regularly engaged in as a means of
livelihood or with a view to profit. (Sec. 131 (d), LGC)
18) Capital Investment –is the capital which a person employs 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. (Sec. 131 ( f ) , LGC)
19) Charges –refer to pecuniary liability, as rents or fees against persons or property. (Sec.
131 (g), LGC)
20) Collateral –property pledged as security for a debt. It is additional security for
performance of principal obligations.
21) Commercial Land –is land devoted principally for the object of profit and is not classified
as agricultural, industrial, mineral, timber, or residential land. (Sec. 199 (i), LGC)
22) Construction –refers to new construction, rehabilitation, improvement, expansion,

alteration and related works and activities. The term includes the necessary supply of
services and labor, equipment, materials, and related items needed to build or rehabilitate
an infrastructure or development facility.
23) Contractor –includes persons, natural or juridical, not subject to professional tax under
Section 139 of R. A. No. 7160 or the Local Government Code of 1991, whose activity
consists essentially of the sale of all kinds of services for a fee, regardless of whether or
not the performance of the service calls for the exercise or use of the physical or mental
faculties of the contractor or his employees. As used herein, the term "contractor" shall
include the following:
a) General engineering, General building and specialty contractors as defined

under applicable laws;
b) Filling, demolition and salvage works contractors;
c) Proprietors or operators of mine drilling apparatus;
d) Proprietors or operators of dockyards;
e) Persons engaged in the installation of water system, gas or electric light,

heat, or power;
f) Proprietors or operators of smelting plants;
g) Engraving, plating, and plastic lamination; establishments;
h) Proprietors or operators of establishments for repairing, repainting,

upholstering, washing or greasing of vehicles, and heavy equipment,
vulcanizing, recapping and battery charging;
i) Proprietors or operators of furniture shops and establishments for planning or

surfacing and re-cutting of lumber, and sawmills under contract to saw or cut
logs belonging to others;
j) Proprietors or operators of dry-cleaning or dyeing establishments, steam

laundries, and laundries using washing machines;
k) Proprietors or owners of shops for the repair of any kind of mechanical and
electrical devices, instruments, apparatus, or furniture and shoe repairing by

machine or any mechanical contrivance;
l) Proprietors or operators of establishments or lots for parking purposes;
m) Proprietors or operators of tailor shops, dress shops, milliners, and hatters,

beauty parlors, barbershops, massage clinics, sauna, Turkish and Swedish
baths, slenderizing and body-building saloons and similar establishments;
n) Photographic studios;
o) Funeral parlors;
p) Proprietors or operators of hotels, motels, and lodging houses;
q) Proprietors or operators of arrastre and stevedoring warehousing, or

forwarding establishments, master plumbers, smiths, and house or sign
painters;
r) Printers, bookbinders, lithographers;
s) Publishers except those engaged in the publication or printing of any

newspaper, magazine, review or bulletin which appears at regular intervals
with fixed prices for subscription and sale and which is not devoted principally
to the publication of advertisements;
t) Business agents, private detective or watchman agencies, commercial and

immigration brokers, cinematographic film owners, lessors and distributors.
(Sec. 131 (h), LGC)
24) Corporation –includes partnerships, no matter how created or organized, joint-stock

companies, joint accounts (cuentasen participacion), associations or insurance
companies, but does not include the following:
a) General professional partnerships which are partnerships formed by persons for

the sole purpose of exercising their common profession, no part of the income of
which is derived from engaging in any trade or business; and
b) Joint venture or consortium formed for the purpose of undertaking construction

projects or engaging in petroleum, coal, geothermal, and other energy operations
or consortium agreement under a service contract with the government.
c) The term "resident foreign" when applied to a corporation means a foreign

corporation not otherwise organized under the laws of the Philippines but engaged
in trade or business within the Philippines. (Sec. 131 (i), LGC)
25) Countryside and Barangay Business Enterprise –refers to any business entity,
association, or cooperative registered under the provisions of R.A. No. 6810, otherwise
known as "Magna Carta for Countryside and Barangay Business Enterprises (Kalakalan
20)". (Sec. 131 (j), LGC)
26) Credit Line –in banking and commerce, the amount of money or merchandise which a
banker or supplier agrees to supply to a person on credit, which is generally agreed to in
advance. Thus, it also refers to the agreed limit of the money which may be borrowed or of
the value of merchandise that may be purchased on credit. (Philippine Law Dictionary, 3rd
edition, Federico B. Moreno)

27) Dealer –means one whose business is to buy and sell merchandise, goods, and chattels
as a merchant. He stands immediately between the producer or manufacturer and the
consumer and depends for his profit not upon the labor he bestows upon his commodities
but upon the skill and foresight with which he watches the market. (Sec. 131 (k), LGC)
28) Deferred Payment–payments or principal or interest postponed to and scheduled for a

future time; installment payments.
29) Depreciated Value –is the value remaining after deducting depreciation from the
acquisition cost. (Sec. 199 (j), LGC)
30) Development Programs–usually, the term refers to the plans and programs included in
the Medium-Term Philippine Development Plan, the Regional Development Plans and
Local Development Plans. It may, however, also refer to other plans and programs not
included in these.
31) Economic Life –is the estimated period over which it is anticipated that a piece of
machinery or equipment may be profitably utilized. (Sec. 199 (k), LGC)
32) Experimental Farms –agricultural lands utilized by a business or corporation to conduct

studies, test, researches or experiments involving agricultural, agri-business, marine or
aquatic, livestock, poultry, dairy and other similar products for the purpose of improving
the quality and quantity of goods or products.
33) Fair Market Value (FMV) –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. (Sec. 199 (l),
LGC)
34) Market value– is the estimated amount for which a property should exchange on the date
of valuation between a willing buyer and a willing seller in arm’s length transaction (a
transaction between independent, unrelated parties involving no irregularity) after proper
marketing wherein the parties had each acted knowledgeably, prudently, and without
compulsion.(MRRPAO)
35) Fee –means a charge fixed by law or ordinance for the regulation or inspection of a
business or activity (Sec. 131 (l), LGC). It shall also include charges fixed by law or
agency for the services of a public officer in the discharge of his official duties (Art. 220
(l), IRR, implementing Sec. 131 (l), LGC)
36) 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.
(Sec. 131 (m), LGC)
37) Gross Sales or Receipts –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 the 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
sale, sales return, excise tax, and The value-added tax (VAT). (Sec. 131 (n), LGC)
Illustrative Case Box 2:
In consonance with the above provision of the IRR, it was further clarified that the term "gross receipts" as
applied to contractors, is the total amount of service fees, including the advance payments or deposits
actually or constructively received during the taxable year. The tax base should exclude payments or

deposits which were not actually or constructively received by the contractor during the taxable year and
materials or equipment that do not form part of the things to be constructed - even if they were supplied
during the said year.
Source: BLGF 1stIndorsement, March 4, 1994; crud BLGF Indorsement, August 10, 1998
38) Idle Lands –for purposes of real property taxation shall include 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 remains
uncultivated or unimproved by the owner of the property or person having legal
interest therein.
b) 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.
c) 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 remains unutilized
or unimproved by the owner of the property or person having legal interest therein.
d) Residential lots in subdivisions duly approved by proper authorities, regardless of

land area, 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. 237, LGC)
39) 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. (Sec. 199 (m), LGC)
The anti-pollution tailing dam structure of the Benguet Corporation-Dizon Copper Gold Operations is an
improvement used in the operation of the corporation and, therefore, taxable under the provisions of the
Local Government Code of 1991. The subject dam falls within the definition of an improvement because it is
permanent in character and it enhances both the value and utility of the mine.
Source: DOF Opinion, February 3, 1994
40) Industrial Land–is land devoted principally to industrial activity as capital investment and
is not classified as agricultural, commercial, timber, mineral, or residential land. (Sec. 199
(n), LGC)
41) Investment –the placing of capital or laying out of money in a way intended to secure
income or profit from its employment. (Philippine Law Dictionary, 3rd edition, Federico B.
Moreno)
42) Loan –in reference to money, is a contract under which one of the parties delivers to
another a sum of money on the condition that the same amount shall be paid (Art. 1933,
Civil Code of the Philippines). It involves the delivery by one party and the receipt by the
other party of a given sum of money, upon an agreement, express or implied, that the
recipient will repay the same sum, with or without interest. (People v. Concepcion, 44
Phil 129)

43) Machinery – embraces machines, equipment, mechanical contrivances, instruments,
appliances, or apparatus which may or may not be attached, permanently or temporarily,
to the real property. It includes physical facilities for production, the installations and
appurtenant service facilities, those 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
manufacturing, mining, logging, commercial, industrial, or agricultural purposes, without
which such industry or facility cannot function. (Sec. 199 (o), LGC)
Thus, underground tanks, elevated tanks, elevated water tanks, gasoline and computing pumps,
car washers, car and tire hoists, air compressors and tire inflators in gasoline stations are considered as
machinery or improvement.
Source: G. R. No. L-50466, May 31, 1982
On the other hand, gas turbine barges owned by the National Power Corporation, although these
are mobile, self-powered and self-propelled, for practical reasons, could not be considered as real property
in the same manner that other mobile machineries/equipment such as trucks, buses, ships, airlines, and the
like, which require registration with the proper agency of government, could not be considered as real
property subject to real property tax.
Source: BLGF Indorsement, May 20, 1996
Machinery which are of general purpose use including but not limited to office equipment,
typewriters, telephone equipment, breakable or easily damaged containers (glass or cartons), micro-
computers, facsimile machines, telex machines, cash dispensers, furniture and fixtures, freezers,
refrigerators, display cases or racks, fruit juice or beverage automatic dispensing machines which are not
directly and exclusively used to meet the needs of a particular industry, business or activity shall not be
considered within the definition of machinery under this rule.
Residential machinery shall include machines, equipment, appliances, or apparatus permanently

attached to residential land and improvements or those immovable by destination.
When machineries are no longer used for its purpose by reason of closure or cessation of
production, the same should be transferred from the taxable roll to the exempt roll and not subject to the
payment of real property taxes during the period of non-use.
Source: BLGF 9th Indorsement, May 26, 1999
44) Manufacturer –includes the following:
a) Every person who, by physical or chemical process, alters the exterior texture or
form or inner substance of any raw material or manufactured or partially
manufactured product in such manner as to prepare it for special use or uses to
which it could not have been put in its original condition,
b) Or who by any such process, alters the quality of any such raw material or
manufactured or partially manufactured products so as to reduce it to marketable
shape or prepare it for any of the use of industry,

c) Or who by any such process, combines any such raw material or manufactured or
partially manufactured products with other materials or products of the same or of
different kinds and in such manner that the finished products of such process or
manufacture can be put to a special use or uses to which such raw material or
manufactured or partially manufactured products in their original condition could not
have been put, and
d) Who, in addition, alters such raw material or manufactured or partially

manufactured products, or combines the same to produce such finished products
for the purpose of their sale or distribution to others and not for his own use or
consumption. (Art. 220 (o), IRR, implementing Sec. 131 (o), LGC)
45) 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 (Sec. 131 (p), LGC), and
whose annual net income from such farming or fishing does not exceed Fifty Thousand
Pesos (₱50,000.00) or the poverty line established by NEDA for the particular region or
locality, whichever is higher. (Art. 220 (p), IRR, implementing Sec. 131 (p), LGC)
46) 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 such
materials. (Sec. 199 (p), LGC)
47) Mortgage –the conveyance of an estate or pledge of property as security for the
payment of money or the performance of some other act, and conditioned to become
void upon such payment or performance.
a) Real Estate Mortgage - refers to mortgage on land or other real property.
b) Chattel Mortgage - refers to mortgage on personal property which is recorded in

the chattel mortgage register.
48) 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, forklifts, amphibian trucks, and cranes if not
used on public roads, vehicles which run only on rails or tracks, and tractors, trailers, and
traction engines of all kinds used exclusively for agricultural purposes. (Sec. 131 (q),
LGC)
49) 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 a third line parallel with the general coastline and fifteen (15) kilometers from it.
Where two (2)municipalities are so situated on the opposite shores that there is less than
fifteen (15) kilometers of marine waters between them, the third line shall be equally
distant from opposite shores of the respective municipalities. (Sec. 131 (s), LGC)
50) Operator –includes the owner, manager, administrator, or any other person who
operates or is responsible for the operation of a business establishment or undertaking.
(Sec. 131 (s), LGC)
51) Peddler –means any person who, either for himself or on commission, travels from place
to place and sells his goods or offers to sell and deliver the same. Whether a peddler is a
wholesale peddler or a retail peddler of a particular commodity shall be determined from

the definition of wholesale dealer or retail dealer as provided in Title 1, Book 2 of R. A.
No. 7160 or the Local Government Code of 1991. (Sec. 131 (t), LGC)
52) Permit Fee –the allowable local government imposition intended to cover the cost of
regulation, inspection, and surveillance of a business or occupation. (p. 126, Philippine
Law on Local Government Taxation, Annotated, 2000 edition, Ursal)
53) Persons –every natural or juridical being, susceptible of rights and obligations or of being
the subject of legal relations. (Sec. 131 (u), LGC)
54) Plantation –a tract of agricultural land planted to trees or seedlings, whether fruit bearing
or not, uniformly spaced or seeded by broadcast methods or normally arranged to allow
highest production. For this purpose, inland fishing grounds shall be considered as
plantation. (Art. 243 (a) (4), IRR implementing Sec. 150, LGC)
55) Police Power –the power to prescribe regulations to promote the health, morals, peace,
education, good order, or safety and general welfare of the people. (Sangalang. et al.,
vs. IAC. 176 SCRA 179)
56) Principal Office –
a) The main or head office of the business appearing in the pertinent documents
submitted to the Securities and Exchange Commission, or the Department of Trade
and Industry, or other appropriate agencies as the case may be.
b) The city or municipality specifically mentioned in the Articles of Incorporation or

official registration papers as being the official address of said principal office shall
be considered the situs for tax purposes.
c) In case there is a transfer or relocation of the principal office to another city or

municipality, it shall be the duty of the owner, operator or manager or the business
to give due notice of such transfer or relocation to the local chief executives of the
cities or municipalities concerned within fifteen (15) days after such transfer or
relocation is effected.(Art. 243 (a) (1), IRR implementing Sec. 150, LGC)
57) Real Property – includes all the rights, interests, and benefits related to the ownership of
real estate. Ownership of real estate is evidences by a Certificate of Title, Free Patent or
Tax Declaration in the absence of Certificate of Title. (MRPAAO)
58) Real Property Tax Collection Operations – involves collection of all real property taxes
and penalties due and payable to the local government unit (LGU) through the positive
and total enforcement of tax laws and their penal provisions. (MRPAAO)
59) Re-assessment –is the assigning of new assessed values to property, particularly real
estate, as the result of general, partial, or individual reappraisal of the property. (Sec. 199
(q), LGC)
60) Regular Income–comprises all recurring income from local sources or revenues plus
regular share of local government units in the proceeds of national taxes.
61) Remaining Economic Life–is the period of time expressed in years from the date of
appraisal to the date when the machinery becomes valueless. (Sec. 199 (r), LGC)
62) Remaining Value –the value corresponding to the remaining useful life of the machinery.
(Sec. 199 (s), LGC)

63) 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. (Sec. 199 (t), LGC)
64) Residents –refer to natural persons who have their habitual residence in the province,
city, or municipality where they exercise their civil rights and fulfill their civil obligations,
and to juridical persons for which the law or any other provisions creating or recognizing
them fixes their residence in a particular province, city or municipality. In the absence of
such law, juridical persons are residents of the province, city, or municipality where they
have their legal residence or principal place of business or where they conduct their
principal business or occupation. (Sec. 131 (v), LGC)
65) Residential Land –is land principally devoted to habitation. (Sec. 199 (u), LGC)
66) Retail –means a sale where the purchaser buys the commodity for his own consumption
irrespective of the quantity of the commodity sold. (Sec. 131 (w), LGC)
67) Securities –evidences of debts or property, of obligations to pay money, or of rights to

participate in earnings and distribution of corporate, trust and other property
68) Service Charges –impositions for services rendered by local governments, or for
conveniences furnished. (p. 126, Philippine Law on Local Government Taxation,
Annotated, 2000 edition, Ursal)
69) Sinking Fund –assets and their earnings earmarked for the retirement of bonds or other
long-term obligations. Most commonly set aside from income of revenue-earning
property.
70) Special Classes of Real Property –are lands, buildings, and other improvements
thereon actually, directly, and exclusively used for hospitals, cultural, or scientific
purposes, and those owned and used by local water districts and government-owned or
controlled corporations rendering essential public services in the supply and distribution
of water and/or generation and transmission of electric power. (p. 9, MRPAAO, BLGF)
71) Toll fee –a sum of money for the use of something, generally applied to the
consideration which is paid for the use of a road, bridge, or the like, of a public nature.
(Sec. 14, Cooley on Taxation 4th edition)
72) User's Charges –prices charged by local governments for the use of public utilities.
73) Vessel –includes every type of boat, craft, or other artificial contrivance used, or capable
of being used, as a means of transportation on water. (Sec. 131 (x), LGC)
74) Warehouse –a building utilized for the storage of products for sale and from which goods
or merchandise are withdrawn for delivery to customers or dealers, or by persons acting
in behalf of the business. A warehouse that does not accept orders and/or issue sales
invoices as aforementioned, shall not be considered a branch or sales office.
A warehouse that does not accept orders, and/or does not issue sales invoices independently of a branch or
sales office, shall not be considered a branch or sales office.
Provincial depots where products are stored for sale are considered warehouses.
Source: BLGF Letter, August 26, 1993 to Republic-Asahi Glass Corp

75) Wharfage –means a fee assessed 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. 131 (y), LGC)
76) Wholesale –means a sale where the purchaser buys or imports the commodities for
resale to persons other than the end user regardless of the quantity of the transaction.
(Sec. 131 (z), LGC)
Chapter 1. REAL PROPERTY TAXATION
Section 155. Power to Levy Real Property Tax. –
a) 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, buildings, machinery, and other
improvements not specifically exempted under the law. (Sec. 232, LGC)
b) The power to levy the ad valorem tax on real property is exercised through the
sanggunian of the local government unit concerned by way of an ordinance. (Art. 323,
IRR, implementing Sec. 232, LGC)
Section 156. 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 (Sec. 198 (a), LGC).
All real property, whether taxable or exempt, shall be appraised at the current and fair
market value prevailing in the locality where the property is situated. The Department of
Finance shall promulgate the necessary rules and regulations for the classification,
appraisal, and assessment of real property pursuant to the provisions of R. A. No. 7160
or the Local Government Code of 1991. (Sec. 201, LGC)
b) Real property shall be classified for assessment purposes on the basis of its actual use.
(Sec. 198 (b), LGC)
c) Real property shall be assessed on the basis of a uniform classification within each local
government unit (Sec. 198 (c), LGC). To this end, Provincial, City, and the Municipal
Assessors of the municipalities within Metropolitan Manila Area shall prepare a Schedule
of Fair Market Values for the different classes of real property situated within their
respective local government units for enactment of ordinance of the sanggunian
concerned. (Sec 212, LGC)
d) The appraisal, assessment, levy and collection of real property tax shall not be let to any
private person. (Sec. 198 (d), LGC)
e) The appraisal and assessment of real property shall be equitable. (Sec. 198 (e), LGC)
Section 157. Administration of the Real Property Tax. –
a) The provinces and cities, including the municipalities within the Metropolitan Manila Area,
shall be primarily responsible for the proper, efficient and effective administration of the
real property tax, subject to the rules and regulations governing the classification,
appraisal and assessment of real property issued by the Department of Finance.

b) Accordingly, the Department of Finance and the provincial governments shall exercise
the authority to review and examine on a continuing basis, property assessment and real
property tax records to ensure the proper implementation hereof and determine
compliance with existing laws and regulations (Art. 291, IRR, implementing Sec. 200,
LGC)
Municipalities outside Metro Manila Area have no power to enact an ordinance levying real property tax, as
such power and authority is vested only upon their respective provinces.
Source: BLGF Opinion, May 5, 1994
Section 158. Rates of Levy. –
a) A province or city or municipality within Metropolitan Manila Area shall fix a uniform rate
of basic real property tax applicable to their respective jurisdiction as follows:
1. For provinces - not exceeding one percent (1%) of the Assessed Value.
2. For cities, or municipalities of Metropolitan Manila Area - not exceeding two

percent (2%) of the Assessed Value.
b) No public hearing shall be required before the enactment of a local tax ordinance levying
the basic real property tax. (Art. 324, IRR, implementing Sec. 233, LGC)
Section 159. Special Levies. – Provinces, cities and the municipalities within the Metropolitan
Manila Area may also levy and collect the following special levies on real properties within their
jurisdiction:
a) Additional Levy on Real Property for the Special Education Fund (SEF).–A province
or city, or a municipality within Metropolitan Manila Area, may levy and collect an annual
tax of one percent (1%) on the assessed value of real property which shall be in addition
to the basic real property tax. The proceeds thereof shall exclusively accrue to the
Special Education Fund. (Sec. 235, LGC)
Having established the propriety of imposing an additional levy for the special education fund at the rate of
0.5%, it follows that there was nothing erroneous in the Municipality of Narra’s having acted pursuant to
Section 48 of the Ordinance. It could thus not be faulted for collecting from owners of real properties
located within its territory an annual tax as special education fund at the rate of 0.5% of the assessed
value subject to tax of the property. Likewise, it follows that it was an error for respondent to hold
petitioner personally liable for the supposed deficiency in collections.
Source: Supreme Court ruling in the case of Lucena D. Demaala vs. COA, GR No. 199752 dated
February 17, 2015
The total three percent (3%) rate (2% basic and 1% SEF) of real property taxes imposed by Calbayog City
is in accordance with the provisions of R. A. No. 7160.
Source: BLGF Letter, May 22, 1998 to the National Food Authority

The authority of local government units to impose the Special Education Fund, a province or city, or a
municipality within Metropolitan Manila Area may levy and collect an annual tax of one percent (1%) on
the assessed value of the real property for the Special Education Fund in addition to the basic real
property tax.
However, the following rules apply to a municipality not located within the Metropolitan Manila Area:
1) It is the province and not the municipality, that has the authority to impose the additional SEF tax;
2) The rate of the SEF tax shall not exceed one percent (1%) of the assessed value of the subject
property; and
3) While the SEF tax is imposed by the province, Municipal Treasurers are authorized to collect the said
tax.
Source: BLGF 1st Indorsement, March 18, 1996
b) Additional Ad Valorem Tax on Idle Lands –
1. A province or city, or a municipality within the Metropolitan Manila Area, may levy
an annual tax on idle lands at the rate not exceeding five percent (5%) of the
assessed value of the property which shall be in addition to the basic real
property tax. (Sec. 236, LGC)
2. For this additional tax on idle lands, the following should be observed:
2.1 Listing of Idle Lands by the Assessor–The Provincial, City or Municipal

Assessor shall make and keep an updated record of all idle lands located
within his area of jurisdiction. For purposes of collection, the Provincial, City
or Municipal Assessor shall furnish a copy thereof to the Provincial or City
Treasurer who shall notify, on the basis of such record, the owner of the
property or person having legal interest therein of the imposition of the
additional tax. (Sec. 239, LGC); and
2.2 In the case of subdivision lots:
i. Individual buyers shall be liable for the additional tax if the ownership
of the property has been transferred to them.
ii. Subdivision owners or operators shall be liable for the additional tax
on lots whose ownership has not been transferred to individual buyers,
these lots being considered still part of the subdivision. (Sec.
237,LGC)
iii. A province or city or a municipality within the Metropolitan Manila Area

may exempt idle lands from 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. 238, LGC)
c) Special Levy by Local Government Units –

1. A province, city or municipality may 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 unit concerned.
2. The following provisions apply in the case of this special levy:
2.1 The special levy shall not exceed sixty percent (60%) of the actual cost of
such projects and improvements, including the costs of acquiring land and
such other property in connection therewith.
2.2 The special levy shall not apply to lands exempt from basic real property
tax and the remainder of land portions of which have been donated to the
local government unit concerned for the construction of such projects and
improvements. (Sec. 240, LGC)
2.3 The tax ordinance imposing the special levy shall:
i. Describe with reasonable accuracy the nature, extent, and location of

the public works projects or improvements to be undertaken;
ii. State the estimated cost of the public works projects or

improvements;
iii. Specify the metes and bounds by monuments and lines; and
iv. Specify the number of annual installments for the payment of the
special levy which in no case shall be less than five (5) years nor
more than ten (10) years.
2.4 The sanggunian concerned shall not be obliged, in the apportionment and
computation of the special levy, to establish a uniform percentage of all
lands subject to the payment of the tax for the entire district, but it may fix
different rates for different parts or sections thereof, depending on whether
such land is more or less benefited by the proposed work. (Sec. 241, LGC)
2.5 Prior to the enactment of an ordinance imposing a special levy, the

sanggunian concerned shall:
i. Conduct a public hearing thereon; and
ii. 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 242, LGC)
2.6 The special levy shall accrue on the first (1st) day of the quarter next
following the effectivity of the ordinance imposing such levy. (Sec. 245,
LGC)
Section 160. Exemption 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. (Sec. 234 (a), LGC). Political subdivisions of the Republic of the
Philippines are the autonomous regions, provinces, sub-provinces, cities, municipalities
and barangays(Sec. 4, Book I, E. O. No. 292). Government-Owned or Controlled
Corporations (GOCCs) are not considered political subdivisions.
ECOZONE operators are exempt from real property tax by virtue of Section 24 of R. A. No. 7916, otherwise
known as the Special Economic Zone Act of 1995, creating the EPZA, later renamed as PEZA, which
states: ". . . . No taxes, local and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned by all businesses and
enterprises within the ECOZONE shall be remitted to the National Government." This exemption only
applies to enterprises under PEZA. Thus, with the enactment of R. A. No. 7160, or the Local Government
Code of 1991, it is believed that PEZA is no longer exempt from payment of realty taxes.
Source: DOJ Letter, September 6, 1999 to PEZA, Pasay City
An installment purchaser of land and building within a housing project of the GSIS is liable to pay real estate
taxes from the time possession of such property was transferred to him/her, although pending full payment
of the purchase price, the seller GSIS retains ownership and title over the property (G.R. No. L-29772,
September 18, 1980). Moreover, the exemption of the GSIS from the payment of all taxes, assessments,
fees, charges and duties of all kinds under Section 33 of its Charter has not been superseded by the Local
Government Code of 1991.
Source: DOJ Letter, December 18, 1994 to GSIS
b) Charitable institutions, churches, parsonages, or convents appurtenant thereto,

mosques, non-profit or religions cemeteries and all lands, buildings, and improvements
actually, directly and exclusively used for religious, charitable or educational purposes.
(Sec. 234 (b), LGC) Charitable institutions are those whose principal aim is to give of its
material substance or time to benefit those who are in need of such assistance, or will be
benefited by such gift or expenditure in some other way than simply by an improvement
of morals. Generally, the exemption of charitable institutions is expressly or impliedly
limited to property devoted to charitable purposes and does not include property
belonging to such institutions not used for secular or non-charitable purposes, such as
property used to create revenue. (DOF Assessment Regulations No. 3-75, February 10,
1975)
c) All machineries and equipment that are 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. (Sec. 234
(c), LGC)
Compression/Compressor House, Sub-Station Building, and Sub-Station Switchboard and Steel Tower
owned by the National Power Corporation (NAPOCOR) may be considered exempt from the payment of
real property taxes, provided the same are actually, directly and exclusively used in the generation and
supply of electric power.
Source: BLGF 3rd Indorsement, February 25, 1997 to the Provincial Assessor of Batanes

Machineries declared in the name of the Bauang Private Power Corporation (BPPC) are subject to real
property tax, although engaged in the generation of electric power, as the company is a private corporation
and does not fall under the category of a government-owned and controlled corporation.
Source: BLGF 7th Indorsement, July 16, 1998 to the Provincial Assessor of La Union
In the case entitled, “National Power Corporation vs. Province of Quezon and the Municipality of Pagbilao”,
the NPC protested the levying of the real property tax on the machineries and equipment utilized by their
PPP BOT power plant operator, Mirant, based on the provision of the LGC.
However, the Supreme Court ruled that “As applied to the present case, the government-owned or
controlled corporation claiming exemption must the entity actually, directly, and exclusively using the real
properties, and the use must be devoted to the generation and transmission of electric power. Neither NPC
nor Mirant satisfies both requirements. Although the plant’s machineries are devoted to the generation of
electric power, by the NPC’s own admission and as previously pointed out, Mirant – a private corporation –
uses and operates them. That Mirant operates the machineries solely in compliance with the will of NPC
only underscores the fact that the NPC does not actually, directly, and exclusively use them. The
machineries must be actually, directly and exclusively used by the government-owned or controlled
corporation for the exemption under Section 234 (a) to apply.”
“Nor will the NPC find solace in its claim that it utilizes all the power plant’s electricity in supplying the power
needs of its customers. Based on the clear wording of the law, it is the machineries that are exempted from
the payment of real property tax, not the water or electricity that these machineries generate and distribute.”
“Even the NPC’s claim of beneficial ownership is unavailing. The test of exemption is the use, not the
ownership of the machineries devoted to generation and transmission of electric power. The nature of the
NPC’s ownership of these machineries only finds materiality in resolving the NPC’s claim of legal interest in
protesting the tax assessment on Mirant. As we discussed above, this claim in inexistent for tax protest
purposes.”
“Lastly, from the points of view of essential fairness and the integrity of our tax system, we find it essentially
wrong to allow the NPC to assume in its BOT contracts the liability of the other contracting party for taxes
that the government can impose on that other party, and at the same time allow NPC to turn around and
say no taxes should be collected because the NPC is tax exempt as a government-owned and controlled
corporation.”
Source: BLGF Memorandum Circular No. 39-2014. October 2, 2014.
d) All real properties owned by duly registered cooperatives as provided under R. A. No.
69381 as amended by RA 9520.(Sec. 234 (d), LGC)
All real properties owned by cooperatives duly registered with the Cooperatives Development Authority
(CDA), with minimum accumulated reserves and undivided net savings of Ten Million Pesos
(₱10,000,000.00) are exempt from payment of real property taxes in view of the specific provisions of R.
A. No. 6938, known as the Cooperative Code of the Philippines. Also covered by this exemption are
electric cooperatives which are duly registered with the CDA pursuant to R. A. No. 6938.
Source: BLGF Letter dated February 26, 1993 to the Municipal Secretary of Pagudpud, Ilocos Norte
1Cooperative Code of the Philippines

e) Machinery and equipment used for pollution control and environmental protection. (Sec.
234 (e), LGC)
f) 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 R. A. No. 7160 or the Local Government Code of 1991. (Sec. 234 (last par.), LGC)The
foregoing enumeration of exemptions from real property tax is clearly exclusive
considering the provisions of the immediately preceding paragraph. (p. 322, The Local
Government Code, Annotated by Nolledo)
Section 161. Withdrawal of Tax Exemption Privileges from Payment of Real Property
Taxes. – Unless otherwise provided in R. A. No. 7160 or the Local Government Code of 1991,
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. No. 6938, non-stock and non-profit hospitals and
educational institutions, are withdrawn upon the effectivity of R. A. No. 7160. (Sec. 193, LGC)
The phrase, "Unless otherwise provided in R. A. No. 7160 or the Local Government Code of1991" refers
to Section 133 of the same code which exempts, among others, national government instrumentalities
from the taxing powers of local government units. (DOJ Letter dated May 13, 1993 to Duty Free
Philippines)
Instrumentality refers to any agency of National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying autonomy, usually through a charter. The term includes
regulatory agencies, chartered institutions and government owned or controlled corporations.
Source: Sec. 2 (10), Introductory Provisions, Administrative Code of 1987
Local governments do not have the authority to grant exemptions from real property taxes to those which
are not expressly exempted by the Local Government Code of 1991, otherwise, they will be exercising
the power of amending laws or acts enacted by Congress.
Source: BLGF Indorsement, May 27, 1998
McArthur Park and Beach Resort, although a subsidiary of the Philippine Tourism Authority, a
government-owned or controlled corporation, is subject to the payment of real property and other local
taxes.
Source: BLGF 3rd Indorsement, April 11, 1997 to the Provincial Assessor of Tacloban City
Section 234 of the Local Government Code of 1991, evidently withdrew the tax exemption privileges
granted to GOCCs like the Land Bank of the Philippines (LBP) and the Government Service Insurance
System (GSIS). Accordingly, the subject properties of the LBP and the GSIS are liable for the payment of
real property tax effective January 1, 1992.

Source: BLGF 2nd Indorsement, February 22, 1993; BLGF Indorsement, April 26, 1994; and BLGF 1st
Indorsement, October. 5, 1998.
Real properties of Philippine Telegraph and Telephone Corporation (PT&T) shall be liable for the
payment of real property taxes beginning January 1, 1992. However, commencing
January 1, 1993, the year after the franchise of SMART took effect, real properties of PT&T which are
directly used in the operation of its franchise are exempt from payment of real property taxes in view of
the equality of treatment clause found in Section 14 of its franchise. R. A. Nos. 7294, 7692 and 7678
granted SMART, Bell Telecommunications Philippines, Inc., and DIGITEL the privilege to enjoy real
property tax exemptions on their real properties used in connection with the operation of their franchises.
All other properties of these companies shall remain taxable.
Source: BLGF 1st Indorsement, February 14, 1995; and BLGF 2nd Indorsement, January 4, 1999
The withdrawal of exemptions by the Local Government Code of 1991 did not, however, affect the status
of real property owned by embassies, consulates, and other diplomatic offices. These are deemed part of
the territory of the country they represent and, therefore, are exempt from any national or local taxes
based on the generally accepted principle that the tax laws of one country are not applicable in another.
Source: BLGF 2nd Indorsement, February 10, 1993 to the Municipal Treasurer of Makati
Section 162. Date of Accrual of Real Property Tax. – The real property tax for any year shall
accrue on the first (1st) day of January and from that 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. (Sec. 246, LGC)
Section 163. Collection of Real Property Tax. –

a) Responsibility of Local Treasurers to Collect–The collection of the real property tax
with interest thereon and related expenses, and the enforcement of the remedies
provided for in Title 22, Book II of R. A. No. 7160 or the Local Government Code of 1991,
or any applicable rules and regulations shall be the responsibility of the City or Municipal
Treasurer concerned. (Sec. 247, LGC)
b) Where Real Property Taxes May Be Paid–Real property taxes shall be paid to the
Office of the City or Municipal Treasurer of the city or municipality where the real property
is located. Property owners, however, at their option or convenience, may pay their real
property taxes at the Office of the Provincial Treasurer of the province of the municipality
where the property is located. (Art. 338, IRR, implementing Sec. 247, LGC) Real property
taxes for properties located in a city or a municipality within the Metropolitan Manila Area,
shall be paid with the Office of the City or Municipal Treasurer concerned.
c) Deputation of Barangay Treasurers– 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. 247 (2nd par.), LGC).
d) Assessor to Furnish Local Treasurer with Assessment Roll –
2Real Property Taxation

a) The Provincial, City or Municipal Assessor shall prepare and submit to the Treasurer
of the local government unit, on or before the thirty-first (31 st) day of December of
each year, an assessment roll containing a list of all persons whose real properties
have been newly assessed or re-assessed and the values of such properties. (Sec.
248, LGC)
b) The Provincial, City or Municipal Assessor shall prepare and submit to the treasurer
of the local government unit, on or before the thirty-first (31st) day of December
each year, an Assessment Roll containing a list of all persons whose real
properties have been newly assessed or reassessed and the values of such
properties (Section 248, LGC),notwithstanding cases where the Assessor’s records
are computerized and the same are directly and operationally connected to the
Office of the Provincial, City or Municipal Treasurer in the form of Local Area
Networking (LAN).
Section 164. Procedures for Collection of Real Property Tax. –The City and Municipal
Treasurers shall adopt the following procedures in the collection of real property taxes:
a) Posting of Collection Notices –
1. Notice of Time for Collection of Tax–The City or Municipal Treasurer shall, on

or before the thirty first (31st) day of January each year, in the case of the basic
real property tax and the additional tax for the SEF or on any other date to be
prescribed by the sanggunian concerned in the case of any other tax levied under
Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991, post the
notice of the dates when the tax may be paid without interest at a conspicuous
and publicly accessible place at the city or municipal hall. Said notice shall
likewise be published in a newspaper of general circulation in the locality once a
week for two (2) consecutive weeks. (Sec. 249, LGC)
b) Payment of Real Property Taxes in Installments –
1. 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, to be due and
payable as follows:
1st Installment - on or before the thirty-first (31st) of March
2nd Installment - on or before the thirtieth (30th) of June
3rd Installment - on or before the thirtieth (30th) of September
4th Installment - on or before the thirty-first (31st) of December
(Section 250, LGC)
2. In the implementation of the installment scheme in the collection of real property

taxes, the following shall be observed:
2.1 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
year.
2.2 The date for the payment without interest of any other tax imposed under
Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991
shall be prescribed by the sanggunian concerned.

