REPUBLIC ACT NO. 7160

AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991

BOOK I

GENERAL PROVISIONS

TITLE ONE — BASIC PRINCIPLES

CHAPTER 1. — The Code: Policy and Application 

SECTION 1.       Title. — This Act shall be known and cited as the “Local Government Code of 1991”.  

SECTION 2.       Declaration of Policy. — (a) It is hereby declared the policy of the State that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals. Toward this end, the State shall provide for a more responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities, and resources. The process of decentralization shall proceed from the national government to the local government units.  

(b)        It is also the policy of the State to ensure the accountability of local government units through the institution of effective mechanisms of recall, initiative and referendum.  

(c)        It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultations with appropriate local government units, nongovernmental and people's organizations, and other concerned sectors of the community before any project or program is implemented in their respective jurisdictions.  

SECTION 3.       Operative Principles of Decentralization. — The formulation and implementation of policies and measures on local autonomy shall be guided by the following operative principles:  

(a)        There shall be an effective allocation among the different local government units of their respective powers, functions, responsibilities, and resources;

 (b)        There shall be established in every local government unit an accountable, efficient, and dynamic organizational structure and operating mechanism that will meet the priority needs and service requirements of its communities;  

(c)        Subject to civil service law, rules and regulations, local officials and employees paid wholly or mainly from local funds shall be appointed or removed, according to merit and fitness, by the appropriate appointing authority;

 (d)        The vesting of duty, responsibility, and accountability in local government units shall be accompanied with provision for reasonably adequate resources to discharge their powers and effectively carry out their functions: hence, they shall have the power to create and broaden their own sources of revenue and the right to a just share in national taxes and an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas;  

(e)        Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays, shall ensure that the acts of their component units are within the scope of their prescribed powers and functions;  

(f)         Local government units may group themselves, consolidate or coordinate their efforts, services, and resources commonly beneficial to them;

 (g)        The capabilities of local government units, especially the municipalities and barangays, shall be enhanced by providing them with opportunities to participate actively in the implementation of national programs and projects;

 (h)        There shall be a continuing mechanism to enhance local autonomy not only by legislative enabling acts but also by administrative and organizational reforms;

 (i)         Local government units shall share with the national government the responsibility in the management and maintenance of ecological balance within their territorial jurisdiction, subject to the provisions of this Code and national policies;

 (j)         Effective mechanisms for ensuring the accountability of local government units to their respective constituents shall be strengthened in order to upgrade continually the quality of local leadership;

 (k)        The realization of local autonomy shall be facilitated through improved coordination of national government policies and programs an extension of adequate technical and material assistance to less developed and deserving local government units;

 (l)         The participation of the private sector in local governance, particularly in the delivery of basic services, shall be encouraged to ensure the viability of local autonomy as an alternative strategy for sustainable development; and

 (m)       The national government shall ensure that decentralization contributes to the continuing improvement of the performance of local government units and the quality of community life.

 SECTION 4.       Scope of Application. — This Code shall apply to all provinces, cities, municipalities, barangays, and other political subdivisions as may be created by law, and, to the extent herein provided, to officials, offices, or agencies of the national government.  

SECTION 5.       Rules of Interpretation. — In the interpretation of the provisions of this Code, the following rules shall apply:  

(a)        Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned;  

(b)        In case of doubt, any tax ordinance or revenue measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayer. Any tax exemption, incentive or relief granted by any local government unit pursuant to the provisions of this Code shall be construed strictly against the person claiming it.

 (c)        The general welfare provisions in this Code shall be liberally interpreted to give more powers to local government units in accelerating economic development and upgrading the quality of life for the people in the community;  

(d)        Rights and obligations existing on the date of effectivity of this Code and arising out of contracts or any other source of presentation involving a local government unit shall be governed by the original terms and conditions of said contracts or the law in force at the time such rights were vested; and  

(e)        In the resolution of controversies arising under this Code where no legal provision or jurisprudence applies, resort may be had to the customs and traditions in the place where the controversies take place.  

CHAPTER 2. — General Powers and Attributes

of Local Government Units 

SECTION 6.       Authority to Create Local Government Units. — A local government unit may be created, divided, merged, abolished, or its boundaries substantially altered either by law enacted by Congress in the case of a province, city, municipality, or any other political subdivision, or by ordinance passed by the sangguniang panlalawigan or sangguniang panlungsod concerned in the case of a barangay located within its territorial jurisdiction, subject to such limitations and requirements prescribed in this Code.  

SECTION 7.       Creation and Conversion. — As a general rule, the creation of a local government unit or its conversion from one level to another level shall be based on verifiable indicators of viability and projected capacity to provide services, to wit:  

(a)        Income. — It must be sufficient, based on acceptable standards, to provide for all essential government facilities and services and special functions commensurate with the size of its population, as expected of the local government unit concerned;  

(b)        Population. — It shall be determined as the total number of inhabitants within the territorial jurisdiction of the local government unit concerned; and  

(c)        Land Area. — It must be contiguous, unless it comprises two or more islands or is separated by a local government unit independent of the others; properly identified by metes and bounds with technical descriptions; and sufficient to provide for such basic services and facilities to meet the requirements of its populace.  

Compliance with the foregoing indicators shall be attested to by the Department of Finance (DOF), the National Statistics Office (NSO), and the Lands Management Bureau (LMB) of the Department of Environment and Natural Resources (DENR).  

SECTION 8.       Division and Merger. — Division and merger of existing local government units shall comply with the same requirements herein prescribed for their creation: Provided, however, That such division shall not reduce the income, population, or land area of the local government unit or units concerned to less than the minimum requirements prescribed in this Code: Provided, further, That the income classification of the original local government unit or units shall not fall below its current classification prior to such division.  

The income classification of local government units shall be updated within six (6) months from the effectivity of this Code to reflect the changes in their financial position resulting from the increased revenues as provided herein.  

SECTION 9.       Abolition of Local Government Units. — A local government unit may be abolished when its income, population, or land area has been irreversibly reduced to less than the minimum standards prescribed for its creation under Book III of this Code, as certified by the national agencies mentioned in Section 7 hereof to Congress or to the sangguniang concerned, as the case may be.  

The law or ordinance abolishing a local government unit shall specify the province, city, municipality, or barangay with which the local government unit sought to be abolished will be incorporated or merged.  

SECTION 10.      Plebiscite Requirement. — No creation, division, merger, abolition, or substantial alteration of boundaries of local government units shall take effect unless approved by a majority of the votes cast in a plebiscite called for the purpose in the political unit or units directly affected. Said plebiscite shall be conducted by the Commission on Elections (Comelec) within one hundred twenty (120) days from the date of effectivity of the law or ordinance effecting such action, unless said law or ordinance fixes another date.  

SECTION 11.      Selection and Transfer of Local Government Site, Offices and Facilities. — (a) The law or ordinance creating or merging local government units shall specify the seat of government from where governmental and corporate services shall be delivered. In selecting said site, factors relating to geographical centrality, accessibility, availability of transportation and communication facilities, drainage and sanitation, development and economic progress, and other relevant considerations shall be taken into account.  

(b)        When conditions and developments in the local government unit concerned have significantly changed subsequent to the establishment of the seat of government, its sanggunian may, after public hearing and by a vote of two-thirds (2/3) of all its members, transfer the same to a site better suited to its needs. Provided, however, That no such transfer shall be made outside the territorial boundaries of the local government unit concerned.  

The old site, together with the improvements thereon, may be disposed of by the sale or lease or converted to such other use as the sangguniang concerned may deem beneficial to the local government unit concerned and its inhabitants.  

(c)        Local government offices and facilities shall not be transferred, relocated, or converted to other uses unless public hearings are first conducted for the purpose and the concurrence of the majority of all the members of the sanggunian concerned is obtained.  

SECTION 12.      Government Centers. — Provinces, cities, and municipalities shall endeavor to establish a government center where offices, agencies, or branches of the national government, local government units, or government-owned or controlled corporations may, as far as practicable, be located. In designating such a center, the local government unit concerned shall take into account the existing facilities of national and local agencies and offices which may serve as the government center as contemplated under this Section. The national government, local government unit or government-owned or controlled corporation concerned shall bear the expenses for the construction of its buildings and facilities in the government center.  

SECTION 13.      Naming of Local Government Units and Public Places, Streets and Structures. — (a) The sangguniang panlalawigan may, in consultation with the Philippine Historical Commission (PHC), change the name of the following within its territorial jurisdiction:  

(1)        Component cities and municipalities, upon the recommendation of the sanggunian concerned;  

(2)        Provincial roads, avenues, boulevards, thoroughfares, and bridges;  

(3)        Public vocational or technical schools and other post-secondary and tertiary schools;  

(4)        Provincial hospitals, health centers, and other health facilities; and  

(5)        Any other public place or building owned by the provincial government.  

(b)        The sanggunian of highly urbanized cities and of component cities whose charters prohibit their voters from voting for provincial elective officials, hereinafter referred to in this Code as independent component cities, may, in consultation with the Philippine Historical Commission, change the name of the following within its territorial jurisdiction:  

(1)        City barangays, upon the recommendation of the sangguniang barangay concerned;  

(2)        City roads, avenues, boulevards, thoroughfares, and bridges;  

(3)        Public elementary, secondary and vocational or technical schools, community colleges and non-chartered colleges;  

(4)        City hospitals, health centers and other health facilities; and  

(5)        Any other public place or building owned by the city government.  

(c)        The sanggunians of component cities and municipalities may, in consultation with the Philippine Historical Commission, change the name of the following within its territorial jurisdiction:  

(1)        City and municipal barangays, upon recommendation of the sangguniang barangay concerned;  

(2)        City, municipal and barangay roads, avenues, boulevards, thoroughfares, and bridges;  

(3)        City and municipal public elementary, secondary and vocational or technical schools, post- secondary and other tertiary schools;  

(4)        City and municipal hospitals, health centers and other health facilities; and  

(5)        Any other public place or building owned by the municipal government.  

(d)        None of the foregoing local government units, institutions, places, or buildings shall be named after a living person, nor may a change of name be made unless for a justifiable reason and, in any case, not oftener than once every ten (10) years. The name of a local government unit or a public place, street or structure with historical, cultural, or ethnic significance shall not be changed, unless by a unanimous vote of the sanggunian concerned and in consultation with the PHC.  

(e)        A change of name of a public school shall be made only upon the recommendation of the local school board concerned.  

(f)         A change of name of public hospitals, health centers, and other health facilities shall be made only upon the recommendation of the local health board concerned.  

(g)        The change of name of any local government unit shall be effective only upon ratification in a plebiscite conducted for the purpose in the political unit directly affected.  

(h)        In any change of name, the Office of the President, the representative of the legislative district concerned, and the Bureau of Posts shall be notified.  