2.3 Excluded from the above schedule of installment payments is the special
levy on properties benefited by development, the payments of which shall
be governed by the schedule specified in the enabling ordinance enacted
by the sanggunian concerned.
(Section 250, LGC)

2.4 The payment of quarterly installments having been fixed by law, cannot be
extended by way of a local ordinance. (Illustrative Case: BLGF 2nd
Indorsement, June 14, 1994 to the Treasurer of Iloilo City.)
c) Issuance of Notice to the Taxpayer or the Real Property Tax Bill 3 –The Local
Treasurer concerned may issue a notice to the taxpayers or Real Property Tax Bill during
the last quarter of the year indicating the real property tax due for his/her property for the
ensuing year and the delinquent taxes due for the previous year or years.
d) Notice of Delinquency in Payment of Real Property Tax –
1. When the real property tax or any other tax imposed under Title 2, Book II of R. A.
No. 7160 or the Local Government Code of 1991, becomes delinquent, the
Provincial, City or Municipal Treasurer shall immediately cause a notice of the
delinquency to be posted at the main entrance of the provincial capitol, or city or
municipal hall, and in a publicly accessible and conspicuous place in each barangay
of the local government unit concerned. The notice of delinquency shall also be
published once a week for two (2) consecutive weeks, in a newspaper of general
circulation in the province, city or municipality.
2. Such notice shall specify the date upon which the tax became delinquent and shall
state that personal property may be distrained to effect payment. It shall likewise
state that any time before the distraint of personal property, payment of the tax with
surcharges, interests and penalties may be made in accordance with the next
following Article, and unless the tax, surcharges and penalties are paid before the
expiration of the year for which the tax is due except when the notice of assessment
or special levy is contested administratively or judicially pursuant to the provisions of
Chapter 3, Book II of the LGC, the delinquent Real Property will be sold at public
auction, and the title to the property will be vested in the purchaser, subject however,
to the right of the delinquent owner of the property or any person having legal interest
therein to redeem the property within one (1) year. (Sec. 254 a-b, LGC)
Section 165. Tax Discount for Advanced and Prompt Payment. –
a) If the basic real property tax and the additional tax accruing to the SEF are paid on time
or in advance in accordance with the prescribed schedule of payment as provided in
Section 250 of R. A. No. 7160 or the Local Government Code of 1991, the sanggunian
concerned may grant a discount not exceeding twenty percent (20%) of the annual tax
due.
b) Prompt payments may be given a discount of ten percent (10%), while advanced
payments may be entitled to the maximum discount of twenty percent (20%). (Art. 342,
3LTO Form 89, Forms and Annexes

c) The tax discount rates shall be specified in an appropriate ordinance enacted by the
sanggunian of the local government unit concerned. In the absence of an appropriate
ordinance, the discounts shall not be granted.
d) Advanced Payment as distinguished from Prompt Payment–To be entitled to tax

discount, the basic real property tax and additional SEF tax must be paid on or before the
deadlines provided under Section 250 of R. A. No. 7160 or the Local Government Code
of 1991. Under Section 246 of the same Code, the real property tax for any year accrues
on the first (1st) day of January, although the tax due for that year may be paid without
interest or penalty on or before March 31st, or in four (4) quarterly installments starting
from the said date . . . {and as may be provided in the ordinance}. This situation is not a
case of "advanced payment" but simply “prompt payment". (Notes on Section 251, LGC,
Local Government Taxation, Ursal)
The grant of discounts should be effected only if the same are provided for in a duly enacted ordinance of
the “Sangguniang Panlungsod”.
Source: BLGF 1st Indorsement, January 26, 1994 to the City Treasurer of Angeles City
In granting discounts, the basic real property tax and the SEF tax should be treated separately and
independent of each other.
Source: BLGF 3rd Indorsement, August 12, 1997 to the Municipal Treasurer of Valenzuela, Metro Manila
If the sanggunian concerned elects to grant said discounts, the grant should be embodied in a duly
enacted ordinance for the purpose. In the absence of an ordinance granting the said discounts, no
discount may be granted to any taxpayer. The law grants sanggunians of LGUs the option to grant
discounts and did not compel them to do so.
Source: BLGF Letter dated July 10, 2002 to a taxpayer in Marikina City
Section 166. Payment under Protest. –
a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be
annotated on the tax receipt the words, "paid under protest". (Sec. 252 (a), LGC).
b) The treasurer shall inform the tax payers that he/she should file the protest in writing.
The protest must be filed within thirty (30) days from 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. (Sec. 252 (a),
LGC)
c) The tax or a portion thereof paid under protest shall be held in trust by the Local Treasurer
concerned (Sec. 252 (b), LGC). However, fifty percent (50%) of the tax paid under protest
shall be distributed in accordance with Sec. 271 of R. A. No. 7160 or the Local Government

Code of 1991, on the distribution of proceeds. (Art. 343 (b), IRR, implementing Sec. 252 (b),
LGC)
d) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion
of the tax protested shall be refunded to the protestant, or applied as tax credit against his
existing or future tax liability. (Sec. 252 (c), LGC)
e) In the event that the protest is denied or upon the lapse of the sixty (60)-day period
prescribed in sub-paragraph (a) of Section 252 of R. A. No. 7160 or the Local Government
Code of 1991, the taxpayer may avail of the remedies as provided for in Chapter 3, Title 2,
Book II of the same code. (Sec. 252 (c), LGC)
Concerned parties entered into a Memorandum of Agreement (MOA) covering the conditional and partial
payment of Mirant amounting to ₱ 400M, pending resolution of its appeal with the Court of Tax Appeals.
Under the aforementioned MOA, the amount of P 400M was considered of Section 252 of R. A. No. 7160,
otherwise known as the Local Government Code of 1991, should be accounted for in the Trust Fund, so
that, in the event that the protest is resolved with finality in favor of Mirant, the same shall be ready for
refund or for application as tax credit against any existing or future tax liability thereof.
Applying the provisions of Article 343, IRR of the Local Government Code of 1991, to the query at hand,
50% of the realty taxes paid under protest shall be held in trust and the remaining 50% shall be distributed
in accordance with the sharing or distribution of proceeds of real property taxes specified under Section
271 of the same code as implemented by par. (a), Art. 362 of the same IRR.
Source: BLGF 1st Indorsement, February 13, 2006 to the Municipal Treasurer of Pagbilao, Quezon
f) Procedure of Booking of Payment Under Protest
1. In case of payment under protest the tax or a portion thereof paid under protest shall be
held in trust by the Local Treasurer concerned (Sec. 252 (b), LGC)
2. In the event the taxpayer fails to avail his/her remedies under this section 252 the
amount held in trust shall transferred accordingly to the general fund. These are as
follows:
2.1 Upon failure to file the protest in writing within thirty (30) days to the provincial, City
or municipal treasurers in case of municipality within Metropolitan Manila Area.
2.2 Upon failure to file protest to the Local Board of Assessment appeals within sixty
(60) days upon receipt of the denial of the protest or after the lapse of sixty (60)
days period prescribed in subparagraph (a) of Sec. 252.
2.3 Upon failure to elevate protest to the following:
i. Central Board of Assessment Appeals

ii. Court of Tax Appeals
Section 167. Repayment of Excessive Collections. –

a) When an assessment of the basic real property tax, or any other tax levied under the
Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991, 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.(Sec. 253, LGC)
b) 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 Chapter 3, Title 2, Book II of R. A. No.
7160 or the Local Government Code of 1991. (Sec. 253, LGC)
c) In case of tax credit, a Certificate of Tax Credit shall be issued to the property owner or to
the person having legal interest therein.
In one instance, there was merit in the request of the Asian Terminals, Inc., for the re-computation of its
real property tax and any excess payment should be treated as tax credit against the future real property
tax liabilities of the said company.
Source: BLGF Letter, February 24, 1997 to the City Treasurer of Manila.
Section 168. Interest on Delinquent Real Property Tax. – In case of failure to pay the basic
real property tax or any other tax levied under Title 2, Book II of R. A. No. 7160 or the Local
Government Code of 1991, upon the expiration of the periods as provided in Section 250 of the
same code, 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 thirty six (36) months. (Sec. 255, LGC)
Unpaid real property tax that accrued prior to January 1, 1992, are imposed an interest of 2% per month,
or a maximum of 24%, in accordance with the law then enforced which was P.D. No. 464, while unpaid
real property tax that accrued on January 1, 1992 onwards are imposed an interest of 2% per month, but
not exceeding 36 months or a maximum rate of 72%, in accordance with the governing law which is R.A.
No. 7160, that repealed P.D. No. 464.
Source: BLGF 2nd Indorsement dated December 20, 2010 to the ICO-Regional Director, Region XII,
Cotabato City
Section 169. Guiding Principles in Determining Delinquency. –
a) The accrual of the tax means that it has become due and payable. The words, "due and
demandable" can merely denote the existence of a simple indebtedness without
reference to the time of payment; they do not necessarily have to refer to the time limit or
the date on which taxes must be paid. (Commissioner of Internal Revenue v. Visayan
Electric Co., May 27, 1968)

b) A taxpayer is delinquent if he fails to pay his taxes within the period fixed by statute or
executive order. (G.R. No. 6133 U.S. v. Estavillo, 19 Phil. 478)
c) Tax delinquencies incurred before the effectivity of R. A. No. 7160 or the Local
Government Code of 1991, shall be governed by the provisions of applicable laws then in
force; the computation of penalties for delinquent real property taxes for CYs 1992 to
1994 should be based on the provisions of Section 255 of the Local Government Code of
1991, providing for a 2% interest rate per month on the unpaid amount but in no case to
exceed thirty-six (36) months. (BLGF 2nd Indorsement, October 30, 1995 to the
Provincial Treasurer of South Cotabato)
Section 170. Procedures in Computing Taxes, Interest and Discounts. – The formula to be
used in computing the payments due for taxes are as follows:
A. Computation of the Basic Tax and SEF.–In computing the basic real property tax and
the tax accruing to the Special Education Fund, the following basic components should
be noted:
1. The Assessed Value of the real property shall be taken from the Assessment Roll
submitted by the Local Assessor concerned.
2. The applicable Tax Rate shall be the rate fixed for the subject property by the
approved tax ordinance of the local government unit concerned.
3. Following are the formulas for the Basic Tax (Sec. 233, LGC) and SEF (Sec. 235,
LGC):
i. For the Basic Tax:
TAX DUE = (Assessed Value) x (Applicable Tax Rate)
ii. For the Special Education Fund Tax:
SEF DUE = (Assessed Value) x (Applicable Tax Rate)
b) Computation of the Tax Discount for Advanced and Prompt Payment. –The
formula for the tax discount is as follows:
TAX DISCOUNT = (Tax Due) x (Applicable Tax Discount Rate/s)
c) Computation of the Interest Due on Unpaid Taxes. –The following formula shall
guide the computation of interests to be paid on delinquent real property taxes:
1. For Real Property Taxes Delinquent for Any Period Up to Thirty-Six (36) Months
maximum:
INTEREST PAYMENT DUE FOR EACH MONTH OF DELINQUENCY = (Tax Due) x (Interest
Rate) x (Number of Months Delinquent)
2. For Real Property Taxes Delinquent for Any Period up to More than Thirty-Six
(36) Months maximum:
INTEREST = (Tax or Taxes Due) x (2%) x (36 Months)

3. For Annual Interest Payment Due:
ANNUAL INTEREST PAYMENT DUE = Sum of Interest Payments Due for Months
Delinquent During the Year
4. For Total Real Property Taxes and Interest to be Paid:
TOTAL TAX AND INTEREST DUE =(Total of Unpaid Taxes Due) +(Interest onUnpaid Taxes
Due)
d) At bottom, the law applicable, in the case at bar, for purposes of computation of the real
property taxes due from private respondent for the years 1986 to 1991, including the
penalties and interests, is still Section 66 of the Real Property Tax Code of 1974 or P.D.
No. 464. The penalty that ought to be imposed for delinquency in the payment of real
property taxes should, therefore, be that provided for in Section 66 of P.D. No. 464, i.e.,
two per centum on the amount of the delinquent tax for each month of delinquency or
fraction thereof but in no case shall the total penalty exceed twenty-four per centum of
the delinquent tax.
e) Accordingly, the penalties imposed by respondents City Treasurer and Assistant City
Treasurer of Iloilo City on the property of private respondent are valid only up to 24% of
the delinquent taxes. The excess penalties paid by the private respondent should, in
view of that, be refunded by the latter.
f) However, from 01 January 1992 onwards, the proper basis for the computation of the
real property tax payable, including penalties or interests, if applicable, must be Rep. Act
No. 7160, known as the Local Government Code, which took effect on the 1st of
January 1992 inasmuch as Section 534 thereof had expressly repealed P.D. No. 464 or
the Real Property Tax Code. Section 5(d) of R. A. No. 7160 provides that rights and
obligations existing on the date of effectivity of the new Code and arising out of
contracts or any source of prestation involving a local government unit shall be
governed by the original terms and conditions of the said contracts or the law in force at
the time such contracts were vested.
(THE HONORABLE SECRETARY OF FINANCE, petitioner, vs. THE HONORABLE

RICARDO M. ILARDE, Presiding Judge, Regional Trial Court, 6th Judicial Region,
Branch 26, Iloilo City, and CIPRIANO P. CABALUNA, JR., respondents, G.R. No.
121782. May 9, 2005.)
Section 171. Acceptance of Real Property Tax Through Over-the-Counter Payment in

Accredited Banks. –
a) Legal basis on the use of electronic means of payment for the settlement of Real
Property Taxes –With the effectivity of R. A. No. 8792(E-Commerce Law), the
government has recognized the use of electronic data messages or documents in
facilitating and effecting its commercial and non-commercial transactions. Ever since the
government institutionalized the present system of collecting internal revenue taxes and
customs duties through the banking facilities of authorized agent banks, it is expected
that local government units, in the acceptance of local tax payments by selected
depository banks, would eventually follow the same system.
b) Guidelines in the Acceptance of Real Property Tax Payments Through Accredited

Banks –

1. Enactment of Ordinance–The sanggunian shall enact the appropriate local
ordinance, authorizing the Local Treasurer to accept, as an alternate mode of tax
collection, over-the-counter payments by taxpayers in accredited government
depository banks of local government units.
2. Accreditation of Authorized Agent Bank–The banking institution shall seek

accreditation from the local government unit to deliver the required services
provided in the local ordinance. The local government unit shall consider the stability
and soundness of the bank, as well as its efficiency in the collection of taxes and
promptness in the remittance of collections to the local government unit. Only
authorized government depository banks or banks authorized by the Monetary
Board of the Bangko Sentral ng Pilipinas shall be allowed to participate in the
collection scheme.
3. Memorandum of Agreement–The local government unit shall enter into a

Memorandum of Agreement with the accredited bank which will be selected based
on the terms and conditions that would be most advantageous to the latter. The
Memorandum of Agreement shall set forth in detail the responsibilities of the bank in
the receipt of tax payments, custody of the funds and the prompt and proper
turnover and remittance of tax collections to the local government unit. The
Memorandum of Agreement shall also provide a holding-period or the number of
days that the collected funds shall remain with the bank before its remittance to the
local government unit, and the related costs and charges, if any.
c) Procedures in the Acceptance of Real Property Taxes Through Over-the-Counter

Payments in Accredited Banks Which are Referred to as the Acceptee Bank –
1. Only real property taxes for the current year shall be eligible for Over-the-Counter
Payment (OCP) in the Acceptee Bank. All delinquent accounts shall continue to be
paid directly to the cashiers/tellers of the Local Government Unit.
2. The Local Government Unit shall send the Real Property Tax Bill to the taxpayer
either through the mail or courier, or through personal delivery, which shall be the
basis for the Over-the-Counter Payment to the Acceptee Bank. The Real Property
Tax Bill may be obtained by the taxpayer or his duly authorized representative
directly from the Local Government Unit.
3. The Bills Payment Slip (BPS) issued by the Acceptee Bank shall be duly
accomplished by the taxpayer for all payments to be made. The Bills Payment Slip
shall indicate the taxpayer's name, the specific tax to be paid, the taxable year and
the amount of tax. The Bills Payment Slip shall also contain the bank account
number of the Local Government Unit to which all tax payments shall be credited.
4. The taxpayer shall pay the real property tax to the teller of the Acceptee Bank,
supported by the Real Property Tax Bill and the duly accomplished Bills Payment
Slip.
5. The teller of the Acceptee Bank shall accept the tax payment and shall validate the
Real Property Tax Bill and the Bills Payment Slip. The validated Real Property Tax
Bill and the Bills Payment Slip shall be returned to the taxpayer.
6. The following banking day, the Acceptee Bank shall generate and send to the Local
Government Unit an Abstract of Collection Report (ACR) of the day's transactions
via e-mail or File Transfer Protocol (FTP).
7. The Local Government Unit may then view and/or print the Abstract of Collection
Report.

8. The Local Government Unit may also be provided by the Acceptee Bank with an on-
line banking facility which can be used to view and download the Local Government
Unit's Statement of Account (SOA) to enable the Local Government Unit to have
real-time data on all Real Property Tax collections made by the Acceptee Bank.
Section 172. Remedies for the Collection of Real Property Tax. –
A. Administrative and Judicial Remedies–When the real property tax and any other tax
levied under Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991,
becomes delinquent upon the expiration of the one (1) year period from the time the tax
becomes due and payable, the local government unit concerned, through the Office of
the Provincial or City Treasurer, or the Municipal Treasurer of a municipality within
Metropolitan Manila Area, may avail of remedies by administrative or judicial action.
1. The Administrative Remedies which are summary in nature are:
1.1 Levy on Real Property; and
1.2 Sale of Real Property at Public Auction.
2. The judicial remedy is availed of in the court of appropriate jurisdiction.
B. The foregoing remedies are cumulative, simultaneous and unconditional, that is, any or
all of them or a combination thereof may be resorted to and the use of one remedy shall
not be a bar against the institution of the other. Formal demand for the payment of the
delinquent taxes and penalties due is not a prerequisite to such remedies. The Notice of
Delinquency required under Section 254 of R. A. No. 7160 or the Local Government
Code of 1991 shall be sufficient for the purpose. (Art. 347, IRR, implementing Sec. 256,
LGC)
Section 173. Detailed Implementing Rules of Procedure in the Conduct of Administrative

Action through Levy on Real Property Tax and Court Action. –
A. Administrative Action:
1. Local Government’s Lien–The basic real property tax and any other tax levied
under Title Two (Real Property Taxation), Book II (Local Taxation and Fiscal
Matters) of R.A. No. 7160, constitute a lien on the real property subject to tax. Such
lien is superior to all liens, charges or encumbrances in favour of any person,
irrespective 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.
2. Pre-Auction Sale –
2.1 Notice of the Delinquency–When the real property tax or any other tax under
Title Two, Book II of R. A. No. 7160 or the Local Government Code of 1991,
becomes delinquent, the Provincial, City or Municipal Treasurer shall:
2.1.1 Issue the Notice of Delinquency with the following specifications

(Sec. 254, LGC):
i. Description, location, and owner of the real property subject to

delinquent tax;
ii. Date upon which the tax became delinquent;

iii. That, personal property may be distrained to effect payment of the
delinquent tax;
iv. That, at any time before the distraint of personal property, payment
of the delinquent tax with surcharges, interests and penalties may
be made, at two percent (2%) per month on such unpaid amount,
until the delinquent tax shall have been fully paid, but not
exceeding thirty-six (36) months or seventy-two (72%) as provided
under Section 255 (Interest on Unpaid Real Property Tax) of R. A.
No. 7160;and
v. That unless the tax, surcharges and penalties are paid before the
expiration of the year for which the tax is due the delinquent real
property will be sold at public auction, except when the notice of
assessment or special levy is contested administratively or
judicially pursuant to the provisions of Chapter 3 (Assessment
Appeals), Title Two, Book II of R. A. No. 7160, the delinquent real
property will be sold at public auction and the title to the property
will be vested in the purchaser, subject, however, to the right of the
delinquent owner of the property or any person having legal
interest therein to redeem the property within one (1) year from the
date of sale or annotation of the Certificate of Sale whichever is
provided in the real property tax ordinance of the province or city
concerned.
2.1.2 Post the Notice of Real Property Tax Delinquency at the main
entrance of the provincial capitol, city or municipal hall and in a publicly
accessible and conspicuous place in each barangay of the local
government unit concerned. (Sec. 254, LGC)
2.1.3 Publish the Notice of Real Property Tax Delinquency once a week
for two (2) consecutive weeks, in a newspaper of general circulation in
the province, city, or municipality within Metropolitan Manila Area.
(Sec. 254, LGC)
2.1.4 Serve a copy of the Notice of Real Property Tax Delinquency

either by registered mail with return card or by personal service to the
delinquent real property owner or any person having legal interest
therein at the address appearing in the records of the local treasury
office or known personally by the local treasurer concerned.
It may be observed that Section 254 does not require the notice of delinquency to be served upon
the delinquent owner or any person having legal interest on the delinquent property or
representative. Notwithstanding and inasmuch as the notice of delinquency is a pre-auction notice,
prudence dictates that a copy thereof may be served upon the registered owner or person having
legal interest in the delinquent property or representative. This is to protect the interest of the
delinquent registered owner and in compliance with due process – a very important requirement for
the validity of auction of delinquent real property. The service of such notice may be effected
through registered mail with return card or personal service. In case of personal service and the
registered owner or person having legal interest in the delinquent property or representative
refuses to receive the notice of delinquency and sign for it, the serving officer shall serve it by
tendering or leaving a copy of the same at the address in the presence of some person of suitable
age and discretion residing therein.
Source: BLGF Letter dated October 12, 2010 to the OIC-Regional Director, Region X, Cagayan de
Oro City

2.1.5 Proof of Service of the Notice of Tax Delinquency shall be
accomplished and submitted by the serving officer to the Provincial, City
or Municipal Treasurer concerned containing a statement that the notice
was served upon the real property owner on a specific time and date,
and at a particular address, with the Registry Receipt Number and date
thereof if the service was by mail or the signature of the delinquent real
property owner, or representative, or any member of the household who
must be of sufficient age and discretion, affixed thereon, acknowledging
receipt of the notice with the time and date if by personal service.
B. Levy on Real Property:
1. Issuance of Warrant of Levy – If the delinquent real property tax remains

unpaid despite the Notice of Delinquency, the Provincial or City Treasurer, or
Municipal Treasurer of Metropolitan Manila, or deputized Municipal Treasurer, as
the case maybe, shall issue a Warrant of Levy on or before, or simultaneously
with the enforcement of judicial remedy through the institution of civil action for
the collection of delinquent real property tax with the proper court.
2. The Warrant of Levy shall be prepared in a duly authenticated certificate showing

the following details:
2.1 The name of the delinquent property owner or person having legal interest
therein;
2.2 The description of the real property; and
2.3 The amount of the tax due and the interest thereon.
3. Service of Warrant of Levy–The Warrant of Levy shall be served either through

registered mail with return card or personally upon the delinquent real property
owner or person having legal interest therein at the address appearing in the
records of the local treasury office or known personally by the Provincial or City
or Municipal Treasurer of Metropolitan Manila, or deputized Municipal Treasurer,
as the case may be. In the event that the property owner is out of the country or
cannot be located, the warrant shall be served upon the duly appointed
administrator of the delinquent real property or the occupant thereof who must be
of sufficient age and discretion.
4. Notice of Levy– A written Notice of Levy with the attached copy of the Warrant
of Levy shall be mailed to or served upon the local assessor and the Registrar of
Deeds of the province, city or a municipality within Metropolitan Manila where the
delinquent real property is located, for annotation of the levy on the Tax
Declaration and the Certificate of Title to the property, respectively.
5. Report of the Levy to the Sanggunian–The Provincial or City Treasurer, or

the case may be, shall submit a report on levy to the sanggunian concerned
within ten (10) days after the receipt of the Warrant of Levy by the owner of the
property or person having legal interest therein.
6. Proof of Service –The officer serving the Warrant of Levy shall accomplish a
proof of service stating therein that the warrant was served upon the delinquent
real property owner on a specific time and date at a particular address, with the
Registry Receipt Number and date thereof if service was through mail, or with the
signature of the delinquent real property owner, or representative, or any member

of the household who must be of sufficient age and discretion, affixed thereon,
acknowledging receipt of the notice of a specific time and date if by personal
service. The proof of service shall also contain a statement that the Notice of
Levy was served upon the local assessor and the Registrar of Deeds concerned.
The proof of service shall be submitted to the Provincial or City Treasurer, or
the case may be.
7. Effect of Warrant of Levy–The Warrant of Levy issued on delinquent real

property shall operate with the force and effect of a legal execution throughout
the province, city, or municipality within Metropolitan Manila, where such property
is located. (Sec. 258, 1st par., LGC)
C. Advertisement of Sale –
1. Expenses of Sale – The Provincial or City Treasurer, or Municipal Treasurer of

Metropolitan Manila, or deputized Municipal Treasurer, as the case may be, may
by ordinance duly approved, advance an amount sufficient to defray the costs of
collection through administrative or judicial remedies, including expenses of
advertisement and sale.
2. Issuance of Notice of Sale– Within thirty (30) days after service of the Warrant
of Levy, the Provincial or City Treasurer, or Municipal Treasurer of Metropolitan
Manila, or deputized Municipal Treasurer, as the case may be, shall proceed to
publicly advertise for public sale or auction the delinquent real property or a
usable portion thereof as may be necessary to satisfy the tax delinquencies and
expenses of sale which shall be effected by the issuance of a Notice of Sale with
the following details:
2.1 Amount of the delinquent tax and interest due thereon;

2.2 Expenses of sale;
2.3 Date and place of sale;
2.4 Name of the owner of the delinquent real property tax or any person having
legal interest therein; and
2.5 Description of the property to be sold.
3. Service of Notice of Sale – The Notice of Sale shall be served either through
registered mail with return card or personally upon the owner of the delinquent
real property or person having legal interest therein, at the address appearing in
the records of the local treasury office or known personally by the Provincial or
City Treasurer, or Municipal Treasurer of Metropolitan Manila, or deputized
Municipal Treasurer, as the case may be. In the event that the real property
owner is out of the country or cannot be located, the warrant shall be served
upon the duly appointed administrator of the delinquent real property or the
occupant thereof who must be of sufficient age and discretion.
4. Proof of Service –The officer serving the Notice of Sale shall accomplish a proof
of service stating therein that the notice was served upon the delinquent real
property owner on a specific time and date and at a particular address, with the
Registry Receipt Number and date thereof if service was through mail or with the
signature of the delinquent real property owner, or representative, or any member
of the household who must be of sufficient age and discretion, affixed thereon,
acknowledging receipt of the notice on a specific time and date if by personal
service. The proof of service shall be submitted to the Provincial or City
Treasurer, or Municipal Treasurer of Metropolitan Manila, or deputized Municipal
Treasurer, as the case may be.

5. Posting of Notice of Sale–The Notice of Sale shall be posted at the main
entrance of the provincial capitol, city or municipal hall, and in a publicly
accessible and conspicuous place in the barangay where the real property is
located.
6. Publication of Notice of Sale–The Notice of Sale shall be published once a

week for two (2) weeks in a newspaper of general circulation in the province, city
or municipality where the property is located.
7. Certificate of Release– 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 paying the delinquent tax, the interest due thereon and the
expenses of sale (Sec. 260, 1 st par., LGC). A Certificate of Release shall be
issued thereby by the Local Treasurer concerned, together with the official receipt
and tax clearance which shall in effect extinguish the tax lien on the property.
D. Public Sale or Auction –
1. Sale of Delinquent Real Property– After the Warrant of Levy shall have been
served to the owner of the delinquent real property or any person having legal
interest therein or to the administrator or occupant thereof, and the advertisement
of the sale having been complied with, and no payment is made, the delinquent
real property shall be sold at the time and date specified in the Notice of Sale.
The sale shall be held at the main entrance of the provincial capitol, city or
municipal hall, or on the property to be sold, or at any other place designated in
the Notice of Sale. The public sale or auction shall be conducted in accordance
with the details specified in the Notice of Sale.
2. In the conduct of auction sale, the Local Treasurer may recommend to the LCE
the creation of an Auction committee. The committee may be created for the
purpose of formulating the rules and regulations of the auction and may be
composed of the Local Treasurer, Legal Officer, Local Assessor, and a
representative of the Office of the Local Chief Executive, of the local government
unit undertaking the public sale or auction.
3. Rules and Regulations of Bid –The rules and regulations of the bid may include
the qualifications of those who are allowed to participate in the bid and the
disqualifications of those who are not allowed to participate therein; the
conditions or limitations of sale; the procedure and manner for the conduct of the
bid; the time within which the winning bidder shall deliver the bid price to the local
treasurer; and such other rules and regulations as may be agreed upon with
interested bidders that are necessary to carry-out the sale justly, properly and
efficiently. These rules and regulations shall be disseminated and read to the
participating bidders before the conduct of the sale. Article 1491 of the Civil Code
of the Philippines (R.A. No. 386) as amended, provide for the persons
disqualified to purchase a property at public auction:
3.1 The guardian, the property of the person or persons who may be under his
guardianship;
3.2 Agents, the property whose administration or sale may have been entrusted
to them, unless the consent of the principal has been given;
3.3 Executors and administrators, the property of the estate under

administration;

3.4 Public officers and employees, the property of the State or any of the
subdivision thereof, or of any government owned or controlled corporation,
or institution, the administration of which has been entrusted to them; this
provision shall apply to judges and government experts who, in any manner
whatsoever, take part in the sale;
3.5 Justices, judges, prosecuting attorneys, clerks of superior and inferior

courts, and other officers and employees connected with the administration
of justice, the property and rights in litigation or levied upon an execution
before the court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of acquiring by
assignment and shall apply to lawyers, with respect to the property and
rights which may be the object of any litigation in which they may take part
by virtue of their profession;
3.6 Any others specially disqualified by law.
4. Registration of Bidders and Bond Requirement –Any person interested to

participate in the bid for the public sale or auction shall register with the Provincial
or City Treasurer, or Municipal Treasurer within Metropolitan Manila, or deputized
Municipal Treasurer, as the case may be, who shall prepare a list of the names of
bidders with sufficient description or qualifications, assigning a number for each
upon which such bidder shall be called or referred to during the entire
proceedings of the bid. The bidder may be required to post a cash bond for a
reasonable amount as determined in the real property tax ordinance of the
province, city or municipality concerned, which shall be returned after the auction,
except bonds posted by winning bidders who failed to pay the bid price within the
time prescribed, in which case, such bond shall be forfeited in favor of such
province, city or municipality.
5. Highest Cash Bidder –The property shall be sold to the highest cash bidder
whose bid is sufficient to pay the delinquent real property tax, the accrued
interest, and the cost of the sale, the sum of which shall be the floor price for
accepting any bid. The highest bidder shall, upon award, immediately pay the bid
price which shall be made in cash or manager’s check for the exact amount of
the bid payable to the Provincial or City Treasurer, Municipal Treasurer of
Metropolitan Manila, or deputized Municipal Treasurer, as the case may be.
6. Failure of the Highest Bidder to Pay the Bid Price –In case the highest bidder
fails to pay the bid price, the next highest bidder whose bid is sufficient to pay the
delinquent real property tax, the accrued interests, and the costs of the sale shall
be considered the winning bidder and shall be notified immediately in writing by
the Provincial or City Treasurer, or Municipal Treasurer of Metropolitan Manila, or
deputized Municipal Treasurer, as the case may be, who shall pay the bid price
within twenty-four (24) hours from receipt of notice.
7. Revocation of Sale or Award –
7.1 The Provincial or City Treasurer, or Municipal Treasurer of Metropolitan

Manila, or deputized Municipal Treasurer shall have the right to revoke any
or all sales or awards under any of the following circumstances that may
surface, but which could not have been ascertained by due diligence before
or during the sale:
i. The evidence presented show that all taxes and penalties due the real
property sold had been paid before the sale;

ii. The real property subject of sale is exempt from the delinquent real
property tax due by virtue of ownership by the state or any of its political
subdivisions except when the beneficial use thereof has been granted,
for consideration or otherwise, to a taxable person, or that property
subject of sale has been devoted exclusively for educational, religious,
or charitable purposes;
iii. The real property subject of sale is exempt from the real property tax
due in accordance with the provisions of Section 234 (Exemptions from
Real Property Tax) of R.A. No. 7160 or any other laws; and
iv. Non-payment of the bid price.
7.2 In case of any of the above circumstances under numbers 1, 2, and 3, the
purchase price shall be returned to the purchaser of the real property
subject of sale without interest.
8. Certificate of Sale –The Provincial or City Treasurer, or Municipal Treasurer of

Metropolitan Manila, or deputized Municipal Treasurer, as the case may be, shall
prepare and deliver to the purchaser of the delinquent real property a Certificate of
Sale containing the name of the purchaser, a sufficient 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 auction proceedings.
E. Post-Auction Sale –
1. Report of Sale to the Sanggunian – Within thirty (30) days after the sale, the
Provincial or City Treasurer, or Municipal Treasurer of Metropolitan Manila, or
deputized Municipal Treasurer, as the case may be, shall submit a report of the
sale to the sanggunian concerned, which report shall form part of the records of
the local treasury office.
2. Annotation of Certificate of Sale –The Provincial or City Treasurer, or

the case may be, shall submit a copy of the Certificate of Sale to the Registrar of
Deeds for annotation, as specifically provided in the real property tax ordinance
of the concerned province, city, or municipality within Metropolitan Manila.
3. Remittance of Excess Payment –Proceeds of the sale in excess of the

delinquent tax, the interest due and the expenses of sale shall be remitted to the
owner of the real property or person having legal interest therein or a duly
authorized representative.
F. Right of Redemption –
1. Redemption Period –Within one (1) year from the date of auction sale or date of
annotation or registration of the Certificate of Sale with the proper registry,
whichever is provided in the real property tax ordinance 4 of the concerned
province, city, or municipality within Metropolitan Manila, the owner of the
delinquent real property or person having legal interest therein, or duly authorized
representative, shall have the right to redeem the property.
2. Exercise of the Right of Redemption – The owner of the delinquent real

property or person having legal interest, or duly authorized representative, shall
redeem the property by payment to the Provincial or City Treasurer, or Municipal
4CITY MAYOR, CITY TREASURER, CITY ASSESSOR, ALL OF QUEZON CITY, And ALVIN EMERSON S. YU, Vs. RIZAL
COMMERCIAL BANKING CORPORATION, G.R. No. 171033, August 3, 2010.

Treasurer of Metropolitan Manila, or deputized Municipal Treasurer, as the case
may be, of the redemption price consisting of the amount of delinquent tax, the
interests 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 auction sale to the date of payment of the
redemption price.
3. Effect of Payment of Redemption Price – Full payment of the redemption price

shall invalidate the Certificate of Sale issued to the purchaser.
4. Certificate of Redemption – Upon payment of the redemption price, 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 Provincial or
City Treasurer, or Municipal Treasurer of Metropolitan Manila, or
deputizedMunicipal Treasurer, as the case may be. The Local Treasurer shall
include the request for cancellation of annotation.
5. Return of the Amount Paid by the Purchaser – The Provincial or City

Treasurer, or Municipal Treasurer of Metropolitan Manila, or deputized Municipal
Treasurer, as the case may be, upon receipt of the Certificate of Sale from the
purchaser, shall forthwith return to the latter the entire amount paid by him/her
including interest of not more than two percent (2%) per month from the date of
sale to the date of payment of the redemption price.
6. Effect of Redemption– Redemption of the real property tax sold at public

auction shall render the said property free from all liens of the delinquent real
property tax, the interest due thereon, and the expenses of sale.
7. Right of Possession of the Auctioned Property– 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 all the income and fruits thereof.
G. Failure to Exercise Right of Redemption –
1. Final Deed of Sale–Incase the owner or person having legal interest therein fails
to redeem the delinquent property, the Provincial Treasurer or City Treasurer, or
the case may be, shall exercise a Final Deed of Sale in favor of the purchaser,
conveying said property, free from all liens of the delinquent tax, the interests due
thereon, and expenses of sale. A brief statement of the auction proceedings upon
which the validity of the sale rests shall be embodied in the deed.
2. Surrender of Owner’s Duplicate Copy of Title – Upon execution of the Final

Deed of Sale of the auctioned real property in favor of the purchaser, the
deputized Municipal Treasurer, as the case may be, shall require the owner of
the auctioned property to surrender possession of the delinquent property and
the corresponding Owner’s Duplicate Copy of Title and the Tax Declaration. The
Owner’s Duplicate Copy of Title and the Tax Declaration shall be attached to the
Final Deed of Sale which shall all be submitted to the Registrar of Deeds.
3. Consolidation of Title in the Name of the Purchaser – Upon submission of the

Owner’s Duplicate Copy of Title, the Final Deed of Sale and the Tax Declaration,
the Registrar of Deeds having jurisdiction over the place where the property is
located shall consolidate the title in the name of the purchaser of the auctioned
property who shall be entitled to a copy of the new Certificate of Title thereto.

4. Tax Declaration in the Name of the New Owner –After the consolidation of title
to the auctioned property by the Registrar of Deeds, the purchaser as the new
owner shall be issued the corresponding Tax Declaration.
5. Duty of Local assessor – It shall be the duty of the local assessor concerned to
issue a new Tax Declaration in the name of the purchaser as new owner of the
auctioned property who shall be liable to pay the annual ad valorem tax and other
taxes that will thereafter become due thereon.
H. Purchase/Forfeiture of Property by the Local Government Units for Want of

Bidder –
1. Purchase/Forfeiture of Property –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 insufficient to 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 unit concerned to satisfy
the claim. (Section 263, LGC)
2. Report of Proceedings of Purchaser/Forfeiture– Within two (2) days after the

purchase/forfeiture of the delinquent property by the local government, the
deputized Municipal Treasurer, as the case may be, shall accomplish a report of
the proceedings of purchase/forfeiture which shall be reflected in the records of
the local treasury office. (Section 263, LGC)
3. Right to Redeem Property – Within one (1) year from the date of
purchase/forfeiture of the delinquent real property, the owner thereof or duly
authorized representative, may redeem the same by paying the full amount of
the real property tax, the related interests thereon and costs of sale. (Section
263, LGC)
4. Registration of Declaration of Purchase/Forfeiture –It shall be the duty of

the Registrar of Deeds concerned, upon registration with his/her office of any
such declaration of purchase/forfeiture to effect the transfer of title of the
purchased/forfeited property in the name of the concerned province, city, or
municipality within Metropolitan Manila, without the necessity of any court
order.(Section 263, LGC)
5. Vesting of Title to the Local Government Unit – If the purchased/forfeited

property is not redeemed within the period as provided herein, the ownership
thereof shall be fully vested to the concerned province, city, or municipality
within Metropolitan Manila.(Section 263, LGC)
6. 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 through
purchase/forfeiture at public auction. The proceeds of sale shall accrue to the
General Fund of the local government unit concerned.(Section 264, LGC)
7. Further Distraint or Levy –If necessary, levy on property may be repeated

until the full amount of real property taxes and interests due, including all
expenses is collected. (Sec. 265, LGC)
I. Court Action –

1. The delinquent real property tax or any deficiency thereof after public sale or
auction may be collected by civil action in a court of competent jurisdiction which
shall be filed by the Provincial or City Treasurer, or Municipal Treasurer of
Metropolitan Manila, or the deputized Municipal Treasurer, as the case may be,
within the period prescribed under Section 270 (Periods Within Which to Collect
Real Property Taxes), Chapter 6, Title Two, Book II of R.A. No. 7160. The
institution of the civil action may be done simultaneously with the administrative
remedy of collection. (Sec. 266, LGC)
2. The delinquent basic real property tax or any other tax levied under Title 2, Book
II of R. A. No. 7160 or the Local Government Code of 1991, shall constitute
indebtedness of the taxpayer to the LGU, hence, collection of such indebtedness
can be enforced through civil action in any court of competent jurisdiction,
observing the following:
2.1 The Provincial or City Treasurer, or Municipal Treasurer of a municipality of

Metropolitan Manila shall furnish the Provincial Attorney or City or Municipal
Legal Officer a certified statement of delinquency who, within fifteen (15)
days after receipt, shall file the civil action in the name of the province, city
or municipality in the proper court of competent jurisdiction. The jurisdiction
of the court is determined by the amount sought to be recovered exclusive
of interests and costs.(Art. 357, IRR implementing Sec. 266, LGC)
2.2 The Provincial or City Treasurer, or Municipal Treasurer of a municipality of

Metropolitan Manila Area shall furnish the Provincial Attorney or the City or
Municipal Legal Officer concerned the complete address of the defendant
where he may be served with summons. (Art. 357, IRR implementing Sec.
266, LGC)
3. 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 Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991,
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 from
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. 267, LGC)
4. 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,”motupropio” or upon representation of the Provincial, City or
Municipal Treasurer or his deputy, award such ownership, possession, or
succession to any party to 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. 268, LGC)
5. Fees on Court Actions – All court actions, criminal or civil, instituted at the
instance of the Provincial, City or Municipal Treasurer under the provisions of RA.
No. 7160, shall be exempt from the payment of court and sheriff’s fees.
Section 174. Fees in Registration of Papers or Documents on Sale 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 and registration fees. (Sec. 281, LGC)
Section 175. Periods Within Which to Collect Real Property Taxes.– The basic real property
tax and any other tax levied under Title 2, Book II of R. A. No. 7160 or the Local Government
Code of 1991, 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. 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 5.The period of prescription within which to collect shall be suspended
for the time during which:
a) The Local Treasurer is legally prevented from collecting the tax;
b) The owner of the property or the person having legal interest therein requests for re-
investigation and executes a waiver in writing before the expiration of the period within
which to collect; and
c) The owner of the property or the person having legal interest therein is out of the country
or otherwise cannot be located. (Sec. 270, LGC)

If the Local Treasurer sends notice of delinquency and/or demand letter for the payment of the
delinquent taxes in observance of due process preparatory to the application of the administrative
remedies in the collection of delinquent taxes provided in the law, the prescriptive period of five (5) years
for the collection of taxes shall not start to run. It is only when the Local Treasurer concerned neglected
to perform his mandated duties that he shall be faulted, giving rise to said prescriptive period under the
law. Otherwise, taxpayers may circumvent the law by not paying their taxes until the collection of the
same prescribes.
Source: BLGF 2nd Indorsement, October 16, 1997 to the Provincial Treasurer of Bataan)
BLGF has clarified and stressed in several opinions that the five-year prescriptive period was provided
only to enforce the collection of real property taxes within a specific period of time. Thus, Local
Treasurers cannot execute administrative or judicial remedies after the lapse of the five-year period, but
it does not mean that Local Treasurers can no longer collect delinquent taxes accruing for the period.
Source: BLGF 1st Indorsement, March 12, 1996 to the Provincial Treasurer of Zamboanga del Sur; and
BLGF 3rd Indorsement, January 26, 1998 to the Treasurer of Cebu City)
Delinquent real property taxes prior to the effectivity of R. A. No. 7160 or the Local Government Code of
1991 were imprescriptible because Section 270 thereof is prospective in application. Hence, the
collection of real property taxes that accrued prior to the effectivity on January 1, 1992 of the Local
Government Code of 1991, shall be governed by the Real Property Tax Code or P. D. No. 464, as
amended.
Source: BLGF Indorsement, June 2, 1994 to the Provincial Treasurer of Pampanga)
5Providing a prescriptive period is beneficial to the taxing authority since Local Treasurers are compelled to collect taxes
promptly. However, the Local Government Code of 1991 does not clearly provide as to when the Local Treasurer can perform
his/her function in order to say that he/she collects promptly. ( Implications of Section 270 of the Local Government Code
(LGC) Re: Periods within which to collect Real Property Taxes, March 10, 2005, study by the National Tax Research Center
(NTRC), DOF. p. 6)

It is clear, explicit and mandatory from the provisions of Section 270 that real property tax shall be
collected within five (5) years from the date they become due. No action for the collection of the tax, that
is, administrative action and/or civil action shall be instituted after the expiration of such period.
Accordingly, failure to collect the real property tax within 5 years from the date it becomes due will bar
the collection thereof even by administrative or judicial means, unless the 5-year prescriptive period was
suspended under the circumstances specified.
In the event of fraud or intent to evade payment of real property tax, however, the 3rd sentence of
Section 270 provides that the action for the collection of the tax may be instituted within ten (10) years
from the date of the discovery of such fraud or intent to evade payment, unless the period is suspended
also under the circumstances specified. The action for the collection of the tax refers to administrative
and civil actions. Tersely stated, if fraud or intent to evade payment exists, the real property tax may be
collected within the 10-year period by means of administrative action and/or civil action. Please take into
account that fraud is a question of fact that must be alleged and proved. It is a serious charge and, to be
sustained, it must be supported by clear and convincing proof.
Source: BLGF Letter, May 22, 2007 to the Treasurer of Quezon City

The wisdom behind the provision of the Local Government Code of 1991, on the prescriptive periods to
collect is to compel local treasurers to promptly perform their duty to collect real property tax for the
benefit of the taxing authority, the local government unit. The prescriptive periods were provided to
enforce the collection of real property tax within a specific time. Thus, no action for collection, whether
administrative or judicial, shall be instituted after the lapse of the five-year or ten-year periods, as the
case may be. Under the ten-year prescriptive period, fraud or intent to evade payment must be alleged
and supported by clear and convincing proof.
Source: BLGF 2nd Indorsement dated July 24, 2009 to the ICO-Regional Director, RVII

The provision on prescriptive periods in the collection of real property tax is not meant to shield a real
property owner-taxpayer from payment of delinquent tax when despite meaningful efforts exerted by the
local treasurer to collect, the tax remains unpaid and unsettled.
Source: BLGF letter dated January 6, 2010 to the Municipal Treasurer of Consolacion, Cebu
Section 176. Compromise Agreement. – Compromise agreement is allowed under R.A. No.
7160, otherwise known as the Local Government Code of 1991, in the following stages:
a) Prior to the Distraint of Personal Property and the Expiration of the Year Which the
Tax is Due – At any time prior to the distraint of personal property, payment of the tax
with surcharges, interests and penalties may be made in accordance with Section 255.
(Interests on Unpaid Real Property Tax), (Chapter 6, Title Two, Book II of R.A. 7160)
b) Before the Date Fixed for the Auction Sale – At any time before the date fixed for the
auction sale, the owner of the real property or person having legal interest therein may
stay the proceedings by paying the delinquent tax, the interest due thereon and the
expenses of sale.
c) Within one Year from the Date of Auction Sale – Within one (1) year from the date of
auction sale, the owner of the delinquent real property or person having legal interest
therein, or representative, shall have the right to redeem the property upon payment to
the Local Treasurer of the amount of the delinquent tax, including the interests 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.

d) Within one year from the Date of Purchase/Forfeiture by the Local Government
Unit for Want of Bidder – Within one (1) year from the date of purchase/forfeiture by the
local government unit, the delinquent owner or representative may redeem the forfeited
property by paying to the Local Treasurer the full amount of the real property tax and the
related interests and the costs of sale.
e) During the Pendency of a Civil Action in Court for the Collection of Delinquent Real
Property Tax – At any stage of the judicial proceeding in an action to collect real
property tax, the parties thereto may enter into a compromise agreement which shall be
submitted to the court for approval and become the judgment of the court.
f) Authority to Resort to Compromise Agreement.
1. The compromise agreement must be covered by an existing real property tax

ordinance authorizing the Provincial/City Treasurer or Municipal Treasurer of
Metropolitan Manila of the concerned province or city, or municipality within
Metropolitan Manila to resort to such agreement with the delinquent real property
owner or authorized representative.
2. With respect to the compromise agreement entered into in a civil action as a judicial
remedy to collect delinquent real property tax, a mere resolution of the sanggunian,
authorizing the provincial/city treasurer or municipal treasurer to enter into such a
compromise agreement will suffice.
g) Guide to Compromise Agreement. – A compromise agreement may be resorted to in

the settlement of delinquent real property tax obligation, as may be justified, taking into
consideration the following:
1. The delinquent real property tax has aggregated to a substantial amount which shall
make it more burdensome and quite doubtful that the taxpayer could ever pay the
tax in lump sum within the remainder of the statutory period to collect the same.
2. There is no doubt that the delinquent real property tax is correct and there is
potential to collect the full amount thereof by way of a compromise agreement.
3. There is no reduction of the amount of the delinquent tax, interests, penalties, and
surcharges.
4. In case another real property or part of the delinquent property is offered by the
taxpayer in settlement of the tax obligation, such property must be properly valued
by the Appraisal Committee to ascertain that its value will be sufficient to pay in full
the tax delinquencies, including interests, penalties and surcharges. A property
other than the delinquent property offered as payment must be duly ascertained of
its ownership and the absence of any lien or encumbrance or any claim by third
persons or lispendens.
5. An ordinance authorizing such compromise agreement and providing the

parameters thereof.
6. The sanggunian, upon consideration of the recommendation of the Local Treasurer,

shall determine the reasonable percentage of the amount of the delinquent tax to be
paid upon the execution of the compromise agreement and the schedule of payment
of the remaining amount.
7. The compromise agreement does not operate to defeat effective tax administration
of the local government unit or serve to discourage diligent taxpayers.