SECTION 14.      Beginning of Corporate Existence. — When a new local government unit is created, its corporate existence shall commence upon the election and qualification of its chief executive and a majority of the members of its sanggunian, unless some other time is fixed therefor by the law or ordinance creating it.  

SECTION 15.      Political and Corporate Nature of Local Government Units. — Every local government unit created or recognized under this Code is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it shall exercise powers as a political subdivision of the national government and as a corporate entity representing the inhabitants of its territory.  

SECTION 16.      General Welfare. — Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.  

SECTION 17.      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 this Code. 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 provisions of the basic services and facilities enumerated herein.  

(b)        Such basic services and facilities include, but are not limited to, the following:  

(1)        For Barangay: 

(i)         Agricultural support services which include planting materials distribution system and operation of

farm produce collection and buying stations;  

(ii)        Health and social welfare services which include maintenance of barangay health center and day-care center;  

(iii)       Services and facilities related to general hygiene and sanitation, beautification, and solid waste collection;  

(iv)       Maintenance of katarungang pambarangay;  

(v)        Maintenance of barangay roads and bridges and water supply systems;  

(vi)       Infrastructure facilities such as multi-purpose hall, multipurpose pavement, plaza, sports center, and other similar facilities;  

(vii)       Information and reading center; and  

(viii)      Satellite or public market, where viable;  

(2)        For a Municipality: 

(i)         Extension and on-site research services and facilities related to agriculture and fishery activities which include dispersal of livestock and poultry, fingerlings, and other seedling materials for aquaculture; palay, corn, and vegetable seed farms; medicinal plant gardens; fruit tree, coconut, and other kinds of seedling nurseries; demonstration farms; quality control of copra and improvement and development of local distribution channels, preferably through cooperatives; interbarangay irrigation system; water and soil resource utilization and conservation projects; and enforcement of fishery laws in municipal waters including the conservation of mangroves;  

(ii)        Pursuant to national policies and subject to supervision, control and review of the DENR, implementation of community-based forestry projects which include integrated social forestry programs and similar projects; management and control of communal forests with an area not exceeding fifty (50) square kilometers; establishment of tree parks, greenbelts, and similar forest development projects;  

(iii)       Subject to the provisions of Title Five, Book I of this Code, health services which include the 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;  

(iv)       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;  

(v)        Information services which include investments and job placement information systems, tax and marketing information systems, and maintenance of a public library;  

(vi)       Solid waste disposal system or environmental management system and services or facilities related to general hygiene and sanitation;  

(vii)       Municipal buildings, cultural centers, public parks including freedom parks, playgrounds, and other sports facilities and equipment, and other similar facilities;  

(viii)      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, rainwater collectors and water supply systems; seawalls, dikes, drainage and sewerage, and flood control; traffic signals and road signs; and similar facilities;  

(ix)       Public markets, slaughterhouses and other municipal enterprises;  

(x)        Public cemetery;  

(xi)       Tourism facilities and other tourist attractions, including the acquisition of equipment, regulation and supervision of business concessions, and security services for such facilities; and  

(xii)       Sites for police and fire stations and substations and municipal jail;  

(3)        For a Province: 

(i)         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;  

(ii)        Industrial research and development services, as well as the transfer of appropriate technology;  

(iii)       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-hydroelectric projects for local purposes;  

(iv)       Subject to the provisions of Title Five, Book I of this Code, health services which include hospitals and other tertiary health services;  

(v)        Social welfare services which include programs and projects on rebel returnees and evacuees; relief operations; and population development services;

 (vi)       Provincial buildings, provincial jails, freedom parks and other public assembly areas and similar facilities;  

(vii)       Infrastructure facilities intended to service the needs of the residence of the province and which are funded out of provincial funds including, but not limited to, provincial roads and bridges; inter-municipal waterworks, drainage and sewerage, flood control, and irrigation systems; reclamation projects; and similar facilities;

(viii)      Programs and projects for low-cost housing and other mass dwellings, except those funded by the Social Security System (SSS), Government Service Insurance System p. 172 (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;  

(ix)       Investment support services, including access to credit financing;  

(x)        Upgrading and modernization of tax information and collection services through the use of computer hardware and software and other means;  

(xi)       Inter-municipal telecommunications services, subject to national policy guidelines; and  

(xii)       Tourism development and promotion programs;

 (4)        For a City:

All the services and facilities of the municipality and province, and in addition thereto, the following:  

(i)         Adequate communication and transportation facilities;  

(c)        Notwithstanding the provisions of subsection (b) hereof, public works and infrastructure projects and other facilities, programs and services funded by the national government under the annual General Appropriations Act, 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.  

(d)        The designs, plans, specifications, testing of materials, and the procurement of equipment and materials pa. p170 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.  

(e)        National agencies or offices concerned shall devolve to local government units the responsibility for the provision of basic services and facilities enumerated in this Section within six (6) months after the effectivity of this Code.  

As used in this Code, the term “devolution” refers to the act by which the national government confers power and authority upon the various local government units to perform specific functions and responsibilities.  

(f)         The national government or the next higher level of local government unit may provide or augment the basic services and facilities assigned to a lower level of local government unit when such services or facilities are not made available or, if made available, are inadequate to meet the requirements of its inhabitants.  

(g)        The basic services and facilities hereinabove enumerated shall be funded from the share of local government units in the proceeds of national taxes and other local revenues and funding support from the national government, its instrumentalities and government-owned or controlled corporations which are tasked by law to establish and maintain such services or facilities. Any fund or resource available for the use of local government units shall be first allocated for the provision of basic services or facilities enumerated in subsection (b) hereof before applying the same for other purposes, unless otherwise provided in this Code.

 (h)        Regional offices of national agencies or offices whose functions are devolved to local government units as provided herein shall be phased out within one (1) year from the approval of this Code. Said national agencies and offices may establish such field units as may be necessary for monitoring purposes and providing technical assistance to local government units. The properties, equipment, and other assets of these regional offices shall be distributed to the local government units in the region in accordance with the rules and regulations issued by the oversight committee created under this Code.  

(i)         The devolution contemplated in this Code shall include the transfer to local government units of the records, equipment, and other assets and personnel of national agencies and offices corresponding to the devolved powers, functions, and responsibilities.  

Personnel of said national agencies or offices shall be absorbed by the local government units to which they belong or in whose areas they are assigned to the extent that it is administratively viable as determined by the said oversight committee: Provided, That the rights accorded to such personnel pursuant to civil service law, rules and regulations shall not be impaired: Provided, further, That regional directors who are career executive service officers and other officers of similar rank in the said regional offices who cannot be absorbed by the local government unit shall be retained by the national government, without any diminution of rank, salary or tenure.  

(j)         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.

Costs may also be charged for the delivery of basic services or facilities enumerated in this Section.  

SECTION 18.      Power to Generate and Apply Resources. — Local government units shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities; to create their own sources of revenues and to levy taxes, fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by them; to have a just share in national taxes which shall be automatically and directly released to them without need of any further action; to have an equitable share in the proceeds from the utilization and development of the national wealth and resources within their respective territorial jurisdictions including sharing the same with the inhabitants by way of direct benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property held by them in their proprietary capacity and to apply their resources and assets for productive, developmental, or welfare purposes, in the exercise or furtherance of their governmental or proprietary powers and functions and thereby ensure their development into self-reliant communities and active participants in the attainment of national goals.

 SECTION 19.      Eminent Domain. — A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property.  

SECTION 20.      Reclassification of Lands. — (a) A city or municipality may, through an ordinance passed by the sanggunian after conducting public hearings for the purpose, authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in the following cases: (1) when the land ceases to be economically feasible and sound for agricultural purposes as determined by the Department of Agriculture or (2) where the land shall have substantially greater economic value for residential, commercial, or industrial purposes, as determined by the sanggunian concerned: Provided, That such reclassification shall be limited to the following percentage of the total agricultural land area at the time of the passage of the ordinance:

(1)        For highly urbanized and independent component cities, fifteen percent (15%);  

(2)        For component cities and first to the third class municipalities, ten percent (10%); and  

(3)        For fourth to sixth class municipalities, five percent (5%): Provided, further, That agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic Act Numbered Sixty-six hundred fifty-seven (R.A. No. 6657). otherwise known as “The Comprehensive Agrarian Reform Law”, shall not be affected by the said reclassification and the conversion of such lands into other purposes shall be governed by Section 65 of said Act.  

(b)        The President may, when public interest so requires and upon recommendation of the National Economic and Development Authority, authorize a city or municipality to reclassify lands in excess of the limits set in the next preceding paragraph.  

(c)        The local government units shall, in conformity with existing laws, continue to prepare their respective comprehensive land use plans enacted through zoning ordinances which shall be the primary and dominant bases for the future use of land resources: Provided. That the requirements for food production, human settlements, and industrial expansion shall be taken into consideration in the preparation of such plans.  

(d)        Where approval by a national agency is required for reclassification, such approval shall not be unreasonably withheld. Failure to act on a proper and complete application for reclassification within three (3) months from receipt of the same shall be deemed as approval thereof.  

(e)        Nothing in this Section shall be construed as repealing, amending, or modifying in any manner the provisions of R.A. No. 6657.  

SECTION 21.      Closure and Opening of Roads. — (a) A local government unit may, pursuant to an ordinance, permanently or temporarily close or open any local road, alley, park, or square falling within its jurisdiction: Provided, however, That in case of permanent closure, such ordinance must be approved by at least two-thirds (2/3) of all the members of the sanggunian, and when necessary, an adequate substitute for the public facility that is subject to closure is provided.  

(b)        No such way or place or any part thereof shall be permanently closed without making provisions for the maintenance of public safety therein. A property thus permanently withdrawn from public use may be used or conveyed for any purpose for which other real property belonging to the local government unit concerned may be lawfully used or conveyed: Provided, however, That no freedom park shall be closed permanently without provision for its transfer or relocation to a new site.  

(c)        Any national or local road, alley, park, or square may be temporarily closed during an actual emergency, or fiesta celebrations, public rallies, agricultural or industrial fairs, or an undertaking of public works and highways, telecommunications, and waterworks projects, the duration of which shall be specified by the local chief executive concerned in a written order: Provided, however, That no national or local road, alley, park, or square shall be temporarily closed for athletic, cultural, or civic activities not officially sponsored, recognized, or approved by the local government unit concerned.  

(d)        Any city, municipality, or barangay may, by a duly enacted ordinance, temporarily close and regulate the use of any local street, road, thoroughfare, or any other public place where shopping malls, Sunday, flea or night markets, or shopping areas may be established and where goods, merchandise, foodstuffs, commodities, or articles of commerce may be sold and dispensed to the general public.  

SECTION 22.      Corporate Powers. — (a) Every local government unit, as a corporation, shall have the following powers:  

(1)        To have continuous succession in its corporate name; 

(2)        To sue and be sued;  

(3)        To have and use a corporate seal;  

(4)        To acquire and convey real or personal property;  

(5)        To enter into contracts; and  

(6)        To exercise such other powers as are granted to corporations, subject to the limitations provided in this Code and other laws.  

(b)        Local government units may continue using, modify, or change their existing corporate seals: Provided, That newly established local government units or those without corporate seals may create their own corporate seals which shall be registered with the Department of the Interior and Local Government: Provided, further, That any change of corporate seal shall also be registered as provided hereon.  

(c)        Unless otherwise provided in this Code, no contract may be entered into by the local chief executive in behalf of the local government unit without prior authorization by the sanggunian concerned. A legible copy of such contract shall be posted at a conspicuous place in the provincial capitol or the city, municipal or barangay hall.  

(d)        Local government units shall enjoy full autonomy in the exercise of their proprietary functions and in the limitations provided in this Code and other applicable laws,  

SECTION 23.      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 hereof, from local and foreign assistance agencies without necessity of securing clearance or approval therefor from any department, agency, or office of the national government of from any higher local government unit: 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 same shall be deemed approved.  

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.  

SECTION 24.      Liability for Damages. — Local government units and their officials are not exempt from liability for death or injury to persons or damage to property.  

CHAPTER 3. — Intergovernmental Relations

ARTICLE I

National Government and Local Government Units 

SECTION 25.      National Supervision over Local Government Units. — (a) Consistent with the basic policy on local autonomy, the President shall exercise general supervision over local government units to ensure that their acts are within the scope of their prescribed powers and functions.  

The President shall exercise supervisory authority directly over provinces, highly urbanized cities, and independent component cities; through the province with respect to component cities and municipalities; and through the city and municipality with respect to barangays.  

(b)        National agencies and offices with project implementation functions shall coordinate with one another and with the local government units concerned in the discharge of these functions. They shall ensure the participation of local government units both in the planning and implementation of said national projects.

 (c)        The President may, upon request of the local government unit concerned, direct the appropriate national agency to provide financial, technical, or other forms of assistance to the local government unit. Such assistance shall be extended at no extra cost to the local government unit concerned.  

(d)        National agencies and offices including government-owned or controlled corporations with field units or branches in a province, city, or municipality shall furnish the local chief executive concerned, for his information and guidance, monthly reports including duly certified budgetary allocations and expenditures.  

SECTION 26.      Duty of National Government Agencies in the Maintenance of Ecological Balance. — It shall be the duty of every national agency or government-owned or controlled corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable resources, loss of crop land, rangeland, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof.  

SECTION 27.      Prior Consultations Required. — No project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2 (c) and 26 hereof are complied with, and prior approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution.

ARTICLE II

Relations with the Philippine National Police 

SECTION 28.      Powers of Local Chief Executives over the Units of the Philippine National Police. — The extent of operational supervision and control of local chief executives over the police force, fire protection unit, and jail management personnel assigned in their respective jurisdictions shall be governed by the provisions of Republic Act Numbered Sixty-nine hundred seventy-five (R.A. No. 6975), otherwise known as “The Department of the Interior and Local Government Act of 1990”, and the rules and regulations issued pursuant thereto.  

ARTICLE III

Inter-Local Government Relations 

SECTION 29.      Provincial Relations with Component Cities and Municipalities. — The province, through the governor, shall ensure that every component city and municipality within its territorial jurisdiction acts within the scope of its prescribed powers and functions. Highly urbanized cities and independent component cities shall be independent of the province.  

SECTION 30.      Review of Executive Orders. — (a) Except as otherwise provided under the Constitution and special statutes, the governor shall review all executive orders promulgated by the component city or municipal mayor within his jurisdiction. The city or municipal mayor shall review all executive orders promulgated by the punong barangay within his jurisdiction. Copies of such orders shall be forwarded to the governor or the city or municipal mayor, as the case may be, within three (3) days from their issuance. In all instances of review, the local chief executive concerned shall ensure that such executive orders are within the powers granted by law and in conformity with provincial, city, or municipal ordinances.  

(b)        If the governor or the city or municipal mayor fails to act on said executive orders within thirty (30) days after their submission, the same shall be deemed consistent with law and therefore valid.  

SECTION 31.      Submission of Municipal Questions to the Provincial Legal Officer or Prosecutor. — In the absence of a municipal legal officer, the municipal government may secure the opinion of the provincial legal officer, and in the absence of the latter, that of the provincial prosecutor on any legal question affecting the municipality.  

SECTION 32.      City and Municipal Supervision over Their Respective Barangays. — The city or municipality, through the city or municipal mayor concerned, shall exercise general supervision over component barangays to ensure that said barangays act within the scope of their prescribed powers and functions.  

SECTION 33.      Cooperative Undertakings Among Local Government Units. — Local government units may, through appropriate ordinances, group themselves, consolidate, or coordinate their efforts, services, and resources for purposes commonly beneficial to them. In support of such undertakings, the local government units involved may, upon approval by the sanggunian concerned after a public hearing conducted for the purpose, contribute funds, real estate, equipment, and other kinds of property and appoint or assign personnel under such terms and conditions as may be agreed upon by the participating local units through Memoranda of Agreement. 

CHAPTER 4. — Relations with People's and

Non-governmental Organizations 

SECTION 34.      Role of People's and Non-governmental Organizations. — Local government units shall promote the establishment and operation of people's and non-governmental organizations to become active partners in the pursuit of local autonomy.  

SECTION 35.      Linkages with People's and Non-governmental Organizations. — Local government units may enter into joint ventures and such other cooperative arrangements with people's and non-governmental organizations to engage in the delivery of certain basic services, capability-building and livelihood projects, and to develop local enterprises designed to improve productivity and income, diversity agriculture, spur rural industrialization, promote ecological balance, and enhance the economic and social well-being of the people.  

SECTION 36.      Assistance to People's and Non-governmental Organizations. — A local government unit may, through its local chief executive and with the concurrence of the sanggunian concerned, provide assistance, financial or otherwise, to such people's and non-governmental organizations for economic, socially-oriented, environmental, or cultural projects to be implemented within its territorial jurisdiction.  

CHAPTER 5. — Local Prequalification, Bids

and Awards Committee 

SECTION 37.      Local Prequalification, Bids and Awards Committee (Local PBAC). — (a) There is hereby created a local prequalification, bids and awards committee in every province, city, and municipality, which shall be primarily responsible for the conduct of prequalification of contractors, bidding, evaluation of bids, and the recommendation of awards concerning local infrastructure projects. The governor or the city or municipal mayor shall act as the chairman with the following as members:  

(1)        The chairman of the appropriations committee of the sanggunian concerned;  

(2)        A representative of the minority party in the sanggunian concerned, if any, or if there be none, one (1) chosen by said sanggunian from among its members;  

(3)        The local treasurer;  

(4)        Two (2) representatives of non-governmental organizations that are represented in the local development council concerned, to be chosen by the organizations themselves; and  

(5)        Any practicing certified public accountant from the private sector, to be designated by the local chapter of the Philippine Institute of Certified Public Accountants, if any.  

Representatives of the Commission on Audit shall observe the proceedings of such committee and shall certify that the rules and procedures for prequalification, bids and awards have been complied with.  

(b)        The agenda and other information relevant to the meetings of such committee shall be deliberated upon by the committee at least one (1) week before the holding of such meetings.  

(c)        All meetings of the committee shall be held in the provincial capitol or the city or municipal hall. The minutes of such meetings of the committee and any decision made therein shall be duly recorded, posted at a prominent place in the provincial capitol or the city or municipal hall, and delivered by the most expedient means to elective local officials concerned.  

SECTION 38.      Local Technical Committee. — (a) There is hereby created a local technical committee in every province, city and municipality to provide technical assistance to the local prequalification, bids and awards committees. It shall be composed of the provincial, city or municipal engineer, the local planning and development coordinator, and such other officials designated by the local prequalification, bids and awards committee.  

(b)        The chairman of the local technical committee shall be designated by the local prequalification, bids and awards committee and shall attend its meeting in order to present the reports and recommendations of the local technical committee.  

TITLE TWO. — ELECTIVE OFFICIALS

CHAPTER 1. — Qualifications and Election 

SECTION 39.      Qualifications. — (a) An elective local official must be a citizen of the Philippines; a registered voter in the barangay, municipality, city, or province or, in the case of a member of the sangguniang panlalawigan, sanguniang panlungsod, or sangguniang bayan, the district where he intends to be elected; a resident therein for at least one (1) year immediately preceding the day of the election; and able to read and write Filipino or any other local language or dialect.  

(b)        Candidates for the position of governor, vice-governor, or member of the sangguniang panlalawigan, or mayor, vice-mayor or member of the sangguniang panlungsod of highly urbanized cities must be at least twenty-one (21) years of age on election day.  

(c)        Candidates for the position of mayor or vice-mayor of independent component cities, component cities, or municipalities must be at least twenty-one (21) years of age on election day.  

(d)        Candidates for the position of member of the sangguniang panlungsod or sangguniang bayan must be at least eighteen (18) years of age on election day.  

(e)        Candidates for the position of punong barangay or member of the sangguniang barangay must be at least eighteen (18) years of age on election day.  

(f)         Candidates for the sangguniang kabataan must be at least fifteen (15) years of age but not more than twenty-one (21) years of age on election day.  

SECTION 40.      Disqualifications. — The following persons are disqualified from running for any elective local position:

(a)        Those sentenced by final judgment for an offense involving moral turpitude or for an offense punishable by one (1) year or more of imprisonment, within two (2) years after serving sentence;  

(b)        Those removed from office as a result of an administrative case;  

(c)        Those convicted by final judgment for violating the oath of allegiance to the Republic;  

(d)        Those with dual citizenship;

 (e)        Fugitives from justice in criminal or non-political cases here or abroad;  

(f)         Permanent residents in a foreign country or those who have acquired the right to reside abroad and continue to avail of the same right after the effectivity of this Code; and  

(g)        The insane or feeble-minded.

 SECTION 41.      Manner of Election. — (a) The governor, vice-governor, city mayor, city vice-mayor, municipal mayor, municipal vice-mayor, and punong barangay shall be elected at large in their respective units by the qualified voters therein. However, the sangguniang kabataan chairman for each barangay shall be elected by the registered voters of the katipunan ng kabataan, as provided in this Code.  

(b)        The regular members of the sangguniang panlalawigan, sangguniang panlungsod, and sangguniang bayan shall be elected by district, as may be provided for by law. Sangguniang barangay members shall be elected at large. The presidents of the leagues of sanggunian members of component cities and municipalities shall serve as ex officio members of the sangguniang panlalawigan concerned. The presidents of the “liga ng mga barangay and the pederasyon ng mga sangguniang kabataan” elected by their respective chapters, as provided in this Code, shall serve as ex officio members of the sangguniang panlalawigan, sangguniang panlungsod, and sagguniang bayan.  