8. The compromise agreement is most advantageous to the local government unit
under the circumstances.
Section 177. Penal Provisions.–
a) 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 R. A. No. 7160 or the Local Government
Code of 1991, and any other local government official whose acts hinder the prompt
disposition of delinquent real property at public auction shall, upon conviction, be subject
to a fine of not less than One Thousand Pesos (₱ 1,000.00) nor more than Five
Thousand Pesos (₱ 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. 519, LGC)
b) Penalty for Failure to Issue and Execute Warrant –Without prejudice to criminal
prosecution under the Revised Penal Code and other applicable, laws, any Local
Treasurer or his deputy who fails to issue or execute the Warrant of Levy within one (1)
year from the time the tax becomes delinquent or within thirty (30) days from the date of
issuance thereof, or who is found guilty of abusing the exercise thereof in an
administrative or judicial proceeding shall be dismissed from the service. (Sec. 259,
LGC)
Section 178. Distribution of Proceeds. –
a) Proceeds of the Basic Real Property Tax –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 by public auction, in accordance with the
provisions of Title 2, Book II of R. A. No. 7160 or the Local Government Code of
1991, by the province or city or a municipality within the Metropolitan Manila Area
shall be distributed as follows:
1. In the case of Provinces:
1.1 Province: Thirty-five percent (35%) shall accrue to the General Fund of the
province;
1.2 Municipality: Forty percent (40%) shall accrue to the General Fund of the
municipality where the property is located; and
1.3 Barangay: Twenty-five percent (25%) shall accrue to the barangay where
the property is located.
2. In the case of Cities –
2.1 City:Seventy percent (70%) shall accrue to the General Fund of the
city; and
2.2 Barangay: Thirty percent (30%) shall be distributed among the

component barangays of the cities where the property is located in the
following manner:
i. Fifty percent (50%) shall accrue to the barangay where the

property is located;

ii. Fifty percent (50%) shall accrue equally to all component
barangays of the city.
3. In the case of Municipality within the Metropolitan Manila Area –
3.1 Metropolitan Manila Authority: Thirty-five percent (35%) shall accrue to the
General Fund of the Authority;
3.2 Municipality: Thirty-five percent (35%) shall accrue to the General Fund of
the municipality where the property is located;
3.3 Barangay: Thirty percent (30%) shall be distributed among the component
barangays of the municipality where the property is located in the following
manner:
i. Fifty percent (50%) shall accrue to the barangay where the property is
located; and
ii. Fifty percent (50%) shall accrue equally to all component barangays of
the municipality. (Sec. 271, LGC)
The sharing or distribution of proceeds of real property taxes should be applied in accordance with the
provisions of Section 235 (Additional Levy onReal Property Tax for SEF) and Section 272 (Application of
Proceeds of the Additional 1% SEF Tax) of the Local Government Code of 1991, as implemented under
Article 326 and Article 363, IRR.
Correspondingly, the ₱ 400M partially paid under protest by Mirant was recorded and distributed, as follows:
For the first 50% of ₱ 400M or ₱ 200M----------------- to the Trust Fund of the Province of Quezon
For the remaining 50% of ₱ 400M or ₱ 200M ------ it shall be accounted for, viz:
₱ 200M
Divide:
_____2 (represents the 1% basic tax plus 1% SEF Tax
₱ 100M
Thus:
₱ 200M
Less
₱ 100M ------ to the SEF which shall be divided equally between the Provincial and Municipal School Boards
of Quezon and Pagbilao, Respectively.
₱100M------ to the General Fund of the concerned LGUs in the following percentage distribution:
35% of ₱ 100M or ₱ 35M to the Province of Quezon

40% of ₱ 100M or ₱ 40M to the Municipality of Pagbilao
25% of ₱ 100M or ₱ 25M to Barangay Ibabang Polo
Source: BLGF 1st Indorsement, February 13, 2006 to the Municipal Treasurer of Pagbilao, Quezon.
Both the province and the municipality are statutorily entitled to their corresponding shares from the proceeds
of the real property tax collection. The promptness and availability of taxes is an urgent need for any
government to fulfill its mandated duty to deliver services to the people. Thus, taxes collected should not be
withheld by those who are statutorily bound to remit or pay.
Source: BLGF letter dated January 7, 2013 to Governor Cuaresma, Nueva Vizcaya

b) Release of Barangay Share -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. 271 (d), LGC) and to such rules as may be
prescribed by the Commission on Audit for this purpose.(Art. 362, IRR implementing
Sec. 271 (d), LGC)
c) Application of Proceeds of the Additional One Percent SEF Tax -The proceeds
from the additional one percent (1%) tax on real property accruing to the SEF shall
be automatically released to the local school boards; Provided, That in case of
provinces, the proceeds shall be divided equally between the provincial and
municipal school boards, Provided, however, That the proceeds shall be allocated for
the following as determined and approved by the local school board(Sec. 272, LGC):
1. Operation and maintenance of public schools;
2. Construction and repair of school buildings, facilities and equipment;
3. Educational research;
4. Purchase of books and periodicals; and
5. Sports development.
The proceeds from the additional one percent (1%) tax accruing to the Special Education Fund (SEF)
shall be automatically released to the local school boards. It follows that such fund is under the
disposition of the local school board concerned and shall not be used or appropriated by the Office of
the City Treasurer for whatever purpose.
Source: BLGF 2nd Indorsement dated July 28, 2003 to the ICO-Regional Director, Region XI, Davao
City
d) Proceeds of the Tax on Idle Lands. - The proceeds of the additional real property
tax on idle lands shall accrue to the respective General Fund of the province or 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. 273, LGC).Accordingly, the proceeds of
this tax shall be treated in the income account as revenue from taxation. (Art. 364,
IRR implementing Sec. 273, LGC)
e) Proceeds of the Special Levy. - The proceeds of the special levy on lands benefited
by public works, project and other improvements shall accrue to the General Fund of
the local government unit which financed such public works, projects or other
improvements. (Sec. 274, LGC)Accordingly, all income derived from this special levy
shall be treated in the income account as revenue from taxation. (Art. 365, IRR
implementing Sec. 274, LGC)
Section 179. General Assessment Revision, Expenses Incident Thereto. –
a) The sanggunian of provinces, cities and municipalities within the Metro Manila Area
shall provide the necessary appropriations to defray the expenses incident to the
general revision of real property assessment. (Sec. 275, LGC)

b) 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. 275, LGC)
c) The barangays may be required by the sanggunian of the city or municipality to share
in the expenses to be incurred for the conduct of a general revision of real property
assessment. (Art. 366 (c), IRR implementing Sec. 275, LGC)
Section 180. 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 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.
276, LGC)
The condonation or reduction contemplated under Section 276, is prospective in application, meaning, only
real property taxes or interests due the succeeding year or years, after any of the abovementioned incidents
happened which adversely affected the taxpayer’s ability to pay, may be condoned or reduced and not
unpaid real property taxes or interests of the past year or years. Further, as such applicability or nature of
the condonation or reduction is prospective, what are covered therefore are real property taxes and interest,
not penalties or surcharges.
Source: BLGF letter dated June 1, 2011 to the City Treasurer of Isabela City, Basilan
Section 181. Condonation or Reduction of Tax by the President of the Philippines. – The
President 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 municipality within the
Metropolitan Manila Area. (Sec. 277, LGC)
The power granted to the President to condone real property tax under Section 277 of the Local Government
Code of 1991, is seldom exercised for the reason that such power to condone is founded on the requirement
of public interest affecting economic stability – a responsibility of the national government.
Source: BLGF Letter dated December 1, 2011 to the City Mayor of Silay City, Negros Occidental.
Chapter 2. BUSINESS AND OTHER LOCAL TAXES: TAXING POWERS OF PROVINCES
Section182. Scope of Taxing Power of Provinces. – Except as otherwise provided in RA 7160

or the Local Government Code of 1991. The province may levy only the following Taxes, Fees
and Charges.
Section 183. Tax on Transfer of Real Property Ownership. –

a) The province may impose a tax on the sale, donation, barter, or on any other mode of
transferring ownership or title of real property at the rate of not be 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. (Sec. 135 (a), LGC)
b) The fair market value as used herein shall be that reflected in the prevailing schedule of
fair market values enacted by the sanggunian concerned. (Art. 224 (a), IRR,
implementing Sec. 135 (a), LGC)
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.
d) 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 the execution of the deed or from
the date of the decedent's death. (Sec. 135 (b), LGC)
e) The sale, transfer or other disposition of real property pursuant to R.A. No. 6657 6shall be
exempt from this tax (Sec. 135 (a), LGC). However, transfer of ownership over a land
pending issuance of a free patent under Commonwealth Act No. 141 7, as amended by
the Bureau of Lands is subject to this tax.
f) Private sector entities and individuals engaged in developing socialized housing projects
under R. A. No. 7279 8, for the benefit of the underprivileged and homeless are exempted
from payment of transfer tax for both raw and completed projects. (Sec. 20, RA 7279)
Section 184. Tax on Business of Printing and Publication. –

a) The province may impose a tax on the business of persons engaged in the printing
and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts,
pamphlets, and others of similar nature, at a rate not exceeding fifty percent (50%) of one
percent (1%) of the gross annual receipts for the preceding calendar year.
b) In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) 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.
c) The receipts from the printing and/or publishing of books or other reading materials
prescribed by the Department of Education, Culture and Sports (now DepEd) as school
texts or references shall be exempt from the tax herein imposed. (Sec. 136, LGC)
The business of printing newspapers and magazines is included in the clause "and others of similar
nature" and therefore subject to this local tax.
6An Act Instituting a Comprehensive Agrarian Reform Program to Promote Social Justice and Industrialization Providing the
Mechanism /Or its Implementation and for Other Purposes.
7Public Land Act

8Socialized Housing Act

Source: BLGF 1st Indorsement, February 19, 1996
Section 185. Franchise Tax. – Notwithstanding any exemption granted by any law or other
special law, the province may impose a tax on businesses enjoying a franchise. (Sec. 137,
LGC)The administration and collection of franchise tax shall be governed by the following:
a) Tax Rate and Base of Franchise Tax. - The rate of franchise tax shall not exceed fifty
percent (50%) of one percent (1%) of the gross annual receipts which shall include both
cash sales and sales on account realized during the preceding calendar year within its
territorial jurisdiction, excluding the territorial limits of any city located within the province.
(Art. 226 (a), IRR, implementing Sec. 137, LGC)
b) Limitation of the Province to Impose Franchise Tax. - The province, however, shall not
impose the tax on businesses enjoying franchise operating within the territorial
jurisdiction of any highly-urbanized or component city located within the province. (Art.
226 (b), IRR, implementing Sec. 137, LGC)
c) Exemption of Public Utility Vehicle Operators with Certification of Public Convenience. -

The term "businesses enjoying franchise" shall not include holders of certificates of public
convenience for the operation of public utility vehicles for reason that such certificates are
not considered as franchise. (Art. 226 (c), IRR, implementing Sec. 137, LGC)
d) Tax Rate and Base of Franchise Tax for Newly Started Business. - In the case of a newly
started business, the tax shall not exceed one-twentieth (1/20) 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 (Art. 226 (d), IRR, implementing Sec. 137, LGC)
e) Capital Investment as Basis of the Franchise Tax of a Newly Started Business. - The
capital investment to be used as basis of the tax of a newly started business as herein
provided shall be determined in the following manner
1. In the locality where the principal office of the business is located, the paid-up capital
stated in the Articles of Incorporation, in case of corporations, or in any similar
document in case of other types of business organizations or enterprises, shall be
considered as the capital investment.
2. Where there is a branch or sales office which commences business operations

during the same year as the principal office but which is located in another province
or in a city outside the province, the paid-up capital referred to above shall be
reduced by the amount of the capital investment made for the said branch of sales
office which shall be taxable instead by the province or city where it is located.
3. Where the newly-started business is a branch or sales office commencing business

operations at a year later than that of the principal office, the capital investment shall
mean the total funds invested in the branch or sales office. (Art. 226 (d), IRR,
Section 186. Tax on Sand, Gravel and Other Quarry Resources. –
a) The province may levy and collect not more than ten percent (10%) of fair market value
in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry
resources, such as but not limited to marl, marble, granite, volcanic cinders, basalt, tuff
and rock phosphate, extracted from public lands or from the beds of seas, lakes, rivers,
streams, creeks, and other public waters within its territorial jurisdiction. (Art. 227 (a),

b) The following shall govern the administration and collection of this tax:
1. Authority to Grant Permit to Extract - The permit to extract sand, gravel and
other quarry resources shall be issued exclusively by the provincial governor,
pursuant to the ordinance of the sangguniang panlalawigan. (Art. 227 (b), IRR,
2. Distribution of Proceeds of the Tax - the proceeds of the tax on sand, gravel
and other quarry resources shall be distributed as follows:
2.1 Province - Thirty percent (30%);
2.2 Component City or Municipality where the sand, gravel and other quarry
resources are extracted - Thirty percent (30%); and
2.3 Barangaywhere the sand, gravel and other quarry resources are extracted -
Forty percent (40%). (Art. 227 (c), IRR, implementing Sec. 138, LGC)
3. Non-taxability of Quarry Resources Extracted from Private Lands - Only

quarry resources extracted from public lands are subject to local taxes. Quarry
resources extracted from private lands are not within the taxing power of the local
government.9

The fair market value shall be the market value of the minerals as extracted in site and not when
delivered to the end users. The assessment of the tax is done on or before extraction of said materials
and not upon the sale thereof to end users.
Source: (BLGF 1st Indorsement, March 24, 1993)
Section 187. Professional Tax. –
a) The province may levy an annual professional tax on each person engaged in the
exercise or practice of his profession requiring government examination at such amount
and reasonable classification as the sangguniang panlalawigan may determine but shall
in no case exceed Three Hundred Pesos (₱300.00) 10. (Sec. 139 (a), LGC)
b) The collection and administration of the professional tax shall be guided by the following:
1. Persons Liable to Pay Professional Tax - The professionals subject to tax

herein imposed are only those who have passed the bar examinations, or any
board or other examinations conducted by the Professional Regulation
Commission (PRC). (Art. 228 (f), IRR implementing Sec. 139, LGC)
2. Place of Payment of Professional Tax - 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 part of the Philippines without being subjected to any other
9The Province of Bulacan vs. Court of Appeals , Public Cement Corp.,G.R. No. 126232. November 27, 1998
10 Among the so called mandatory impositions the rates of which are declared by law or regulation to be uniformed
throughout certain levels of Local Government Units (Ursal, Philippine Law on Local Government Taxation, annotated, 2000
edition, p. 246)

national or local tax, license, or fee for the practice of such profession. (Sec. 139
(b), LGC)
3. Time of Payment of Profession Tax - 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. (Sec. 139 (d), LGC)
4. Responsibility of Employers in Ensuring Payment of Professional Tax - 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
and annually thereafter. (Sec 139 (c), LGC)
5. Tax is Due for Each Profession Practiced - A line of profession does not
become exempt even if conducted with some other profession for which the tax
has been paid. (Sec. 139 (d), LGC). For example, a lawyer who is also a Certified
Public Accountant (CPA) must pay the professional tax imposed on lawyers and
that fixed for CPAs, if he/she is to practice both professions. (Art. 228 (0, IRR
6. Exemption of Professionals Exclusively Employed in the Government -

Professionals exclusively employed in the government shall be exempt from the
payment of this tax. (Sec. 139 (d), LGC)
7. Documentation Requirements:
7.1 Upon Payment of Tax - For purposes of collecting the tax, the Provincial
Treasurer or his/her duly authorized representative shall require from such
professionals their current annual registration cards issued by the
competent authority before accepting payment of their professional tax for
the current year. The PRC shall likewise require the professionals'
presentation of proof of payment before registration of professionals or
renewal of their licenses. (Art. 228 (f), IRR implementing Sec. 139, LGC)
7.2 On Transaction Documents of Practicing Professionals - Any person

subject to the professional tax shall write in deeds, receipts, prescriptions,
reports, books of accounts, plans and designs, surveys and maps, as the
case may be, the number of the official receipts issued to him/her. (Sec 139
(e), LGC)
Section 188. Amusement Tax. – 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. (Sec. 140 (a), LGC) The collection and administration of the
amusement tax shall be guided by the following:
a) Rate and Base of Amusement Tax –The rate of amusement tax shall not be more than
ten percent (10%) of the gross receipts from admission fees. (R.A. 9640)
b) Procedure for Determining Amusement Tax Payable by Proprietors, Lessees, or

Operators and Distributors of Cinematographic Films –In the case of theaters or
cinemas, the tax shall first be deducted and withheld by 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. (Sec. 140 (b), LGC)
c) Exemption from Payment of Amusement Tax - The holding of operas, concerts,

dramas, recitals, paintings, and art exhibitions, flowers shows, musical programs, literary

and oratorical presentations, except pop, rock or similar concerts shall be exempt from
the payment of the amusement tax, subject to guidelines issued by the DOF (Art. 229 (c),
IRR implementing Sec. 140 (c), LGC). The Admission fees to resort, swimming pools,
bath houses, hot springs and tourist spots pursuant to Supreme Court Decision in the
case of Pelizloy Corp. vs. Province of Benguet, GR No. 183137 dated April 10, 2013.
d) Procedures in Payment of Amusement Tax - The sangguniang panlalawigan may

prescribe the time, manner, terms and conditions for the payment of tax including the
issuance by the proprietor, lessee, or operator of the theater or amusement place of
admission tickets. In case of fraud or failure to pay the tax, the sangguniang
panlalawigan may impose such surcharges, interests, and penalties as it may deem
appropriate. (Art. 229 (d), IRR implementing Sec. 140 (d), LGC)
e) Distribution of Proceeds of Amusement Tax - The proceeds of the amusement tax

shall be shared equally by the province and the municipality where such amusement
places are located. (Sec. 140 (e), LGC)
f) "Other Places of Amusement" Construed - Not only theaters and cinema houses, but
all "places of amusement" such as night clubs, cockpits, and the like, are subject to the
amusement tax on admission if any amount is charged as entrance fee to the patrons.
(p. 77, Philippine Law on Local Government Taxation, Annotated. 2000 edition, Ursal)
g) For the Effective Administration of the Amusement Tax, an Administrative

Provision may be Provided in the Tax Ordinance, Requiring Proprietors, Lessees
or Operators Liable to the Amusement Tax on Admission to:
1. Number the admission tickets consecutively and serially;
2. Reflect in the admission tickets the name of the amusement place and the fee
charged for admission;
3. Register ticket rolls or booklets with the Provincial/City Treasurer of the locality
where the amusement place is located before issuing the tickets;
4. Tear admission tickets into halves, once issued, the first half to be given by the
gatekeepers to the customer or patron and the other half to be deposited in a
ticket box to be made available for inspection by the Local Treasurer or his
deputy; and
5. Provide a strong and safe ticket box to contain the admission ticket halves, which
boxes will be secured with a separate padlock, the only key to which shall be
deposited with the Local Treasurer concerned.
Amusement tax is not collectible from business establishments that operate token and coin-operated
video and similar machines that do not charge admission fees. The purchase of token is for the
purpose of playing games on or operating the machines installed in the amusement place, not to gain
admission to the premises, and therefore does not constitute the payment of admission fees on which
an amusement tax may be levied and collected. A person may enter the place without paying
anything and leave without operating any machine, in which case, he does not even have to
purchase tokens.
However, the operator of the said business establishment shall be taxable under Sec. 143 (h) of the
Local Government Code of 1991, on the basis of the gross receipts from the sale of tokens.

Source: BLGF 1st Indorsement, February 27, 1996 to the City Treasurer of Manila
Section 189. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers,
Producers Wholesalers of, Dealers and Retailers in, Certain Products. –
a) The province may levy an annual fixed tax for every truck, van or any vehicle used by
manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution
of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other products
as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers,
whether directly or indirectly, within the province in an amount not exceeding Five
Hundred Pesos (₱ 500.00).
b) The manufacturers, producers, wholesalers, dealers, and retailers referred to in the

immediately foregoing paragraph shall be exempt from tax on peddlers referred to in
Section 143 (g) of R. A. No. 7160 or the Local Government Code of 1991.239 (Sec. 141,
LGC)
c) The annual fixed tax is applicable per province. If the same truck is used to deliver goods
in several provinces, the owner of the truck is liable to pay the said tax to each province
where he/she delivers goods. Provided, that the province concerned has enacted the
ordinance necessary to impose the tax.
Chapter 3.BUSINESS AND OTHER LOCAL TAXES: TAXING POWERS OF

MUNICIPALITIES
Section 190. Scope of Taxing Powers of Municipalities. –Except as otherwise provided in R.

A. No. 7160 or the Local Government Code of 1991, municipalities may levy taxes, fees, and
charges not otherwise levied by the provinces. (Sec. 142, LGC)
Section 191. Tax on Business11. – The municipality may impose the taxes on the following
businesses operating within its jurisdiction:
a) Manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and

compounders of liquors, distilled spirits, and wines or manufacturers of any article of
commerce of whatever kind or nature (Sec. 143 (a), LGC);
b) Wholesalers, distributors, or dealers in any article of commerce of whatever kind or

nature (Sec. 143 (b), LGC);
c) Exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers,

or retailers of essential commodities. (Sec. 143 (c), LGC);
d) Retailers (Sec. 143 (d), LGC);
e) Contractors and other independent contractors (Sec. 143 (e), LGC);
f) Banks and other financial institutions (Sec.143, LGC);
g) Peddlers engaged in the sale of any merchandise or article of commerce (Sec. 143 (g),
LGC);
h) Any business not otherwise specified in the above enumeration.(Sec. 143 (h), LGC)
11The LGC has no provision authorizing LGUs to impose local business tax on newly started business except in the case of
Tax on Printing and Publication, under section 136 and Franchise Tax under Sec. 137, all of the LGC, both of which are
provincial impositions but maybe imposed by a city in relation to Sec. 151, LGC

Section 192. Scheduleon Business Tax. –
a) Business Taxes onManufacturers, Assemblers, Repackers, Processors, Brewers,
Distillers, Rectifiers, and Compounders of Liquors, Distilled Spirits, and Wines or
Manufacturers of Any Article of Commerce of Whatever Kind or Nature shall be imposed
in accordance with the following schedule:
With Gross Sales or Receipts for the Preceding Amount of Tax,

Calendar Year in the Amount of (Pesos): Per Annum (Pesos):
Less than 10,000.00 165.00

10,000.00 or more but less than 5,000.00 220.00
50,000.00 or more but less than 75,000.00 1,320.00
750,000.00 or more but less than 1,000,000.00 10,000.00
1,000,000.00 or more but less than 2,000,000.00 13,750.00
2,000,000.00 or more but less than 3,000,000.00 16, 500.00
3,000,000.00 or more but less than 4,000.000.00 19,800.00
4,000.000.00 or more but less than 5,000,000.00 23,100.00
6,500,000.00 or more at a rate not exceeding
thirty seven and a half percent (371/2%)
of one percent (1%) of the amount in
excess of ₱6,500,000.00 plus
₱24,375.00(Sec. 143 (a), LGC)
The preceding rates shall apply only to the amount of domestic sales of manufacturers,
assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors,
distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature
other than those enumerated under paragraph (c) in this Section. (Art. 232 (a), IRR implementing
Sec. 143 (a), LGC)
b) Business Tax on Wholesalers, Distributors, or Dealers in Any Article of Commerce of

Whatever Kind or Nature shall be imposed in accordance with the following schedule:
With Gross Sales or Receipts for the Preceding Amount of Tax

Calendar Year in the Amount of (Pesos) Per Annum (Pesos)
Less than 1,000.00 18.00


2,000,000.00 or more at a rate not exceeding fifty percent (50%) of one
percent (1%) of the amount in excess of
₱2,000,000.00 plus ₱10,000.00. (Sec. 143 (b),
LGC)
The business tax enumerated under paragraph (b) in this Section shall no longer be subject to
the tax on wholesalers, distributors, or dealers herein provided for. (Art. 232 (b), IRR
implementing Sec. 143 (b), LGC)
c) Business Tax on Exporters, and on Manufacturers, Millers, Producers, Wholesalers,

Distributors, Dealers, or Retailers of Essential Commodities enumerated hereunderat a rate not
exceeding one-half (1/2) of the rates prescribed under the preceding paragraphs a and b on this
Section:
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, insecticides, herbicides and other farm inputs;
6. Poultry feeds and other animal feeds;
7. School supplies; and
8. Cement. (Sec. 143 (c), LGC)
For purposes of this provision, the term "exporters" shall refer to those who are
principally engaged in the business of exporting goods and merchandise, as well as
manufacturers and producers whose goods or products are both sold domestically and
abroad. (Art. 232 (c), IRR implementing Sec. 143 (c), LGC)
Exporters shall be subject to the business tax as follows:
1. The gross sales or receipts on goods or products sold domestically shall be

subject to the business tax at rates prescribed under paragraphs (a) (b) and (d) of

this Section;
2. Taxable export sales shall be subject to the business tax at a rate not exceeding
one half (1/2) of the rates of domestic sales; and
3. The amount of export sales shall be excluded and declared separately from the
total sales and shall be subject to the rates prescribed underthis Section. Failure
to make this separate declaration of export sales shall subject the total sales to
the rates prescribed under this Section. (Local Finance Circular 4-93, Department
of Finance)
For the purpose of imposing the business tax, the gross receipts of rice and corn millers shall be the total
fees paid to the miller by the owners of palay or corn without deducting the cost of labor and other
maintenance and operating expenses.
Mill operators who also buy palay or corn grains and then sell these after milling, are also subject to the
tax for engaging in other business such as dealers. The gross receipts shall be the actual sale of rice or
corn without deducting the cost of palay, labor and other maintenance and operating expenses. The
gross sales or receipts for each business shall be separately reported for purposes of computing the
business taxes due from each business.
Source: BLGF 1st Indorsement, March 24, 1995 to the Municipal Treasurer of Cabacan, North Cotabato)
d) Retailers. –The guidelines on the administration and collection of the business tax on
retailers are as follows:
With gross sales or receipts for the preceding Rate of Tax

calendar year in the amount of: Per Annum
₱400,000.00 or less 2%
1% in excess of ₱400,000.00 plus ₱8,000.0012.

more than ₱400,000.00
(Sec. 143 (b), LGC)
1. Barangays shall have the exclusive power to levy taxeson gross sales or receipts
of the preceding calendar year in the amount of Fifty Thousand Pesos
(₱50,000.00) or less in the case of cities, and Thirty Thousand Pesos
(₱30,000.00) or less in the case of municipalities (Art. 232 (d), IRR implementing
Sec. 143 (d), LGC). The following are the guidelines for the imposition of such
taxes by the barangays:
1.1 Stores or retailers with fixed business establishments in a barangay within a

city whose gross sales or receipts for the preceding year do not exceed
₱50,000.00 shall be taxable exclusively by the barangay. Those whose gross
sales or receipts exceed ₱50,000.00 shall be taxable by the city.
1.2 Stores or retailers with fixed business establishments in a barangay within a

municipality whose gross sales or receipts for the preceding year do not
12 ₱400,000.00 x 2% = ₱8,000.00

exceed ₱30,000.00 shall be taxable exclusively by the barangay. Those
whose gross sales or receipts exceed ₱30,000.00 shall be taxable by the
municipality.
1.3 The barangay shall have the power to collect the business tax on retailers
only if it had levied the tax pursuant to an ordinance duly enacted by its
sanggunian. Otherwise, the tax shall be collected by the municipality or city
where the barangay is located, provided they have enacted the required
ordinance levying the tax.
2. The following rules shall apply in the determination of business taxon retailers of
both essential and non-essential commodities:
2.1 A retailer who sells essential and non-essential commodities shall segregate
sales accordingly;
2.2 The gross sales from essential commodities of the preceding year shall be
subject to the tax provided under paragraph (c) of this Section;
2.3 The gross sales on non-essential commodities of the preceding year shall be
subject to the retailer's tax provided under paragraph (d) of this Section.
(Philippine Law on Local Government Taxation, Annotated, 2000 edition,
Ursal)
3. The following rules shall apply in the case of a retailer who is also a wholesaler of
both essential and non-essential commodities:
3.1 A wholesaler who is at the same time a retailer of both essential

commodities and non-essential commodities shall segregate sales
accordingly;
3.2 The gross sales from essential commodities shall be subject to the tax
under paragraph (c) of this Section; and
3.3 If the wholesaler who is at the same time a retailer fails to keep a separate
account for the different sales or receipts, he/she shall be liable as a
wholesaler at the rates under paragraphs (b) and (d) of this Section.
(Philippine Law on Local Government Taxation, Annotated, 2000 edition,
Ursal)
e) On Contractors and Other Independent Contractors in accordance with the following

schedule:
1. Graduated Schedule of Tax -
With Gross Sales or Receipts for the Preceding Amount of Tax

Calendar Year in the Amount of (Pesos) Per Annum (Pesos)
Less than 5,000.00 7.50


2,000,000.00 or more at a rate not exceeding 50% of 1% of the
amount in excess of
₱2,000,000.00 plus₱11,500.00.(Sec. 143 (e),
LGC)
2. Determination of taxablegross receipts of construction contractors:
2.1 The taxable gross receipts shall be the amounts received by the principal
contractor as the total contract price less the amount paid to sub-contractors
under sub-contract arrangements, if there is any. The gross receipts of sub-
contractors are in turn subject to the same business tax as construction
contractors.
2.2 The taxable gross sales or receipts include the total amount of money or its
equivalent actually or constructively received during the taxable quarter for the
services performed or to be performed, consisting of the following:
i. The contract price;
ii. The compensation or service fee, including the amount charged

formaterials installed or used in conjunction with the services, and
iii. Deposits or advance payments
2.3 Taxable gross receipts exclude discounts that can be determined at the time of
sales, sales returns, and the excise taxes and value added tax (VAT) paid by the
contractor.
(Local Finance Circular No. 3-95, Department of Finance)
Local governments may impose business tax on contractors and independent contractors.
However, subcontractors shall not be liable for business tax if the total contract price for the
project is embodied in the contract between the primary contractor and the client. On the other
hand, if the cost of the portion of the project that is sub-contracted is paid directly by the client to
the sub-contractor, the sub-contractor becomes an independent contractor subject to the same
business tax.
Source:BLGF 1st Indorsement, August 10, 1998 and BLGF 1st Indorsement, July 13, 1993
3. Situs or Place of Payment of Business Tax on Construction Contractors - For the
purpose of collection of the business tax on construction contractors, the following
rules shall apply:
3.1 On Domestic Construction Projects - For projects bidded out and

implemented within the territorial jurisdiction of the Philippines:

3.2 All gross receipts realized from domestic projects or contracts undertaken by the
branch office shall be recorded in the said branch office and the tax thereon
shall be payable to the city or municipality where the said branch is located;
3.3 In cases where there is no branch office, the gross receipts from domestic
projects or contracts shall be recorded in the Head/Principal Office and the same
shall be allocated as follows:
i. Thirty percent (30%) of the gross receipts shall be taxable by the city or
municipality where the principal office is located; and
ii. Seventy percent (70%) of the gross receipts shall be taxable by the city or
municipality where the project office is located.
4. On Overseas Construction Projects - For construction projects undertaken by a

Philippine-based construction contractor outside the territorial boundaries of the
Philippines, as well as construction contracts involving fabrication works with attendant
installation works outside the Philippines, which are paid for in accepted freely
convertible foreign currency:
4.1 In the case of overseas construction projects, the construction contractors shall
declare separately the gross receipts realized therefrom, which shall not be
subject to the business tax.
4.2 In the case of pre-fabricated works which are paid for in accepted freely
convertible foreign currency with attendant installation works outside the
Philippines, the gross receipts realized therefrom shall be subject to not more
than one half (1/2) of the rate underparagraph (e)(1) of this Section.
4.3 In case there is transfer or relocation of the Head/Principal Office or of any

branch to another city or municipality, the construction contractor shall give due
notice of such transfer or relocation to the cities or municipalities concerned at
least fifteen (15) days before such transfer or relocation is effected. (Local
Finance Circular No. 3-95, Department of Finance dated May 22, 1995)
f) On Banks and Other Financial Institutions
1. Rate and Base of Tax -
1.1 Banks and other financial institutions are subject to a business tax at a rate not
exceeding fifty percent (50%) of one percent (1%) of the gross receipts of the
preceding calendar year derived from interests, commissions and discounts
from lending activities, income from financial leasing, dividends, rentals on
property and profit from exchange or sale of property, insurance premium
(Sec. 143 (f), LGC). All other income and receipts of banks and financial
institutions not otherwise enumerated above shall be excluded from the
computation of this tax. (Art. 232 (f), IRR implementing Sec. 143 (f), LGC)
1.2 The taxes imposed on banks, insurance companies, and financing companies
accruing to the local government units shall be paid within the first twenty (20)
days of January or of each subsequent quarter, as the case may be, unless
otherwise fixed in the local tax ordinance. (LFC Nos. 1-93,2-93, and 3-93
dated June 16, 1993, Department of Finance)
2.Guidelines Applicable to Banks -

2.1 For the purpose of imposing the tax on gross receipts of banks, the term "gross
receipts" shall include only the following:
2.1.1 Interest from loans and discounts representing interest earned and
actually collected on loans and discounts such as:
i. Discounts earned and actually collected in advance on bills

discounted;
ii. Interest earned and actually collected on demand loans;
iii. Interest earned and actually collected on time loans, including the
earned portions of interest collected in advance;
iv. Interest earned and actually collected on mortgage contracts

receivables; and
v. Interest earned and actually collected on inter-bank loans.
2.1.2 Income from rental of property shall include the following:
i. Earned portion of rental collected in advance from lessees of safe

deposit boxes; and
ii. Rental earned and actually collected from lessees of bank premises
and equipment.
2.1.3 Income earned and actually collected from acquired assets.
2.1.4 Income from sale or exchange of assets and property.
2.1.5 Cash dividends earned and received on equity investments.
2.1.6 Commissions from lending activities.
2.1.7 Income component of rentals from financial leasing.
2.2 The following income and receipts of banks shall be excluded from the
taxing authority of the local government units:
2.2.1 Interest earned under the expanded foreign currency deposit system;
2.2.2 Interest accumulated by lending institutions on mortgages insured under

R. A. No. 580, as amended, otherwise known as the Home Financing
Act; and
2.2.3 Receipts from filing fees, service and other administrative charges.
(LFC No. 1-93 dated June 16, 1993, Department of Finance)
2.3 Situs or Place of Payment of Tax on Banks - All transactions filed with or
negotiated in a branch shall be recorded in the same branch and the gross
receipts derived therefrom shall be applied to:

2.3.1 Transactions negotiated and approved by the Branch.
2.3.2 Transactions filed and negotiated in the Branch but approvedin the Head
Office.
2.4 The gross receipts derived from transactions at the Head Office, except gross
receipts recorded in the Branch shall be taxable by the city or municipality where
that Head Office is located.
2.5 In case of transfer or relocation of the Head Office or of any branch to another
city or municipality, the bank shall give due notice of such transfer or relocation
to the Local Chief Executives of the cities or municipalities concerned within
fifteen (15) days after transfer or relocation is effected.
(LFC No. 2-07 dated February 26, 2007, Department of Finance)

3.Guidelines Applicable to Insurance Companies.
3.1 Gross Receipts of Insurance Companies Subject to Tax -Gross receipts of

insurance companies shall include only the following:
3.1.1 Insurance premiums actually collected, except the following tax exempt
premiums which must be recorded and declared separately:
i. Premiums collected before the effectivity of the ordinance imposing

the tax;
ii. Two percent (2%) of all premiums for the sale of fire, earthquake, and
explosion hazard insurance pursuant to the Fire Code of the
Philippines (P.D. No. 1185, as amended by RA);
iii. Premiums refunded within six (6) months after payment of the
account;
iv. Premiums collected or received by any branch of a domestic

corporation, firm, or association doing business outside the
Philippines on account of a life insurance of the insured who is a non-
resident;
v. Premiums collected or received on account of any reinsurance, if the

risk insured covers property located outside the Philippines, or the
insured, in case of personal insurance, resides outside the foreign
country where the original insurance has been issued or perfected;
vi. Portions of the premiums collected or received by insurance

companies pertaining to variable contracts; and
vii. The excess of the amount necessary to insure the lives of variable
contracts.
3.1.2 Interest earnings on loans and discounts actually collected.
3.1.3 Rentals actually collected from property owned by insurance companies.
3.1.4 Income actually collected from acquired assets.
3.1.5 Cash dividends received on equity investments.