(c)        In addition thereto, there shall be one (1) sectoral representative from the women, one (1) from the workers, and one (1) from any of the following sectors: the urban poor, indigenous cultural communities, disabled persons, or any other sector as may be determined by the sanggunian concerned within ninety (90) days prior to the holding of the next local elections as may be provided for by law. The Comelec shall promulgate the rules and regulations to effectively provide for the election of such sectoral representatives.  

SECTION 42.      Date of Election. — Unless otherwise provided by law, the elections for local officials shall be held every three (3) years on the second Monday of May.  

SECTION 43.      Term of Office. — (a) The term of office of all local elective officials elected after the effectivity of this Code shall be three (3) years, starting from noon of June 30, 1992 or such date as may be provided for by law, except that of elective barangay officials: Provided, That all local officials first elected during the local elections immediately following the ratification of the 1987 Constitution shall serve until noon of June 30, 1992.  

(b)        No local elective official shall serve for more than three (3) consecutive terms in the same position. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of service for the full term for which the elective official concerned was elected.  

(c)        The term of office of barangay officials and members of the sangguniang kabataan shall be for three (3) years, which shall begin after the regular election of barangay officials on the second Monday of May 1994.  

CHAPTER 2. — Vacancies and Succession 

SECTION 44.      Permanent Vacancies in the Offices of the Governor, Vice-Governor, Mayor, and Vice-Mayor. — If a permanent vacancy occurs in the office of the governor or mayor, the vice-governor or vice-mayor concerned shall become the governor or mayor. If a permanent vacancy occurs in the offices of the governor, vice-governor, mayor, or vice-mayor, the highest ranking sanggunian member or, in case of his permanent inability, the second highest ranking sanggunian member, shall become the governor, vice-governor, mayor or vice-mayor, as the case may be. Subsequent vacancies in the said office shall be filled automatically by the other sanggunian members according to their ranking as defined herein.  

(b)        If a permanent vacancy occurs in the office of the punong barangay, the highest ranking sanggunian barangay member or, in case of his permanent inability, the second highest ranking sanggunian member, shall become the punong barangay.  

(c)        A tie between or among the highest ranking sanggunian members shall be resolved by the drawing of lots.  

(d)        The successors as defined herein shall serve only the unexpired terms of their predecessors.

For purposes of this Chapter, a permanent vacancy arises when an elective local official fills a higher vacant office, refuses to assume office, fails to qualify, dies, is removed from office, voluntarily resigns, or is otherwise permanently incapacitated to discharge the functions of his office.

 For purposes of succession as provided in the Chapter, ranking in the sanggunian shall be determined on the basis of the proportion of votes obtained by each winning candidate to the total number of registered voters in each district in the immediately preceding local election.

SECTION 45.      Permanent Vacancies in the Sanggunian. — (a) Permanent vacancies in the sanggunian where automatic successions provided above do not apply shall be filled by appointment in the following manner:  

(1)        The President, through the Executive Secretary, in the case of the sangguniang panlalawigan and the sangguniang panlungsod of highly urbanized cities and independent component cities;  

(2)        The governor, in the case of the sangguniang panlungsod of component cities and the sangguniang bayan;  

(3)        The city or municipal mayor, in the case of sangguniang barangay, upon recommendation of the sangguniang barangay concerned.  

(b)        Except for the sangguniang barangay, only the nominee of the political party under which the sanggunian member concerned had been elected and whose elevation to the position next higher in rank created the last vacancy in the sanggunian shall be appointed in the manner hereinabove provided. The appointee shall come from the same political party as that of the sanggunian member who caused the vacancy and shall serve the unexpired term of the vacant office. In the appointment herein mentioned, a nomination and a certificate of membership of the appointee from the highest official of the political party concerned are conditions sine qua non, and any appointment without such nomination and certification shall be null and void ab initio and shall be a ground for administrative action against the official responsible therefore.  

(c)        In case or permanent vacancy is caused by a sanggunian member who does not belong to any political party, the local chief executive shall, upon recommendation of the sanggunian concerned, appoint a qualified person to fill the vacancy.  

(d)        In case of vacancy in the representation of the youth and the barangay in the sanggunian, said vacancy shall be filled automatically by the official next in rank of the organization concerned.  

SECTION 46.      Temporary Vacancy in the Office of the Local Chief Executive. — (a) When the governor, city or municipal mayor, or punong barangay is temporarily incapacitated to perform his duties for physical or legal reasons such as, but not limited to, leave of absence, travel abroad, and suspension from office, the vice-governor, city or municipal vice-mayor, or the highest ranking sangguniang barangay member shall automatically exercise the powers and perform the duties and functions of the local chief executive concerned, except the power to appoint, suspend, or dismiss employees which can only be exercised if the period of temporary incapacity exceeds thirty (30) working days.  

(b)        Said temporary incapacity shall terminate upon submission to the appropriate sanggunian of a written declaration by the local chief executive concerned that he has reported back to office. In cases where the temporary incapacity is due to legal causes, the local chief executive concerned shall also submit necessary documents showing that said legal causes no longer exist.  

(c)        When the incumbent local chief executive is traveling within the country but outside his territorial jurisdiction for a period not exceeding three (3) consecutive days, he may designate in writing the officer-in-charge of the said office. Such authorization shall specify the powers and functions that the local official concerned shall exercise in the absence of the local chief executive except the power to appoint, suspend, or dismiss employees.  

(d)        In the event, however, that the local chief executive concerned fails or refuses to issue such authorization, the vice-governor, the city or municipal vice-mayor, or the highest ranking sangguniang barangay member, as the case may be, shall have the right to assume the powers, duties, and functions of the said office on the fourth (4th) day of absence of the said local chief executive, subject to the limitations provided in subsection (c) hereof.  

(e)        Except as provided above, the local chief executive shall in no case authorize any local official to assume the powers, duties, and functions of the office, other than the vice-governor, the city or municipal vice-mayor, or the highest ranking sangguniang barangay member, as the case may be.  

SECTION 47.      Approval of Leaves of Absence. — (a) Leaves of absence of local elective officials shall be approved as follows:  

(1)        Leaves of absence of the governor and the mayor of a highly urbanized city or an independent component city shall be approved by the President or his duly authorized representative;  

(2)        Leaves of absence of vice-governor or a city or municipal vice-mayor shall be approved by the local chief executive concerned: Provided, That the leaves of absence of the members of the sanggunian and its employees shall be approved by the vice-governor or city or municipal vice-mayor concerned;  

(3)        Leaves of absence of the component city or municipal mayor shall be approved by the governor; and  

(4)        Leaves of absence of a punong barangay shall be approved by the city or municipal mayor: Provided, That leaves of absence of sangguniang barangay members shall be approved by the punong barangay.  

(b)        Whenever the application for leave of absence hereinabove specified is not acted upon within five  

(5) working days after receipt thereof, the application for leave of absence shall be deemed approved.  

CHAPTER 3. — Local Legislation 

SECTION 48.      Local Legislative Power. — Local legislative power shall be exercised by the sangguniang panlalawigan for the province; the sangguniang panlungsod for the city; the sangguniang bayan for the municipality; and the sangguniang barangay for the barangay.  

SECTION 49.      Presiding Officer. — (a) The vice-governor shall be the presiding officer of the sangguniang panlalawigan; the city vice-mayor, of the sangguniang panlungsod; the municipal vice-mayor, of the sangguniang bayan; and the punong barangay, of the sangguninag barangay. The presiding officer shall vote only to break a tie.

(b)        In the event of the inability of the regular presiding officer to preside at a sanggunian session, the members present and constituting a quorum shall elect from among themselves a temporary presiding officer. He shall certify within ten (10) days from the passage of ordinances enacted and resolutions adopted by the sanggunian in the session over which he temporarily presided.

SECTION 50.      Internal Rules of Procedure. — (a) On the first regular session following the election of its members and within ninety (90) days thereafter, the sanggunian concerned shall adopt or update its existing rules of procedure.

 (b)        The rules of procedure shall provided for the following:  

(1)        The organization of the sanggunian and the election of its officers as well as the creation of standing committees which shall include, but shall not be limited to, the committees on appropriations, women and family, human rights, youth and sports development, environmental protection, and cooperatives; the general jurisdiction of each committee; and the election of the chairman and members of each committee;  

(2)        The order and calendar of business for each session;  

(3)        The legislative process;  

(4)        The parliamentary procedures which include the conduct of members during sessions;  

(5)        The discipline of members for disorderly behavior and absences without justifiable cause for four  

(4) consecutive sessions, for which they may be censured, reprimanded, or excluded from the session, suspended for not more than sixty (60) days, or expelled: Provided, That the penalty of suspension or expulsion shall require the concurrence of at least two-thirds (2/3) vote of all the sanggunian members: Provided, further, That a member convicted by final judgment to imprisonment of at least one (1) year for any crime involving moral turpitude shall be automatically expelled from the sanggunian; and  

(6)        Such other rules as the sanggunian may adopt.  

SECTION 51.      Full Disclosure of Financial and Business Interests of Sanggunian Members. — (a) Every sanggunian member shall, upon assumption to office, make a full disclosure of his business and financial interests, or professional relationship or any relation by affinity or consanguinity within the fourth civil degree, which he may have with any person, firm, or entity affected by any ordinance or resolution under consideration by the sanggunian of which he is a member, which relationship may result in conflict of interest. Such relationship shall include:  

(1)        Ownership of stock or capital, or investment, in the entity or firm to which the ordinance or resolution may apply; and  

(2)        Contracts or agreements with any person or entity which the ordinance or resolution under consideration may affect.

In the absence of a specific constitutional or statutory provision applicable to this situation, “conflict of interest” refers in general to one where it may be reasonably deduced that a member of a sanggunian may not act in the public interest due to some private, pecuniary, or other personal considerations that may tend to affect his judgment to the prejudice of the service or the public.  

(b)        The disclosure required under this Act shall be made in writing and submitted to the secretary of the sanggunian or the secretary of the committee of which he is a member. The disclosure shall, in all cases, form part of the record of the proceedings and shall be made in the following manner:

(1)        Disclosure shall be made before the member participates in the deliberations on the ordinance or resolution under consideration: Provided, That, if the member did not participate during the deliberations, the disclosure shall be made before voting on the ordinance or resolution on second and third readings; and

 (2)        Disclosure shall be made when a member takes a position or makes a privilege speech on a matter that may affect the business interest, financial connection, or professional relationship described herein.  

SECTION 52.      Sessions. — (a) On the first day of the session immediately following the election of its members, the sanggunian shall, by resolution, fix the day, time, and place of its regular sessions. The minimum numbers of regular sessions shall be once a week for the sangguniang panlalawigan, sangguniang panlungsod, and sangguniang bayan, and twice a month for the sangguniang barangay.  

(b)        When public interest so demands, special sessions may be called by the local chief executive or by a majority of the members of the sanggunian.  