3.2 Income and Receipts of Insurance Companies Not Subject to Tax - All other
incomes and receipts of insurance companies not enumerated in the preceding
paragraph shall be excluded from the taxing authority of local government units,
such as service fees received from fire, earthquake, and explosion pre-
insurance adjustment business directly to agents, pursuant to the Fire Code of
the Philippines (P.D. No. 1185). (LFC No. 2-93 dated June 16, 1993,
Department of Finance)
3.3 Situs or Place of Payment of Tax on Insurance Companies - The situs of tax
on insurance companies shall be in accordance with the following rules:
3.3.1 Insurance contracts or policies shall be recorded in the issuing Head

Office or branch. However, the taxes shall be collected by the city or
municipality where the office or branch to which the premiums or gross
receipts were actually paid is located. This rule shall be applied
irrespective of whether or not the insurance contracts/policies were
solicited or negotiated by insurance agents or brokers who are not
residents of the city or municipality where the branch is located, or who
are not affiliated with or assigned to such branch.
3.3.2 The offices of an insurance agent or broker shall not be considered a

branch and shall not be subject to the situs of taxation rule.
3.3.3 All insurance premiums and/or gross receipts from transactions not
recorded in the branches or the insurance companies shall be recorded in
the Head Office and taxable by the city or municipality where the said
Head Office is located.
3.3.4 In case there is transfer or relocation of the Head Office or of any branch
to another city or municipality, the insurance company shall give due
notice to the local chief executives of the cities or municipalities
concerned within 15 days after such transfer or relocation.
4. Guidelines Applicable to Financing Companies.
4.1 Financing companies shall refer to corporations or partnerships, except those

regulated by the Bangko Sentral ng Pilipinas (BSP), the Insurance Commission,
and the Cooperatives Development Authority, which are primarily organized for
the purpose of extending credit facilities to consumers and to industrial,
commercial or agricultural enterprises, either by discounting or factoring
commercial papers or account receivables, or by buying and selling contracts,
leases, chattel mortgages, or other evidences of indebtedness, or by leasing of
motor vehicles, heavy equipment and industrial machinery, business and office
machines and equipment, appliances and other movable property.
4.2 For the purpose of imposing business tax on financing companies, gross receipts
shall include only the following:
4.2.1 Interest earned and actually collected on loans and discounts; viz:
i. Discounts earned and actually collected in advance on bills

discounted;

ii. Interest earned and actually collected on demand loans;
iii. Interest earned and actually collected on time loans, including the
earned portions of interest collected in advance; and
iv. Interest earned and actually collected on mortgage contract

receivables.
4.2.2 Interest earned and actually collected on inter-bank loans.
4.2.3 Income from rental of property shall include the following:
i. Earned portion of rental collected in advance from lessees of safe

deposit boxes; and
ii. Rental earned and actually collected from lessees of bank premises
and equipment.
4.2.4 Income earned and actually collected from acquired assets.
4.2.5 Income from sale or exchange of assets and property.
4.2.6 Cash dividends earned and received on equity investments.
4.2.7 Income component of rentals from financial leasing.
4.3 All other incomes and receipts of financing companies not enumerated in the
preceding paragraph shall be excluded from the taxing authority of local
government units.
4.4 Situs or Place of Payment of Tax on Financing Companies - The situs of tax
on financing companies shall be in accordance with the following:
4.4.1 All transactions filed with or negotiated in the branch shall be recorded in
said branch and the gross receipts derived from said transactions shall
be applied to:
i. Transactions negotiated with and approved by the Branch; or
ii. Transactions filed and negotiated in the Branch and approvedby the
Head Office.
4.4.2 Gross receipts derived from transactions at the Head Office, except gross
receipts recorded in the branches, shall be taxable by the city or
municipality where said Head Office is located.
4.4.3 In case of transfer or relocation of the Head Office or of any branch to

another city or municipality, the insurance company shall give due notice
to the Local Chief Executives of the cities or municipalities concerned
within fifteen (15) days after transfer or relocation.
5) Guidelines Applicable to Credit Card Companies.

Credit card companies fall within the purview of banks and other financial institutions contemplated
under Section 143 (f) of R. A. No. 716 or the Local Government Code of 1991, and therefore may
be subject to business taxes at the rate of 50% of 1 % on the gross receipts upon enactment of the
appropriate ordinance by the local government unit concerned.
Source: BLGF Letter, March 15, 1999 to Picazo Buyco Tan Fider & Santos Law Offices
Section 193. On Peddlers Engaged in the Sale of Any Merchandise or Articles of

Commerce. –Peddlers shall be taxed at a rate not exceeding Fifty Pesos (₱50.00) per peddler
annually (Sec. 143 (g), LGC).
Delivery trucks, vans or motor vehicles used by manufacturers, producers, wholesalers, dealers
or retailers shall be exempt from peddler's tax. (Art. 232 (g), IRR implementing Sec. 143 (g),
LGC).
Section 194. On Any Business.– Municipalities may also impose taxes on any business not
otherwise specified in the preceding paragraphs which the sanggunian concerned may deem
proper to tax provided:
a) The rate of tax on any business subject to the excise, value added or percentage tax
under the National Internal Revenue Code, as amended, shall not exceed two percent
(2%) of gross sales or receipts of the preceding calendar year (Sec. 143 (h), LGC), and
provided further that in line with the existing national policy, any business engaged in the
production, manufacture, refining, distribution or sale of oil, gasoline and other petroleum
products shall not be subject to any local tax imposed under this provision.(Sec. 143 (h),
LGC;Art. 232 (h), IRR )
b) The sanggunian concerned may prescribe a schedule of graduated tax rates but in no
case shall exceed the rates prescribed under paragraphs (a), (b), (c), (d), (e), (f) and (g)
of this Section.
Section 195. Taxing Powers of Municipalities within Metro Manila Area. –

a) The municipalities within the Metropolitan Manila Area may levy taxes on businesses
enumerated under paragraphs (a), (b), (c), (d), (e) and (f) of Section 196 of this Manual at
rates not exceeding fifty percent (50%) of the maximum rates prescribed for said
businesses. (Art. 236 (a), IRR implementing Sec. 144, LGC)
b) Said municipalities within the Metro Manila Area, may levy and collect the taxes which
may be imposed by the province under Sections 187, 188, 189, 190, 191, 192 and 193 of
this Manual at the rates not exceeding those prescribed therein. (Art. 236 (b), IRR
Chapter 4. BUSINESS AND OTHER LOCAL TAXES: TAXING POWERS OF CITIES
Section 196. Scope of Taxing Powers of Cities. –
a) Except as otherwise provided in this Manual, the city may levy the taxes, fees, and
charges which the province or municipality may impose: Provided, however that the
taxes, fees, and charges levied and collected by highly urbanized and independent
component cities shall accrue to them and distributed in accordance with the provisions
of R. A. No. 7160 or the Local Government Code of 1991.
b) 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.

c) The city may levy and collect a percentage tax on any business not otherwise specified
under paragraphs (a), (b), (c), (d), (e), (f) and (g) of Section 196 of this Manual at rates
not exceeding three percent (3%) of the gross sales or receipts of the preceding calendar
year. (Art. 237, IRR implementing Sec. 151, LGC)
Section 197. Rates for the Professional and Amusement Taxes. – The rates for the
professional and amusement taxesshall be uniform for the city and the province, as follows:
a) Professional Tax shall not exceed Three Hundred Pesos (₱ 300.00); and
b) Amusement tax shall not be more than ten percent (10%) of the gross receipts from
admission fees. (R.A. No. 9640)
Section 198. Sharing of Proceeds Derived from Tax on Quarry Resources in Highly
Urbanized Cities.– The proceeds of the tax on sand, gravel, and other quarry in highly
urbanized cities shall be distributed, as follows:
a) Highly Urbanized City - Sixty percent (60%)
b) Barangay where the sand, gravel,

and other quarry resources are extracted - Forty percent (40%)
(Art. 239, IRR, LGC)
Chapter 5.BUSINESS AND OTHER LOCAL TAXES: TAXING POWERS OF

BARANGAYS
Section 199. Scope of Taxing Powers of Barangays. –The barangays may levy the following
taxes, fees, and charges which shall exclusively accrue to them:
a) Stores or retailers havingfixed business establishments with gross sales or receipts of the
preceding calendar year in the amount of Fifty Thousand Pesos (₱50,000.00) or less, in
the case of a barangay within a city, and Thirty Thousand Pesos (₱30,000.00) or less, in
the case of a barangay within a municipality, at rates not exceeding one percent (1%) of
such gross sales or receipts. (Arts. 232 (d) and 240, IRR implementing Sections 143 (d)
and 152, LGC)
b) The following guidelines shall be observed in the imposition of business tax retailers by
the barangays:
1. Stores or retailers having fixed business establishments within a barangay or city

whose gross sales or receipts for the preceding year do not exceed Fifty Thousand
Pesos (₱50,000) shall be taxable exclusively by the barangay. Those whose gross
sales or receipts exceed Fifty Thousand Pesos (₱50,000.00) shall be taxable by the
city.
2. Stores or retailers having fixed business establishments in a barangay or a

municipality whose gross sales or receipts for the preceding year do not exceed
Thirty Thousand Pesos (₱30,000.00) shall be taxable exclusively by the barangay.
Those whose gross sales or receipts exceed Thirty Thousand Pesos (₱30,000.00)
shall be taxable by the municipality.

3. The barangay shall have the power to collect the business tax on retailers only if it
had levied the tax pursuant to an ordinance duly enacted by its sanggunian.
Otherwise, the tax shall be collected by the municipality or city where the barangay
is located, provided that they have enacted the required ordinance levying the tax.
(Local Finance Circular No. 1-94, Department of Finance)
Chapter 6.GENERAL GUIDELINES ON THE APPLICATION OF BUSINESS AND OTHER

LOCAL TAXES
Section 200. Assessment of Business Taxes. – c/o Brenda/Tom
Section 201. Related or Combined Businesses. –
1. The business taxes under Section 196 of this Manual shall be payable for every separate
or distinct establishment or place where the business subject to tax is conducted, and
one line of business does not become exempt by being conducted with some other
businesses for which such tax has been paid. The tax on business must be paid by the
person conducting the same. The conduct or operation of two or more related businesses
by any one person, natural or juridical, shall require the issuance of a separate permit or
license for each business. (Art. 242 (a), IRR implementing Sec. 146 (a), LGC)
2. In cases where a person conducts or operates two (2) or more of the businesses
mentioned in Section 196 of thisManual which are subject to the same tax rate, the tax
shall be computed on the basis of the combined total gross sales or receipts of the said
two (2) or more related businesses. (Sec. 146 (b), LGC)
3. In cases where a person conducts or operates two (2) or more businesses mentioned in
Section 196 of this Manual which are subject to different rates of tax, the gross sales or
receipts of each business shall be separately reported for the purpose of computing the
tax due from each business. (Sec. 146 (c) LGC)
Section 202. Situs of the Tax. –For purposes of collection of taxes under Section 196 of this
Manual manufacturers, assemblers, repackers, brewers, distillers, rectifiers and compounders of
liquor, distilled spirits and wines, millers, producers, exporters, wholesalers, distributors, dealers,
contractors, banks and other financial institutions, and other businesses, maintaining or operating
branch or sales outlet elsewhere shall record the sale in the branch or sales outlet making the
sale or transaction, and the tax thereon shall accrue and shall be paid to the city or municipality
where such branch or sales outlet is located. In cases where there is no such branch or sales
outlet in the city or municipality where the sale or transaction is made, the sale shall be duly
recorded in the principal office and the taxes due shall accrue and shall be paid to such city or
municipality.
The following sales allocation shall apply to manufacturers, assemblers, contractors, producers,
and exporters with factories, project offices, plants, and plantations in the pursuit of their
business:
a) All sales made in a locality where there is a branch or sales office or warehouse shall
be recorded in said branch or sales office or warehouse and the tax shall be payable to
the city or municipality where it is located.
b) In cases where there is no such branch, sales office or warehouse in the locality where
the sale is made, the sale shall be recorded in the principal office along with the sales

made by said principal office and the tax shall accrue to the city or municipality where
said principal office is located.
c) In cases where there is a factory, project office, plant or plantation in pursuit of

business:
1. Thirty percent (30%) of all sales recorded in the principal office shall be taxable by
the city or municipality where the principal office is located, and
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.
3. LGUs where only experimental farms are located shall not be entitled to the sales
allocation herein provided.
4. However, on-site sales of commercial quantity made in experimental farms shall be

similarly imposed the corresponding tax under Sec. 143 of R. A. No. 7160 or the
Local Government Code of 1991, and allocated as herein provided.
5. The foregoing sales allocation shall be applied irrespective of whether or not sales
are made in the locality where the factory, project office, plant or plantation is
located.
d) In the case of a plantation located in a locality other than that where the factory is
located, said seventy percent (70%) sales allocation mentioned in item (3.2) under sub-
paragraph (3) above shall be divided as follows:
1. Sixty percent (60%) to the city or municipality where the factory is located; and
2. Forty percent (40%) to the city or municipality where the plantation is located.
e) In cases where a manufacturer, assembler, producer, exporter or contractor has two

(2) or more factories, project offices, plant, or plantations located in different localities,
the seventy percent (70%) the sales allocation mentioned in item (3.2) under sub-
paragraph (3) above shall be pro-rated among the localities where the factories, project
offices, plants, and plantations are located in proportion to their respective volumes of
production during the period for which the tax is due. (Sec. 150 (d), LGC) In the case of
project offices of service and other independent contractors, the term "production" shall
refer to the cost of projects actually undertaken during the tax period.
f) In the case of manufacturers or producers which engage the services of an

independent contractor to produce or manufacture some of their products, the rules on
situs of taxation shall apply as clarified under Article 243, IRR, implementing Section
150 of R. A. No. 7160 or the Local Government Code of 1991, which are provided
herein, except that the factory or plant and warehouse of the contractor utilized for the
production and storage of the manufacturers' products shall be considered as the
factory or plant and warehouse of the manufacturer.
g) In the case of sales made by the factory, project office, plant or plantation, the sale
shall be covered by paragraphs (1) and (2) above.
h) The city or municipality where the port of loading is located shall not levy and collect tax
imposable under Section 143 of R. A. No. 7160 or the Local Government Code of
1991, unless the exporter maintains in said city or municipality its principal office, a
branch, sales office or warehouse, factory, plant, or plantation in which case the
foregoing rules on the matter shall apply accordingly.

i) The following guidelines shall apply to route sales:
1. For route sales made in the locality where a manufacturer, producer, wholesaler,
retailer or dealer has a branch or sales office or warehouse, the sales shall be
recorded in that branch, sales office or warehouse and the tax due paid to the
LGU where such branch, sales office or warehouse is located.
2. For route sales made in a locality where a manufacturer, producer, wholesaler,

retailer or dealer has no branch, sales office or warehouse, the sales shall be
recorded in the branch, sales office or warehouse from where the route trucks
withdraw their products for sale, and the tax due on such sales is paid to the LGU
where such branch, sales office or warehouse is located.
3. Based on the foregoing, LGUs where route trucks deliver merchandise cannot
impose any tax on said trucks except the annual fixed tax authorized to be
imposed by the province under Section 141 of R. A. No. 7160 or the Local
Government Code of 1991, which cities may likewise impose under Section 151 of
the same Code, on every delivery truck or van or any vehicles used by
manufacturers, producers, wholesalers, dealers or retailers in the delivery or
distribution of distilled spirits, fermented liquors, softdrinks, cigars and cigarettes,
and other products as may be determined by the sangguniang panlalawigan.
(Art. 243, IRR implementing Sec. 150 (b), LGC)
Section 203. Retirement of Business. –
a) 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 be less than the tax due on said gross sales or receipts of the
current year, the difference shall be paid before the business is considered officially
retired. (Sec. 145, LGC)
b) Termination of Business Construed - For purposes hereof, termination shall mean that
business operations are stopped completely. Any change in ownership, management
and/or name of the business shall not constitute termination as herein contemplated.
Unless stated otherwise, the assumption of the business by any new owner or manager
or re-registration of the same business under a new name will be considered by the LGU
concerned only for record purposes in the course of the renewal of the permit or license
to operate the business.
A transfer in ownership does not mean the retirement or termination of a business. The retirement of
business, as contemplated by law, means a complete cessation or stoppage of business operations. In
a change of ownership, the business continues under the stewardship of another set of owners.
Source: BLGF Opinion, August 12, 1993
c) Confirmation of Retirement of Business and Taxation - The Local Treasurer

concerned shall see to it that the payment of taxes of a business is not avoided by
simulating the termination or retirement thereof. For this purpose, the following
procedural guidelines shall be strictly followed:
1. The Local Treasurer shall assign every application for the termination or
retirement of business to an inspector in his office who shall go to the address of
the business on record to verify if it is really no longer operating. If the inspector

finds that the business is simply placed under a new name, manager and/or new
owner, the Local Treasurer shall recommend to the Mayor the disapproval of the
application for the termination or retirement of said business;
2. Accordingly, the business shall continue to be liable for the payment of all the
taxes, fees and charges imposed on it under existing local tax ordinances;
3. In addition, in the case of a new owner to whom the business was transferred by
sale or other form of conveyance, said new owner shall be liable to pay the tax or
fee for the transfer of the business to him/her if there is an existing ordinance
prescribing such a transfer tax.
d) In case it is found that the retirement or termination of the business is found to be

legitimate, and the tax due from therefrom be less than the tax due for the current year
based on the gross sales or receipts, the difference in the amount of the tax shall be paid
before the business is considered officially retired or terminated.
e) The permit issued to a business retiring or terminating its operations shall be surrendered
to the Local Treasurer who shall forthwith cancel the same and record the cancellation in
his books. (Art. 241, IRR implementing Sec. 145, LGC)
Chapter 7.THE COMMUNITY TAX
Section 204. Community Tax. – Cities or municipalities may levy a community tax in lieu of the
former; residence taxlevied and collected under Section 38 of P. D: No. 231, as amended.
Accordingly, all cities and municipalities shall enact, for the purpose, a local tax ordinance to take
effect January 1, 1992. For purposes of enacting a local tax ordinance levying the community
tax, the conduct of a public hearing provided for under Section 186 of R. A. No. 7160 or the Local
Government Code of 1991, shall be dispensed with. (Art. 245, IRR implementing Sec. 156, LGC)
a) Imposition of Community Tax - The levy or imposition of community tax by a city or

municipality shall be governed by the following rules and procedural guidelines:
1. Individuals liable for the payment of the Community Tax:
1.1 Every inhabitant of the Philippines eighteen (18) years of age or over who
has been regularly employed on a wage or salary basis for at least thirty
(30) consecutive working days during any calendar year;
1.2 An individual who is engaged in business or occupation;
1.3 An individual who owns real property with an aggregate assessed value of
One Thousand Pesos (₱1,000.00) or more; and
1.4 An individual who is required by law to file an income tax return. (Art. 246
(a), IRR, implementing Sec. 157, LGC)
2. Rate of Community Tax Payable by Individuals:
2.1 The rate of the annual community tax that may be levied and collected from
said individuals shall be Five Pesos (₱ 5.00) plus an annual additional tax
of One Peso (₱ 1.00) for every One Thousand Pesos (₱ 1,000.00) of
income regardless of whether from business, exercise of profession, or
from property but which in no case shall exceed Five Thousand Pesos (₱
5,000.00).

2.2 In case of husband and wife, each of them shall be liable to pay the basic
annual tax of Five Pesos (₱ 5.00), but the additional tax imposable on the
husband and wife shall be One Peso (₱ 1.00) for every One Thousand
Pesos (₱ 1,000.00) of income from the total property owned by them and/or
the total gross receipts or earnings derived by them. (Art. 246 (b), IRR
3. Juridical Persons Liable for the Payment of the 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 (₱ 500.00) and an annual additional tax,
which, in no case, shall exceed Ten Thousand Pesos (₱ 10,000.00) in
accordance with the following schedule:
3.1 For every Five Thousand Pesos (₱5,000.00) worth of real property in the
Philippines, owned by the juridical entity during the preceding year, based
on the assessed value used for the payment of the real property tax under
existing laws - Two Pesos (₱2.00); and
3.2 For every Five Thousand Pesos (₱ 5,000.00) of gross receipts or earnings
derived from the business in the Philippines during the preceding year -
Two Pesos (₱2.00).
4. The dividends received by a corporation from another corporation shall, for the
purpose of the additional tax, be considered as part of the gross receipts or
earnings of said corporation. (Art. 246 (c), IRR implementing Sec. 158, LGC)
b) Exemptions - The following are exempt from the community tax:
1. Diplomatic and consular representatives; and
2. Transient visitors when their stay in the Philippines does not exceed three (3)
months. (Sec. 159, LGC)
c) 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 (Sec.
160, LGC).The following are the guidelines for the place of payment of the community
tax:
1. The community tax shall be paid in the city or municipality where the residence of
the individual is located, or in the city or municipality where the principal office of the
juridical entity is located (Art. 246 (e) (1), IRR implementing Sec. 160, LGC). Thus, a
sales office or branch office is not liable to pay community tax in the city of
municipality where it is located. (Sec. 2, Memorandum Circular No. 153 dated June
4, 1992 issued by the Office of the President)
2. It shall be unlawful for any City or Municipal Treasurer to collect the community tax
outside the territorial jurisdiction of the city or the municipality. (Art. 246 (e) (2), IRR
3. In case of branch, sales office or warehouse where sales are made and recorded,
the corresponding community tax shall be paid to the LGU where such branch, sales
office or warehouse is located. (Art. 246 (e) (3), IRR implementing Sec. 160, LGC)
4. Any person, natural or juridical, who pays the annual community tax to a city or

municipality other than the city or municipality where his residence, or principal
office in the case of juridical persons, is located shall not anymore pay the
community tax. (Sec. 2 of Memorandum Circular No. 153 dated June 4, 1992 issued
by the Office of the President),(BLGF 1st Indorsement dated July 26, 1993)
d) Time of Payment; Delinquency–Guidelines as to when the community tax shall be paid:
1. The community tax shall accrue on the first (1st) day of January of each year and
shall be paid not later than the last day of February of each year.
2. If a person reaches the age of eighteen (18) years or 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 last day of March, he shall have twenty (20) days to pay the
community tax without becoming delinquent.
3. Persons who come to reside in the Philippines or reach the age of eighteen (18)
years on or after the first (1st) 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.
4. Corporations 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 not be subject to the
community tax for that year.
(Sec. 161, LGC)
e) Penalties for late payment - If the tax is not paid within the time prescribed above,
there shall be added to the unpaid amount and interest of twenty-four percent (24%) per
annum from the due date until it is paid. (Sec. 161, LGC)
f) Issuance of Community Tax Certificate - A community tax certificate shall be issued

to every person or corporation upon payment of the community tax. A community tax
certificate may also be issued to any person or corporation not subject to the community
tax upon payment of One Peso (₱1.00) (Sec. 162, LGC)
g) Printing of Community Tax Certificate - The Bureau of Internal Revenue (BIR) shall
cause the printing of community tax certificates and distribute the same to the cities and
municipalities through the City and Municipal Treasurers in accordance with prescribed
regulations. However, in order to facilitate distribution, the BIR may send on
consignment to the Provincial Treasurers blank forms of the community tax certificates
and the Municipal Treasurers of the province shall secure through the Provincial
Treasurer, their respective requirements. The City or Municipal Treasurer concerned
shall remit to the National Treasurer, for the account of the BIR, the cost of printing and
distribution, within ten (10) days after the end of each quarter. In cases where the
certificates were secured or requisitioned from the Provincial Treasurer, the Municipal
Treasurer shall remit payments to the Provincial Treasurer who shall, in turn, effect the
remittance to the National Treasurer as required. (Art. 249, IRR implementing Sec. 164
(a), LGC)

h) Collection of the Community Tax by Barangay Treasurers - The tax ordinance
levying the community tax shall authorize the City or Municipal Treasurer to deputize the
Barangay Treasurers to collect the community tax in their respective jurisdictions. Said
deputation, however, shall be limited to the community tax payable by individual
taxpayers and shall be extended only to Barangay Treasurers who are properly bonded
in accordance with existing laws. (Art. 250, IRR implementing Sec. 164 (b), LGC)
i) Allocation of Proceeds of the Community Tax - 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 or municipality
concerned; and
2. Fifty percent (50%) shall accrue to the barangay where the tax is collected. (Art.
251, IRR implementing Sec. 164 (c), LGC)
Chapter 8.SPECIFIC APPLICATIONS OF AUTHORITY TO TAX FRANCHISES
Section 205. Corporation is Liable for Franchise Taxnotwithstanding Exemption Granted

Under its Charter. – Section 137 of R. A. No. 7160 or the Local Government Code of 1991,
provides that notwithstanding any exemption granted by law or other special law, the province or
city may impose a tax on business enjoying a franchise, at a rate not exceeding fifty percent
(50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on
the incoming receipts realized within its territorial jurisdiction.
The National Power Corporation (NPC), a government corporation does not fall within the purview of
business enjoying a franchise since its operation is not for profit but for public service, and further, that it is
exempt from all forms of taxes under its Charter, P.D. No. 938 13.
As to the conflict between the provisions of the Local Government Code of 1991, .a general law, and the
NPC Charter, a special law, it was held that while admittedly the established jurisprudence is that if a
general law is enacted after the special law, the special law nevertheless remains, this admits of
exceptions. One such exception is the cited case of Compania General vs. Collector of Customs, 46 Phil.
8, in which it was ruled that when there is a clear, necessary and irreconcilable conflict between the
general and special law, the general law shall prevail.
Souce: BLGF Letter, September 4, 1995 to National Power Corp., Baguio City
Section 206. Authority to Examine the Terms of Franchise. – Provincial and City Treasurers
are authorized to examine the terms of franchises operating within their respective jurisdictions.
(Secs. 171 and 470, LGC)
13Section 10. Non-profit Character of the Corporation; Exemption from All Taxes, Duties, Fees, Imposts and Other Charges by the Government and
Government Instrumentalities. The Government shall be non-profit and shall devote all its return form its capital investment as well as excess revenues
from its operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective implementation of the
policy enunciated in Section One of this Act, the Corporation, including its subsidiaries, is hereby declared exempt from the payment of all forms of taxes,
duties, fees, imposts as well as costs and service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative proceedings.

Section 207. Uncollected Gross Receipts Included in Computing Franchise Tax. –
Uncollected amounts due shall be included in the computation of the franchise tax which is
based on gross receipts. The term "gross receipts" means "gross earnings”. The uncollected
"gross receipts" or “gross earnings” shall be subject to the franchise tax 14.
Chapter 9. FEES AND CHARGES
Section 208. Authority to Impose and Collect Fees and Charges.–Every local government
unit may impose and collect such reasonable fees and charges on business and occupation
and, except as reserved to the province in Section 139 of R.A. 7160,otherwise known as the
Local Government Code of 1991, 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.
In the exercise of their governmental functions, local government units are endowed with police powers,
under which they may regulate and inspect businesses and their activities and the practice of any
profession or calling, and collect fees commensurate to the cost of regulation, inspection, and licensing.
Source: Sangalang, et al., vs. IAC, 176 SCRA 179)
Section 209. Common Revenue Raising Powers of LGUs. –The following are the common
revenue raising powers of LGUs:
1. Service Fees and Charges - Local government units may impose and collect such
reasonable fees and charges for services rendered. (Sec. 153, LGC)
2. Public Utility Charges - Local government units may fix the rates for the operation of
public utilities owned, operated and maintained by them within their jurisdiction. (Sec.
154, LGC)
3. Toll Fees or Charges - The sanggunian concerned may prescribe the terms and
conditions and fix the rates for the use of any public road, pier or wharf, waterway,
bridge, ferry or telecommunication system funded and constructed by the local
government unit concerned: Provided, That no such toll fees or charges shall be
collected from officers and enlisted men of the Armed Forces of the Philippines and
members of the Philippine National Police on mission, post office personnel delivering
mail, physically-handicapped, and disabled citizens who are sixty-five (65) years or older.
When public safety and welfare so requires, the sanggunian concerned may discontinue
the collection of the tolls, and thereafter the said facility shall be free and open for public
use. (Sec. 155, LGC)
Local government units are also authorized to levy and collect charges in the exercise of their proprietary
functions. Proprietary functions are exercised not for regulatory purposes but for the peculiar benefit and
advantage of citizens.
Source: City of Pueblo vs. Weed, Colo. App. 570 p.2d 15, 18
14 A person may have earned his salary but may not have collected it, thereby showing that "to collect" is a different act from "to earn. (Escudero
Electric Service vis. Tabios, 33 SCRA 547)

Section 210. Imposition of Fees and Charges.–The power to impose a tax, fee, or charge shall
be exercised by the sanggunian of the local government unit concerned through an appropriate
ordinance. (Sec. 132, LGC)
Fees and charges shall be reasonable and commensurate with the cost of regulation, inspection,
and licensing. In fixing the amount of fees and charges the following shall be considered:
a) The fee for regulation of useful occupations may only be in an amount sufficient to cover
the expenses of issuing the license and the cost of the necessary inspection or police
surveillance, taking into account not only the expense of direct regulation but also all
other incidental expenses.
b) While local government units are allowed much wider discretion in fixing the amount of
license fees in the case of non-useful occupations, fees and charges must not be
unreasonable, oppressive, or tyrannical.
Section 211. Mayor's Permit.–All businesses shall obtain a Mayor's Permit before they can
engage in any business within a city or municipality. This permit allows them the privilege of
conducting their business within the jurisdiction of the city or municipality.
a) The following procedures shall be observed in securing Mayor's Permit for business:
1. Application for Mayors' Permit - An application for a Mayor's Permit shall be filed
with the Office of the City/Municipal Mayor. The form for the purpose shall be issued
by the Mayor's Office and shall set forth the requisite information, including the name
and residence of the applicant, the description of business or undertaking that is to
be conducted, and such other data or information as may be required. (Local Tax
Regulation No. 1-77, Department of Finance, p. 138, Philippine Law on Local
Government Taxation, Annotate, 2000 edition, Ursal)
2. Documentation Requirements - The following documents may be required, if

applicable:
2.1 For a newly started business:
i. Location sketch of the new business
ii. Department of Trade and Industry (DTI) Registration Certificate with

approved Application Form, in case of single proprietorship
iii. Securities and Exchange Commission (SEC) Registration and Articles of

Incorporation and By-Laws, in case of partnership or corporation
iv. A certificate attesting to the tax exemption if the business is tax exempt
v. Certification from the officer in charge of the zoning that the location of the
new business is in accordance with zoning regulations
vi. Tax Clearance showing that the operator has paid all tax obligations in the
city/municipality
vii. Barangay Clearance/proof of filing (In case of non-issuance of barangay

clearance within seven (7) working days from the date of filing, the
City/Municipality may issue the permit to the applicant
viii. Three (3) passport size pictures of the owner or operator or in cases of a
partnership or corporation the pictures of the senior or managing partners

and that of the President or General Manager
ix. Health Certificate for all food handlers, and those required under the
provisions of a duly-enacted revenue code
x. Community Tax Certificate
xi. Contract of Lease, if renting
2.2 For renewal of existing business permit:
i. Mayor's Permit for the previous year
ii. Copies of the annual or quarterly tax payments
iii. Copies of all receipts showing payment of all regulatory fees as provided for
in the Code
iv. Certificate of Tax Exemption from local taxes or fees, if exempt
v. Audited Financial Statement with a gross income prescribed by the BIR for
the next preceding year
vi. BIR registration certificate and annual registration fee payment
vii. Barangay Clearance
viii. Declaration of previous year's gross sales/receipts
3. Inspection and other Requirements - Upon submission of the application, it shall be

the duty of the proper authorities to verify if other city/municipal requirements
regarding the operation of the business or activity such as sanitary requirements,
installation or power and light requirements, as well as other safety requirements are
complied with. The permit to operate shall be issued only upon compliance with such
safety requirements and after the payment of the corresponding inspection fees and
other impositions required by the Revenue Code and other city/municipal tax
ordinances.
4. Time and Manner of Payment - The fee for the issuance of a Mayor's Permit shall be
paid to the City/Municipal Treasurer upon application, before any business or
undertaking can be lawfully begun or pursued, and within the first twenty (20) days of
January of each year in case of renewal of the permit.
5. Issuance of Permit - A Mayor's Permit shall be secured for every separate or

distinct establishment or place where business is conducted (Art. 242 (a), IRR
implementing Sec. 146, LGC). The following are the guidelines for the issuance
of Mayor's Permit:
5.1 The Mayor's Permit shall be issued by the City/Municipal Mayor's Office
upon submission of official receipt issued by the City/Municipal Treasurer for
the payment of the business tax.
5.2 Every permit issued by the Mayor shall reflect the name and residence of the
applicant, his nationality and marital status; nature of the organization
(whether the business is a sole proprietorship, corporation or partnership,
etc); location of the business; date of issue and expiration of the permit; and
other information as may be necessary.

5.3 The City/Municipality shall, upon submission of satisfactory proof that the
original of the permit has been lost, stolen or destroyed, issue a duplicate of
the permit upon the payment of a fee prescribed by ordinance.
b) Posting of Permit - Every business owner shall keep his permit conspicuously posted
at all times in his place of business or office or if he has no place of business or office,
he shall keep the permit on his person. The permit shall be immediately produced upon
demand by the City/Municipal Mayor, the City/Municipal Treasurer or any of their duly
authorized representatives.
c) Duration of Permit and Renewal - The Mayor's Permit shall be valid for a period of not
more than one (1) year and shall expire on the thirty-first (31 St) of December following
the date of issuance, unless revoked or surrendered earlier. Every permit shall cease to
be in force upon revocation or surrender thereof. The permit issued shall be renewed
within the first twenty (20) days of January. It shall have a continuing validity only upon
renewal and payment of the corresponding fee.
d) Revocation of Permit - The Mayor's Permit may be revoked on the following grounds:
1. When a person doing business under the provisions of the revenue code of the
city or municipality violates any of its provisions.
2. When the person refuses to pay any indebtedness or liability to the

city/municipality.
3. When the person abuses his privilege to do business to the injury of the public
moral or peace.
4. When such business is being conducted in a disorderly or unlawful manner, is a

nuisance or allows its premises to be used as a resort for disorderly characters,
criminal or women of ill-repute.
f) Such revocation shall operate to:
1. Forfeit all sums which may been paid in respect to said privilege, in addition to
the fines and imprisonment that may be imposed by the court or any provision
of an enabling ordinance governing the establishment and maintenance of
business; and
2. Prohibit the exercise of the business by the person whose privilege is revoked,
until restored.
g) Sanctions - Any business establishments operating without Mayor's Permit shall be

subjected to penalties provided by law or ordinance.
1. Any false statement deliberately made by the applicant shall constitute ground
from denying or revoking the permit issued by the Mayor, and the applicant or
licensee may be prosecuted in accordance with the penalties provided by
ordinance.
2. A Mayor's Permit shall not be issued to the following persons:
2.1 Any person who previously violated any ordinance or regulation governing
permits granted.
2.2 Any person whose business establishment or undertaking does not

conform with zoning regulations, and safety, health and other requirements
of the city/municipality.
2.3 Any person who has unsettled tax obligation, debt or other liability to the
government.
2.4 Any person who is disqualified under any provision of law or ordinance to
establish or operate the business applied for.
h) Computation of Fee for Mayor's Permit -
1. The rates of Mayor's Permit fees shall not be based on capital investment or
gross sales or receipts of the person or business. (Art. 233 2nd par., IRR
2. The Mayor's Permit fee may be based on various schemes, as follows:
2.1 Fixed rates for each kind of business activity;
2.2 A schedule of graduated fixed rates for each kind of business activity;
2.3 Grouping similar businesses or occupations and assigning a fixed rate of

permit fee for each group;
2.4 Fixing or graduating the permit fee based on the number of employees of
business establishments. (A variation of schemes (2.1) and (2.2)); and
2.5 Graduated rate based on the area being used by the business.
3. For a newly started business or activity that starts to operate after January 20, the fee
shall be reckoned from the beginning of the calendar quarter.
4. When the business or activity is abandoned, the fee shall not be exacted for a period
longer than the end of the calendar or quarter. If the fee has been paid for a period
longer than the current quarter and the business activity is abandoned, no refund of
the fee corresponding to the unexpired quarter or quarters shall be made.
Section 212. Fees for Sealing and Licensing 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. (Sec. 148 (a),
LGC) Cities are similarly empowered to levy such fees. (Sec. 151, LGC)
b) The sanggunian concerned shall prescribe the necessary regulations for the use of such
weights and measures, subject to the guidelines prescribed by the Department of
Science and Technology. The sanggunian concerned shall, by appropriate ordinance,
penalize fraudulent practices and unlawful possession or use of instruments of weights
and measures and prescribed the criminal penalty in accordance with the provisions of R.
A. No. 7160 or the Local Government Code of 1991. However, the sanggunian may
authorize the Local Treasurer to settle an offense not involving the commission of fraud
before a case is filed in court, upon payment of a compromise penalty of not less than
Two Hundred Pesos (₱ 200.00). (Sec. 148 (b), LGC)
c) The ordinance of the sangguniang bayan may also embody such sanctions as may deem
appropriate as regards the use of any weight or measure not properly sealed or license in
accordance with the foregoing provisions, such as the confiscation of said illegal weight

and measure, or the revocation of the permit or license of the business, and/or the filing
of appropriate charges against the owner or operator of the business. (Art. 234 (c), IRR
d) Fraudulent Practices Relative to Weights and Measures – The following acts relating to
weights and measures are prohibited:
1. for any person other than the official sealer or his duly authorized representative to
place or attach an official tag, seal, sticker, mark, stamp, brand or other
characteristic sign used to indicate that such instrument of weight and measure has
officially been tested, calibrated, sealed or inspected;
2. for any person to imitate any seal, sticker, mark, stamp, brand, tag or other
characteristic sign used to indicate that such instrument of weight or measures has
been officially tested, calibrated, sealed or inspected;
alter in any way the certificate or receipt given by the official sealer or his duly
authorized representative as an acknowledgment that the instrument for determining
weight or measure has been fully tested, calibrated, sealed or inspected;
4. for any person to make or knowingly sell or use any false or counterfeit seal, sticker,
brand, stamp, tag, certificate or license or any dye for printing or making the same or
any characteristic sign used to indicate that such instrument of weight or measure
has been officially tested, calibrated, sealed or inspected;
alter the written or printed figures, letters or symbols on any official seal, sticker,
receipt, stamp, tag, certificate or license used or issued;
6. for any person to use or reuse any restored, altered, expired, damaged stamp, tag
certificate or license for the purpose of making it appear that the instrument of
weight of measure has been tested, calibrated, sealed or inspected;
7. for any person engaged in the buying and selling of consumer products or of
furnishing services the value of which is estimated by weight or measure to possess,
use or maintain with intention to use any scale, balance, weight or measure that has
not been sealed or if previously sealed, the license therefor has expired and has not
been renewed in due time;
8. for any person to fraudulently alter any scale, balance, weight, or measure after it is
officially sealed;
9. for any person to knowingly use any false scale, balance, weight or measure,
whether sealed or not;
10. for any person to fraudulently give short weight or measure in the making of a scale;
11. for any person, assuming to determine truly the weight or measure of any article
bought or sold by weight or measure, to fraudulently misrepresent the weight or
measure thereof; or
12. for any person to procure the commission of any such offense abovementioned by
another.
e) Instruments officially sealed at some previous time which have remained unaltered and
accurate and the seal or tag officially affixed thereto remains intact and in the same

position and condition in which it was placed by the official sealer or his duly authorized
representative shall, if presented for sealing, be sealed promptly on demand by the
official sealer or his authorized representative without penalty except a surcharge fixed
by law or regulation.
(Sec. 64, RA 7394, Consumer Act)
Section 213. 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 therefor in accordance with the
provisions of this Section (Sec. 149 (a), LGC). Cities are similarly authorized to grant
such privileges and impose such rentals, fees or charges. (Sec 151, LGC)
b) Such rentals, fees and charges shall be imposed in accordance with the following
provisions:
1. Fishery Privileges - The sangguniang bayan may 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 it may determine:
1.1 Provided, further, That duly registered organizations and cooperatives of

marginal fisherman shall have the preferential right to such fishery privileges;
1.2 Provided, however, That the sangguniang bayan may require a public bidding
in conformity with and pursuant to an ordinance for the grant of such privileges;
and
1.3 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 provisions. (Sec. 149 (b)
(1), LGC)
2. Fishing Privileges for Marginal Fisherman - The sangguniang bayan may 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 fisherman free from any rental, fee, charge or any other impositions
whatsoever. (Sec. 149 (b) (2), LGC)
3. Licensing of Fishing Vessels - The sangguniang bayan may issue licenses for the
operation of fishing vessels of three (3) tons or less for which purpose it shall
promulgate rules and regulations regarding the issuances of such licenses to
qualified applicants under existing laws.
4. Illegal Activities -Provided, however, That the sangguniang bayan concerned shall,
by appropriate ordinance, penalize the use of explosives, noxious or poisonous
substances, electricity, muro-ami, and other deleterious methods of fishing and
prescribe a criminal penalty therefor in accordance with the provisions of R. A. No.
7160 or the Local Government Code of 1991. Provided, finally, That the sanggunian
bayan concerned shall, have the authority to prosecute any violation of the provisions
of applicable fishery laws. (Sec. 149 (b) (3), LGC)
Section 214. Fees and Charges that May Be Imposed by Barangays. –Barangays may levy
fees and charges which shall accrue exclusively to them (Sec. 152, LGC), as follows:
a) Service Fees or Charges -Barangays may collect reasonable fees or charges for
services rendered in connection with the regulation or use of barangay-owned properties

or service facilities such as palay, copra, or tobacco dyers. (Sec. 152 (b), LGC)
b) 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. The application for clearance shall be acted
upon within seven (7) working days from 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. (Sec. 152 (c), LGC)
c) Barangays may collect reasonable fees or charges for services rendered in connection
with the regulation or use of barangay-owned properties or service facilities such as
palay, copra, or tobacco dryers.
d) 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. The application for clearance shall be acted within seven (7) working days
from the filing thereof. In the event that a clearance is not issued or the application is
denied within the said period, the city or municipality may issue the license or permit to
the applicant.
e) The barangay may levy reasonable fees and charges on:
1. Commercial breeding fighting cocks. For purposes of imposing barangay fees

and charges on the commercial breeding of fighting cocks, commercial breeding
shall mean an annual sale of more than five (5) fighting cocks of a duly registered
breeder;
2. Cockfights and cockpits;
3. Places of recreation which charge admission fees. Places of recreation shall

include places of amusement where one seeks admission to entertain
himself/herself by seeing or viewing the show or performance or those where one
amuses himself/herself by direct participation;
4. Billboards, signboards, neon signs, and outdoor advertisements at rates not less
than the following :
4.1 Billboards or signboards for advertisement of business, per square meter or

fraction thereof:
i. Single-Faced - Ten Pesos (₱ 10.00)
ii. Double-Faced - Twenty Pesos (₱ 20.00)
4.2 Billboards or signs for professionals, per square meter or fraction thereof:
Eight Pesos (₱ 8.00).
4.3 Billboards, signs, or advertisements for business and professions painted

on any building or structures or otherwise separated or detached therefrom,
per square meter thereof: Nine Pesos (₱9.00).
4.4 Advertisement for business or professions by means of slides in movies

payable by the advertisers: One Hundred Pesos (₱100.00).
4.5 Advertisement by means of vehicles, balloons, kites, etc.

i. Per day or fraction thereof - Forty Pesos (₱40.00)
ii. Per week or fraction thereof - Sixty Pesos (₱60.00)
iii. Per month or fraction thereof - Eighty Pesos (₱ 80.00)
iv. For use of electric or neon lights in billboards under items (i) to (iv)
hereof, the amount of Ten Pesos (₱10.00) per square meter or fraction
thereof shall be imposed in addition to the above prescribed rates.
4.6 Signs, signboards, billboards, advertisements including stick-outs,

streamers, lighted signs and other electronic media, posters, store signs,
placards, price strips, buntings, and the like, belonging to manufacturers or
producers or professionals, but displayed at the place where a business or
profession is conducted, or displayed on delivery or other service and
public utility vehicles, shall be exempt from such fees or charges provided
in paragraphs 4.1 to 4.5 hereof and other impositions that may be imposed
by the barangay.
4.7 Privilege panels shall be subject to one half (1/2) of the rates herein
prescribed.
4.8 For purposes of this Section, the new rates to be adopted by the barangays
shall apply only to billboards, privilege panels, signs, and outdoor
advertisements which shall be constructed or installed after the effectivity of
the Code. (Art. 240, IRR implementing Sec. 152, LGC)
Section 215. Fees and Charges that may be Imposed by Local Government Units. – The
following are some of the fees and charges that may be imposed by local government units:
a) Registration and Transfer of Large Cattle
b) Permit Fee for Excavations on Streets
c) Fee for the Sealing and Licensing of Weights and Measures
d) Permit Fee on Film Making Within LGUs Territory
e) Permit Fee for Agricultural Machinery and Other Heavy Equipment for Rent
f) Permit Fee on Occupations/Callings Not Requiring Government Examination
g) Permit Fee for the Storage of Flammable and Combustible Materials
h) Permit Fee on Certain Types of Machinery and Engines
i) Permit Fee for Temporary Use of Roads, Streets, Sidewalks, Alleys, Patios
j) Local Civil Registry Fees
k) Police Clearance Fees
l) Sanitary Inspection Fees
m) Service Fees for Health Examinations
n) Dog Registration and Vaccination Fees

o) Fishery Rentals, Fees and Charges
p) Service Charge for Garbage Collection
q) Charges for Parking
r) Cemetery Charges
s) Slaughter and Corral Fees
t) Toll Fees or Charges
u) Permit Fee for Cockpit Owner/Operators/Licensees/Promoters and Cockpit
v) Permit Fee for the Conduct of Group Activities
Section 216. Fees and Charges Collected by Local Government Units for the National
Government. – Certain fees and charges imposed by the National Government on businesses
and activities are collected on its behalf by the local government units. It is the duty of the Local
Treasurer concerned to collect fees and charges and to remit collections promptly in accordance
with law or issuance, authorizing the local government unit to undertake the collection.
a) Fire Safety Inspection Fee -
1. The Fire Safety Inspection Certificate shall be issued upon payment by the applicant
of a fee equivalent to ten percent (10%) of all fees charged by the building official,
government agencies concerned in the granting of pertinent permits or licenses.
(Sec. 1, 206, P.D. No. 1185)
2. The Annual Fire Inspection Fee should not exceed the amount equivalent to one
tenth percent (0.01%) of the assessed value of the building or structure. To partially
provide for the funding of the Fire Service, the following taxes and fees are imposed:
(Sec. 13-b, P. D. No. 1185)
2.1 One-tenth of one per centum (0.01%) of the verified estimated value of
buildings or structures to be erected, to be collected from the owner, but not to
exceed Fifty Thousand Pesos (₱ 50,000.00), one half (1/2) to be paid prior to
the issuance of the Building Permit, and the balance after final inspection and
prior to the issuance of the Use and Occupancy Permit.
2.2 One-hundredth of one per centum (0.01%) of the assessed value of buildings
or structures annually payable upon payment of the real estate tax, except on
structures used as single family dwellings.
b) Fees and Charges for National Meat Inspection Commission Services - The fees
and charges for services rendered by the National Meat Inspection Commission (NMIC)
are subject to the rates prescribed under Article 17 (d) of R. A. No. 7394, on the
following:
1. Ante-Mortem Inspection Fees;
2. Post-Mortem Inspection Fees;
3. Accreditation Fees of Slaughterhouses, Poultry Dressing Plants, Meat

Processing Plants, Meat Cold Storage and Meat Delivery Van;

4. Meat Import and Export Clearance and Inspection Fees;
5. Fees for the Issuance of License to Meat Handlers; and
6. Laboratory Fees for the Examination of Meat and Meat Products:
6.1 Pathological Examination
6.2 Parasitological Examination
6.3 Microbiological Examination
6.4 Chemical Examination
6.5 Organoleptic Examination
(RA 9296) (DA Administrative Order No. 28 s, 2005)
Section 217. Building Permit. – No person, firm or corporation, including any agency or
instrumentality of the government, shall erect, construct, alter, repair, move, convert, or demolish
any building or structure or cause the same to be done without first obtaining a building permit
from the building official assigned in the place where the subject building is located or the
building work is to be done. (Sec. 301, P. D. No., 1096)
a) Payment of Related Fees and Charges - The corresponding fees and charges shall be
collected for services rendered in connection with the processing and issuance of
building permit fees, signboard permit fee, plumbing inspection permit fee, sanitary
inspection fees, mechanical installation and inspection fees and such other impositions
as may be prescribed by the Department of Public Works and Highways from persons,
firms and corporations before they are allowed to erect, construct, alter, move, convert or
demolish any public or private building or structure within the city/municipality in the
exercise of regulatory powers over public buildings and structures.
b) Issuing Official - The City/Municipal Engineer shall be responsible for the issuance of
building and other permits and the computation of the correct regulatory fees. Payments
shall be paid at the Treasurer's Office.
Section 218. Permit Fee for Zoning and Locational Clearance Permit. –
a) There shall be collected a Mayor's Permit Fee for Zoning/Locational Clearance for all
structures to be constructed in the city/municipality in accordance with existing
ordinances and Housing and Land Use Regulatory Board (HLURB) guiding rates.
b) Time and Manner of Payment - The fees shall be paid by the applicant or his
representatives to the City/Municipal Treasurer when zoning/locational clearance is
granted.
c) Administrative Provisions - The City/Municipal Mayor shall administer the provision of

existing ordinances, executive orders, laws relating to and governing zoning/locational
clearance.
d) Scope of Structures, Projects and Improvements for Zoning and Local Clearances:

1. Residential structure, single or detached other than apartments/townhouses,
dormitories, and subdivisions/condominium projects
2. Apartments
3. Dormitories
4. Institutions
5. Commercial, industrial, agro-industrial projects
6. Special uses/special projects
7. Alterations/Expansions (affected areas/cost of expansion only)
e) Coverage. - The following developments and activities are covered:
1. Subdivisions and Condominium Projects/Activities (P. D. No. 95715):
1.1 Approval of Subdivision Plan (including Townhouse):
i. Preliminary Approval and Locational Clearance - for every additional

hectare or a fraction thereof
ii. Final Approval and Development Permit - additional fee on floor area of
houses/building sold with the lot
iii. Inspection Fee
iv. Alteration of Plans (affected areas only)
v. Certificate of Registration and License to Sell (per saleable lot)
vi. Additional fee on floor area of house/buildings sold with the lot; and
vii. Certificate of Completion (per hectare)
1.2 Approval of Condominium Project (under P.D. No. 957):
1.2.1 Preliminary Approval and Locational Clearance (PA/LC):
i. Land Area
ii. Building
1.2.2 Final Approval & Development Permit:
i. Per square meter of the total land area

ii. Additional cost on the area of the building
1.2.3 Inspection Fee

1.2.4 Alteration (affected areas only)
1.2.5 Conversion (affected areas only)
1.2.6 Certificate of Registration and License to Sell:
i. Residential (per square meter of saleable area)

ii. Commercial/office (per square meter of saleable area)
1.2.7 Certificate of Completion
2. Projects under B.P. Blg. 22016:
15An Act Regulating the Sale of Subdivision Lots and Condominium, Providing Penalties for Violation Thereof.

2.1 Subdivision
2.1.1.1 Preliminary Approval and Locational Clearance:
i. Socialized Housing
ii. Economic Housing
2.1.2 For every additional hectare or a fraction thereof:
2.1.3 Final Approval & Development Permit

2.1.4 Inspection Fee:
2.1.5 Alteration of Plan (affected areas only)

2.1.6 Building Permit (per square meter of floor area of housing unit)
2.1.7 Certificate of Registration & License to Sell:
2.1.8 Certificate of Completion (per hectare or a fraction of land area)

2.1.9 Certificate of Occupancy (per square meter of floor area of the
housing unit)
2.2 Simple Subdivision:
i. Approval
ii. Inspection Fee
2.3 Condominium:
2.3.1 Preliminary Approval & Locational Clearance
i. Per square meter of total land area

ii. Additional cost per square meter of housing unit
2.3.3 Inspection fee (per square meter of total saleable floor area)
2.3.5 Building permit (per square meter of housing unit)
2.3.6 Certificate of Registration & License to Sell
2.3.8 Certificate of Occupancy
2.4 Approval of Industrial Subdivision:
16An Act Authorizing the Ministry of Human Settlements to Establish and Promulgate Different Levels of Standards and
Technical Requirements for Economic and Socialized Housing Projects in Urban and Rural areas from those Provided under
P.D. Nos. 957, 1216, 1096 and 1185

i. First five (5) hectares
ii. Every additional hectare or a fraction thereof
2.4.2 Final Approval & Development Permit of location Inspection Fee:
i. Alteration of Plan (affected areas only)

ii. Certificate of Registration & License to Sell
iii. Certificate of Completion
2.5 Approval of Commercial Subdivision:
2.5.1 Preliminary Approval and Locational Clearance:
i. First two (2) hectares

ii. Every additional hectare or fraction thereof
2.5.2 Final Approval and Development Permit:
i. Inspection Fee
ii. Alteration of Plan (affected areas only)
iii. Certificate of Registration & License to Sell
iv. Certificate of Completion
2.6 Approval of Farmlot Subdivision:
i. First five (5) hectares

ii. Every additional hectare
2.6.2 Final Approval and Development Permit

2.6.3 Inspection Fee
2.6.5 Certificate of Registration & License to Sell
2.7 Approval of Memorial Park/Cemetery Project:

i. Memorial Projects
ii. Cemeteries
2.7.2 Every additional hectares or a fraction thereof:

i. Memorial Project
ii. Cemeteries
ii. Cemeteries
2.7.4 Inspection Fees:
ii. Cemeteries
2.7.6 Certificate of Registration and License to Sell (per saleable plot):
ii. Cemeteries
2.7.7 Certificate of Completion:

ii. Cemeteries
2.8 Other Transactions/Certifications – Applications/Requests:
i. Advertisement Approval
ii. Cancellation/Reduction of Performance Bond
iii. Lifting of Suspension of License to Sell
iv. Extension of Time to Complete Development
v. Exemption from Cease and Desist Order
vi. Clearance to Mortgage
vii. Lifting of Cease and Desist Order
viii. Change of Name/Ownership
ix. Voluntary Cancellation of CR/LS
x. Revalidation/Renewal of Permit (condominium)
2.9 Other Certifications:
2.9.1.1 Zoning Certifications

2.9.2.2 Certificate of Town Plan/Zoning Ordinance Approval
2.9.3.3 Certificate of New Rights/Sales
2.9.4.4 Certificate of Locational Viability
2.9.5.5 Certificate of Registration and License to Sell (form)
2.9.6.6 Others to include:
i. Availability of records/public request of copies/research works

ii. Certificate of no records on file
iii. Certificate of with or without CR/LS
iv. Certified true copies of documents
2.10 Registration of Dealers/Brokers/Salesmen:
i. Dealers/Brokers
ii. Salesmen/Agent
Section 219. Motorized Tricycle Operator's Permit. – The sangguniang bayan or panlungsod
shall, subject to the guidelines prescribed by the Department of Transportation and
Communications (DOTC), regulate the operation of tricycles and grant franchises for the
operation thereof within the territorial jurisdiction of the municipality or city. (Sec. 447 a) (3) (vi),
LGC) The issuance of licenses to tricycle drivers and charging of fees for the registrations of
tricycles are under the jurisdiction of the Land Transportation Office (LTO).
a) Definition of Terms -The following terms as used in relation to the regulation of the
operation of motorized tricycles shall refer to:
1. Motorized Tricycle - a motor vehicle propelled other than by muscular power,

composed of a motorcycle fitted with a single wheel sidecar or a motorcycle with
a two-wheeled cab, the former having a total of four (4) wheels, otherwise known
as the motorela.
2. Tricycle Operators - persons engaged in the business of operating tricycle.
3. Tricycle-for-Hire - a motorized tricycle operated to render transport services to

the general public for a fee.

4. Motorized Tricycle Operator's Permit (MTOP) - a document granting franchise
or license to a person, natural or juridical, allowing to operate tricycle-for-hire over
specified zones.
5. Zone - a contiguous land area or block, such as a subdivision or barangay,

where tricycle-for-hire may operate without a fixed origin and destination.
b) Annual Franchise Fee - The city or municipality may, through a duly approved
ordinance, fix, impose and collect an annual franchise fee for the operation of motorized
tricycle-for-hire.
c) Other Fees on Motorized Tricycle Operations - In addition to the annual franchise fee,
the city or municipality may, also by passing the appropriate legislation, fix and collect
other fees on motorized tricycle-for-hire operations, such as but not limited to the
following:
1. Filing fee (when applying for franchise)
2. Fare adjustment fee for fare increase
3. Filing fee for amendment of MTOP
d) Guidelines in the Payment of Fees:
1. Prospective operators of tricycle should first secure MTOP from the sanggunian;
2. The fee shall be paid to the City/Municipal Treasurer upon application or renewal
of the permit;
3. The filing fee shall be paid upon application for an MTOP based on the number of
units;
4. Filing fee for amendment of MTOP shall be paid upon application for transfer to
another zone, change of ownership of unit or transfer of MTOP.
e) Scope of Franchising Power of the Sanggunian - The sanggunian of the

city/municipality shall:
1. Issue, amend, revise renew, suspend, or cancel the MTOP;
2. Prescribe the appropriate terms and conditions of the MTOP;
3. Prescribe and regulate zones of service in coordination with the barangay;
4. After public hearing, determine, fix, prescribe or periodically adjust fares or rates
for the service provided in a zone;
5. Fix, impose and collect, and periodically review and adjust but not oftener than
once every three (3) years, reasonable fees and other related charges in the
regulation of tricycle for hire and;
6. Establish and prescribe the conditions and qualifications of service.
f) Other Provisions - In the exercise of the regulatory powers of the sanggunian, the
following additional provisions are to be observed:

1. Fares - The sanggunian shall establish a fare structure that will provide the
operator a reasonable return or profit and still be affordable to the general public:
1.1 The fare structure may either be flat (single fare regardless of distance) or a
minimum amount plus a basic rate per kilometer;
1.2 The official rate to be initially adopted shall be minimum fee fixed by way of
an ordinance;
1.3 Operators of tricycle-for-hire are required to post in a conspicuous part of

the tricycle the schedule of fares.
2. Zoning and Coding -
2.1 The sanggunian may impose a common color for tricycles-for-hire in the
same zone. Each tricycle shall be assigned and bear an identification
number, aside from its license plate number issued by the Land
Transportation Office.
2.2 Any zone must be set within the boundaries of the city/municipality. Existing
zones that extend beyond the territorial limits of the city/municipality to
other adjoining municipalities or cities shall be maintained, provided, the
operator serving the said zone secures the MTOPs that may be required by
the sharing municipalities.
3. Registry of Operators - The City/Municipal Treasurer shall keep a registry of all

tricycle operators which shall, among others, include the name and address of
the operators and the number and brand of tricycles owned and operated by the
said operators.
4. Regulatory Board - A City/Municipal Tricycle Operator's Permit Regulatory

Board shall be constituted, the membership of which shall be determined by the
sanggunian.
Section 220. Registration and Transfer of Large Cattle. –
a) Registration Requirements:
1. Certificate of Ownership - The owner of large cattle is hereby required to

register ownership of said cattle with the City/Municipal Treasurer for which a
Certificate of Ownership shall be issued to the owner upon payment of a
registration fee fixed by an ordinance.
2. Certificate of Transfer. - When large cattle is sold or its ownership is transferred

to another person, the sale or transfer shall be registered with the City/Municipal
Treasurer, for which a Certificate of Transfer shall be issued to the purchaser or
new owner upon payment of a transfer certificate fee in an amount fixed by
ordinance.
3. Registration of Owner's Brand. - The owner of large cattle shall register his
owner's brand with the City/Municipal Treasurer and pay the brand registration
fee provided by ordinance.

b) Guidelines in the Registration of Large Cattle:
1. Large cattle shall be registered with the Office of the City/Municipal Treasurer
upon reaching the age of two (2) years.
2. The ownership of large cattle or its sale or transfer of ownership to another

person shall be registered with the Office of the City/Municipal Treasurer. All
branded and counter-branded large cattle presented to the City/Municipal
Treasurer shall be registered in a book showing among others, the name and
residence of the owner, the consideration or purchase price of the animal in
cases of sale or transfer, and the class, color, sex, brands and other identification
marks of the cattle. These data shall also be stated in the certificate of ownership
issued to the owner of the large cattle.
3. The transfer of the large cattle, regardless of its age, shall be entered in the
registry book setting forth, among others, the names and the residences of the
owners and the purchaser, the consideration or purchase price of the animal for
sale or transfer, class, sex, brands and other identifying marks of the animals;
and a reference by number to the original Certificate of Ownership with the name
of the city/municipality who issued it.
4. No entries of transfer shall be made or certificate of transfer shall be issued by

the City/Municipal Treasurer except upon the production of the original Certificate
of Ownership and Certificate of Transfer and such other documents showing title
to the owner.
5. All other matters relating to the registration of large cattle shall be governed by
the pertinent provisions of the Revised Administrative Code and other applicable
laws, ordinances and rules and regulations.
Section 221. Permit Fee for Excavation on Streets. –
a) General Provision. - There shall be collected a fee on every person who shall make or
cause to be made any excavation on public or private streets within the city/municipality,
such as:
1. For crossing streets with concrete pavement.
2. For crossing streets with asphalt pavement.
3. For crossing streets with gravel pavement.
4. For crossing existing curbs and gutters resulting in damage.

5. Additional fee for every delay in excess of excavation period provided in the Mayor's
Permit.
b) Guidelines for Excavation on Public or Private Streets:
1. No person shall undertake or cause to undertake any digging or excavation, on any

part or portion of the municipal streets unless a permit shall have been first secured
from the Office of the City/Municipal Mayor, specifying the duration of the
excavation.
2. The City/Municipal Engineer/Building Official shall supervise the digging and

excavation and shall determine the necessary width of the streets to be dug or
excavated. Said official shall likewise inform the City/Municipal Treasurer of any

delay in the completion of the excavation work for purposes of collection of the
additional fee.
3. In order to protect the public from any danger, appropriate signs must be placed in
the area where work is being done.
Section 222. Permit Fee for Sealing and Licensing of Weights and Measures. –
a) General Provision - Every person before using instruments of weights and measures for
business, service, commercial, or other transactions with the public within the
city/municipality, shall first have them sealed and pay the corresponding fee, fixed under
an ordinance, to the City/Municipal Treasurer.
b) Instruments Usually Covered - Sealing shall include the following instruments:
1. Linear metric measures.
2. Metric measures of capacity.
3. Metric instruments of weights.
4. Apothecary balances of precision.
5. Scales or balances with complete set of weights.
c) For each and every re-testing and re-sealing of weights and measuring instruments
including gasoline pumps outside the office upon request of the owner or operator, an
additional service charge to be fixed by ordinance for each instrument shall be collected.
d) Exemptions:
1. All instruments for weights and measures used in government work or maintained
for public use by any instrumentality of the government shall be tested and
sealed free.
2. Dealers of weights and measuring instruments intended for sale.
e) Administrative Provisions:
1. Unless otherwise provided by ordinance, law or other valid order, the official
receipt for the fee issued for the sealing of weight or measure shall serve as a
license to use such instrument for one (1) year from the date of sealing, unless
deteriorationor damage renders the weight or measure inaccurate within the
period.
2. Unless otherwise provided, the license shall be preserved by the month of the
year following its original issuance. Such license shall be preserved by the owner
and together with the weight or measure covered by the license shall be
presented (exhibited) on demand by the City/Municipal Treasurer or his deputies.
3. The City/Municipal Treasurer is hereby required to keep full sets of secondary

standards which shall be compared with the fundamental standards in the
Department of Science and Technology annually. When found to be within
accepted tolerances, the secondary standards shall be distinguished by label, tag
or seal and shall be accompanied by a certificate showing the degree of their

variation from the fundamental standards. If the variation is of sufficient
magnitude to impair the utility of instrument, it shall be destroyed at the
Department of Science and Technology.
4. The City/Municipal Treasurer or his deputies shall conduct periodic physical

inspection and test of weights and measures instruments within the locality.
5. Instruments of weights and measures found to be defective beyond repair shall

be confiscated in favor of the government and shall be destroyed by the
City/Municipal Treasurer in the presence of the City/Provincial Auditor or his
representative.
f) Fraudulent Practices and Corresponding Penalties:
1. Fraudulent practices relative to weights and measures - It shall be

considered a fraudulent practice for any person other than the official sealer of
weights and measures to:
1.1 Place an official tag or seal upon any instrument of weights and measures
or attach it thereto.
1.2 Fraudulently imitate any mark, stamp or brand, tag or other characteristic
sign used to indicate that the weights and measures have been officially
sealed.
1.3 Alter in any way the certificate given by the sealer as an acknowledgement
that the weights and measures mentioned therein have been duly sealed.
1.4 Make or knowingly sell or use any false or counterfeit stamps, tag,
certificate, license, or any dye for printing or making stamps, tags,
certificates, or licenses which is an imitation of or purports to be a lawful
stamp, tag, certificate or license required.
1.5 Alter the written or printed figures or letters on any stamp, tag, certificate of
license used or issued.
1.6 Have in his possession any such false, counterfeit restored or altered
stamp, tag, certificate, or license for the purpose of using or re-using the
same in payment of fees or charges.
1.7 Procure the commission of any such offense by another.
2. Corresponding Penalties:
2.1. A person who commits any of the offences above shall, for each offense,
be fined an amount or imprisoned or, at the discretion of the court, both
fined and imprisoned in accordance with the amounts and terms imposed
under an ordinance duly enacted by the sanggunian of the local
government unit.
2.2. Any person with fraudulent intent, alters any scale or balance, weight or
measure after it is officially sealed or who knowingly uses any false scale or
balance, weight or measure, whether sealed or not shall be punished by a
fine of an amount fixed in the ordinance or by imprisonment for a period
prescribed therein, or both, at the discretion of the court.

2.3. Any person who fraudulently gives short weight or measure in the making
of a sale, or who fraudulently takes excessive weight or measure in the
making of a purchase, or who, assuming to determine truly the weight or
measure of any article bought or sold by weight or measure, fraudulently
misrepresents the weights or measures thereof shall be punished by a fine
of an amount fixed by an ordinance or by imprisonment for a period
prescribed therein, or both at the discretion of the court.
3. Unlawful possession or use of instrument not sealed before using and not
sealed within the period prescribed –
3.1 Any person with the practice of buying or selling goods by weights and/or
measures, or of furnishing services the value of which is estimated by
weight or measure who has in his possession, without permit, any unsealed
scale, balance, weight or measure, and any person who uses in any
purchase or sale or in estimating the value of any service furnished, any
instrument of weight or measure that has not been officially sealed, or if
previously sealed, the license therefor has expired and has not been
renewed in due time shall be punished by a fine of an amount imposed in
the ordinance or by imprisonment for a period prescribed therein, or both at
the discretion of the court.
3.2 If, however, such scale , balance, weight or measure, has been officially
sealed at some previous time and the seal and tag officially affixed thereto
remain intact and in the same position and condition in which they were
placed by the official sealer, and the instrument is found not to have been
altered or rendered inaccurate but still to be sufficiently accurate to warrant
its being sealed without repairs or alterations such instruments shall, if
presented for sealing promptly on demand of an authorized sealer or
inspector of weights and measures, be sealed, and the owner, possessor,
or user of the same shall be subject to no penalty except a surcharge to be
fixed by ordinance plus the regular fee fixed by law for the sealing of an
instrument of its class, this surcharge to be collected and accounted for by
the City/Municipal Treasurer in the same manner as the regular fees for
sealing such instruments.
4. Administrative Penalties:
4.1 Any person with the practice of buying or selling by weight and measure
using unsealed and/or unregistered instrument shall be penalized an
amount fixed in an ordinance:
i. When correct
ii. When incorrect, but within tolerable allowance of defect or short
measure.
4.2 Failure to produce weight and measure tag or license or certificate upon
demand, but the instrument is duly registered:
i. When correct
ii. When incorrect, but within tolerable allowance of defect or short
measure.
4.3 Any person found violating any of the above two (2) provisions for the
second time shall be fined twice the above penalty.

4.4 Recommendation shall be made to the Mayor for the closure of business
establishments using fraudulent weights and measures.
Section 223. Permit Fee on Film-Making within the Territory of the Local Government Unit.
–There shall be collected a permit fee from any person who shall go on location-filming within the
territorial jurisdiction of the city/municipality, such as:
a) Commercial movies
b) Commercial advertisements
c) Documentary film
d) Videotape coverage
Section 224. Permit Fee on Agricultural Machinery and Other Heavy Equipment for Rent. -
There shall be collected an annual fee for each agricultural machinery or heavy equipment from
operators of said machinery, renting out said equipment in the city/municipality such as but not
limited to the following:
a) Hand Tractors
b) Light Tractors
c) Heavy Tractors
d) Bulldozers
e) Forklifts
f) Heavy Graders
g) Light Graders
h) Mechanized Threshers
i) Manual Threshers
j) Cargo Trucks
k) Dump Trucks
l) Payloaders
m) Prime Movers/Flatbeds
n) Backhoes
o) Rock Crushers
p) Batching Plants
q) Transit/Mixer Trucks
r) Cranes
s) Other Agricultural Machinery and Heavy Equipment
Section 225. Permit Fee on Occupation or Calling not Requiring Government Examination.
–
a) General Provision - There shall be collected an annual fee for the issuance of Mayor's
Permit to every person who shall be engaged in the practice of occupation or calling not
requiring government examination.
b) Common Occupations or Callings - The application of these fees generally are applied
but need not cover, nor are limited to the following common classifications or groups of
occupations and callings:
1. Employees and workers in generally considered "offensive and dangerous business

establishments".
2. Employees and workers in commercial establishments who cater or attend to the

daily needs of the inquiring or paying public.
3. Employees and workers in food or eatery establishments.

4. Employees and workers in night or night and day establishments.
5. All occupations or callings subject to periodic inspection, surveillance and/or

regulations by the City/Municipal Mayor, such as, animal trainer; auctioneer; barber;
bartender; beautician; bondsman; bookkeeper; butcher; blacksmith; criminologist;
electrician; electronic technician; club/floor manager; forensic electronic expert;
fortune teller; guest relations officer; hair stylist; handwriting expert; hospital
attendant; lifeguard; magician; make-up artist; manicurist; masonry worker; masseur
attendant; mechanic; certified hilot; painter; musician; pianist; photographer
(itinerant); professional boxer; private ballistic expert; rig driver (cochero); taxi driver;
stage-performer; salesgirl; sculptor; waiter or waitress; and welder and other
occupation/calling.
c) Exemptions - All professionals who are subject to the city/provincial tax imposition
pursuant to Section 139 of R. A. No. 7160 or the Local Government Code of 1991, and
government employees are exempted from payment of this fee
d) Persons Usually Covered - The following workers or employees whether working on

temporary or permanent basis, shall secure the individual's Mayor's Permit prescribed
under the ordinance.
1. Employees or workers in generally considered offensive and dangerous business

establishments such as but not limited to the following:
1.1 Employees or workers in industrial or manufacturing establishment such as

aerated water and soft drink factories; air rifle and pellets manufacturing;
battery charging shops; blacksmith; breweries; candy and confectionery
factories; canning factories; coffee, cocoa and tea factories; cosmetics and
toiletries factories; cigar and cigarette factories; construction and/or repair
shops of motor vehicles; carpentry shop; drug manufacturing; distillers; edible
oil or lard factories; electric bulbs or neon lights factories; electric plant;
electronics manufacturing; oxidizing plants; food and flour mills; fish curing and
drying shops; footwear factories; foundry shops; furniture manufacturing;
garments manufacturing; general building and other construction jobs during
the period of construction; glass and glassware factories; handicraft
manufacturing; hollow block and tile factories; ice plants; milk, ice cream and
other allied products factories; metal closure manufacturing; iron steel plants;
leather and leatherette factories;, machine shops; match factories; paints and
allied products manufacturing; plastic products factories; perfume factories;
plating establishment; pharmaceutical laboratories; repair shops of whatever
kind and nature; rope and twine factories; sash factories; smelting plants;
tanneries; textile and knitting mills; upholstery shops; vulcanizing shops and
welding shops.
1.2 Employees and workers in commercial establishments, cinematography film

storage, cold storage or refrigerating plants, delivery and messengerial
services, elevator and escalator services, funeral parlors, janitorial services,
junk shops, hardwares, pest control services, printing and publishing houses,
service stations, slaughterhouses, textile stores, warehouses and parking lots.
1.3 Employees and workers on other industrial and manufacturing firms or

commercial establishments who are normally exposed to excessive heat, light,
noise, cold and other environmental factors which endanger their physical and
health well-being.
2. Employees and workers in commercial establishment who generally enter or attend

to the daily needs of the general public such as but not limited to the following:
Employees and workers in drugstores, department stores, groceries supermarkets,
beauty salons, tailor shops, dress shop, bank teller, receptionist, receiving clerk in
paying outlets of public utilities corporation except transportation companies, and
other commercial establishment whose employees and workers attend to the daily
needs of the inquiring or paying public.
3. Employees and workers in food or eatery establishments such as but not limited to
the following:
3.1 Employees and workers in canteen, carinderia, catering services, bakeries, ice
cream or ice milk factories, refreshment parlor, restaurants, sari-sari stores, and
soda fountains.
3.2 Stakeholders, employees and workers in public markets.
3.3 Peddlers of cooked or uncooked food.
3.4 All other food peddlers, including peddlers of seasonal merchandise.
4. Employees or workers in night or night and day establishments such as but not
limited to the following:
4.1 Workers or employees in bars, boxing stadium, bowling alleys, billiards and
pool halls, cinema houses, cabarets and dance halls, cocktails lounges,
circuses, carnivals and the like, day clubs and night clubs, golf clubs, massage
clinics, sauna baths, or similar establishments, hotels, motels, horse racing
clubs, pelota courts, polo clubs, private detective or watchman security
agencies, supper clubs and all other business establishments whose business
activities are performed and consumed during night time.
4.2 Provided, That in the case of night and day clubs, night clubs, day clubs,
cocktail lounges, bars, cabarets, sauna bath houses and other similar places of
amusements, they shall under no circumstances allow hostesses, waitresses,
waiters, entertainers, or hospitality girls below 18 years of age to work as such.
Workers who shall secure the individual Mayor's Permit on their 18thi birth
year, shall present their baptismal or birth certificate duly issued by the local
civil registrar concerned.
5. All other employees and persons who exercise their profession, occupation or calling
within the jurisdiction limits of the city/municipality aside from those above mentioned.
e) Surcharge for Late Payment - Failure to pay the fee within the time prescribed shall
subject a taxpayer to a surcharge of twenty-five percent (25%) of the original amount of
the fee due, such surcharge shall be paid at the same time and in the same manner as
the tax due.
f) Other Provisions:
1. In the case of single proprietorships, if the business changes ownership or

relocates from one city/municipality to another, it shall be the duty of the new
owner, agent or manager of such business to secure a new permit as required
and pay the corresponding permit fee as though it were new business
2. Newly hired workers and/or employees employed in the covered occupations

shall secure their individual Mayor's Permit from the moment they are actually
accepted by the management of any business or individual establishments to

start working.
3. The Treasurer shall keep a record of persons engaged in occupation and/or

calling not requiring government examination and the corresponding payment of
fees required under personal data for reference purpose.
Section 226. Permit Fee for the Storage of Flammable and Combustible Materials. –
a) Basic Provisions - There shall be collected an annual permit fee for the storage of
combustible materials at the rates fixed by an ordinance on the following:
1. Storage of gasoline, diesel, fuel, kerosene and similar products.