(c)        All sanggunian sessions shall be open to the public unless a closed-door session is ordered by an affirmative vote of a majority of the members present, there being a quorum, in the public interest or for reasons of security, decency, or morality. No two (2) sessions, regular or special, may be held in a single day.

 (d)        In the case of special sessions of the sanggunian, a written notice to the members shall be served personally at the member's usual place of residence at least twenty-four (24) hours before the special session is held.  

Unless otherwise concurred in by two-thirds (2/3) vote of the sanggunian members present, there being a quorum, no other matters may be considered at a special session except those stated in the notice.

 (e)        Each sanggunian shall keep a journal and record of its proceedings which may be published upon resolution of the sanggunian concerned.  

SECTION 53.      Quorum. — (a) A majority of all the members of the sanggunian who have been elected and qualified shall constitute a quorum to transact official business. Should a question of quorum be raised during a session, the presiding officer shall immediately proceed to call the roll of the members and thereafter announce the results.  

(b)        Where there is no quorum, the presiding officer may declare a recess until such time as a quorum is constituted, or a majority of the members present may adjourn from day to day and may compel the immediate attendance of any member absent without justifiable cause by designating a member of the sanggunian to be assisted by a member or members of the police force assigned in the territorial jurisdiction of the local government unit concerned, to arrest the absent member and present him at the session.  

(c)        If there is still no quorum despite the enforcement of the immediately preceding subsection, no business shall be transacted. The presiding officer, upon proper motion duly approved by the members present, shall then declare the session adjourned for lack of quorum.  

SECTION 54.      Approval of Ordinances. — (a) Every ordinance enacted by the sangguniang panlalawigan, sangguniang panlungsod, or sangguniang bayan shall be presented to the provincial governor or city or municipal mayor, as the case may be. If the local chief executive concerned approves the same, he shall affix his signature on each and every page thereof; otherwise, he shall veto it and return the same with his objections to the sanggunian, which may proceed to reconsider the same. The sanggunian concerned may override the veto of the local chief executive by two-thirds (2/3) vote of all its members, thereby making the ordinance or resolution effective for all legal intents and purposes.  

(b)        The veto shall be communicated by the local chief executive concerned to the sanggunian within fifteen (15) days in the case of a province, and ten (10) days in the case of a city or a municipality; otherwise, the ordinance shall be deemed approved as if he had signed it.  

(c)        Ordinances enacted by the sangguniang barangay shall, upon approval by the majority of all its members, be signed by the punong barangay.  

SECTION 55.      Veto Power of the Local Chief Executive. — (a) The local chief executive may veto any ordinance of the sanggunian panlalawigan, sangguniang panlungsod, or sanggunian bayan on the ground that it is ultra vires or prejudicial to the public welfare, stating his reasons therefor in writing.

 (b)        The local chief executive, except the punong barangay, shall have the power to veto any particular item or items of an appropriations ordinance, an ordinance or resolution adopting a local development plan and public investment program, or an ordinance directing the payment of money or creating liability. In such a case, the veto shall not affect the item or items which are not objected to. The vetoed item or items shall not take effect unless the sanggunian overrides the veto in the manner herein provided; otherwise, the item or items in the appropriations ordinance of the previous year corresponding to those vetoed, if any, shall be deemed reenacted.  

(c)        The local chief executive may veto an ordinance or resolution only once. The sanggunian may override the veto of the local chief executive concerned by two-thirds (2/3) vote of all its members, thereby making the ordinance effective even without the approval of the local chief executive concerned.  

SECTION 56.      Review of Component City and Municipal Ordinances or Resolutions by the Sangguniang Panlalawigan. — (a) Within three (3) days after approval, the secretary to the sanggunian panlungsod or sangguniang bayan shall forward to the sangguniang panlalawigan for review, copies of approved ordinances and the resolutions approving the local development plans and public investment programs formulated by the local development councils.  

(b)        Within thirty (30) days after the receipt of copies of such ordinances and resolutions, the sangguniang panlalawigan shall examine the documents or transmit them to the provincial attorney, or if there be none, to the provincial prosecutor for prompt examination. The provincial attorney or provincial prosecutor shall, within a period of ten (10) days from receipt of the documents, inform the sangguniang panlalawigan in writing of his comments or recommendations, which may be considered by the sangguniang panlalawigan in making its decision.

(c)        If the sangguniang panlalawigan finds that such an ordinance or resolution is beyond the power conferred upon the sangguninag panlungsod or sangguniang bayan concerned, it shall declare such ordinance or resolution invalid in whole or in part. The sangguniang panlalawigan shall enter its action in the minutes and shall advise the corresponding city or municipal authorities of the action it has taken.  

(d)        If no action has been taken by the sangguniang panlalawigan within thirty (30) days after submission of such an ordinance or resolution, the same shall be presumed consistent with law and therefore valid.  

SECTION 57.      Review of Barangay Ordinances by the Sangguniang Panlungsod or Sangguniang Bayan. — (a) Within ten (10) days after its enactment, the sangguniang barangay shall furnish copies of all barangay ordinances to the sangguniang panlungsod or sangguniang bayan concerned for review as to whether the ordinance is consistent with law and city or municipal ordinances.  

(b)        If the sangguniang panlungsod or sangguniang bayan, as the case may be, fails to take action on barangay ordinances within thirty (30) days from receipt thereof, the same shall be deemed approved.

 (c)        If the sangguniang panlungsod or sangguniang bayan, as the case may be, finds the barangay ordinances inconsistent with law or city or municipal ordinances, the sanggunian concerned shall, within thirty (30) days from receipt thereof, return the same with its comments and recommendations to the sangguniang barangay concerned for adjustment, amendment, or modification; in which case, the effectivity of the barangay ordinance is suspended until such time as the revision called for is effected.  

SECTION 58.      Enforcement of Disapproved Ordinances or Resolutions. — Any attempt to enforce any ordinance or any resolution approving the local development plan and public investment program, after the disapproval thereof, shall be sufficient ground for the suspension or dismissal of the official or employee concerned.  

SECTION 59.      Effectivity of Ordinances or Resolutions. — (a) Unless otherwise stated in the ordinance or the resolution approving the local development plan and public investment program, the same shall take effect after ten (10) days from the date a copy thereof is posted in a bulletin board at the entrance of the provincial capitol or city, municipal, or barangay hall, as the case may be, and in at least two (2) other conspicuous places in the local government unit concerned.  

(b)        The secretary to the sanggunian concerned shall cause the posting of an ordinance or resolution in the bulletin board at the entrance of the provincial capitol and the city, municipal, or barangay hall in at least two (2) conspicuous places in the local government unit concerned not later than five (5) days after approval thereof.  

The text of the ordinance or resolution shall be disseminated and posted in Filipino or English and in the language understood by the majority of the people in the local government unit concerned, and the secretary to the sanggunian shall record such fact in a book kept for the purpose, stating the dates of approval and posting.  

(c)        The gist of all ordinances with penal sanctions shall be published in a newspaper of general circulation within the province where the local legislative body concerned belongs. In the absence of any newspaper of general circulation within the province, posting of such ordinances shall be made in all municipalities and cities of the province where the sanggunian of origin is situated.  

(d)        In the case of highly urbanized and independent component cities, the main features of the ordinance or resolution duly enacted or adopted shall, in addition to being posted, be published once in a local newspaper of general circulation within the city: Provided, That in the absence thereof the ordinance or resolution shall be published in any newspaper of general circulation.  

CHAPTER 4. — Disciplinary Actions 

SECTION 60.      Grounds for Disciplinary Actions. — An elective local official may be disciplined, suspended, or removed from office on any of the following grounds:  

(a)        Disloyalty to the Republic of the Philippines;  

(b)        Culpable violation of the Constitution;  

(c)        Dishonesty, oppression, misconduct in office, gross negligence, or dereliction of duty;  

(d)        Commission of any offense involving moral turpitude or an offense punishable by at least prision mayor;  

(e)        Abuse of authority;

(f)         Unauthorized absence for fifteen (15) consecutive working days, except in the case of members of the sangguniang panlalawigan, sangguniang panlungsod, sangguniang bayan, and sangguniang barangay;  

(g)        Application for, or acquisition of, foreign citizenship or residence or the status of an immigrant of another country; and  

(h)        Such other grounds as may be provided in this Code and other laws.

An elective local official may be removed from office on the grounds enumerated above by order of the proper court.  

SECTION 61.      Form and Filing of Administrative Complaints. — A verified complaint against any erring local elective official shall be prepared as follows:

 (a)        A complaint against any elective official of a province, a highly urbanized city, an independent component city or component city shall be filed before the Office of the President;

 (b)        A complaint against any elective official of a municipality shall be filed before the sangguniang panlalawigan whose decision may be appealed to the Office of the President; and

 (c)        A complaint against any elective barangay official shall be filed before the sangguniang panlungsod or sangguniang bayan concerned whose decision shall be final and executory.

 SECTION 62.      Notice of hearing. — (a) Within seven (7) days after the administrative complaint is filed, the Office of the President or the sanggunian concerned, as the case may be, shall require the respondent to submit his verified answer within fifteen (15) days from receipt thereof, and commence the investigation of the case within ten (10) days after receipt of such answer of the respondent.

 (b)        When the respondent is an elective official of a province or highly urbanized city, such hearing and investigation shall be conducted in the place where he renders or holds office. For all other local elective officials, the venue shall be the place where the sanggunian concerned is located.

 (c)        However, no investigation shall be held within ninety (90) days immediately prior to any local election, and no preventive suspension shall be imposed within the said period. If preventive suspension has been imposed prior to the 90-day period immediately preceding local election, it shall be deemed automatically lifted upon the start of aforesaid period.

 SECTION 63.      Preventive Suspension. — (a) Preventive suspension may be imposed:

 (1)        By the President, if the respondent is an elective official of a province, a highly urbanized or an independent component city;

 (2)        By the governor, if the respondent is an elective official of a component city or municipality; or

 (3)        By the mayor, if the respondent is an elective official of the barangay.

 (b)        Preventive suspension may be imposed at any time after the issues are joined, when the evidence of guilt is strong, and given the gravity of the offense, there is great probability that the continuance in office of the respondent could influence the witnesses or pose a threat to the safety and integrity of the records and other evidence: Provided, That, any single preventive suspension of local elective officials shall not extend beyond sixty (60) days: Provided, further, That in the event that several administrative cases are filed against an elective official, he cannot be preventively suspended for more than ninety (90) days within a single year on the same ground or grounds existing and known at the time of the first suspension.

 (c)        Upon expiration of the preventive suspension, the suspended elective official shall be deemed reinstated in office without prejudice to the continuation of the proceedings against him, which shall be terminated within one hundred twenty (120) days from the time he was formally notified of the case against him. However, if the delay in the proceedings of the case is due to his fault, neglect, or request, other than the appeal duly filed, the duration of such delay shall not be counted in computing the time of termination of the case.

 (d)        Any abuse of the exercise of the power of preventive suspension shall be penalized as abuse of authority.

 SECTION 64.      Salary of Respondent Pending Suspension. — The respondent official preventively suspended from office shall receive no salary or compensation during such suspension; but upon subsequent exoneration and reinstatement, he shall be paid full salary or compensation including such emoluments accruing during such suspension.

 SECTION 65.      Rights of Respondent. — The respondent shall be accorded full opportunity to appear and defend himself in person or by counsel, to confront and cross-examine the witnesses against him, and to require the attendance of witnesses and the production of documentary process of subpoena or subpoena duces tecum.

 SECTION 66.      Form and Notice of Decision. — (a) The investigation of the case shall be terminated within ninety (90) days from the start thereof. Within thirty (30) days after the end of the investigation, the Office of the President or the sanggunian concerned shall render a decision in writing stating clearly and distinctly the facts and the reasons for such decision. Copies of said decision shall immediately be furnished the respondent and all interested parties.

 (b)        The penalty of suspension shall not exceed the unexpired term of the respondent or a period of six (6) months for every administrative offense, nor shall said penalty be a bar to the candidacy of the respondent so suspended as long as he meets the qualifications required for the office.

 (c)        The penalty of removal from office as a result of an administrative investigation shall be considered a bar to the candidacy of the respondent for any elective position.

 SECTION 67.      Administrative Appeals. — Decisions in administrative cases may, within thirty (30) days from receipt thereof, be appealed to the following:

 (a)        The sangguniang panlalawigan, in the case of decisions of the sangguniang panlungsod of component cities and the sangguniang bayan; and

 (b)        The Office of the President, in the case of decisions of the sangguniang panlalawigan and the sangguniang panlungsod of highly urbanized cities and independent component cities.

 Decisions of the Office of the President shall be final and executory.

 SECTION 68.      Execution Pending Appeal. — An appeal shall not prevent a decision from becoming final or executory. The respondent shall be considered as having been placed under preventive suspension during the pendency of an appeal in the event he wins such appeal. In the event the appeal results in an exoneration, he shall be paid his salary and such other emoluments during the pendency of the appeal.  

CHAPTER 5. — Recall 

SECTION 69.      By Whom Exercised. — The power of recall for loss of confidence shall be exercised by the registered voters of a local government unit to which the local elective official subject to such recall belongs.  

SECTION 70.      Initiation of the Recall Process. — (a) Recall may be initiated by a preparatory recall assembly or by the registered voters of the local government unit to which the local elective official subject to such recall belongs.  

(b)        There shall be a preparatory recall assembly in every province, city, district, and municipality which shall be composed of the following:

 (1)        Provincial level. — All mayors, vice-mayors, and sanggunian members of the municipalities and component cities;  

(2)        City level. — All punong barangay and sanggunian barangay members in the city;  

(3)        Legislative District level. — In case where sangguniang panlalawigan members are elected by district, all elective municipal officials in the district; and in cases where sangguniang panlungsod members are elected by district, all elective barangay officials in the district; and  

(4)        Municipal level. — All punong barangay and sangguniang barangay members in the municipality.  

(c)        A majority of all the preparatory recall assembly members may convene in session in a public place and initiate a recall proceedings against any elective official in the local government unit concerned. Recall of provincial, city, or municipal officials shall be validly initiated through a resolution adopted by a majority of all the members of the preparatory recall assembly concerned during its session called for the purpose.  

(d)        Recall of any elective provincial, city, municipal, or barangay official may also be validly initiated upon petition of at least twenty-five percent (25%) of the total number of registered voters in the local government unit concerned during the election in which the local official sought to be recalled was elected.

 (1)        A written petition for recall duly signed before the election registrar or his representative, and in the presence of a representative of the petitioner and a representative of the official sought to be recalled and, and in a public place in the province, city, municipality, or barangay, as the case may be, shall be filed with the Comelec through its office in the local government unit concerned. The Comelec or its duly authorized representative shall cause the publication of the petition in a public and conspicuous place for a period of not less than ten (10) days nor more than twenty (20) days, for the purpose of verifying the authenticity and genuineness of the petition and the required percentage of voters.

 (2)        Upon the lapse of the aforesaid period, the Comelec or its duly authorized representative shall announce the acceptance of candidates to the position and thereafter prepare the list of candidates which shall include the name of the official sought to be recalled.

 SECTION 71.      Election on Recall. — Upon the filing of a valid resolution or petition for recall with the appropriate local office of the Comelec, the Commission or its duly authorized representative shall set the date of the election on recall, which shall not be later than thirty (30) days after the filing of the resolution or petition for recall in the case of the barangay, city, or municipal officials. and forty-five (45) days in the case of provincial officials. The official or officials sought to be recalled shall automatically be considered as duly registered candidate or candidates to the pertinent positions and, like other candidates, shall be entitled to be voted upon.

 SECTION 72.      Effectivity of Recall. — The recall of an elective local official shall be effective only upon the election and proclamation of a successor in the person of the candidate receiving the highest number of votes cast during the election on recall. Should the official sought to be recalled receive the highest number of votes, confidence in him is thereby affirmed, and he shall continue in office.

 SECTION 73.      Prohibition from Resignation. — The elective local official sought to be recalled shall not be allowed to resign while the recall process is in progress.  

SECTION 74.      Limitations on Recall. — (a) Any elective local official may be the subject of a recall election only once during his term of office for loss of confidence.  

(b)        No recall shall take place within one (1) year from the date of the official's assumption to office or one (1) year immediately preceding a regular local election.

SECTION 75.      Expenses Incident to Recall Elections. — All expenses incident to recall elections shall be borne by the Comelec. For this purpose, there shall be included in the annual General Appropriations Act a contingency fund at the disposal of the Comelec for the conduct of recall elections.  

TITLE THREE — HUMAN RESOURCES AND DEVELOPMENT

 SECTION 76.      Organizational Structure and Staffing Pattern. — Every local government unit shall design and implement its own organizational structure and staffing pattern taking into consideration its service requirements and financial capability, subject to the minimum standards and guidelines prescribed by the Civil Service Commission.

 SECTION 77.      Responsibility for Human Resources and Development. — The chief executive of every local government unit shall be responsible for human resources and development in his unit and shall take all personnel actions in accordance with the Constitutional provisions on civil service, pertinent laws, and rules and regulations thereon, including such policies, guidelines and standards as the Civil Service Commission may establish: Provided, That the local chief executive may employ emergency or casual employees or laborers paid on a daily wage or piecework basis and hired through job orders for local projects authorized by the sanggunian concerned, without need of approval or attestation by the Civil Service Commission: Provided, further, That the period of employment of emergency or casual laborers as provided in this Section shall not exceed six (6) months.  

The Joint Commission on Local Government Personnel Administration organized pursuant to Presidential Decree Numbered Eleven Hundred thirty-six (P.D. No. 1136) is hereby abolished and its personnel, records, equipment and other assets transferred to the appropriate office in the Civil Service Commission.

 SECTION 78.      Civil Service Law, Rules and Regulations, and Other Related Issuances. — All matters pertinent to human resources and development in local government units shall be governed by the civil service law and such rules and regulations and other issuances promulgated pursuant thereto, unless otherwise specified in this Code.

 SECTION 79.      Limitation to Appointments. — No person shall be appointed in the career service of the local government if he is related within the fourth civil degree of consanguinity or affinity to the appointing or recommending authority.  

SECTION 80.      Public Notice of Vacancy; Personnel Selection Board. — (a) Whenever a local executive decides to fill a vacant career position, there shall be posted notices of the vacancy in at least three (3) conspicuous public places in the local government unit concerned for a period of not less than fifteen (15) days.

 (b)        There shall be established in every province, city or municipality a personnel selection board to assist the local chief executive in the judicious and objective selection or personnel for employment as well as for promotion, and in the formulation of such policies as would contribute to employee welfare.

 (c)        The personnel selection board shall be headed by the local chief executive, and its members shall be determined by resolution of the sanggunian concerned. A representative of the Civil Service Commission, if any, and the personnel officer of the local government unit concerned shall be ex officio members of the board.

 SECTION 81.      Compensation of Local Officials and Employees. — The compensation of local officials and personnel shall be determined by the sanggunian concerned: Provided, That the increase in compensation of elective local officials shall take effect only after the terms of office of those approving such increase shall have expired: Provided, further, That the increase in compensation of the appointive officials and employees shall take effect as provided in the ordinance authorizing such increase: Provided, however, That said increases shall not exceed the limitations on budgetary allocations for personal services provided under Title Five, Book II of this Code: Provided, finally, That such compensation may be based upon the pertinent provisions of Republic Act Numbered Sixty-seven fifty-eight (R.A. No 6758), otherwise known as the “Compensation and Position Classification Act of 1989”.  

The punong barangay, the sangguniang barangay member, the sangguniang kabataan chairman, the barangay treasurer, and the barangay secretary shall be entitled to such compensation, allowances, emoluments, and such other privileges as provided under Title One Book III of this Code.

 Elective local officials shall be entitled to the same leave privileges as those enjoyed by appointive local officials, including the cumulation and commutation thereof.

 SECTION 82.      Resignation of Elective Local Officials. — (a) Resignations by elective local officials shall be deemed effective only upon acceptance by the following authorities:

 (1)        The President, in the case of governors, vice-governors, and mayors and vice-mayors of highly urbanized cities and independent component cities;

 (2)        The governor, in the case of municipal mayors, municipal vice-mayors, city mayors and city vice-mayors of component cities;

 (3)        The sanggunian concerned, in the case of sanggunian members; and  

(4)        The city or municipal mayor, in the case of barangay officials.

 (b)        Copies of the resignation letters of elective local officials, together with the action taken by the aforesaid authorities, shall be furnished the Department of the Interior and Local Government.  

(c)        The resignation shall be deemed accepted if not acted upon by the authority concerned within fifteen (15) days from receipt thereof.

 (d)        Irrevocable resignations by sanggunian members shall be deemed accepted upon presentation before an open session of the sanggunian concerned and duly entered in its records: Provided, however, That this subsection does not apply to sanggunian members who are subject to recall elections or to cases where existing laws prescribed the manner of acting upon such resignations.

 SECTION 83.      Grievance Procedure. — In every local government unit, the local chief executive shall establish a procedure to inquire into, act upon, resolve or settle complaints and grievances presented by local government employees.

 SECTION 84.      Administrative Discipline. — Investigation and adjudication of administrative complaints against appointive local officials and employees as well as their suspension and removal shall be in accordance with the civil service law and rules and other pertinent laws. The results of such administrative investigations shall be reported to the Civil Service Commission.

 SECTION 85.      Preventive Suspension of Appointive Local Officials and Employees. — (a) The local chief executives may preventively suspend for a period not exceeding sixty (60) days and subordinate official or employee under his authority pending investigation if the charge against such official or employee involves dishonesty, oppression or grave misconduct or neglect in the performance of duty, or if there is reason to believe that the respondent is guilty of the charges which would warrant his removal from the service.