2. Storage of cinematographic film.
3. Storage of celluloid.
4. Storage of calcium carbide.
5. Storage of tar, resin, and similar materials.
6. Storage of coal deposits.
7. Storage of combustible, flammable or explosive substance not mentioned above.
b) No person shall keep or store at his place of business any of the above cited flammable,
combustible or explosive substance without securing a permit therefor.
c) Exemption - Gasoline or naptha not exceeding the quantity of one hundred (100)
gallons, kept in and used by launches or motor vehicles, shall be exempt from the permit
fee herein required.
d) Monitoring/Compliance - The Mayor shall promulgate regulations for the proper storing
of said substances and shall designate the proper official who shall be in charge of
ensuring compliance with the provisions of the ordinance.
Section 227. Permit Fee on Certain Types of Machineries and Engines. –

a) There shall be imposed an annual fee fixed by an ordinance on the following but not
limited to:
1. Internal combustion engines
2. Other stationary engines or machines
3. Electrical generators
b) The basis for the fee generally is the need to regulate machinery and equipment that may
be considered pollutive, or hazardous when operated without care or in certain locations
or under certain conditions, or that may create a nuisance (e.g., noise, vibrations). Other
reasonable bases for regulation may also be considered.
Section 228. Permit Fee for Temporary Use of Roads, Streets, Sidewalks, Alleys, Patios,
Plaza and Playgrounds. –
a) General Provision - Any person who shall temporarily use and/or occupy a street,
sidewalk, or alley or portion thereof in the city/municipality in connection with their
construction works and other purposes, shall first secure a permit from the Mayor and
pay a fee in accordance with the ordinance.
b) Exemptions - For wakes and other charitable, religious and educations purposes, use
and/or occupancy is exempted from the payment of permit fee provided the proper permit
is secured before such use and/or occupancy.
Section 229. Permit Fee for the Conduct of Group Activities. –
a) General Provision - Every person who shall conduct or hold any program or activity

involving the grouping of people within the jurisdiction of the city/municipality shall obtain
Mayor's Permit for every occasion and pay to the City/Municipal Treasurer the
corresponding fee imposed under an ordinance:
1. Conference, meetings, rallies and demonstrations in outdoor, in parks, plazas,

roads/streets
2. Dances
3. Coronation and ball
4. Premiere showing
5. Pop/rock concerts
6. Promotional sales
7. Other Group Activities
b) Exemptions - Programs or activities conducted by educational, charitable, religious and

governmental institutions free to the public shall be exempt from the payment of the fee
herein imposed: Provided, That the appropriate Mayor's Permit shall be secured
beforehand. However, programs or activities requiring admission fees for attendance
shall be subject to the fees herein imposed even if they are conducted by exempt
entities.
Section 230. Secretary's Fees. –
a) General Provision. - There shall be collected the fees fixed in an Ordinance from every
person requesting for copies of official records and documents from the offices of the
city/municipality.
b) Usual Coverage:
1. For every page or fraction thereof, typewritten (not including the certification and
notation):
1.1 Typewritten
1.2 Computerized print-out
2. For each certificate of correctness (with seal of office) written on the copy or
attached thereto:
2.1 For certifying the official act of the City/Municipal Judge or other judicial
certificate with seal.
2.2 For certified copies of any papers, records, decrees, judgment or entry of
which any person is entitled to demand and received a copy (in connection
with judicial proceeding) for each page.
2.3 Photocopy or any other copy produced by copying machine, per page.
c) Exemption - The fees imposed shall not be collected for copies furnished to other offices
and branches of the government for official business, except for those copies required by
the court at the request of the litigant, in which case, charges shall be in accordance
withthe prescribed rates under an ordinance.
Section 231. Local Civil Registry Fees. –
a) General Provision - There shall be collected for services rendered by the Local Civil
Registrar of the city/municipality the fees, fixed under an ordinance, on the following:

1. Marriage Fees:
1.1 Application for Marriage License;

1.2 Marriage License Fee; and
1.3 Marriage Solemnization Fee.
2. For registration of the following:
2.1 Legitimation;
2.2 Adoption;
2.3 Annulment of Marriage;
2.4 Divorce/Legal Separation;
2.5 Naturalization;
2.6 Change of Name; and
2.7 Other legal documentation for record purposes.
3. For certified copies of any document in the register, for each page.
4. Burial Fees:
4.1 Burial Permit Fee or transfer of cadaver

4.2 Fee for exhumation of cadaver
4.3 Fee for removal of cadaver
b) Exemption - The fee herein imposed shall not be collected in the following cases:
1. Issuance of certified copies of documents for official use at the request of a competent
court or other government agency, except those copies required by the courts at the
request of litigants, in which case the fee should be collected.
2. Issuance of Birth Certificates of children reaching school age when such certificates are
required for admission to the primary grades in a public school.
3. Burial Permit of a pauper, per recommendation of the City/Municipal Mayor.
Section 232. Police Clearance. –
a) Purpose - Fees shall be fixed by ordinance and paid for each Police Clearance
Certificate obtained from the Station Commander of the Philippine National Police (PNP)
of the city/municipality for the following purposes:
1. Change of name
2. Application for Filipino citizenship
3. Passport or visa application
4. Firearms permit application
5. PLEB clearance
6. Employment, scholarship, study grant and other purposes specified by ordinance
b) Collection of Fees - The fees shall be collected by the City/Municipal Treasurer.
Section 233. Sanitary Inspection Fee. –
a) Provision - There shall be collected an annual fee from each business establishment
and house for rent in the city/municipality, for the purpose of supervision and
enforcement of existing rules and regulations on sanitation and safety of the public:

1. For house for rent
2. For each business, industrial, and agricultural establishment
b) Provisions on Inspection and Payment:
1. The City/Municipal Health Officer or his duly authorized representative shall

conduct an annual inspection of all establishments and buildings, and
accessories and houses for rent, in order to determine their adequacy of
ventilation, general sanitary conditions and propriety for habitation.
2. The City/Municipal Health Officer shall require evidence of payment of the fee
imposed herein before he issues the sanitary inspection certificate.
Section 234. Service Fees for Health Examinations. –
a) Provisions - There shall be collected a fee from any person who is given a physical
examination by the City/Municipal Health Officer or his duly authorized representative, as
required by existing ordinances.
b) Usual Coverage - Individuals engaged in an occupation or working in the following

establishments, are hereby required to undergo physical and medical examination before
they can be employed and once every six (6) months thereafter.
1. Food establishments - where food or drinks are manufactured, processed, stored,

sold, or served.
2. Public swimming or bathing places.
3. Dance schools, dance halls and nightclubs - include dance instructors, hostess,
cooks, bartenders, waitresses, etc.
4. Tonsorial and beauty establishments - include employees of barber shops,

beauty parlors, hairdressing and manicuring establishments, exercise gyms and
figure slenderizing saloons, facial centers, aromatherapy establishments etc.
5. Massage clinics and sauna bath establishments - include masseurs, massage

clinic/bath attendants, etc.
6. Hotels, motels and apartments, lodging, boarding, or tenement houses, and

condominiums.
c) Responsibility of Employers - Owners, managers or operators of the establishment

shall see to it that employees who are required to undergo physical and medical
examination have been issued the necessary medical certificates.
Section 235. Dog Registration and Vaccination Fees. –
a) General Provision. - There shall be collected/imposed from every owner of a dog a

vaccination fee imposed under the ordinance for every dog vaccinated within the
territorial jurisdiction of the city/municipality.
b) Specific Provision on Vaccination Against Rabies:
1. "Vaccination" means the inoculation of a dog with rabies vaccine licensed for the
species by the Bureau of Animal Industry (BAI), Department of Agriculture.
2. Such vaccination must be performed by trained individual from the BAT, the

City/Municipal Veterinarian Office, and the City/Municipal Agriculture Office.
3. The dog owners shall be provided with a copy of the vaccination certificate. The
veterinarian/vaccinator will retain one copy for the duration of the vaccination. A
durable metal or plastic tag, serially numbered issued by the
veterinarian/vaccinator, shall be securely attached to the collar of the dog.
4. The above provision may not apply in a mass vaccination program. During a free
mass vaccination, the cost shall be borne by the owner after the scheduled date.
c) Specific Provision on Dog Registration or Licensing - Every dog shall be registered

by its owner upon reaching the age of three (3) months and every year thereafter.
Unvaccinated dogs registered after reaching the age of three (3) months and dogs three
(3) months old and above not previously registered shall be vaccinated upon registration.
The dog owner shall pay such registration fee as may be determined by the sanggunian.
The registration officer shall provide a Certificate of Registration of the dog and affix to a
distinguished collar tag as proof of registration.
d) Specific Provision on Responsibility for Enforcement - It shall be the responsibility of

the City/Municipal Rabies Control Authority to administer the ordinance and to
promulgate the necessary rules and regulations for its implementation. Enforcement shall
be the responsibility of the City/Municipal Rabies Control Authority.
e) Other Provisions:
1. Elimination of Unregistered Dog - Unregistered dogs over the age of four (4)
months shall be seized and humanely exterminated under the supervision of a
licensed veterinarian or the City/Municipal Rabies Control Authority or vaccinated
under the above provision.
2. Reporting of Biting Incidents - The owner of a dog which has bitten any person
and the person who has been bitten shall, within twenty-four (24) hours from the
occurrence, report the incident to the City/Municipal Rabies Control Authority, a
health care worker or a police officer. On receiving such information, the health
care worker or police officer shall immediately transmit it to the City/Municipal
Rabies Control Authority for investigation.
Section 236. Fishery Rentals, Fees and Charges. –
a) Purpose - The purpose of this ordinance is to enable the City/Municipality to exercise its
exclusive rights to grant certain fishery privileges within its municipal waters.
b) Definition of Terms:
1. Marginal Fisherman - refers to an individual engaged in subsistence fishing which

shall be limited to the sale, barter or exchange of marine products produced by
himself/herself and his/her immediate family, and whose annual net income from
fishing does not exceed Fifty Thousand Pesos (P 50,000.00) or the poverty line
established by NEDA for the particular region or locality whichever is higher. (Art.
220 (p), IRR implementing Sec. 131 (p), LGC)
2. Municipal Waters include the following:
2.1 Streams, lakes, and tidal waters within the municipality, not being the
subject of private ownership and not comprised within national parks, public
forest, timber lands, forest reserves, or fishery reserves;

2.2 Marine waters included between two (2) lines drawn perpendicularly to the
general coastline from points where the boundary lines of the municipality
or city touch the sea at low tide and a third line parallel with the general
coastline and fifteen (15) kilometers from it., and
2.3 Where two (2) municipalities are so situated on the opposite shores that
there is less than fifteen (15) kilometers of marine waters between them,
the third line shall be equally distant from opposite shores of the respective
municipalities. (Sec 131 (r), LGC)
3. Vessel includes every type of boat, craft or other artificial contrivance used, or
capable of being used as a means of transportation on water. (Sec. 131 (x),
LGC)
c) Coverage - The municipality shall have the exclusive authority to grant the following
fishery privileges within its municipal waters and impose rentals, fees or charges therefor:
(Sec. 149, LGC)
1. To erect fish corals, oyster, mussel, or other aquatic beds or bangus fry areas.
2. To gather, take or catch bangus fry, prawn or kawag-kawag or fry of other

species and fish from municipal waters by nets, traps or other fishing gears.
However, marginal fishermen shall be exempt from any rentals, charge or any
other imposition whatsoever.
3. Duly registered organizations and cooperatives of marginal fishermen shall have

the preferential right to such fishery privileges without being required to undergo
public bidding. In the absence of such organizations and cooperatives or upon
failure to exercise their preferential right, other parties may participate in the said
public bidding.
d) Public Bidding Committee. - For this purpose, there is hereby created a committee to
be determined by the sanggunian to conduct the public auction.
1. Membership:
1.1 The Mayor or his duly authorized representative as Chairman;

1.2 Three (3) members of the sanggunian to be designated by said body; and a)
The Municipal Treasurer
2. The Public Bidding Committee shall advertise the call for sealed bids for the
leasing of a zone or zones of municipal waters in public auction for two (2)
consecutive weeks in the bulletin board of the city/municipal hall. If no bids are
received within two (2) weeks, such notice shall be posted for another two (2)
weeks. If after said two (2) notices for the grant of exclusive fishery rights through
public auction, there are no interested bidders, the sanggunian shall grant the
rights within the definite area or portion of the municipal waters to any interested
individual upon payment of a license fee fixed by an ordinance.
3. The notice advertising the call for bids shall indicate the date and time when such
bids shall be filed with the City/Municipal Treasurer.
4. An application to participate in the public bidding shall be submitted to the

City/Municipal Mayor in a form prescribed therefor. Upon submitting a sealed bid,
a person shall accompany such bid with a deposit of an amount fixed by an
ordinance which shall be deducted from the first rental of the person should the

bid be awarded to him/her.
5. At the time and place designated in the notice, the Committee sitting en banc
shall open all the bids and award the lease to the qualified bidder offering the
highest bid. The lease shall be executed within ten (10) days after the award is
made by a committee and if the successful bidder refuses to accept, or fails or
neglects to execute the lease within such time, his deposit shall be forfeited in
favor of the city/municipal government in such a case another bidding shall be
held in the manner provided above.
6. The deposits of the unsuccessful bidders shall be returned upon the execution of
the Lease Contract by the successful bidder or before the calling of another bid.
e) Duration of Lease - The grant of fishery rights through public auction shall be for a
period prescribed by an ordinance.
f) Zoning of Municipal Waters - The municipal waters of the municipality are divided and
classified into zones for purposes of granting a lease or exclusive fishery rights through
public auction as prescribed in the ordinance.
g) Privilege of Residents to Take Fish in Municipal Waters - Any person who is not a
grantee of license or privilege to engage in commercial fishing is hereby allowed to fish
for domestic use, in every municipal water, for as long as no commercial fishery therein is
yet established. Provided, That such fishing shall not take place within Two Hundred
(200) meters from a fish corral licensed by the city/municipality; and that such fish caught
under this privilege shall not be sold. Furthermore, no rental fee, charge, or any other
imposition whatsoever shall be collected from marginal fishermen (Sec. 149 (b) (2), LGC)
h) Applicability of Pertinent Provisions of Laws - All existing laws, rules and regulations
governing municipal waters and municipal fisheries are hereby adopted.
Section 237. Service Charge for Garbage Collection - There shall be collected from every
owner or operator of a business establishment an annual garbage fee fixed in an ordinance on
the following:
a) Manufacturers, Millers, Assemblers, Processors, and similar businesses.

b) Hotels, Apartments, Motels and Lodging Houses.
c) Restaurants, Day and Night Clubs, Cafes' and Eateries.
d) Hospitals, Clinics, Laboratories and similar businesses.
e) Movie Houses and Retailers.
f) Other Businesses not mentioned above.
g) Residential. Establishments
Section 238. Charges for Parking. -
a) Provision for Charges. - There shall be collected fees for the use of city/municipality
owned parking areas or designated streets for pay parking in accordance with the
following:
1. Day Parking Rates for the following types of vehicles:
1.1 Tricycles;
1.2 Private Cars and Service Vehicles;
1.3 Passenger Jeepneys;
1.4 Cargo Truck/Delivery Vans;

1.5 Passenger Buses; and
1.6 Other Vehicles
2. Overnight Parking Rates/Night Parking Rates for all types of vehicles.
3. Towing fee and impounding fee fixed under an ordinance shall be collected from
owners of vehicles who shall violate the rules/regulations on parking.
b) Time and Manner of Payment. - The fees fixed by an ordinance shall be paid to the
City/Municipal Treasurer or his duly authorized representative upon parking thereat.
Section 239. Cemetery Charges. – There shall be collected rentals for the city/municipal
cemetery lots at the rates prescribed by an ordinance.
Section 240. Slaughter and Corral Fees. –
a) General Provision. - Before any animal is slaughtered for public consumption, a permit
therefor shall be secured from the Office of the City/Municipal Veterinarian/Health Officer
or his duly authorized representative who will determine whether the animal is fit for
human consumption, through the City/Municipal Treasurer upon payment of the
corresponding fee, prescribed by an ordinance on the following animals:
1. Large cattle
2. Hog Goats
3. Sheep
4. All Others
b) Slaughter Fee. - The fee fixed by an ordinance shall be paid to cover the cost of service
in the slaughter of animals at the city/municipal slaughterhouse.
c) Corral Fee - The fee fixed by an ordinance, may be collected for the animals to be
slaughtered which are deposited and kept in a corral owned by the local government.
(Sec. 31, P. D. No. 231)17
d) Condemned Animals. - No permit to slaughter shall be granted nor the corresponding

fee collected on any animals condemned by the City/Municipal Veterinarian.
Section 241. Toll Fees or Charges. –
a) Nature and Purpose of Tolls - There shall be collected fees or charges for the use of
certain utilities owned and operated by the city/municipality as a means to recover parts
of the public investments to construct/acquire them, to cover maintenance or operating
costs, and for similar reasonable purposes. Piers, ferries, bridges and roads are only
some examples of utilities that may be subject to toll charges.
b) Exemptions - No such tolls or fees or charges shall be collected from officers and
enlisted men of the Armed Forces of the Philippines and members of the Philippine
National Police on mission, ambulances, post office personnel delivering mails, physically
handicapped and disabled citizens who are sixty five (65) years or older.
Section 242. Permit for Cockpit Owners/Operators/Licensees/Promoters and Personnel. –
a) Powers and Relevant Provisions of Law - The provisions of P. D. No. 449 18, P. D. No.
17Enacting a Local Tax Code for Provinces, Cities, Municipalities and Barrios

180219, and such other pertinent laws shall apply to all matters regarding the operation of
cockpits and the holding of cockfighting in the city/municipality. The power to authorize
the establishment, operation and maintenance of cockpits and to regulate cockfighting
has been lodged with the city/municipal government even before R. A. No. 7160 or the
Local Government Code of 1991. (GAB20-Opinion unnumbered, February 3, 1995).
Considering that the functions of the Philippine Gamefowl Commission (PGC) have been
devolved to the cities and municipalities, there is no need to issue the rules governing the
Commission. The power to regulate the importation of game fowls shall be left to the
local government units subject to quarantine laws and regulations (OC Resolution No.
95-05, May 19, 1995). Although regulation of cockfighting has been devolved to local
governments, a municipal government cannot issue a permit to a promoter to hold
cockfights in places other than a licensed cockpit since this would violate said law (DILG
Opinion Nos. 296-1993, 31-1194 and PNP Opinion OLS/LO No. 352-1994, March 22,
1994).
b) Application, Payment and Issuance of Mayor's Permit -
1. The application/filing fee is payable to the City/Municipal Treasurer upon application

for a permit or license to operate and maintain cockpits.
2. The cockpit registration fee is also payable upon application for a permit before a
cockpit can operate and within the first twenty (20) days of January of each year in
case of renewal thereof.
3. The permit fees on cockpit personnel shall be paid before they participate in a
cockfight and shall be paid annually upon renewal of the permit on the birth month of
the permitee.
4. Upon payment of the fees imposed, the corresponding Mayor's Permit shall be
issued.
c) Ownership, Operation and Management of a Cockpit - Only Filipino citizens not

otherwise inhibited by existing ordinances or laws shall be allowed to own, manage and
operate cockpits. Cooperative capitalization is encouraged.
d) Establishment of a Cockpit - The sanggunian concerned shall determine the number of

cockpits to be allowed in the city/municipality.
e) Cockpit Size and Construction - Cockpits shall be constructed and operated within the
appropriate areas as prescribed in the zoning law or ordinance. In the absence of such
law or ordinance, the City/Municipal Mayor shall see to it that no cockpits are constructed
within or near existing residential or commercial areas, hospitals, school buildings,
churches or other public buildings. Owners, lessees, or operators of cockpits which are
now in existence and do not conform to this requirement are required to comply with
these provisions within a period to be specified by the City/Municipal Mayor. The
City/Municipal Engineer shall approve and issue building permits for the construction of
cockpit in accordance with the existing ordinance, laws and practices.
f) Cockfighting Officials- Gaffers, referees, bet-managers, bet-takers, cashiers, pit

referees, and promoters shall not act as such in any cockfight in the city/municipality
without first securing a license renewable every year on their birth month from the
city/municipality where such cockfights are held. Only gaffers, referees, bet-takers, or
18Cockfighting Law of 1974
19Law Cheating the Philippine Gamefowl Commission
20Game and Amusement Board

promoters licensed by the city/municipality shall officiate in all kinds of cockfighting
authorized. No operator or owner of a cockpit shall employ or allow any of the mentioned
personnel to participate in a cockfight unless they have registered and paid the imposed
fee.
g) Cockfighting for Entertainment of Tourists or for Charitable Purposes - Subject to

the preceding sub-Section hereof, the holding of cockfights may also be allowed for the
entertainment of foreign dignitaries or for tourists, or for returning Filipinos, commonly
known as Balikbayans or for the support of national fund-raising campaigns for charitable
purpose as may be authorized upon resolution of the sanggunian, in licensed cockpits, or
in playgrounds or parks. This privilege shall be extended for only one (1) time for a period
not exceeding three (3) days, within a year.
Chapter 10. LOCAL GOVERNMENT ENTERPRISE OPERATIONS
Section 243. Political and Corporate Nature of Local Government Units. –
a) Every local government unit created or recognized under R. A. No. 7160 or the Local
Government Code of 1991, 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. 15, LGC)
b) Local government units shall enjoy full autonomy in the exercise of their proprietary
functions and in the management of their economic enterprise, subject to the limitations
provided in the Local Government Code of 1991, and other applicable laws.
Section 244. Nature of Government Enterprise. – A government enterprise is a project or

undertaking of the government that is more or less permanent in nature, with the objective of
promoting public health, safety, morals, general welfare, security, prosperity and contentment of
the inhabitants. (Black's Law Dictionary)
Section 245. Ordinance Establishing and Governing the Enterprise. –
a) An enterprise may only be established and operated by virtue of an ordinance duly
enacted by the sanggunian.
b) In relation to the imposition and collection of fees and charges, the ordinance shall
include provisions on the following:
1. Public utility charges/rates for the operation of public utilities owned, operated and
maintained by the local government units within their jurisdiction. (Sec. 154, LGC);
2. Toll fees or charges for the use of any public road, pier or wharf, waterway, bridge,
ferry or telecommunications systems, etc. (Sec. 155, LGC and Sec. 47, Vol. I,
GAAM);
3. Officers and enlisted men of the Armed Forces of the Philippines and members of the
Philippine National Police on mission, post office personnel delivering mail,
physically-handicapped, and disabled citizens who are 65 years or older shall not be
collected the toll fees or charges. (Sec. 155, LGC);
4. When public safety and welfare so requires, the sanggunian concerned may
discontinue the collection of the tolls, and thereafter the said facility shall be free and
open for public use. (Sec. 155, LGC)
Section 246. Basic Services and Facilities. –

a) Local government units shall endeavor to be self-reliant and shall continue exercising the
powers and discharging the duties and functions currently vested upon them. They shall
also discharge the functions and responsibilities of national agencies and offices
devolved to them pursuant to R. A. No. 7160 or the Local Government Code of 1991.
Local government units shall likewise exercise such other powers and discharge such
other functions and responsibilities as are necessary, appropriate, or incidental to
efficient and effective provision of the basic services and facilities enumerated herein.
(Sec. 17 (a), LGC)
b) Such basic services and facilities include, but are not limited to the following:
1. For a Barangay –
1.1 Agricultural support services which include planting materials, distribution

system and operation of farm produce collection buying stations;
1.2 Health and social welfare services which include maintenance of barangay
health center and day-care center;
1.3 Services and facilities related to general hygiene and sanitation,

beautification, and solid waste collection;
1.4 Maintenance of katarungang pambarangay;
1.5 Maintenance of barangay roads and bridges and water supply systems;
1.6 Infrastructure facilities such as multi-purpose hall, multi-purpose pavement,

plaza, sports center, and other facilities;
1.7 Information and reading center; and
1.8 Satellite or public market, where viable
2. For a Municipality –
2.1 Extension and on-site research services and facilities related to agriculture
and fishery activities which include dispersal livestock and poultry,
fingerlings, and other seeding materials for aquaculture, palay, corn, and
vegetable seed farms, medicinal plant gardens, fruit trees, coconut, and
other kinds of seedling nurseries, demonstration farms; quality control of
copra and improvement and development of local distribution channels
preferably through cooperatives; inter-barangay irrigation system, water
and soil resources utilization and conservation projects; and enforcement of
fishery laws in municipal waters including the conservation of mangroves;
2.2 Pursuant to national policies and subject to supervision, control and review
of the Department of Environment and Natural Resources (DENR),
implementation of community-based forestry projects which include
integrated forestry programs and similar projects, management and control
of communal forests with an area not exceeding fifty (50) square
kilometers, establishment of tree parks, and similar forest development
projects;
2.3 Subject to the relevant provisions of Title 5, Book I of R. A. No. 7160 or the
Local Government Code of 1991, 21health services which include the
21Local Health Board

implementation of programs and projects on primary health care, maternal
and child care, and communicable and non-communicable disease control
services access to secondary and tertiary health services; purchase of
medicines, medical supplies, and equipment needed to carry out the
services herein enumerated;
2.4 Social welfare services which include programs and projects on child and
youth welfare, family and community welfare, women's welfare, welfare of
the elderly and disabled persons, community-based rehabilitation programs
for vagrants, beggars, street children, scavengers, juvenile delinquents, and
victims of drug abuse, livelihood and other pro-poor projects, nutrition
services and family planning services;
2.5 Information services which include investments and job placement

information systems, tax and marketing information systems, and
maintenance of a public library;
2.6 Solid waste disposal system or environmental management system and

services or facilities related to general hygiene and sanitation;
2.7 Municipal buildings, cultural centers, public parks including freedom parks,
playgrounds, and sports facilities and equipment, and other similar facilities;
2.8 Infrastructure facilities intended primarily to service the needs of the

residents of the municipality and which are funded out of municipal funds
including, but not limited to municipal roads and bridges, school buildings
and other facilities for public elementary and secondary schools, clinics,
health centers and other health facilities necessary to carry out health
services, communal irrigation, small water impounding projects and other
similar projects, fish ports, artesian wells, spring development, rain water
collectors and water supply systems, seawalls, dikes, drainage and
sewerage, and flood control, traffic signals and road signs and similar
facilities;
2.9 Public markets, slaughterhouses and other municipal enterprises;
2.10 Public cemetery;
2.11 Tourism facilities and other tourist attractions, including the acquisition of
equipment, regulation and supervision of business concessions and
security services for such facilities; and
2.12 Sites for police and fire stations and sub-stations and the municipal jail
3. For a Province –
3.1 Agricultural extension and on-site research services and facilities which
include the prevention and control of plant and animal pests and diseases,
dairy farms, livestock markets, animal breeding stations, and artificial
insemination centers, and assistance in the organization of farmers' and
fishermen's cooperatives and other collective organizations, as well as the
transfer of appropriate technology;
3.2 Industrial research and development services, as well as the transfer of

appropriate technology;
3.3 Pursuant to national policies and subject to supervision, control and review

of the DENR, enforcement of forestry laws limited to community-based
forestry projects, pollution control law, small-scale mining law, and other
laws on the protection of the environment, and mini-hydro-electric projects
for local purposes;
3.4 Subject to the provisions of Title 5, Book 1 of R. A. No. 7160 or the Local
Government Code of 1991, health services which include hospitals and
other tertiary health services;
3.5 Social welfare services which include programs and projects on rebel
returnees and evacuees, relief operations and population development
services;
3.6 Provincial buildings, provincial jails, freedom parks and other public
assembly areas, and other similar facilities;
3.7 Infrastructure facilities intended to service the needs of the residents of the
province and which are funded out of provincial funds including, but not
limited to, provincial roads and bridges, inter-municipal water-works,
drainage and sewerage, flood control, and irrigation systems, reclamation
projects and similar facilities;
3.8 Programs and projects for low-cost housing and other mass dwellings,
except those funded by the Social Security System (SSS), Government
Service Insurance System (GSIS), and the Home Development Mutual
Fund (HDMF): Provided, That national funds for these programs and
projects shall be equitably allocated among the regions in proportion to the
ratio of the homeless to the population;
3.9 Investment support services, including access to credit financing;
3.10 Upgrading and modernization of tax information and collection services

through the use of computer hardware and software and other means;
3.11 Inter-municipal telecommunications services, subject to national policy

guidelines; and
3.12 Tourism development and promotion programs.
4. For a City–All the services and facilities of the municipality and province, and in
addition thereto are the following:
4.1 Adequate communication and transportation facilities; and
4.2 Support for education, police and fire services and facilities; (Sec. 17 (b),
LGC)
4.3 Notwithstanding the provisions of sub-section (4.2) hereof, public works and
infrastructure projects and other facilities, programs and services funded by
the National Government under the annual General Appropriations Act
(GAA), other special laws, pertinent executive orders, and those wholly or
partially funded from foreign sources, are not covered under this Section,
except in those cases where the local government unit concerned is duly
designated as the implementing agency for such projects, facilities,
programs and services. (Sec. 17 (c), LGC)
4.4 The designs, plans, specifications, testing of materials, and the

procurement of equipment and materials from both foreign and local
sources necessary for the provision of the foregoing services and facilities
shall be undertaken by the local government unit concerned, based on
national policies, standards and guidelines. (Sec. 17, LGC)
Section 247. Examples of Government Enterprises. – Among the government enterprises

known to have been established and operated by local government units are the following:
a) Beach Houses
b) Coliseums
c) Cold Storage Plants
d) Communication and Transportation Facilities
e) Cultural Centers
f) Electric Power Plants
g) Ferries
h) Food Terminal Markets
i) Health Resorts
j) Hospitals
k) Irrigation Systems
l) Lease of Equipment and Machinery
m) Low-Cost Housing and Other Dwelling Projects
n) Markets
o) Multi-Purpose Hall, Multi-Purpose Pavements and Plazas
p) Public Cemeteries
q) Radio Stations
r) Sports Complexes and Sports Facilities
s) Telephone Systems
t) Toll Roads & Bridges
u) Tourism Facilities and Other Tourist Attractions
v) Waterworks Systems
w) Wharves
x) Water Supply Systems
Section 248. Role of Treasurers in Local Government Enterprise Operations.– The

Treasurer of the local government unit operating a public enterprise shall have the following
functions in its establishment and operations:
a) Advise the local chief executive, the sanggunian, and the management of the public
enterprise on its financing aspects.
b) Advise the sanggunian in the enactment of ordinances on public enterprises, especially

in relation to their financial management.
c) Take charge of the collections and take custody of funds of all government enterprises.
d) Ensure that payments are made on duly certified and approved disbursement vouchers.
e) Advise the local chief executive of delinquencies of government enterprise clientele for
purposes of enforcing sanctions and taking the necessary remedial measures.
f) Recommend qualified persons for designation as collectors.
g) Maintain records of payments of market stall holders and of other government

enterprise's lessors.
h) Prepare periodic financial reports for each government enterprise as required by BLGF
rules and regulations.

Section 249. Private Sector Participation in the Operation and Management of Local
Government Unit Enterprises. –
a) 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. (Sec. 3 (l), LGC)
b) To ensure the active participation of the private sector in local governance, local
government units may, by ordinance, sell, lease, encumber, or otherwise dispose of
public economic enterprises owned by them in their proprietary capacity. (Sec. 17 (j),
LGC)
Section 250. Common Modes of Contracting for Local Government Units. –
a) The local chief executive may be authorized through a sanggunian resolution to enter
into a contract with the private sector for the management and operation of government
enterprise.
b) The Local Treasurer shall advise the local chief executive and sanggunian on the relative
advantages and propriety of the following, as well as other common modes of contracting
by which local government units might engage the private sector:
1. Service Contract - This is appropriate when the LGU requires the assistance of
a private entity to perform specific tasks.
1.1 The contract is generally short-term (usually less than one year, and not
more than 2 years);
1.2 The responsibility for fixed investment fund and working capital remains in
the LGU;
1.3 The contractor is assured of a fixed fee from the LGU budget or from the
revenues of the enterprise; and
1.4 This scheme provides an avenue for tapping private sector expertise for the
performance of specialized, particular tasks.
2. Management Contract - In this type of contract, the LGU transfers the entire
management, including the operation and maintenance of the facility, to the
private operator. The contract may have a duration of three (3) to five (5) years,
but the LGU should provide for earlier termination, in case this is needed to
protect its interests. The following are the features of a management contract:
2.1 Fixed investments continue to be borne by the LGU, but the working capital
is often but not always provided by the private proponent; and
2.2 To encourage efficiency, the payment for services in management

contracts is often a combination of a fixed fee and a success fee.
2.3 The success fee is based primarily on the performance of the enterprise in
relation to profit targets, although other factors may also be used as part of
the criteria.
2.4 The fixed fee may come from the LGU budget or from the enterprise
revenues. The success fee, which is contingent in nature, invariably comes
from enterprise revenues.

3. Lease Contract - Under this type of arrangement, the private firm leases an
asset of an LGU for a fixed lease payment, and assumes the responsibility for
operating, maintaining, and managing the asset, aside from the commercial risks
of the operations. It effectively buys the rights to the income stream of the leased
asset. The features of a lease contract are as follows:
3.1 Lease contracts are generally long-term, usually eight (8) to fifteen (15)
years;
3.2 Lease arrangements are appropriate for government enterprises whose

operations have a wide latitude for improving efficiency; and
3.3 The ownership of the asset and the improvements made generally revert to
the LGU at the end of the lease.
4. Concession Agreement - Under this type of contract, a private sector proponent

is allowed to manage, operate, maintain, and introduce investments on the
assets of the contracting government entity. The concession agreement has the
following features:
4.1 The concession agreement generally involves large government

enterprises and long-term contracts typically lasting twenty (20) to thirty
(30) years;
4.2 The concession contract specifies the performance targets, mechanisms for
setting and adjusting tariffs, schedule of concession fees, income sharing,
etc.;
4.3 Since the responsibility for putting new investments in concessions is with
the private operator, the government does not need to raise financing;
4.4 The government can generally expect greater efficiency and improved
service since the commercial risks are borne by the concessionaire; and
4.5 Any improvements or additional assets brought in by the proponent accrue

to the government when the contract ends.
5. Concessions involve large enterprises and long-term contract that often are
related to the delivery of important services to the public. They generally confer
monopolistic powers on concessionaire. For these reasons, it is essential for
responsibilities and accountabilities to be carefully defined, and for the LGU to set
into place, as an integral feature of the arrangements, a well-designed, effective
regulatory framework that will protect the public from possible predatory practices
and poor services.
Section 251. Barangay Micro-Business Enterprise (BMBE). – Section 2 of R. A. No. 9178,

otherwise known as the Barangay Micro Business Enterprise Act of 2002, provides that it is the
policy of the State to hasten the country's economic development by encouraging the formation
and growth of barangay micro-business enterprises which effectively serve as seedbeds of
Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream
economy, through the rationalization of bureaucratic restrictions, active intervention of the
government specially in the local level, and granting incentives and benefits to generate much-
needed employment and alleviate poverty. (Sec. 1, Rule 1, DOF Order No. 17-0422)
22Providing for Guidelines in the Registration of BMBEs and the Availment of Tax Incentives under the BMBE Act of 2002

Section 252. Registration of Barangay Micro-Business Enterprise. - Any business entity or
enterprise falling under the following conditions, whether operated as a sole proprietorship or a
corporation, partnership, cooperative or association, organized/incorporated and existing under
Philippine laws can register as a Barangay Micro-Business Enterprise:
a) Those engaged in the production, processing or manufacturing of products or

commodities, including agro-processing, trading and services, and which activities are
barangay-based and micro-business in nature and scope: Provided, That, "services"
shall exclude those rendered by the following:
1. Natural persons who are duly licensed by the government after having passed a
government licensure examination in connection with the exercise of one's
profession; and
2. Juridical persons such as partnerships or corporations engaged in consultancy,

advisory and similar activities where the performance of such services are
essentially carried out through licensed professionals;
b) Those whose total assets, real or personal, inclusive of those arising from loans, but
exclusive of the land on which the particular business entity's office, plant and equipment
are situated, shall not be more than Three Million Pesos (₱ 3,000,000.00) or as may be
adjusted by the Small and Medium Enterprises Development (SMED) Council as
mandated under R. A. No. 6977 23, as amended by R. A. No. 8289 24: Provided, that for the
purpose of registering as a Barangay Micro-Business Enterprise, the assets must be
owned and used for the conduct of its business as such enterprise.
Section 253. When is a Business Enterprise "Barangay-Based".– A business enterprise shall

be considered barangay-based under the following conditions:
a) The majority of its employees are residents of the municipality where its principal place of
business is located; or
b) Its principal activity consists in the application/use of a particular skill peculiar to the
locality or of raw materials predominantly sourced from the area; or
c) Its business operations are confined within the territorial jurisdiction of the municipality or
local government unit in which its principal place of business is located: Provided,
however, that the enterprise may establish warehouses, buying stations, sales outlets,
and booking or administrative offices anywhere in the Philippines, subject to pertinent
rules and registration requirements of the concerned local government units and other
government agencies where such warehouses, outlets, stations or offices are
established.
Section 254. Meaning of Micro-Business in Nature and Scope. – A business is considered a
micro-business in nature and scope when:
23An Act to Promote and Develop and Assist SMED Council, and Rationalization of Government Assistance Program and
Agencies Concerned with the Development of Small and Medium Enterprises and for Other Purposes, or the Magna Carta for
Small Enterprises.
24An Act to Strengthen the Promotion and Development of, And Assistance to Small and Medium Scale Enterprises,
Amending for that Purpose R.A. No. 6977, and for Other Purposes.

a) Its principal activity is primarily for livelihood or determined by the Small and Medium
Enterprises Development Council or the Department of Trade and Industry as a priority
area for development or government assistance;
b) The enterprise is not a branch, subsidiary, division or office of a large enterprise; and
c) Its policies and business modus operandi are not determined by a large scale enterprise
or by persons who are not owners or employees of the enterprise.
Section 255. Registration of Barangay Micro-Business Enterprises. – The Office of the

Treasurer of each city or municipality shall register Barangay Micro-Business Enterprises and
issue a Certificate of Authority to enable the Barangay Micro-Business Enterprises to avail of
incentives under Barangay Micro-Business Enterprise Act of 2002: Provided, That only one
Certificate of Authority shall be issued for each Barangay Micro-Business Enterprise and only by
the Office of the Treasurer of the city or municipality that has jurisdiction over the principal place
of business of the Barangay Micro-Business Enterprise. (Sec. 2, IRR, R. A. No. 9178)
Section 256. Exemption of Barangay Micro-Business Enterprises from Taxes and Fees.
a) All Barangay Micro-Business Enterprises shall be exempt from income tax for income
arising from the operation of the enterprise.
b) Interests, commissions, and discounts derived from loans by the Land Bank of the
Philippines, Development Bank of the Philippines, People's Credit and Finance
Corporation and Small Business Guarantee and Finance Corporation granted to
Barangay Micro-Business Enterprises, as well as loans extended by the GSIS and SSS
to their respective member-employees under the Barangay Micro-Business Enterprise
Act of 2002 shall be exempt from gross receipts tax. (Sec. 9, IRR, R. A. No. 9178)
Section 257. Submission of Documents for Registration as Barangay Micro-Business

Enterprise. – The application for registration as Barangay Micro-Business Enterprise shall be
processed by the Office of the Local Treasurer upon submission of all of the following
documentary requirements:
a) For new applicant:
1. Application for Registration;
2. Registration as a business entity or enterprise from the appropriate government

agency, such as the following:
2.1 Securities and Exchange Commission, in the case of corporations,

partnerships or associations;
2.2 Cooperatives Development Authority, in the case of cooperatives; and
2.3 Department of Trade and Industry, in the case of sole proprietorship.
3. Tax Identification Number;
4. Certificate of Registration from the Bureau of Internal Revenue;
5. Mayor's Permit or City/Municipal Business Permit;

6. Sworn Affidavit executed by the sole proprietor or the president of the enterprise, as
the case may be, that the enterprise is barangay-based and micro-business in nature
and scope;

7. Sworn Statement of Assets and Liabilities, showing the value of the assets owned
and to be used in the conduct of business which shall be supported by pertinent
information such as the date of acquisition, acquisition cost and depreciated value. In
the case of assets acquired in the year of registration, it shall be supported by either
the invoice or official receipt or the contract document or deed;
8. Pictures of the place of business and its assets, other than cash, receivables and
intangibles;
9. Copy of loan contracts, if any, and duly-notarized certification of amortization

payments on the loan; and
10. Income Tax Return with proof that it has been filed with the Bureau of Internal
Revenue, including attachments, if any (for existing business only).
b) For renewal of registration:
1. Documents listed under (A) (1) to (A) ( 9) above, inclusive; and
2. Annual Information Return (for the year immediately preceding the renewal of
registration) duly filed with the Bureau of Internal Revenue, together with
attachments.
Section 258. Verification of Qualifications. – The City or Municipal Treasurer must conduct a
verification of the physical existence of the business and the true amount of its assets. A sworn
certification shall be executed by the Local Treasurer that such verification has been conducted,
and which shall form part of the records of the application for registration.
Section 259. Issuance of the Certificate of Authority. – After determining the eligibility of the
business enterprise, the Office of the City or Municipal Treasurer shall register the business
entity as a Barangay Micro-Business Enterprise and issue a Certificate of Authority. The
Certificate of Authority shall be effective for a period of two (2) years and renewable for a period
of two (2) years for every renewal. The Local Treasurer shall indicate in the Certificate of
Authority the date when the registration of the Barangay Micro-Business Enterprise commences.
Section 260. Registration Fee. – The Office of the Local Treasurer shall issue the Certificate of
Authority promptly and free of charge, unless a fee therefor, not exceeding One Thousand Pesos
(₱ 1,000) is imposed by the local government unit through a properly enacted ordinance.
Section 261. List of Registered Barangay Micro-Business Enterprises to be Furnished the

Bureau of Internal Revenue. – The Office of the City/ Municipal Treasurer shall furnish the
Revenue District Officer of the Bureau of Internal Revenue in the locality concerned on a
quarterly basis, the list of all registered Barangay Micro-Business Enterprises of good standing.
Said list of registered Barangay Micro-Business Enterprises shall be one of the bases of the
Bureau of Internal Revenue in granting the income tax exemption to the said enterprise.
Section 262. Periodic Evaluation by the Local Treasurer. – The Office of the City/Municipal
Treasurer shall conduct an evaluation and verification of the Barangay Micro-Business
Enterprise's financial status, including the amount and condition of its assets within thirty (30)
days from the close of the year after a Barangay Micro-Business Enterprise's initial registration,
and within thirty (30) days from the close of each year thereafter. The Local Treasury official(s)
conducting the verification must be authorized in writing by the City/Municipal Treasurer. The
written authority should include the name of the official(s) who will conduct the verification, the
address of the place of business to be verified, and the duration of the written authority which
should not exceed a period of one (1) week from its issuance.

Section 263. Cancellation of Registration. –
a) The Office of the City/Municipal Treasurer shall cancel the registration of a Barangay
Micro-Business Enterprise under the following circumstances:
1. When the Barangay Micro-Business Enterprise transfers its place of business to

another locality;
2. When the value of its total assets as determined exceeds Three Million Pesos (₱
3,000,000.00);
3. When the Barangay Micro-Business Enterprise voluntarily surrenders its Certificate of

Authority to the Office of the City/Municipal Treasurer;
4. In case of death of the registered individual owner of the Barangay Micro-Business

Enterprise, in the case of a sole proprietorship;
5. In case of violation or non-compliance with the provisions of R. A. No. 9178 and its
Implementing Rules and Regulations, as well as DOF Order No. 17-04;
6. In case of merger or consolidation with an entity which is not eligible to be a Barangay

Micro-Business Enterprise;
7. In case of sale or transfer of the Barangay Micro-Business Enterprise, if it is a sole

proprietorship, without prejudice to the transferee applying for registration should it be
qualified under the provisions hereof;
8. Submission of fake, false or falsified documents;
9. In case of retirement from business or cessation/suspension of operations for one (1)

year; and
10. Making false or omitting required declarations or statements.
b) In circumstances (e), (h) and (j) above, the City/Municipal Treasurer should initiate the filing
of appropriate criminal complaints before the Office of the Public Prosecutor.
c) In the cancellation of registration, the Barangay Micro-Business Enterprise shall surrender

its Certificate of Authority to the Local Treasurer. The Local Treasurer shall immediately
notify the Bureau of Internal Revenue of any cancellation of registration of a Barangay
Micro-Business Enterprise.
Section 264. Exemption of Barangay Micro-Business Enterprises from Income Tax. – All
duly registered Barangay Micro-Business Enterprises shall be exempt from income tax arising
purely from their operations as such enterprise: Provided, that such exemption shall not apply to
the following:
a) Interest, including those from any currency bank deposit and yield or any other monetary
benefit from deposit substitutes and from trust funds and similar arrangements;
b) Royalties;
c) Prizes and other winnings;
d) Cash and/or property dividends;
e) Capital gains from the sale of shares of stock not traded through the stock exchange;

f) Capital gains from the sale or other disposition of real property;
g) The share of an individual in the net income after tax of an association, a joint account, or a
joint venture or consortium;
h) The share of an individual in the distributable net income after tax of a taxable partnership
of which he is a partner;
i) Income from the practice of profession received directly from the clients or from the
professional partnership of which the individual is a partner;
j) Compensation; and
k) All other forms of passive income and income from revenues not effectively connected with
or arising from operations of the Barangay Micro-Business Enterprises as such.
Section 265. Determination of the Value of Assets of the Barangay Micro-Business

Enterprise for Income Tax Exemption Purposes. - For the purpose of exemption from income
tax, the following conditions shall be met:
a) The total assets of the Barangay Micro-Business Enterprise, which shall not exceed
Three Million Pesos (₱3,000,000.00), shall include all kinds of properties, both personal
properties and real properties (but excluding land on which the particular business
entity's office, plant and equipment are situated) that are owned and used/to be used, or
even if not owned but used/to be used, by the Barangay Micro-Business Enterprise
and/or its affiliates for the conduct of its/their business/es.
b) Provided, That the term, "affiliate" shall refer to any person or business enterprise/entity
that, directly or indirectly through one (1) or more intermediaries, controls or is controlled
by, or is under common control with, the Barangay Micro-Business Enterprise concerned.
Section 266. Procedures in Availing Tax Incentives. – For purposes of availing the tax
incentives, the Barangay Micro-Business Enterprise shall register as such Barangay Micro-
Business Enterprise with the Revenue District Office of the Bureau of Internal Revenue where
the principal office or place of business of the Barangay Micro-Business Enterprise is located. Its
application for registration shall be supported by the following documents:
a) Copy of the Certificate of Authority of the Barangay Micro-Business Enterprise duly

authenticated by the Office of the City/Municipal Treasurer;
b) Sworn Statement of the Values of the Assets owned and/or used/to be used by the
Barangay Micro-Business Enterprise and/or its affiliates reflecting the current values
thereof. The sworn statement shall be supported by the following:
1. Acquisition cost, date of acquisition and depreciated value for existing assets;
2. Invoices and/or official receipts for newly-acquired assets not yet depreciated;
3. Duly-notarized copy of the Contract of Lease for assets used in the conduct of
business covered by lease agreement; and
4. Copy of Loan Contract/s, if any, and duly notarized Certification of Amortization

Payments on the Loan.
c) Certified list of branches, sales outlets, places of production, warehouse and storage

places, or such other facility owned and/or operated by the Barangay Micro-Business
Enterprise, indicating their respective addresses, whether located in the same
municipality or city where the principal place of business is located, or elsewhere;
d) Certified list of affiliates, indicating addresses, line of business and responsible officers
thereof; and
e) Latest Audited Financial Statements, or Account Information Form or its equivalent,

containing data lifted from the audited financial statements.
Section 267. Filing of Annual Information Return. – Every Barangay Micro-Business

Enterprise entitled to full income tax exemption is required to file an Annual Information Return,
together with an Account Information Form, or its equivalent, containing data lifted from the
audited financial statements and a sworn statement of assets owned and/or used in the
business.
Section 268. Where and When to File the Annual Information Return. – Except in cases
where the Bureau of Internal Revenue Commissioner otherwise permits, the Annual Information
Return shall be filed with the Revenue District Officer or the Revenue Collection Officer or the
duly authorized Treasurer of the city or municipality in which the Barangay Micro-Business
Enterprise has its principal place of business. The Annual Information Return shall be filed on or
before the fifteenth (15th) day of the fourth (4thh) month following the close of the taxable year.
Section 269. Revocation of Income Tax Exemption Privilege. –

a) The Bureau of Internal Revenue shall revoke the income tax exemption privilege of a
Barangay Micro-Business Enterprise for any of the causes set forth in Section 286 of this
Manual on the cancellation of registration of a Barangay Micro-Business Enterprise.
b) The Bureau of Internal Revenue shall notify the Barangay Micro-Business Enterprise in
writing of its findings and require the Barangay Micro-Business Enterprise to pay the
corresponding income tax, without prejudice to the filing of administrative or criminal
complaints, if warranted.
c) The Bureau of Internal Revenue shall also notify the Office of the City/Municipal
Treasurer concerned of its action, whereupon the City/Municipal Treasurer shall make a
determination within fifteen (15) clays from receipt of the Bureau of Internal Revenue's
notice, whether or not the Barangay Micro-Business Enterprise's Certificate of
Registration issued by the Local Treasurer must likewise be cancelled.
Chapter 11.CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS
Section 270. General Policy. –
a) It shall be the basic policy that any local government unit may create indebtedness, and
avail of credit facilities to finance local infrastructure and other socio-economic
development projects in accordance with the approved local development plan and public
investment program.
b) A local government unit may also avail of credit lines from government or private banks
and lending institutions for the purpose of stabilizing local finances. (Sec. 296, LGC)
Section 271. Credit and Other Sources of Funds Available to Local Government Units.–
Local government units may avail of the following credit financing, indebtedness and other
financing mechanisms for the purposes under, and in accordance with, the provisions of R. A.
No. 71 60 or the Local Government Code of 1991, as well as other relevant laws:

a) Loans, credit, and other forms of indebtedness; (Sec. 297, LGC)
b) Deferred payment and other financial schemes; (Sec. 298, LGC)
c) Loans, grants and subsidies to other Local Government Units; (Sec. 300, LGC)
d) Joint and several loans with other Local Government Units; (Sec. 300, LGC)
e) Loans from funds secured by the National Government from foreign sources; (Sec. 301,
LGC)
f) Bonds and other long-term securities; (Sec. 299, LGC)
g) Private sector financing, construction, maintenance operations, and management of
infrastructure projects under Build Operate Transfer arrangement; and
h) Grants
Section 272. Other Build-Operate Transfer Arrangements.– Build-Operate-Transfer

arrangements entail various degrees of involvement of the private sector in the financing,
construction and management of public infrastructure and facilities. Among the arrangements
referred to as Build-Operate-Transfer, although they have some features that are different from
those described in (3) above, are the following:
a) Build-and-Transfer:
1. A contractual arrangement under which the project proponent finances and

constructs an infrastructure or facility and after its completion turns it over to the
government agency or local government unit concerned.
2. The local government unit shall pay the proponent on an agreed schedule its total
investment plus a reasonable rate of return.
3. This arrangement is most suitable for the construction of any infrastructure or

development project, including sensitive facilities with security or strategic
implications that the Government opts to operate directly.
b) Build-Lease-and Transfer:
1. A contractual arrangement under which project proponent finances and

constructs an infrastructure or facility and upon its completion turns it over to the
sponsor agency or local government unit on a lease arrangement.
2. The terms and fixed period of the lease enable the proponent to recover its
investments and make a reasonable profit.
3. The title of the facility is transferred to the sponsor agency or local government
unit at the end of the contracted lease period.
c) Build-Own-and-Operate:
1. A contractual arrangement under which a project proponent is authorized to

finance, construct, own, operate and maintain an infrastructure or development
facility.
2. The proponent, which in this case owns the assets, is allowed to recover its total
investment, the costs of maintaining and operating the facility and a reasonable
return, by collecting tolls, fees, rentals or other charges from facility users.
3. Under this scheme, the proponent, as project owner, may assign its operation
and maintenance to a facility operator.
d) Build-Transfer-and-Operate:

1. A contractual arrangement under which the sponsor government agency or local
government unit contracts a private entity to build an infrastructure facility on a
turn-key basis.
2. The contractor assumes cost over-runs, delays, and specified performance risks.
3. The title is transferred to the project sponsor as soon as the facility is

commissioned satisfactorily, but the private entity operates the facility on its
behalf under an agreement.
e) Contract-Add-and-Operate (CAO):
1. A contractual arrangement under which the project proponent is authorized to

add to any existing infrastructure facility which it is renting from the government
and to operate the expanded project over an agreed franchise period.
2. Any transfer arrangement as regards the added facility depends on the specific
agreements and approved contractual arrangements.
f) Rehabilitate-Operate-and-Transfer (ROT) - A contractual arrangement which an

existing facility is turned over to the private sector to refurbish, operate and maintain for a
franchise period, at the expiry of which it is turned to the Government.
g) Rehabilitate-Own-and-Operate (ROO) - A contractual arrangement under which an

existing facility is turned over to the private sector to refurbish and operate with no time
limitation imposed on ownership. As long as the operator is not in violation of its
franchise, it can continue to operate the facility in perpetuity.
Section 273. Duties and Responsibilities of Local Treasurers. – Local Treasurers have the
following duties and responsibilities that relate to the powers of LGUs to use credit financing,
indebtedness and alternative sources of funds:
a) Act as the custodian of all funds directly released to the LGU from the proceeds of grants
and from loans, credits and other forms of indebtedness, as well as income and express
profits derived from the operations of the projects financed from them. He shall deposit
these funds in a separate depository account in the name of the LGU with banks,
preferably government owned, located in or nearest to the area of jurisdiction of the LGU;
b) Prepare the required reports of checks issued, disbursements and other accountabilities;
c) In coordination with other LGU official concerned, ensure that the debt servicing for the
LGU credit does not exceed twenty percent (20%) of its annual regular income for each
year until the loan is fully paid. (Sec. 324 (b), LGC);
d) Pay or amortize loans, including all interests incurred, as appropriate from the income of
the projects or services and/or from the regular income of the LGUs until fully paid; and
e) Upon authorization of the sanggunian concerned, Local Treasurers shall:
1. Establish a Sinking Fund for the re-payment of bond issues or maintain Trust
Funds for the purpose;
2. Maintain special accounts in the General Fund for loans, interest, bond issues,
and receipts arising from Build Operate Transfer transactions, such as toll fees,
charges, and other mandatory contributions for specific purposes. (Sec. 313,
LGC);

3. Maintain separate records of funds received for projects financed by proceeds of
loans, credits, grants, and other forms of financing to keep track of the cash flow
of the project fund;
4. If required, provide financial data about the LGU that may be needed in relation
to its availment of the funding sources and mechanisms described in this
Chapter.
Section 274. Provisions for the Servicing of Contractual Obligations of Local Government
Units. –
a) Using Portion of IRA Shares as Payment to Contractual Obligations - Any LGU, through
its Local Chief Executive and upon authorization by the sanggunian concerned, may
authorized the National Government to deduct or withhold a portion of its IRA share for
the payment of its contractual obligation, subject to the limitations defined in the
succeeding paragraph (c) hereof. (Article 401, IRR implementing Sec. 303, LGC)
b) Mandatory Appropriations for Re-payment of Loans - Local government units 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 contracted obligations issued under this Chapter as they become
payable until the total obligations shall have been paid in full. Provided, That failure to
provide the appropriations herein shall render their annual budgets inoperative. (Sec.
303, LGC)
c) Mandatory Requirements and Limitations on Debt Service - Local government units shall
make full provision for all statutory and contractual obligations: Provided, however, that
the amount of appropriations for debt servicing shall not exceed twenty percent (20%) of
the regular income of the local government unit concerned. (Sec. 324 (b), LGC)
d) Regular Income shall refer to revenues and receipts realized by provinces, cities and
municipalities from regular sources of the local General Fund including the Internal
Revenue Allotment and other shares provided for under R. A. No. 7160 or the Local
Government Code of 1991, but exclusive of non-recurring receipts such as other national
aids, grants, financial assistance, loan proceeds, sale of fixed assets and other similar
receipts.
Section 275. Enforceability of Loan Obligations notwithstanding the Expiration of the

Terms of the Elective Contracting Officials. – Loan obligations contracted by local
government units will subsist and remain binding and enforceable notwithstanding the expiration
of the terms of the elective local officials who contracted the same. The corporate existence of
the local government unit is not co-terminus with the term of its officials who merely are its
agents. The sanggunian which authorized the contracting of loan obligations binds the
succeeding sanggunian of the local government unit which is separate and distinct from the
personality of its officials. (DOJ Opinion No. 160, series of 1994)
Section 276. Guidelines on the Use of Funds Raised by Indebtedness. –
a) A local government unit may contract loans, credits, and other forms of indebtedness
with any government or domestic private bank and other lending institutions to finance
the:
1. Construction, installation, improvement, expansion, operation, or maintenance of

public facilities, infrastructure facilities, housing projects;
2. Acquisition of real property; and

3. Implementation of other capital investment projects, subject to such terms and
conditions as may be agreed upon by the local government unit and the lender.
(Sec. 297 (a), LGC)
b) A local government unit may likewise secure from any government bank and lending
institution short, medium, and long term loans and advances against security of real
estate or other acceptable assets for the establishment, development, or expansion of
agricultural, industrial, commercial, house financing and livelihood projects, and other
economic enterprises. (Sec. 297 (b), LGC)
c) Government financial and other lending institutions are authorized to grant loans, credits,
and other forms of indebtedness out of their loanable funds to local government units for
purposes specified above. (Sec. 297, LGC)
Section 277. Tax Exemption Privileges of Local Government Units. – Local government
units shall be exempt from payment of duties and taxes for the importation of heavy equipment or
machinery 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, That such equipment or machinery shall not be disposed of, either
by public auction or negotiated sale, within five (5) years from their importation. To avail of the
incentives and for expeditious processing of request for duty and tax exemption, the following
specific requirements are prescribed:
a) A letter application signed by the Local Chief Executive (Governor, City Mayor or
Municipal Mayor) or his duly authorized representative, attaching therewith the pertinent
Board Resolution, authorizing the Local Chief Executive to import/accept donation;
b) The usual import-documents such as:
1. Bill of Lading, Airway Bill, Parcel Post Notice or other shipping documents;
2. Commercial Invoice and Packing List; and
3. Other relevant documents covering the shipment.
c) Sworn Statement that the imported articles are not for sale, hire or barter; and
d) An undertaking from the local government unit that, upon release and physical
possession of the machinery and equipment, the notice, "ENTERED DUTY/TAX-FREE
UNDER THE NEW LOCAL GOVERNMENT CODE" shall be printed in a conspicuous
space on the machinery and equipment which was accorded duty-and-tax-free release.
(Sec. 5, Department Order No. 21.92, Department of Finance)
Section 278. Limitations on the Use of Credit Lines to Stabilize Local Finance. - In the use
of credit lines for the purpose of stabilizing local finances as provided in Section 296 of R. A. No.
7160 or the Local Government Code of 1991, local government units shall observe the following
guidelines:
a) Availment must be approved by the concerned sanggunian;
b) Funds availed through credit for this purpose shall be spent and disbursed solely to
finance expenditures covered by appropriations authorized in the duly approved local
government budget for the current year.
Section 279. Common Requirements for Credit Financing of Local Development Projects. -
Local government units shall observe the following common requirements in the use of credit
financing for their development projects:
a) Inclusion of the proposed project in the approved local development plan and public

investment program. (Sec. 296 (a), LGC)
b) Sanggunian resolution authorizing the Local Chief Executive to secure/negotiate and/or

enter into an agreement, which may include the following:
1. Endorsing the proposed project.

2. Identifying the forms/types of financing the projects.
3. Authorizing the mode/form of financing the projects.
c) Sworn statement of the Local Treasurer and Accountant on the following outstanding
debts and obligations of the local government unit, if any:
1. Kinds of loans.
2. Purpose of loans and other obligations.
3. Lending agencies/institutions.
4. Dates approved/granted and maturities.
5. Terms and conditions.
6. Annual amortizations (segregate/specify principal and interest);
7. Remaining balances (principal and interest):
7.1 Current
7.2 Arrears
8. Assignments/Collaterals.
d) Current year budget together with the twenty percent (20%) development fund program.
e) Financial data on the financial and other operations of the local government unit, as well
as the socio-economic climate within its territory. The more common financial data are
shown in the following table:
TABLE ON LGU FINANCIAL DATA COMMONLY REQUIRED WHEN AVAILING

OF INDEBTEDNESS AND OTHER FINANCING MECIIANISMS
LGU INCOME Social Security /Social Services and Welfare
Economic Services
Local Sources Debt Servicing
Tax Revenue Other Purposes
Real Property Taxes Special Education Fund
Business Taxes and Licenses Education, Culture and Sports/Manpower Development
Other Taxes
2.2 By Sector
Non Tax Revenue - Economic Services

- Social Services
Operations of Economic Enterprises - General Public Services
Regulatory Fees - Debt Burden
Service/users Charges 2.3 By object
Other Receipts - Personnel Services (PS)
Shares from National Tax Collections/ - Maintenance and Other Operating Services (MOOE)
Grants/Aids - Capital Outlay
Internal Revenue Allotment (IRA) - 20% Development Fund
Share in National Wealth - Other Capital Outlay
Share in tobacco Excise Tax - Liabilities Being Serviced
Grants
Domestic 3.0 TAX BASE

Foreign 3.1 Potential Collection
National Aid 3.2 Actual Collection
Loans, Borrowing, and Transfers
Loans
Transfers 4.0 VALUE ASSETS
Inter-Local Transfers 4.1 Equipment
4.2 Buildings
LGU EXPENDITURES 4.3 Land
2.1 By Function 5.0 PROJECTIONS OF INCOME AND EXPENDITURES

- General public services
- Education, culture and sports 6.0 ECONOMIC ENTERPRISES
- labor and employment 6.1 Service/commodity
- Housing and Community Development 6.2 Capacity
6.3 Summary of Operations
Other credit worthiness documentary requirements and further credit analysis to be done by the
Bureau of Local Government Finance are discussed in a separate manual entitled,
"Creditworthiness Rating Manual".
Section 280. Acceptable Collateral. – The most common securities or collaterals which local
government units may offer for loans to satisfy the requirements of lending institutions are any
one or a combination of the following:
a) Assignment of a portion of the share from the Internal Revenue Allotment of the local
government unit concerned. Any local government unit through its local chief executive
and upon authorization by way of a resolution of the sanggunian concerned, may
authorize the National Government to deduct or withhold a portion of its Internal Revenue
Allotment share for the payment of its contractual obligations, subject to the limitations
under Sec, 324 (b) of R. A. No. 7160 or the Local Government Code of 1991.The
resolution of the sanggunian shall clearly state the name of the creditor, the nature of
indebtedness, the amount to be withheld, and the period and term that such withholding
of the Internal Revenue Allotment shares shall be made;
b) Chattel Mortgage of equipment financed by the loan;
c) Real Estate Mortgage of the patrimonial property of the local government unit; and
d) Net profit from the project financed by the credit.
Section 281. Special Account for Loans, Interests, Bonds, and Contributions for Specific
Purposes. – Local government units shall maintain Special Accounts in their General Fund for
the following:
a) Public utilities and other economic enterprises;
b) Loans, interests, bond issues, and other contributions for specific purposes;
c) Development projects funded from the Internal Revenue Allotment; and
d) Such other special accounts which may be created by law or ordinance.
Section 282. Other Requirement for Loans, Deferred Payments and Other Financial
Schemes. – The officials of local government units contracting loans and other forms of
indebtedness under the provisions of this Chapter shall also comply with the following:

a) Any other provisions of R. A. No. 7160 or the Local Government Code of 1991, or other
laws that may be relevant to a particular project or the transactions necessary to realized
it;
b) The rules and regulations on property and supply management, which shall be applied in
the acquisition of equipment or machinery under the loans, deferred payment and other
financial schemes; and
c) All applicable accounting and auditing policies and regulations.
Section 283. Inter-Local Government Units Loans, 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 government units under such terms and conditions as may be agreed upon by the
contracting parties. (Sec. 300 1st par., LGC) There are no standard terms and conditions for
loans under this scheme. However, the creditor LGU and the borrower LGU have to negotiate,
come to an agreement, and observe the following processes:
a) Enactment by the lending and the borrowing LGUs of the required resolutions and/or
ordinances duly signed/approved by the majority of all the members of their respective
sanggunian, stipulating the terms and conditions that shall include the following:
1. Repayment scheme and grace period;

2. Interest lending/borrowing rate;
3. Security/collateral;
4. Benefits to both the lending and the borrowing LGUs; and
5. Automatic budget allocation of the necessary amount for repayment
b) Ratification of the loan contract by the sanggunian of both contracting LGUs/parties,

which is needed for the loan agreement to become valid and enforceable.
c) Certification by the Local Treasurer of the lending LGU, attested to by its Auditor, of the
accumulated surpluses eligible for lending, grants or subsidies.
Section 284. Joint and Several Local Government Unit Loan Arrangements. – Local
government units may, upon approval of their respective sanggunian, jointly and severally
contract loans, credits, and other forms of indebtedness for purposes mutually beneficial to them.
(Sec. 300 2nd par., LGC)
Section 285. Loans from wands Secured by the National Government from Foreign
Sources. – The President or his duly authorized representative may, through any government
financial or other lending institution, re-lend to any province, city, municipality, or barangay, the
proceeds of loans contracted with foreign financial institutions or other international funding
agencies.
a) Guidelines:
1. The loans shall be used for the purpose of:
1.1 Financing the construction, installation, improvement, expansion, operation or

maintenance of public facilities, infrastructure facilities, or housing projects;
1.2 Acquiring real property; and
1.3 Implementing other capital investment projects.
2. Such loans shall be subject to the terms and conditions agreed upon by the President
and the local government unit. The proceeds from such loans shall accrue directly to
the local government unit. (Sec. 301 (a), LGC)

3. The President may likewise authorize the re-lending to local government units the
proceeds of grants secured from foreign sources, subject to the provisions of existing
laws and the applicable grant agreements. (Sec. 301 (b), LGC)
4. Re-payment or amortization of loans, including their accrued interest thereon, may be

financed partly from the income of the projects or services and from the regular
income of the local government unit, which must be provided for and appropriated
regularly in its annual budget until the loan and interest thereon shall have been frilly
paid. (Sec. 301 (c), .LGC)
b) The Municipal Development Fund as Conduit. - The Municipal Development Fund,

created under P. D. No. No. 1914, operates for the above purposes with the Department
of Finance as administrator. Provinces, cities and municipalities may tap the Municipal
Development Fund for loans through agreements with the Department of Finance, setting
the terms and conditions of the loan. (Sec. 1, P. D. 1914)
Section 286. Deferred Payments and Other Financial Schemes. - Provincial, city and
municipal governments may acquire property, plant, machinery, equipment, and such necessary
accessories under a supplier's credit, deferred payments plan, or other financial schemes (Sec.
298, LGC) under the following conditions:
a) That the acquisition of such equipment, machinery, and their accessories shall be
governed by the pertinent provisions of the Implementing Rules and Regulations of R. A.
No. 7160 or the Local Government Code of 1991, on "Local Government Supply and
Property Management", whether such items are to be supplied or purchased from a local
or foreign supplier; and
b) That the Local Chief Executive, through a sanggunian resolution, is authorized to

negotiate the contract executed under the deferred payment scheme. (Art. 396, IRR
Section 287. Bonds and Other Long Term Securities. - Subject to the rules and regulations of
the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission, provinces, cities
and municipalities are authorized to issue bonds, debentures, securities, collaterals, notes and
other obligations to finance self-liquidating, income-producing development or livelihood projects
pursuant to the priorities established in the approved local development plan or the public
investment program. (Sec. 299, LGC)
a) Debt Service Requirement and Limitations - As debt instruments, bonds are subject to
the mandatory appropriations in the respective annual budgets of local government units
as provided under Section 303 of R. A. No. 7160 or the Local Government Code of
1991.Likewise, bonds are subject to the debt service limitations provided for under
Section 324 (b) of R. A. No. 7160 or the Local Government Code of 1991.The BLGF
certification on the maximum borrowing or debt service capacity of a local government
unit is part of the documentation required for the issuance of local government bonds.
b) Sanggunian Approval - The sanggunian concerned shall, by way of 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. (Sec.
299, LGC)
c) National Government Guarantee - In cases where the bond issue shall bear the
guarantee of the National Government, the approval of the Secretary of Finance shall be
required. (Art. 397 (b), IRR implementing Sec. 299, LGC)
d) Local Government Bond Issuances are Subject to Rules and Regulations of the

Bangko Sentral ng Pilipinas - Whenever local government units contemplate to borrow
within the Philippines, the prior opinion of the Monetary Board shall be requested in order
that it may render an opinion on the probable effects of the proposed operation on
monetary aggregates, the price level and the balance of payments. (Sec. 123, Art 111,
R. A. No. 7653 or the Bangko Sentral ng Pilipinas Charter)
e) Local Government Bonds are Exempt from Registration Requirements of the

Securities and Exchange Commission. - Local government bonds are exempt from the
registration requirements of the Securities and Exchange Commission. However, in order
to maintain standards in the securities market, the Securities and Exchange Commission
maintains authority and control over the underwriters and brokers of all types of securities
including local government bonds.
f) Special Documentation Requirements for Local Government Bonds. - In addition to

the common requirements reflected in Section 302 6f this Manual, the following
documentary requirements shall be complied with in the issuance of local government
bonds:
1. BLGF Certification as to the Debt Service Capacity of the LGU concerned (BSP
Letter, Nov 27, 2000);
2. DOF Certification as to the national government guarantee in case the floatation

requires National Government guarantee (BSP Circular No. 44);
3. Monetary Board opinion on the probable effects of the proposed issuance of the
LGU Bonds on the monetary aggregates, price levels and balance of payments
(BSP Circular No. 41);
4. Sanggunian Resolution, for the following:
4.1 Establishment of sinking fund for the payment of retiring or maturing bonds;
4.2 Authorizing the Local Chief Executive to enter into an agreement with the
Financial Advisor/Trustee; and
4.3 Certifying that the LGU will or will not seek any National Government
guarantee for the bond.
5. Annual Audit Report for the immediately preceding year;
6. Budget Operation Statement/Statement of Actual Income and Expenditure for the

past five (5) years duly signed by the Local Treasurer and/or Local Accountant
indicating the IRA actually received for the same period.
Section 288. Private Sector Financing Under the Build-Operate-Transfer Arrangement. -

Local government units may avail of the several variations of Build-Operate-Transfer
arrangement to finance, construct, maintain, operate and manage infrastructure projects. The
general provisions are as follows:
a) Authorization - Local government units may enter into contracts with duly pre-qualified
individual contractor, for the financing, construction, operation, and maintenance of any
financially viable infrastructure facilities, under the build-operate-and-transfer agreement,
subject to the applicable provisions of R. A. No. 6957, authorizing the financing,
construction, operation and maintenance of infrastructure projects by the private sector
and the rules and regulations issued thereunder and as such terms and conditions
provided for in this Section. (Sec. 302 (a), LGC)

b) Inclusion in Development Plans and Investment Programs - Local government units
shall 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. (Sec. 302 (b), LGC)
c) Disclosure and Public Endorsement. - It shall be the duty of the local government unit
concerned to disclose to the public all projects eligible for financing under this Section,
including official notification of duly registered contractors and publication in newspaper
of general or local circulation and in conspicuous and accessible public places. Local
projects under the build-operate-and-transfer agreement shall be confirmed by the local
development councils. (Sec. 302 (b), LGC)
d) Terms and Conditions. - Projects implemented under the provisions of 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. (Sec. 302 (c) (1), LGC)
2. Upon approval by the sanggunian of the project plans and specifications, the
provincial, city or municipal engineer shall, as the case may be, cause to be
published once every week for two (2) consecutive weeks in at least one (1) local
newspaper which is circulated 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 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 R. A. No. 7160 or the Local Government Code of
1991, and other applicable laws, rules and regulations. (Sec. 302 (c) (2) 1st par.,
LGC)
3. 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
prescribed minimum design and performance standards, plans and
specifications. For this purpose, the winning contractor shall be automatically
granted by the local government unit concerned the franchise to operate and
maintain the facility, including the collection of tolls, fees, rentals, and charges, in
accordance with sub-Section (c) (4) hereof. (Sec. 302 (c) (2) 2nd par., LGC)
4. 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 designs and performance standards, plans
and specifications. (Sec. 302 (c) (2) 3rd par., LGC)
5. 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 fixed by the sanggunian concerned.
(Sec. 302 (c) (3), LGC)
6. The provincial, city or municipal engineer shall, as the case may be, not allow any
projects under this Section unless such contractor presents proof or evidence
that he has posted the required bond. (Sec. 302 (c) (3), LGC)

7. The contractor shall be entitled to a reasonable return of its investment in
accordance with its bid proposal as accepted by the local government unit
concerned.
8. In the case of build-operate-and-transfer agreement, repayment shall be made by

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:
8.1 Provided, That the local government unit concerned shall, based on
reasonableness and equity, approve the tolls, fees, rentals and charges;
8.2 Provided, further, That the imposition and collection of tolls, fees, rentals
and charges shall be for a fixed period as proposed in the bid and
incorporated in the contract which shall in no case exceed fifty (50) years;
8.3 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 in the
contract. (Sec. 302 (c) (4) 1st and 2nd pars., LGC)
9. In the case of 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.
10. In the case of land reclamation or construction of industrial estates, the

repayment plan may consist of the grant of a portion or percentage of the
reclaimed land or the industrial estate constructed. (Sec. 302 (c) (4) 3rd and 4th
pars., LGC)
11. Every infrastructure project undertaken under this Section shall be constructed,
operated, and maintained by the contractor under the technical supervision of the
local government unit and in accordance with the plans, specifications,
standards, and costs approved by it. (Sec. 302 (c) (5), LGC)
e) Review of Contracts. - 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. 302 (d), LGC)
f) Build-Operate-Transfer Project Formulation and Proponent Selection. - The existing

Build-Operate-Transfer legal framework based on R. A. No. 7718 recognizes two (2)
modes for identifying projects and selecting proponents, which affect the processes
involved in the early phases of the Build-Operate-Transfer project. These modes are as
follows:
1. Solicited Proposals - These are the priority projects identified by the sponsor
agency or local government unit. The sponsor formulates the project based on its
objectives and studies, and then invites ("solicits") the private sector to participate
in its realization.
2. Unsolicited Proposals - These are Build-Operate-Transfer project proposals of

private proponent to prospective sponsor agencies/local government units. An
unsolicited project may be accepted if it addresses existing priorities or needs
that may or may not have been previously realized by the prospective sponsor.
The agency/local government unit may accept an unsolicited proposal on a
negotiated basis if the project meets certain conditions.

Section 289. Authority to Negotiate and Secure Grants. – Local chief executives may, upon
authority of the sanggunian, negotiate and secure financial grants or donations in kind, in support
of the basic services or facilities enumerated under Section 17 of R. A. No. 7160 or the Local
Government Code of 1991, from local and foreign assistance agencies, without necessity of
securing clearance or approval therefore from any department, agency, or office of the National
Government or from any higher local government unit.
a) Projects with National Security Implications - Provided, That projects financed by

such grants or assistance with national security implications shall be approved by the
national agency concerned: Provided, further, That when such national agency fails to
act on the request for approval within thirty (30) days from receipt thereof, the request
shall be deemed approved. (Sec. 23 1st par., LGC)
b) Required Report to Congress and the President - The local chief executive shall,
within thirty (30) days upon signing of such grant agreement or deed of donation, report
the nature, amount, and terms of such assistance to both Houses of Congress and the
President. (Sec. 23 2nd par., LGC)
c) Formal Procedural Requirements - In availing of the Official Development Assistance

(ODA) facilities, the LGU needs to consider that ODA donors as a matter of procedure
coordinate regularly with the National Economic Development Authority (NEDA), which in
turn coordinates local government matters with the Department of the Interior and Local
Government (DILG). For this reason, the following formal procedures shall be observed:
1. The LGU prepares the project proposal using the required NEDA forms in
consultation with the DILG and NEDA and with other National Government
Agencies (NGAs), as appropriate;
2. The Local Development Council (LDC) evaluates the project proposal for
consistency with its Local Development Plan and the Annual Investment
Program;
3. Upon satisfactory evaluation of the proposal, the sanggunian authorizes the LCE
to negotiate the grant;
4. NEDA checks the proposal for possible duplication with other proposed/on-going
projects, and upon clearance endorses it to the ODA institution. If duplications or
conflicts are found, the proposal is referred back to the LGU for review and
revision;
5. The LCE endorses the project, through NEDA, to the identified ODA-granting
institution;
6. The LGU submits the project proposals to the DILG which refers it to the
concerned NGAs for possible security implications;
7. The concerned NGAs review the project proposal and within thirty (30) days,
inform the DILG and the LGU concerned of the result of the review. As
appropriate, the proposal may be approved, objected to due to security
implications, or referred back for revisions;
8. LGU coordinates directly with the ODA grant funding institutions in monitoring the
latter's processing of the proposal and regularly informs the DILG and the NEDA
of the status of the proposal;
9. NEDA coordinates regularly with the ODA grant funding institution in facilitating
the evaluation and approval of the local project proposal; and

10. An NGA or higher local or regional governmental body (i.e. PDC and RDC)
evaluates the project proposals only upon express request of the ODA grant
donor and the consent of the LGU(s) concerned.
Section 290. Prohibited Acts Related to the Awards of Contracts Under the Provisions on
Credit Financing. –
a) It shall be unlawful for any public official or employee in the provincial, city, or municipal
government, or their relatives within the fourth civil degree of consanguinity or affinity, to
enter into or have any pecuniary interest in any contract for the construction, acquisition,
operation, or maintenance of any project awarded pursuant to the provisions of Title 4,
Book II of R. A. No. 7160 or the Local Government Code of 1991, or for the procurement
of any supplies, materials, or equipment of any kind to be used in the said project.
b) Any person convicted for violation of the provisions of said Title shall be removed from
office and shall be punished by imprisonment of not less than one (1) month but not more
than two (2) years, at the discretion of the court, without prejudice to prosecution under
other laws. (Sec. 520, LGC
Chapter 12. THE STATEMENT OF RECEIPTS AND EXPENDITURES (SRE) AND

ELECTRONIC STATEMENT OF RECEIPTS AND EXPENDITURES (eSRE) FINANCIAL
MANGEMENT REPORTING SYSTEM
Section 291. Statement of Receipts Expenditures (SRE) Financial Report System:

Definition, Composition and Legal Basis. –
a) The Statement of Receipts and Expenditures (SRE) is the official reporting system of the
DOF for monitoring LGU financial performance. This report is generated by the Electronic
Statement of Receipts and Expenditures system (eSRE system) of the Bureau of Local
Government Finance. It captures data that generates information on the fiscal capacity,
level of borrowings, and credit worthiness of LGUs. The SRE report also provides
financial information to the Local Chief Executive for the purpose of policy formulation
and fiscal management.
b) The SRE was formerly known as the Statement of Income and Expenditures (SIE). The
word “Income” was replaced with “Receipts” so as to include loan proceeds and other
receipts not classified as income (i.e., proceeds from loan, sale of assets, etc.). Likewise,
expenditures are classified into operating and non-operating to distinguish outright
expense (operating) from capital and investment outlays and loan payments (non-
operating).
c) The SRE presents receipts and expenditures of the General Fund, the Special Education
Fund (SEF) and the Trust Fund. The data presented in the SRE are totals of major
captions comprising various account classifications in the following financial statements:
(a) Statement of Receipt Sources; and (b) Statement of Expenditures.
d) The SRE is divided into three major segments:
1. The first is the current operating segment which is identical to the Commission on
Audit’s Statement of Income and Expenses. It shows the operating income from
local and external sources and current operating expenses which includes Personal
Services (PS), Maintenance and Other Operating Expenses (MOOE), and Financial
Expenses (FE);

2. The second segment is the non-operating receipts and expenditures which is
equivalent to the investing and financing activities in the COA’s Cash Flow
Statement which includes receipts from sale of assets, investment, loan proceeds
and expenditure such as purchase of assets, investment and payment of loans; and
3. The third segment is the fund balance which show the details of cash balances.
e) Legal Basis:
1. This Manual is prescribed by the Department of Finance (DOF) pursuant to the

provisions of Republic Act (RA) No. 7160 and Executive Order (EO) 127, Series
of 1987, which provide, respectively, that:
“…the Department of Finance has the authority to monitor and regulate the
financial performance of LGUs.”
and
“…the Department of Finance is responsible in the fiscal and financial

management of the Government including the Local Government Units. The
Bureau of Local Government Finance being the arm of DOF is responsible in
the administration and technical supervision of LGUs. The BLGF is specifically
directed to supervise the revenue operations of all local government units, with
the objective of making these entities less dependent on funding from the
national government.”
2. Corollary to this, the Department of Finance issued Department Order No. 8-2011
dated February 11, 2011 to read as follows:
“The Department of Finance shall be responsible for supervision of the

revenue operations of all local government units, with the objective of making
these entities less dependent on funding from the national government”.
“The BLGF issued a Memorandum Circular Nos. 14-2008, 19-2008 and

19-2008 prescribing the Statement of Receipts and Expenditures for collecting
and monitoring financial information and performance of all LGUs, thereby
upgrading the SIE system for the purpose of harmonizing the data with other
government fiscal reports, such as the New Government Accounting System of
the COA, and to synchronize the preparation of the SRE by concerned LGU
officials”.
“The Electronic Statement of Receipts and Expenditures is hereby

instituted as the official Reporting system of the DOF on Local Government
Fiscal and Financial Matters, to be maintained by the BLGF to fully establish a
reliable, accurate and timely reporting and monitoring system in the country”.
Section 292. Statement of Receipts and Expenditures (SRE): Purpose and Use. –
a) Purpose:
1. LGU Monitoring System - LGU financial performance can be evaluated through

the data inputted to the SRE system from reports submitted by the LGUs
2. Policy Development - SRE offers sound financial information to assist

policymakers and legislators in drafting local and national legislations.