 (b)        Upon expiration of the preventive suspension, the suspended official or employee shall be automatically reinstated in office without prejudice to the continuation of the administrative proceedings against him until its termination. If the delay in the proceedings of the case is due to the fault, neglect or request of the respondent, the time of the delay shall not be counted in computing the period of suspension herein provided.

 SECTION 86.      Administrative Investigation. — In any local government unit, administrative investigation may be conducted by a person or a committee duly authorized by the local chief executive. Said person or committee shall conduct hearings on the cases brought against appointive local officials and employees and submit their findings and recommendations to the local chief executive concerned within fifteen (15) days from the conclusion of the hearings. The administrative cases herein mentioned shall be decided within ninety (90) days from the time the respondent is formally notified of the charges.

 SECTION 87.      Disciplinary Jurisdiction. — Except as otherwise provided by law, the local chief executive may impose the penalty of removal from service, demotion in rank, suspension for not more than one (1) year without pay, fine in an amount not exceeding six (6) months salary, or reprimand and otherwise discipline subordinate officials and employees under his jurisdiction. If the penalty imposed is suspension without pay for not more than thirty (30) days, his decision shall be final. If the penalty imposed is heavier than suspension of thirty (30) days, the decision shall be appealable to the Civil Service Commission, which shall decide the appeal within thirty (30) days from receipt thereof.

 SECTION 88.      Execution Pending Appeal. — An appeal shall not prevent the execution of a decision of removal or suspension of a respondent-appellant. In case the respondent-appellant is exonerated, he shall be reinstated to his position with all the rights and privileges appurtenant thereto from the time he had been deprived thereof.

 SECTION 89.      Prohibited Business and Pecuniary Interest. — (a) It shall be unlawful for any local government official or employee, directly or indirectly, to:

 (1)        Engage in any business transaction with the local government unit in which he is an official or employee or over which he has the power of supervision, or with any of its authorized boards, officials, agents, or attorneys, whereby money is to be paid, or property or any other thing of value is to be transferred, directly or indirectly, out of the resources of the local government unit to such person or firm;

 (2)        Hold such interests in any cockpit or other games licensed by a local government unit;

 (3)        Purchase any real estate or other property forfeited in favor of such local government unit for unpaid taxes or assessment, or by virtue of a legal process at the instance of the said local government unit;

 (4)        Be a surety for any person contracting or doing business with the local government unit for which a surety is required; and

 (5)        Possess or use any public property of the local government unit for private purposes.

 (b)        All other prohibitions governing the conduct of national public officers relating to prohibited business and pecuniary interest so provided for under Republic Act Numbered Sixty-seven thirteen (R.A. No. 6713) otherwise known as the “Code of Conduct and Ethical Standards for Public Officials and Employees” and other laws shall also be applicable to local government officials and employees.  

SECTION 90.      Practice of Profession. — (a) All governors, city and municipal mayors are prohibited from practicing their profession or engaging in any occupation other than the exercise of their functions as local chief executives.

 (b)        Sanggunian members may practice their professions, engage in any occupation, or teach in schools except during session hours: Provided, That sanggunian members who are also members of the Bar shall not:

 (1)        Appear as counsel before any court in any civil case wherein a local government unit or any office, agency, or instrumentality of the government is the adverse party;  

(2)        Appear as counsel in any criminal case wherein an officer or employee of the national or local government is accused of an offense committed in relation to his office.

 (3)        Collect any fee for their appearance in administrative proceedings involving the local government unit of which he is an official; and

 (4)        Use property and personnel of the government except when the sanggunian member concerned is defending the interest of the government.

 (c)        Doctors of medicine may practice their profession even during official hours of work only on occasions of emergency: Provided, That the officials concerned do not derive monetary compensation therefrom.

 SECTION 91.      Statement of Assets and Liabilities. — (a) Officials and employees of local government units shall file sworn statements of assets, liabilities and net worth, lists of relatives within the fourth civil degree of consanguinity or affinity in government service, financial and business interests, and personnel data sheets as required by law.  

SECTION 92.      Oath of Office. — (a) All elective and appointive local officials and employees shall, upon assumption to office, subscribe to an oath or affirmation of office in the prescribed form. The oath or affirmation of office shall be filed with the office of the local chief executive concerned. A copy of the oath or affirmation of office of all elective and appointive local officials and employees shall be preserved in the individual personal records file under the custody of the personnel office, division, or section of the local government unit concerned.  

SECTION 93.      Partisan Political Activity. — No local official or employee in the career civil service shall engage directly or indirectly in any partisan political activity or take part in any election, initiative, referendum, plebiscite, or recall, except to vote, nor shall he use his official authority or influence to cause the performance of any political activity by any person or body. He may, however, express his views on current issues, or mention the names of certain candidates for public office whom he supports. Elective local officials may take part in partisan political and electoral activities, but it shall be unlawful for them to solicit contributions from their subordinates or subject these subordinates to any of the prohibited acts under the Omnibus Election Code.  

SECTION 94.      Appointment of Elective and Appointive Local Officials; Candidates Who Lost in an Election. — (a) No elective or appointive local official shall be eligible for appointment or designation in any capacity to any public office or position during his tenure.  

Unless otherwise allowed by law or by the primary functions of his position, no elective or appointive local official shall hold any other office or employment in the government or any subdivision, agency or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries.

 SECTION 95.      Additional or Double Compensation. — No elective or appointive local official or employee shall receive additional, double, or indirect compensation, unless specifically authorized by law, nor accept without the consent of Congress, any present, emoluments, office, or title of any kind from any foreign government. Pensions or gratuities shall not be considered as additional, double, or indirect compensation.

 SECTION 96.      Permission to Leave Station. — (a) Provincial, city, municipal, and barangay appointive officials going on official travel shall apply and secure written permission from their respective local chief executives before departure. The application shall specify the reasons for such travel, and the permission shall be given or withheld based on considerations of public interest, financial capability of the local government unit concerned and urgency of the travel.

 Should the local chief executive concerned fall to act upon such application within four (4) working days from receipt thereof, it shall be deemed approved.

 (b)        Mayors of component cities and municipalities shall secure the permission of the governor concerned for any travel outside the province.

 (c)        Local government officials traveling abroad shall notify their respective sanggunian: Provided, That when the period of travel extends to more than three (3) months, during periods of emergency or crisis or when the travel involves the use of public funds, permission from the Office of the President shall be secured.

 (d)        Field officers of national agencies or offices assigned in provinces, cities, and municipalities shall not leave their official stations without giving prior written notice to the local chief executive concerned. Such notice shall state the duration of travel and the name of the officer whom he shall designate to act for and in his behalf during his absence.  

SECTION 97.      Annual Report. — On or before March 31 of each year, every local chief executive shall submit an annual report to the sanggunian concerned on the socio-economic, political and peace and order conditions, and other matters concerning the local government unit, which shall cover the immediately preceding calendar year. A copy of the report shall be forwarded to the Department of the Interior and Local Government. Component cities and municipalities shall likewise provide the sangguniang panlalawigan copies of their respective annual reports.  

TITLE FOUR. — LOCAL SCHOOL BOARDS 

SECTION 98.      Creation, Composition, and Compensation. — (a) There shall be established in every province, city, or municipality a provincial, city, or municipal school board, respectively.

 (b)        The composition of local school boards shall be as follows:  

(1)        The provincial school board shall be composed of the governor and the division superintendent of schools as co-chairman; the chairman of the education committee of the sangguniang panlalawigan, the provincial treasurer, the representative of the “pederasyon ng mga sangguniang kabataan” in the sangguniang panlalawigan, the duly elected president of the provincial federation of parents-teachers associations, the duly elected representative of the teachers' organizations in the province, and the duly elected representative of the non-academic personnel of public schools in the province, as members;  

(2)        The city school board shall be composed of the city mayor and the city superintendent of schools as co-chairmen; the chairman of the education committee of the sangguniang panlungsod, the city treasurer, the representative of the “pederasyon ng mga sangguniang kabataan” in the sangguniang panlungsod, the duly elected president of the city federation of parents- teachers associations, the duly elected representative of the teachers' organizations in the city, and the duly elected representative of the non-academic personnel of public schools in the city, as members; and

 (3)        The municipal school board shall be composed of the municipal mayor and the district supervisor of schools as co-chairmen; the chairman of the education committee of the sangguniang bayan, the municipal treasurer, the representative of the “pederasyon ng mga sangguniang kabataan” in the sangguniang bayan, the duly elected president of the municipal federation of parent-teacher associations, the duly elected representative of the teachers' organizations in the municipality, and the duly elected representative of the non-academic personnel of public schools in the municipality, as members.

 (c)        In the event that a province or city has two (2) or more school superintendents, and in the event that a municipality has two (2) or more district supervisors, the co-chairman of the local school board shall be determined as follows:  

(1)        The Department of Education, Culture and Sports shall designate the co-chairman for the provincial and city school boards; and

 (2)        The division superintendent of schools shall designate the district supervisor who shall serve as co-chairman of the municipal school board.

 (d)        The performance of the duties and responsibilities of the abovementioned officials in their respective local school boards shall not be delegated.

 SECTION 99.      Functions of Local School Boards. — The provincial, city or municipal school board shall:  

(a)        Determine, in accordance with the criteria set by the Department of Education, Culture and Sports, the annual supplementary budgetary needs for the operation and maintenance of public schools within the province, city, or municipality, as the case may be, and the supplementary local cost of meeting such as needs, which shall be reflected in the form of an annual school board budget corresponding to its share of the proceeds of the special levy on real property constituting the Special Education Fund and such other sources of revenue as this Code and other laws or ordinances may provide;

 (b)        Authorize the provincial, city or municipal treasurer, as the case may be, to disburse funds from the Special Education Fund pursuant to the budget prepared and in accordance with existing rules and regulations;  

(c)        Serve as an advisory committee to the sanggunian concerned on educational matters such as, but not limited to, the necessity for and the uses of local appropriations for educational purposes; and  

(d)        Recommend changes in the names of public schools within the territorial jurisdiction of the local government unit for enactment by the sanggunian concerned.

 The Department of Education, Culture and Sports shall consult the local school board on the appointment of division superintendents, district supervisors, school principals, and other school officials.

 SECTION 100.    Meetings and Quorum; Budget. — (a) The local school board shall meet at least once a month or as often as may be necessary.

 (b)        Any of the co-chairmen may call a meeting. A majority of all its members shall constitute a quorum. However, when both co-chairmen are present in a meeting, the local chief executive concerned, as a matter of protocol, shall be given preference to preside over the meeting. The division superintendent, city superintendent or district supervisor, as the case may be, shall prepare the budget of the school board concerned. Such budget shall be supported by programs, projects, and activities of the school board for the ensuing fiscal year. The affirmative vote of the majority of all the members shall be necessary to approve the budget.