3. Forecasting and Planning - the SRE consolidated data is useful in planning,
forecasting, debt certification process, creditworthiness rating system, LGU
income classification system, etc.
4. Statistics - the SRE provides key data like locally sourced income, income from
external sources, expenditures and other financial or fiscal statistics on LGU
finance that can be used to design economic and fiscal capacity models.
b) Users and Uses:
Users Uses
a. BLGF Monitor the LGU’s financial performance; determine
collection efficiency; set income targets; use in
forecasting revenues and expenditures, financial
analysis, credit worthiness rating, fiscal capacity, and
LGU income classification.
b. DILG Evaluate the LGU’s operating performance.
c. MDFO Serve as source of data for application of

loans/grants.
d. NEDA/NTRC/DBM/BSP Serve as source of data for statistics, forecasting and

planning.
e. DOF Serve as source of data for revenue collections and

borrowings, consolidated public sector surplus or
deficits and drafting of national policies.
f. Senate/Congress Serve as interim financial reports in aid of

legislations.
g. Financial Institutions Serve as source of data for evaluation of LGU’s

credit application.
h. Potential Donors Serve as basis for extending

grants/donations/aids/loans to LGUs.
i. Public Serve as information for assessing performance in

local public financial management.
Section 293. Electronic Statement of Receipts and Expenditures (eSRE). –
a) The eSRE System was primarily established to provide the BLGF with detailed and
timely financial information for the purpose of monitoring LGUs’ financial performance
and to address the financial monitoring and management needs of LGUs users.
b) The eSRE System is composed of the eSRE LGU Report System and the eSRE Central
System. The eSRE LGU Report System is a system installed in all LGUs for the purpose
of entering LGU-specific SRE data and generating reports which will be submitted to the
BLGF for review and approval. The eSRE Central System serves as a web-based engine
to view profile and report records of local government units. It collects the reports from

the eSRE LGU Report System of all LGUs. Once the data of the LGUs are uploaded, the
BLGF can analyze and generate reports.
c) The current release version of the eSRE includes the following modules:
1. Debt Monitoring System – captures the aggregate debt of the LGUs and
provides early warning if LGUs are nearing the statutory 20% debt ceiling.
2. Creditworthiness Rating System –shows the capacity of an LGU to incur and

repay debt responsibly.
3. Economic and Fiscal Capacity Model – is used to project the income levels of
all provinces, cities and municipalities which will be useful in the setting of income
targets.
4. LGU Income Classification System – the income classification system will use
the SRE in computing the annual regular income of the LGU and in determining
the income ranges as bases for income reclassification.
d) The e-SRE database also provides information for the following LGU performance
systems:
1. LGU Fiscal Sustainability Scorecard – the SRE provides the main backend
database in computing the benchmarks for all financial indicators of the
Scorecard and in rating the reporting compliance of treasurers.
2. Performance Standards for Local Treasurers and Assistant Treasurers – the

SRE is used for computing financial indicators measuring performance in
achieving various operational goals of treasurers and assistant treasurers.
3. Seal of Good Local Governance (SGLG) – the SRE provides financial

indicators for the Department of the Interior and Local Government performance
management indicator system.
4. Cities and Municipal Competitiveness Index (CMCI) –the National

Competitiveness Council (NCC) uses the SRE for the computation of the Ratio of
LGU collected tax to total LGU revenues. This is one of the indicators in the
CMCI which measures economic development and competitiveness at the local
government level.
Section 294. Guidelines and Manuals for the Preparation of the SRE and Submission of
the eSRE Reports. –
a) Manual for the Preparation of Statement of Receipts and Expenditures for LGUs
(Concepts, Input Preparation and Reporting) - The Manual contains the guidelines,
procedures and instructions in the preparation of Statement of Receipts and
Expenditures (SRE) which shall be the used by all LGU treasurers and SRE focal
persons. The objectives of this manual are the following:
1. Uniformity in the preparation of the SRE report by applying common classification

of accounts and use of terminologies and timing of recording financial
transactions in harmony with the NGAS reports and in conformity with the PFRS
and IFRS;

2. Identification of various source documents to be used in the preparation of SRE
report and guidelines for the completion of the various report forms; and
3. Illustration on the utilization of the financial information for monitoring the financial
performance of the LGUs.
b) Electronic Statement of Receipts and Expenditures v2.1 User Manuals (LGU

System & Central System)
1. The Electronic Statement of Receipts and Expenditures System LGU System

User’s Manual provides the necessary information for encoders to provide
information for the eSRE reporting system and reviewers and approvers to
evaluate the submissions. Each type of user is provided with screen shots and
procedure steps to be able to use the system efficiently.
2. The Electronic Statement of Receipts and Expenditures System Central System

User’s Manual provides technical guidance to the Central Office staff assigned for
the maintenance of the eSRE system.
c) The electronic copy of these manuals are downloadable online at .
Section 295. Submission of SRE Reports. –
a) Pursuant to Section 3 of the Department Order No. 034-2014 dated May 26, 2014, BLGF
adopts the following guidelines on the submission of eSRE reports:
1. The eSRE cash basis reports shall be uploaded to the eSRE Web Information
System by all local treasurers on or before the following dates:
1.1 For the first three quarterly reports: On or before the 20 th of the month
following the end of the quarter.
1.2 For the year-end report: On or before March 31 of the subsequent calendar
year.
2. When the deadline falls on a Saturday, Sunday or legal holiday, eSRE reports
shall be submitted on the next working day.
b) Grace Period - Upon written request prescribed by the BLGF, the local treasurers
who failed to submit eSRE report on time may be given a grace period of fifteen (15)
days from the prescribed period. The BLGF Regional Director upon the
recommendation of the BLGF Regional Reviewer shall approve the request provided
that, such delay was due to fortuitous events, force majeure or other analogous
causes.
Section 296. Responsibilities and Sanctions. –
a) Section 8 of Department Order No. 8-2011 dated February 2011, amending the
penalties for failure to submit timely and/or accurate eSRE reports is hereby adopted,
to wit:
“Section 8. Failure of the concerned local treasurer to submit timely and/or

accurate eSRE reports shall constitute sufficient grounds for filing a complaint in
accordance with the Revised Rules on Administrative Cases in the Civil Service
(RRACCS) of the Civil Service promulgated on November 8, 2011, specifically:

b) The failure to submit the reports within the prescribed period is considered a light
offense, hence, Section 46 (F.3) of Rule 10 of the RRACCS shall apply:
Violation of reasonable office rules and regulations:
1st Offense – Reprimand
2nd Offense – Suspension of one (1) day to thirty (30) days
3rd Offense - Dismissal from the service

c) The submission of inaccurate reports is considered a less grave offense. Inaccurate
report shall mean a report containing data that materially affects the integrity of the report
which may consequently mislead end-users. For this purpose, Section 46 (D.2) of Rule
10 of the RRACCS shall apply:
Simple Misconduct:
1st Offense – Suspension of one (1) month and one (1) day to six (6) months
2nd Offense – Dismissal from the service

FORMS
AND
ANNEXES

Forms and Annexes
LTO Form 89 – Real Property Tax Bill
BLGF Form No. ________________________
Republic of the Philippines
PROVINCE/CITY __________________________, Municipality of ___________________
Office of the Treasurer
REAL PROPERTY TAX BILL
NO._________________________________
M______________________________
________________________________
Sir/Madam:
This is to inform you that per records of this Office the taxes due on the real property/ies described hereunder as of _____________ amount to P_____________.
Grand
Total
Name of Location Tax Dec. ASSESSED VALUE Annual Year BASIC SEF (12=16)
Declared (Number No/ARP Tax
Owner & Street of No. (17)
Brgy) Land Imp. Tax Discount Interest Sub-total Tax Discount Int. Sub-total
(1) (2) (3) Mach. (7) (8) (9-10)C (9-10)C
(9-11)P (9-11)P
(6) (9) (10) (11) (12) (13) (14) (15) (16)
(4) (5)
TOTAL
NOTE:
1. Kindly inform this office of any error or omission that you may have discovered in this Bill.
2. Please present this Bill to this Office when payment is made
3. Payment of the said taxes/discounts/interest is up to ____________________.
4. Failure to pay the aforementioned real property taxes within twenty (20) days from receipts hereof of will force this office to apply the remedial measures provided under Sec. 256 of
R.A. 7160 to enforce collection of the same
5. Please disregard this Bill in case you have paid your taxes. Very truly yours,
Legend:
C - Current Year CITY/MUNICIPAL TREASURER

P - Previous Year

FORM TITLE : REAL PROPERTY TAX BILL
PREPARED BY : Billing Clerk, Municipal/City
FREQUENCY : Annually
 Current Year - Before end of 1st Quarter
 Previous Years - Before end of the 2nd Quarter
NO OF COPIES : three (3)
PURPOSE OF FORM 1. To inform the taxpayer of his current tax (for up-to-date taxpayer) and of his
delinquent taxes (for delinquent taxpayer) which he has to pay within a specified
period of time.
2. To indicate breakdown of his –
(a) Up-to-date
(b) delinquent
Current year tax - Delinquent tax -Tax Discounts - Interest
3. To record the owner of the possible consequences of failure to
settle tax obligations
INSTRUCTIONS:
1. Look into the RPTAR of up-to-date/delinquent accounts filed alphabetically
2. Prepare the Real Property Tax Bill.
a. Assign RPTB Number.
b. Enter the date when the bill is prepared
c. Indicate the name of owner and mailing address
d. Indicate date when the computation of tax, tax discounts and interest in unpaid tax was made.
e. Indicate the total amount of taxes billed on the line provided for the same
3. Make appropriate entries in the following Columns:
1. Indicate the name of the owner
2. Indicate Location
3. Enter the Tax Declaration No. (TD No.)
4. Enter the amount of the RPU as the Bill
5. Land, Improvement, Machinery
6. Enter the Annual Tax
7. Indicate the tax year
BASIC
8. Enter the tax (for up-to date)
9. Enter the tax (for up-to-date)
10. Enter the tax discount (property owner)
11. Enter the interest(for delinquent taxpayers)
12. Enter the difference of the tax and tax discounts (Up-to-date) Enter the sum of the tax and interests
(Delinquent)
SEF
13. Enter the tax (for-up-to-date)
14. Enter the tax discount (property owner)
15. Enter the interest ( for delinquent taxpayer)
16. Enter the difference of the tax and tax discounts (Up-to-date) Enter the sum of the tax and interests
(delinquent)
17. Enter the sum of Columns 12 and 16

LTO Form 90 – Certified List Of All Real Property Tax Delinquencies

City/Municipality of _________________________
CERTIFIED LIST OF ALL REAL PROPERTY TAX DELINQUENCIES

As of December 31, ___________________________
BARANGAY
BASIC SEF Grand
Name ASSESSED VALUE Total Remarks
Tax Dec. Mailing Classification of Annual
No. of Year (13-16)
No./AR Address Property Tax
Owner Land Imp. Mach Tax Penalty Sub-total Tax Penalty Sub-total
(11+12) (14+15)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
TOTAL
PREPARED BY CERTIFIED CORRECT
______________________________ ___________________________________
CITY/MUNICIPAL TREASURER

FORM TITLE : Certified List of All Real Property Tax Delinquencies
PREPARED BY : Records Clerk, Municipal/City Treasurer’s Office
FREQUENCY : Yearly, before the end of December
NO. OF COPIES : four (4)
PURPOSE OF FORM
a. To record all pertinent information on individual real property unit (i.e., owners name, mailing address,
location of property).
b. To reflect each real property unit’s assessed value as well as the owner’s taxes due for a particular year.
c. To reflect the total number of owners of delinquent real properties as well as the total tax collectibles in each
barangay.
d. To provide data for the identification of real property units to be subject for remedial measures.
RECIPIENTS:
Original copy – Local Sanggunian
Duplicate copy – Provincial Treasurer’s Office (In case of __________? Mun. Treasurer’s Office)
Third copy – Barangay Captain
Fourth copy – Office
INSTRUCTIONS:
Column:
1. Enter the name of the Municipality/city/Barangay as well as the year on the lines provided in the upper portion
of the list
2. Assign a number for each property owner irrespective of the number of real property units he/she has in the
barangay;
3. Indicate the name of property owner
4. Indicate the mailing address of the property owner
5. Indicate the location of the real property unit
6. enter the assessed value of
7. the real property unit as to kind
8. land, improvement, machineries
9. Enter annual tax
10. Enter the tax year
BASIC
11. Enter the basic tax
12. Enter penalty
13. Enter the sum of columns 11 and 12
SEF
14. Enter the SEF tax
15. Enter the penalty
16. Enter the sum of columns 14 and 15
17. Enter the sum columns 13 and 16
Whenever payment is made, the records clerk should draw a red line across the number assigned to the property owner
(column 1 up to column 17). Under the column Remarks, the official receipt number and date of issue should be entered by
the records clerk.

LTO Form 91 – Notice Of Realty Tax Delinquency
REPUBLIC OF THE PHILIPPINES

Prov/City/Mun. (MMA) of _______________________
NOTICE OF REALTY TAX DELINQUENCY
Date ______________
Mr/Ms.____________________________
Address____________________________
Dear Sir/Madam:
In compliance to the requirement of Sec. 254 of R.A. 7160 (local Government Code of 1991) you are hereby
informed of the tax delinquency on your property described as follows:
Lot No.:__________________ Block No. __________________________

TD No./ARPN_______________________________________
Location ______________________________________________
Assessed Value _________________________________; Area _______________sq.m./ha.
Residential/Commercial/Industrial/Educational
Land_____________________________
Improvement______________________
Machinery _______________________
Total ________________________
For the year(s) in the total amount of P ________________ including penalties computed as follows:
19____ & previous years taxes P _____________________ & ______________% penalty of P _______________
20____ tax of P _______________ & ________________% penalty of P __________________
20____ tax of P _______________ & ________________% penalty of P __________________
Total Amount Due P ________________________________
In case any of the above stated taxes has already been paid, please furnish us with the number of the official
receipt and the date of payment or Xerox copy of your receipt, otherwise we shall appreciate very much your early
remittance of the aforestated total amount of P ___________. If after fifteen (15) days from your receipt hereof you failed to
remit or pay the said amount, the remedies provided for under the law for the collection of delinquent taxes, shall be applied
to enforce collection.
Very truly yours,
_____________________
PROVINCIAL/CITY/MUN.
TREASURER

LTO Form 92 –Warrant Of Levy

Prov./City/Mun. of _______________________
WARRANT OF LEVY
(Pursuant to Section 258 of LGC)
Date:_______________________
Mr./Ms.__________________________
_________________________________
Sir/Madam:
On the basis of the records of this Office, the undersigned hereby certifies that the following described real
property/properties., is/are delinquent in the payment of real property taxes for the year/s and in the amount/s indicated,
hereunder:
Declared Owner : _______________________________________________

TD No./ARP No. : __________________________ PIN _________________
Kind of Property : _______________________________________________
(Land, Building/Machinery/Improvement)
Classification Area Market Assessment Assessed

(sq.m./ha) Value Level Value
___________ _________ P______ ___________ P___________

___________ _________ _______ ___________ _____________
Total _________ P______ ___________ P____________
Taxes due: Add:Interest due: Totals
___________ ______________ _________________

WHEREFORE, this Warrant of Levy is hereby issued on the property/properties described above pursuant to
Section 258 of the Local Government code of 1991 (R.A. 7160) for the total amount of the tax delinquency of
P___________, covering the tax years period from _________________ to ______________, for all intents and purposes
therein provided.
Issued this ________________ day of _________________ 19_________ at the Province /City/Municipality of

______________________.
__________________________________
(Provincial/City/Municipal Treasurer)
ACKNOWLEDGEMENT:
Date:______________________
Signature : ________________________
Printed Name ________________________
Property Owner/Administrator or Representative
Cc:
Provincial/City/Municipal Assessor

LTO Form 93 – Notice Of Levy
The Registrar of Deeds/Provincial/City

Municipal Assessor
_________________________________________
NOTICE OF LEVY
Sir/Madam:
Please take notice that a Warrant of Levy, copy hereto attached has been issued pursuance to the provision s of
Section 258 of the Local Government Code of 1991 (R.A. 7160) and served upon Mr/Ms _____________________ of
________________________, as owner/administrator/mortgagor/leases of the real property/ies described as follows:
TD. No. ______________________________

ARP ______________________________
PIN ______________________________
Kind of Property ______________________________
Location ______________________________
OCT/TCT No. ______________________________
Very truly yours
_____________________________
(PROVINCIAL/CITY/MUN.
TREASURER)

LTO Form 94 – Notice Of Publication and Auction Sale

Prov/City/Mun of _____________________
NOTICE OF PUBLICATION AND AUCTION SALE
Date ___________________________
Mr/Ms ______________________________
____________________________________
Sir/Madam:
Records in this Office show that in spite of our letter to you dated ______________, 19_________, the delinquent
realty taxes due on your property described hereunder have remained unpaid:
Lot No. ________________; Block No. _______________________:
TD No./ARPN ____________________________
Location ___________________________________________
Area __________________sq. m/ha.
Assessed Value
Land __________________________
Improvement ___________________________
Machinery ___________________________
Total ___________________________
COMPUTATION OF TAX DELINQUENCY:

Total Taxes _______________________
Penalties _______________________
Total Amount Due _______________________
Because of said tax delinquency, your property is now included in the list of delinquent real property which will be
published in the (name of newspaper) a newspaper of general circulation in the Prov/City/Municipality of _____________
pursuant to Sec. 260 of R.A. 7160 (Local Government Code of 1991), once a week for three (3) consecutive week on the
dates of _____________, and _____________, after which the property will be sold at public auction on
_____________________, 19_______________; otherwise, we will proceed with the publication preparatory to auction
sale. Thereafter, you will be required to pay the costs thereof in the amount of P __________ in addition to the total amount
due as taxes and penalties.
It is therefore, urged that you pay the delinquent taxes and penalties as soon as possible but not later than
__________, 19__ to avoid the inclusion of your name in the publication and the additional charged for the costs, the
eventual sale of your property at public auction.
In case payment/s for any of the above stated taxes has/have been made already, please furnish us with the
number of the official receipt and date of payment or Xerox copy thereof in order that the same could be reflected in your
record, if omitted or neglected; otherwise we shall consider you to have confirmed our statement of your tax liability.
Very truly yours
_____________________________
(PROVINCIAL/CITY/MUN.
TREASURER

LTO Form 95 – Proof Of Service
REPUBLIC OF THE PHILIPPINES)

Prov/City/Mun of _____________________)S.S.
PROOF OF SERVICE
OF “NOTICE OF PUBLICATION AND AUCTION SALE”
I, _______________, of legal age, Filipino, single/married and resident of

___________________________________, after being sworn in accordance with the law, depose and say:
1. That I am an employee of the Provincial/City/Mun. Treasurer’s Office, assigned as

__________________;
2. That on _____________, 19____, at about _______ AM/PM, I served the attached “Notice of
Publication and Auction Sale” dated ___________ to Mr/Ms ___________ being the addressee
thereof at his/her residence/office located at ______________, his/her address of record;
3. That as proof thereof, he/she has affixed his/her signature at the bottom of the attached notice as
admission of such serve;
OR
4. That she/he was out then, I left a copy thereof to a certain Mr/Ms ____________________, a
person of sufficient discretion found in his/her residence/office who signed/refused to sign the
acknowledgement of receipt.
SUBSCRIBED AND SWORN TO BEFORE ME this day of _______________, 19____, at the

Provincial/City/Municipality of ____________________, Philippines, affiant exhibiting to me his, her Community
Certificate No. __________, issued on _______________, 19___ at the Provincial/City/Municipality of
____________________________.
_____________________________
(PROVINCIAL/CITY/MUN. TREASURER)
(or Officer Authorized to Administer Oath)

LTO Form 96 – Certificate Of Sale Of Delinquent Property

Prov/City/Mun (MMA) of _____________________
Office of the Provincial/City/Mun. Treasurer
CERTIFICATE OF SALE OF DELINQUENT PROPERTY
I HEREBY CERTIFY THAT after having been advertised for sale in accordance with Section 260 of R.A. 7160
(Local Government Code of 1991) and subject to the conditions set forth therein, the delinquent real property (land,
machinery/improvement) described as follows:
Declared Owner : ____________________________________

Location : ____________________________________
TD No. ARPN : ________________; Area_____________sq.m/ha.
Lot No : ________________; Block No. ________________
Assessed Value:
Land ______________________;Machinery ________________________
Improvement __________________________________________________________
Has been sold at the public auction held today at the (place) to Mr/Ms________________________ a citizen of the
Philippines, of legal age, single/married to ____________________________________ and a resident of
________________being the highest bidder thereof, for the total consideration of __________________________ payment
of which is hereby acknowledge to have been received from him/her as for Official Receipt NO. ______________ dated
__________. 19__, sufficient to satisfy the amount of taxes, penalties and costs due thereon itemized as follows:
Taxes : ___________________________
Penalties: ___________________________
Cost of Sale : ___________________________
Total ___________________________
BOUNDERIES:
North ____________________________; South ______________________.
East _____________________________; West _______________________.
NOTE: If covered by Torens Title indicate technical description therein
This certification is issued in pursuant to provisions of Section 260 of R.A. 7160 __________________,
Philippines, _____________________________.
Attested:
______________________________
Prov./City/Mun. Treasurer
Copy furnished: Mr./Ms.________________________

Owner/Admin./Occupant
_________________________
_________________________
_____________________________
(PROVINCIAL/CITY/MUN. TREASURER)
(or Officer Authorized to Administer Oath)

LTO Form 97 – Certificate of Redemption

Prov./Mun./City of ______________________
OFFICE OF THE PROV’L/MUN./CITY TREASURER
CERTIFICATE OF REDEMPTION
Date ______________________
TO WHOM IT MAY CONCERN:
This is to certify that the real property (land, machinery, and/or improvement) described as follows:
Declared Owner ___________________________
TD No./ARPN__________________: Area _______________sq.m./ha
Location __________________________________________________
Lot No. _________________________: Block No._________________
Assessed Value:
Land P____________________
Machinery ____________________
Improvement ____________________
which was sold to Mr./Ms. ______________________________________ for the price of P _________________ at the
public auction conducted by this Office on ______________ was redeemed on ________________, _______________, by
Mr./Ms. ______________________who was ascertained to be the ( ) delinquent taxpayer, ( ) representative of the
delinquent taxpayer, ( ) person holding a lien or claim over the property by paying the total amount of P ______________ as
redemption cost and acknowledged under Official Receipt No. _______________ dated _________________.
At any time upon surrender to this Office of the Certificate of Sale dated _______________ and Official Receipt
No. ________________ dated ___________________ of the purchase price, including the 20% interest corresponding
thereto which is from date of sale to the date of redemption shall be refunded to the purchaser.
This certificate is issued pursuant to Sec. 261 of Republic Act No. 7160, otherwise known as the Local
Government Code of 1991.
Very truly yours,
Prov’l/mun./City Treasurer
Copy furnished: Mr./Ms. (purchaser)
Note: The municipal treasurer refers to the Municipal Treasurers in municipalities within Metro Manila Area which do not
belong to any province.

LTO Form 98 – Notice of Redemption

Prov./Mun./City of ______________________
OFFICE OF THE PROV’L/MUN./CITY TREASURER

Date ______________________
NOTICE OF REDEMPTION
Mr./Ms. ____________________________
___________________________________
Sir/Madam:
I have the honor to inform you that the real property ( ) land, ( ) machinery and/or ( ) improvement described as
follows:
Declared Owner: _______________________________
TD No./ARPN _________________:Area ____________sq./m/ha.
Location ______________________________________________
Lot No. ______________________; Block No. _______________
Assessed Value
Land ________________________
Machinery ________________________
Improvement ________________________
which you purchased for the price of P ____________ at the public auction conducted by this Office on
__________________ upon payment of the total amount of P___________ as redemption cost acknowledge under Official
Receipt No. ___________ dated ________________, ______________, was redeemed on ________, _____________,
pursuant to Sec. 261 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991. By virtue of the
said redemption, the Certificate of Sale issued to you on _________, __________, is hereby invalidated.
It is requested that the Official Receipt No. __________ be returned to this Office at your earliest convenience,
duly endorsed by signing your name at the backside thereof, together with the original of the Certificate of Sale if still in your
possession or, if already registered, a certification by the Register of Deeds of the concerned locality that the same is now
on file with said office, so that the amount of P ________ covered thereby may be refunded to you with the corresponding
accrued interest.
Very truly yours,
Prov./Mun./city Treasurer
Enclosed : Copy of Certificate of Redemption
Date _______________________

LTO Form 99 – Final Deed of Sale

Prov./Mun./City of ______________________
FINAL DEED OF SALE
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, the real property declared in the name of ________________ under ARP No. __________
(OCT/TCT) OCT. No. __________________ has been delinquent in the payment of taxes for the year (or years)
________________; Ref. Number ___________.
WHEREAS, on account of said delinquency, the above-mentioned real property was advertised for sale at public
auction to satisfy, all taxes and penalties due and the costs of sale in the total amount of ______________, by posting on
____________ 20______, a NOTICE OF SALE for two (2) consecutive weeks at the main entrances of the City Hall, the
provincial building and all municipal buildings in province, and in a public and conspicuous place in the barangay wherein
the property is situated, in English and the local dialect commonly used, a copy of which was sent by registered mail
messenger to the delinquent at his residence.
WHEREAS, at the public auction held on ______________. 20_____, pursuant to said NOTICE OF SALE the
property as herein below described was sold to _____________, and ___________________ citizenship, of legal age,
married to ________________. Widow or widower, with residence and postal address at
____________________________;
Description of the Property Sold
ARP No. ____________; Name of Owner ______________________

Area _____________SW.M;
Assessed Value P _________________________ Location ________________________
(North __________________________________
(East __________________________________
(South __________________________________
(West __________________________________
Improvement ____________________________________________________________
(if covered by Torrens Title, indicate technical description)
WHEREAS, the delinquent taxpayer or any other person in his behalf has not, within the period of one year from
the date of sale, redeemed the property sold by paying to this Office the total amount of taxes and penalties due up to the
date of redemption, the costs of sale and the interest at the rate of twenty four percent (24%) per annum on the purchase
price;
NOW THEREFORE, pursuant to the provisions of R.A. 7160 (Local Government Code of 1991), the real property
above described, free from any encumbrance or third party claim whatsoever, is hereby conveyed on _________________,
the holder of the CERTIFICATE OF SALE issued on ______________, 20 ______ covering said property.
WITNESS:
____________________________________ ________________________
Municipal/city Treasurer Provincial Treasurer
____________________________________ ________________________
Municipal/city Assessor Provincial Assessor
____________________________________ ________________________
Municipal/city Secretary S.B./SP Provincial Secretary, S.P.
____________________________________ ________________________
Municipal/city Mayor Provincial Governor
REPUBLIC OF THE PHILIPPINES)
_____________________________) S.S.

In the municipality/province of _________________ this day of _________, 20 ______, personally appeared
before me Mr.?Ms. ____________, Provincial/City/Municipal Treasurer of ________________, who is known to me to be
the same person who executed the foregoing document and acknowledged same as his free act and deed. Said Provincial
Treasurer exhibited to me his Residence Certificate No. _______________ issued at _____________ on ____________,
20 ________.
This document consists of two (2) pages, including this one, each page having been signed by the
Provincial/City/Municipal Treasurer and his witnesses and said document refers to the absolute sale of property therein
described to ___________, a citizen of _____________.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal at the ______________
and on the date abovementioned.
______________________________
Notary Public
My commission expires on December 31, 20______
Doc. No. __________________;

Page No. __________________;
Book No. __________________;
Series of ___________________.

LTO Form 100 – Compromise Agreement
COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This COMPROMISE AGREEMENT is entered into by and between ____________________ in his

capacity as Prov/City/Mun. (of MMA) of ________________, Philippines, hereinafter referred to as PARTY OF THE FIRST
PART and resident of and with postal address at ____________________, hereinafter referred to as PARTY OF THE
SECOND PART.
WITNESSETH:
That the PARTY OF THE FIRST PART is the Provincial/City/Municipal (MMA) Treasurer of _________________
whose office address is located at _____________________________________.
That the PARTY OF THE SECOND PART is/are/owner(s) of real property, delinquent on realty tax located at
barangay _______________________ Municipal/City, Province of ___________________ which property of properties
is/are described as follows:
C.T. No. TAX DEC. No. Lot No. Location Assessed Value
_________ _____________ __________________ __________________
_________ _____________ __________________ __________________
That the PARTY OF THE SECOND PART voluntarily agreed to pay ____________ of the total delinquent taxes
due on the above-described property/properties upon the execution of this agreement and the remaining balance in
installment of equal amount within a period of ________________ months from the date of this agreement without
necessity of demand, to the PARTY OF THE FIRST PART, in the following manner:
Term Month Amount

1st installment ____________ _________________
2nd installment ____________ _________________
That in case of default of the PARTY OF THE SECOND PART in settling in full the obligation within the stipulated
period, the PARTY OF THE FIRST PART shall have the right over the above described property/properties, together with all
the existing improvements thereon, to sell at public auction in accordance with the provisions of R.A. 7160.

LTO Form 101 – Certificate of Tax Credit
BLGF Form No. ______________________

PROVINCE/CITY/MUNICIPALITY
CERTIFICATE OF TAX CREDIT
____________________________________ CTC No. _____________

____________________________________
____________________________________
Date_________________
Sir/Madam:
Please be informed that this Certificate of Tax Credit No. _______________ in the amount of
___________________, is issued on even date in your favor, covering
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________.
It is further informed that this tax credit may be applied to future payments of the taxes due on the real property
described hereunder:
Name of Declared Owner:____________________________________________________________

Kind:_________________________________________Classification ____________________
Location_______________________________________________________________________
Barangay Municipality/City Province
Tax Dec. No. __________________________________________

Assessed Value: ________________________________________
Very truly yours,
___________________________
Provincial/City/Municipal Treasurer

LTO Annex 102
LTO Annex 102 – Sample Cases of the Allocation of Gross Sales for the Situs of Tax
(Celestino eta, p130-132, Handbook on Local Fiscal Administration in the Philippines)
MI M2 M3
(BI) (P)
M4 M5 M6
(B2)
Case 1: Given a business establishment selling commodities in 6 municipalities M1 to M6. M3 is the allocation of the
principal office (P) and branches (B1 and B2) are located in Municipalities 1 and 6.
Allocation of Gross Sales
One hundred percent (100%) of gross sales in Municipality 1 where Branch 1 is located shall be allocated in that
Municipality and the tax shall accrue to Municipality 1. The rule shall apply to B2 on sales in M6. All sales of the business
establishment in M2, M3, M4 and M5 shall be allocated to the principal office in M3 and the business tax shall accrue to that
municipality.

MI M2 M3
(B) (L) (P)

(W)
M4 M5 M6
(F) (W) (B)
Case 2: A principal office (P) located in Municipality 3, with branches located in Municipalities 1 and 6, factory (F) and the
warehouse (W) located in Municipality 4 and a plantation (L) and warehouse (W) in Municipality 2.
Allocation of Gross Sales
 One hundred percent (100%) of gross sales in municipalities M1 and M6 where the branches are located shall
accrue to the municipalities where the branches are located, respectively. The gross receipts in municipalities M2,
M3, and M4 shall be taken up in Municipality 3 where the principal office is located. The said gross receipt shall
be located as follows:
1. 30% to Municipality 3 where the principal office is located

2. 60% of the remaining 70% to Municipality 4 or where the factory is located. Municipality 3 shall not be entitled
to a share for the location of a warehouse. It can be entitled to a share if and only if the warehouse is also a
branch or sales office, meaning the warehouse and conduct sales
3. 40% of the remaining 70% to Municipality 2 where the plantation is located
 Municipality 5 has no share.

M2 M3
M1 (B) M7
(L) (L) M8 M9
(L) (F)
(E) (P)
M4 (F) M5 M6 M10 M11

(W) (B) (PL) (W) (PL) (D) (B)

Case 3: Consider the above diagram on two islands where a big business firm operates the following:
Principal Office (P) in M3
Branches/Sales Office (B) in M1, M5 and M11
Factories (F) in M4 and M7
Plantations (L) in M1, M2 and M3
Warehouse (W) in M4 and M10
Display Center (D) in M11
Port of Loading (PL) in M6 and M10
Experimental Farm (E) in M2
Sales Allocation
Sales in the Municipalities where the branches are located shall be 100% allocated to M1, M5 and M11,
respectively.
All sales outside the municipalities where the branches are located shall be recorded in the principal office and
consequently allocated as follows:
 M3 which hosts the principal office gets 30%

 M1 and M4 which host the factories will be allocated 60% of the remaining 70%. Since there are two factories
they shall share the 60% of 70% which will be apportioned on the basis of volume of production.
 M1, M2 and M3 of the location of plantation shall get 40% of the 70%. The sales allocation shall be on the
basis of volume of production in each municipality.
 The LGU where the warehouse is located will not be allocated any gross sales for hosting the warehouse
unless the warehouse is simultaneously a branch. This will be the same predicament faced by LGUs hosting
the display centers and port of loading. Experimental farms will be treated as factory if the production is
already of economic quantity

REFERENCES
1. The Local Government Code of 1991, Annotated, Jose A. Nolledo, 1993 Reprint with August
1993 Addendum;
2. Local Government Taxation ( Philippine Laws on Local Government Finance), Vol. III,
Annotated, Sofronio B. Ursal, 1992;
3. Philippine Law on Local Government Taxation, Annotated, Sofronio B. Ursal, 2000;
4. Real Property Taxation, Annotated, Atty. Florecita P. Flores and Antonio A. Avila, Jr., First
Edition, 2002;
5. Local Taxation and Fiscal Matters, Book II, LGC of 1991, PACTAA, Inc., 1992;
6. Local Government Code of the Autonomous Region in Muslim Mindanao (Muslim Mindanao
Autonomy Act No. 25);
7. Decentralization in the Philippines – Strengthening Local Government Financing and

Resource Management in the Short-Term, Joint Document of the World Bank and Asian
Development Bank, March 31, 2005;
8. Omnibus Election Code of the Philippines (BP 881), Commission on Elections (COMELEC),
1992;
9. Omnibus Rules Implementing Book V of EO 292, as Amended by MC No. 41, s. 1998, Civil
Service Commission (CSC);
10. State Audit Code (Government Auditing Code of the Philippines or PD 1445), Reprinted 1999,
Accounting and auditing Development Office, Commission on Audit (COA);
11. Government Accounting and Auditing Manual (GAAM), Vol. 1, Government Auditing Rules
and Regulations, COA, 1992;
12. Government Accounting and Auditing Manual (GAAM), Vol. 2, Government Accounting,
COA, 1992;
13. Government Accounting and Auditing Manual (GAAM), Vol. 3, Government Auditing
Standards and Procedures, and Internal Control System, COA, 1992;
14. Manual on the New Government Accounting System (NGAS) for Local Government Units,
Vol. I – III, ProfessionalDevelopmentCenter, COA, 2002;
15. Updated Description of Accounts under the NGAS (COA Circular No. 2004-008), Sept. 20,
2004;
16. 2005 IFAC Handbook of International Public Sector Accounting Standards (IPSAS);
17. Handbook on the Implementing Rules and Regulations (IRR) to the Government
Procurement Reform Act (RA No. 9184);
18. Updated Budget Operations Manual (UBOM) for Local Government Units, Department of
Budget and Management (DBM), June 2005;
19. Management Services, Part II, 2nd Ed., Nenita Angeles Deaño-Mejorada, 1993;
20. Manual on Certificate of Settlement and Balances, Revised 1993, COA, 1993;

21. Rules Implementing the Barangay Micro-Business Enterprises (BMBE Act of 2002 or RA
9178), Department of Finance (DOF) Order No. 17-04;
22. Local Administrative Regulation (LAR) No. 1-85, DOF, 1985;
23. Training Handbook on Cash Management and Control System,

ProfessionalDevelopmentCenter, COA, May 2004;
24. Training Handbook on Internal Control Structure, ProfessionalDevelopmentCenter, COA,

Nov. 2002;
25. Training Handbook on Risk Management, ProfessionalDevelopmentCenter, COA, Dec. 2004;
26. Revenue Audit Manual for Local Governments, Vol. I, COA, 1997;
27. DOF Circulars, Memoranda, Opinions, and Rulings, various years;
28. BLGF Circulars, Memoranda, Circular Letters, Opinions, and Rulings, various years;
29. COA Circulars and Memoranda, various years.

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UPDATED

LOCAL TREASURY OPERATIONS

Detailed Procedures, Reports and Forms on

Copyright © Bureau of Local Government Finance, 2016

Bureau of Local Government Finance

First Printing, 2008.

2016 Revised Edition

All rights reserved.

Printed in the Philippines

Updated Local Treasury Operations Manual (LTOM) 2

ACR - Abstract of Collection Report

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Updated Local Treasury Operations Manual (LTOM) 5

Updated Local Treasury Operations Manual (LTOM) 6

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Updated Local Treasury Operations Manual (LTOM) 8

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Updated Local Treasury Operations Manual (LTOM) 10

Section 154. Definition of Terms. –

b) To be considered an agricultural product whether in its original form or not, its

6) Amusement –a pleasurable diversion and entertainment. It is synonymous to relaxation,

Updated Local Treasury Operations Manual (LTOM) 11

16) Build-Operate-and Transfer–strictly construed, Build-Operate-Transfer is a contractual

Also classified as Build-Operate-Transfer are supply-and-operate contracts under which

Updated Local Treasury Operations Manual (LTOM) 12

22) Construction –refers to new construction, rehabilitation, improvement, expansion,

a) General engineering, General building and specialty contractors as defined

b) Filling, demolition and salvage works contractors;

c) Proprietors or operators of mine drilling apparatus;

d) Proprietors or operators of dockyards;

e) Persons engaged in the installation of water system, gas or electric light,

f) Proprietors or operators of smelting plants;

g) Engraving, plating, and plastic lamination; establishments;

h) Proprietors or operators of establishments for repairing, repainting,

i) Proprietors or operators of furniture shops and establishments for planning or

j) Proprietors or operators of dry-cleaning or dyeing establishments, steam

Updated Local Treasury Operations Manual (LTOM) 13

l) Proprietors or operators of establishments or lots for parking purposes;

m) Proprietors or operators of tailor shops, dress shops, milliners, and hatters,

p) Proprietors or operators of hotels, motels, and lodging houses;

q) Proprietors or operators of arrastre and stevedoring warehousing, or

r) Printers, bookbinders, lithographers;

s) Publishers except those engaged in the publication or printing of any

t) Business agents, private detective or watchman agencies, commercial and

24) Corporation –includes partnerships, no matter how created or organized, joint-stock

a) General professional partnerships which are partnerships formed by persons for

b) Joint venture or consortium formed for the purpose of undertaking construction

c) The term "resident foreign" when applied to a corporation means a foreign

Updated Local Treasury Operations Manual (LTOM) 14

28) Deferred Payment–payments or principal or interest postponed to and scheduled for a

32) Experimental Farms –agricultural lands utilized by a business or corporation to conduct

Illustrative Case Box 2:

Updated Local Treasury Operations Manual (LTOM) 15

d) Residential lots in subdivisions duly approved by proper authorities, regardless of

39) Improvement – is a valuable addition made to a property or an amelioration in its

Illustrative Case Box 3:

Source: DOF Opinion, February 3, 1994

Updated Local Treasury Operations Manual (LTOM) 16

Illustrative Case Box 4:

Source: G. R. No. L-50466, May 31, 1982

Illustrative Case Box 5:

Source: BLGF Indorsement, May 20, 1996