(c)        The annual school board budget shall give priority to the following:  

(1)        Construction, repair, and maintenance of school buildings and other facilities of public elementary and secondary schools;  

(2)        Establishment and maintenance of extension classes where necessary; and

 (3)        Sports activities at the division, district, municipal, and barangay levels.  

SECTION 101.    Compensation and Remuneration. — The co-chairmen and members of the provincial, city or municipal school board shall perform their duties as such without compensation or remuneration. Members thereof who are not government officials or employees shall be entitled to necessary traveling expenses and allowances chargeable against the funds of the local school board concerned, subject to existing accounting and auditing rules and regulations.  

TITLE FIVE. — LOCAL HEALTH BOARDS 

SECTION 102.    Creation and Composition. — (a) There shall be established a local health board in every province, city, or municipality. The composition of the local health boards shall be as follows:  

(1)        The provincial health board shall be headed by the governor as chairman, the provincial health officer as vice-chairman, and the chairman of the committee on health of the sangguniang panlalawigan, a representative from the private sector or non-governmental organizations involved in health services, and a representative of the Department of Health in the province, as members;  

(2)        The city health board shall be headed by the city mayor as chairman, the city health officer as vice-chairman, and the chairman of the committee on health of the sangguniang panlungsod, a representative from the private sector or non-governmental organizations involved in health services, and a representative of the Department of Health in the city, as members; and  

(3)        The municipal health board shall be headed by the municipal mayor as chairman, the municipal health officer as vice-chairman, and the chairman of the committee on health of the sangguniang bayan, a representative from the private sector or non-governmental organizations involved in health services, and a representative of the Department of Health in the municipality, as members.

 (b)        The functions of the local health board shall be:

 (1)        To propose to the sanggunian concerned, in accordance with standards and criteria set by the Department of Health, annual budgetary allocations for the operation and maintenance of health facilities and services within the municipality, city or province, as the case may be;  

(2)        To serve as an advisory committee to the sanggunian concerned on health matters such as, but not limited to, the necessity for, and application of local appropriations for public health purposes; and

(3)        Consistent with the technical and administrative standards of the Department of Health, create committees which shall advise local health agencies on matters such as, but not limited to, personnel selection and promotion, bids and awards, grievance and complaints, personnel discipline, budget review, operations review and similar functions.  

SECTION 103.    Meetings and Quorum. — (a) The board shall meet at least once a month or as may be necessary.  

(b)        A majority of the members of the board shall constitute a quorum, but the chairman or the vice- chairman must be present during meetings where budgetary proposals are being prepared or considered. The affirmative vote of all the majority of the members shall be necessary to approve such proposals.

SECTION 104.    Compensation and Remuneration. — The chairman, vice-chairman, and members of the provincial, city or municipal health board shall perform their duties as such without compensation or remuneration. Members thereof who are not government officials or employees shall be entitled to necessary traveling expenses and allowances chargeable against the funds of the local health board concerned, subject to existing accounting and auditing rules and regulations.  

SECTION 105.    Direct National Supervision and Control by the Secretary of Health. — In cases of epidemics, pestilence, and other widespread public health dangers, the Secretary of Health may, upon the direction of the President and in consultation with the local government unit concerned, temporarily assume direct supervision and control over health operations in any local government unit for the duration of the emergency, but in no case exceeding a cumulative period of six (6) months. With the concurrence of the government unit concerned, the period for such direct national control and supervision may be further extended.  

TITLE SIX. — LOCAL DEVELOPMENT COUNCILS

 SECTION 106.    Local Development Councils. — (a) Each local government unit shall have a comprehensive multi-sectoral development plan to be initiated by its development council and approved by its sanggunian. For this purpose, the development council at the provincial, city, municipal, or barangay level, shall assist the corresponding sanggunian in setting the direction of economic and social development, and coordinating development efforts within its territorial jurisdiction.  

SECTION 107.    Composition of Local Development Councils. — The composition of the local development council shall be as follows: 

(1)        Members of the sangguniang barangay;  

(2)        Representatives of non-governmental organizations operating in the barangay who shall constitute not less than one fourth (1/4) of the members of the fully organized council;  

(3)        A representative of the congressman.

 (b)        The city or municipal development council shall be headed by the mayor and shall be composed of the following members:  

(1)        All punong barangays in the city or municipality;  

(2)        The chairman of the committee on appropriations of the sangguniang panlungsod or sangguniang bayan concerned;  

(3)        The congressman or his representative; and  

(4)        Representatives of non-governmental organizations operating in the city or municipality, as the case may be, who shall constitute not less than one-fourth (1/4) of the members of the fully organized council.  

(c)        The provincial development council shall be headed by the governor and shall be composed of the following members:  

(1)        All mayors of component cities and municipalities;  

(2)        The chairman of the committee on appropriations of the sangguniang panlalawigan;  

(3)        The congressman or his representative; and  

(4)        Representatives of non-governmental organizations operating in the province, who shall constitute not less than one-fourth (1/4) of the members of the fully organized council.  

(d)        The local development councils may call upon any local official concerned or any official of national agencies or offices in the local government unit to assist in the formulation of their respective development plans and public investment programs.  

SECTION 108.    Representation of Non-governmental Organizations. — Within a period of sixty (60) days from the start of organization of local development councils, the non-governmental organizations shall choose from among themselves their representatives to said councils. The local sanggunian concerned shall accredit non-governmental organizations subject to such criteria as may be provided by law.  

SECTION 109.    Functions of Local Development Councils. — (a) The provincial, city, and municipal development councils shall exercise the following functions:

 (1)        Formulate long-term, medium-term, and annual socio-economic development plans and policies;  

(2)        Formulate the medium-term and annual public investment programs;  

(3)        Appraise and prioritize socio-economic development programs and projects;  

(4)        Formulate local investment incentives to promote the inflow and direction of private investment capital;  

(5)        Coordinate, monitor, and evaluate the implementation of development programs and projects; and  

(6)        Perform such other functions as may be provided by law or component authority.  

(b)        The barangay development council shall exercise the following functions:  

(1)        Mobilize people's participation in local development efforts;  

(2)        Prepare barangay development plans based on local requirements;  

(3)        Monitor and evaluate the implementation of national or local programs and projects; and  

(4)        Perform such other functions as may be provided by law or competent authority.  

SECTION 110.    Meetings and Quorum. — The local development council shall meet at least once every six (6) months or as often as may be necessary.

 SECTION 111.    Executive Committee. — The local development council shall create an executive committee to represent it and act in its behalf when it is not in session. The composition of the executive committee shall be as follows:  

(1)        The executive committee of the provincial development council shall be composed of the governor as chairman, the representative of component city and municipal mayors to be chosen from among themselves, the chairman of the committee on appropriations of the sangguniang panlalawigan, the president of the provincial league of barangays, and a representative of non-governmental organizations that are represented in the council, as members;

 (2)        The executive committee of the city or municipal development council shall be composed of the mayor as chairman, the chairman of the committee on appropriations of the sangguniang panlalawigan, the president of the city or municipal league of barangays, and a representative of non-governmental organizations that are represented in the council, as members; and  

(3)        The executive committee of the barangay development council shall be composed of the punong barangay as chairman, a representative of the sangguniang barangay to be chosen from among its members, and a representative of non-governmental organizations that are represented in the council, as members.  

(b)        The executive committee shall exercise the following powers and functions:  

(1)        Ensure that the decision of the council are faithfully carried out and implemented;  

(2)        Act on matters requiring immediate attention or action by the council;  

(3)        Formulate policies, plans, and programs based on the general principles laid down by the council; and  

(4)        Act on other matters that may be authorized by the council.  

SECTION 112.    Sectoral or Functional Committees. — The local development councils may form sectoral or functional committees to assist them in the performance of their functions.  

SECTION 113.    Secretariat. — There is hereby constituted for each local development council a secretariat which shall be responsible for providing technical support, documentation of proceedings, preparation of reports and such other assistance as may be required in the discharge of its functions. The local development council may avail of the services of any non-governmental organization or educational or research institution for this purpose.  

The secretariats of the provincial, city, and municipal development councils shall be headed by their respective planning and development coordinators. The secretariat of the barangay development council shall be headed by the barangay secretary who shall be assisted by the city or municipal planning and development coordinator concerned.  

SECTION 114.    Relation of Local Development Councils to the Sanggunian and the Regional Development Council. — (a) The policies, programs, and projects proposed by local development councils shall be submitted to the sanggunian concerned for appropriate action.  

(b)        The approved development plans of provinces, highly-urbanized cities, and independent component cities shall be submitted to the regional development council, which shall be integrated into the regional development plan for submission to the National Economic and Development Authority, in accordance with existing laws.  

SECTION 115.    Budget Information. — The Department of Budget and Management shall furnish the various local development councils information on financial resources and budgetary allocations applicable to their respective jurisdictions to guide them in their planning functions. 

TITLE SEVEN. — LOCAL PEACE AND ORDER COUNCIL 

SECTION 116.    Organization. — There is hereby established in every province, city and municipality a local peace and order council, pursuant to Executive Order Numbered Three hundred nine (E.O. No. 309), as amended, Series of 1988. The local peace and order councils shall have the same composition and functions as those prescribed by said executive order.  

TITLE EIGHT. — AUTONOMOUS SPECIAL ECONOMIC ZONES 

SECTION 117.    Establishment of Autonomous Special Economic Zones. — The establishment by law of autonomous special economic zones in selected areas of the country shall be subject to concurrence by the local government units included therein.  

TITLE NINE. — OTHER PROVISIONS APPLICABLE

TO LOCAL GOVERNMENT UNITS 

CHAPTER 1. — Settlement of Boundary Disputes 

SECTION 118.    Jurisdictional Responsibility for Settlement of Boundary Dispute. — Boundary disputes between and among local government units shall, as much as possible, be settled amicably. To this end:

 (a)        Boundary disputes involving two (2) or more barangays in the same city or municipality shall be referred for settlement to the sangguniang panlungsod or sangguniang bayan concerned.

 (b)        Boundary disputes involving two (2) or more municipalities within the same province shall be referred for settlement to the sangguniang panlalawigan concerned.

 (c)        Boundary disputes involving municipalities or component cities of different provinces shall be jointly referred for settlement to the sanggunians of the province concerned.  

(d)        Boundary disputes involving a component city or municipality on the one hand and a highly urbanized city on the other, or two (2) or more highly urbanized cities, shall be jointly referred for settlement to the respective sanggunians of the parties.  

(e)        In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the dispute was referred thereto, it shall issue a certification to that effect. Thereafter, the dispute shall be formally tried by the sanggunian concerned which shall decide the issue within sixty (60) days from the date of the certification referred to above.  

SECTION 119.    Appeal. — Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the area in dispute. The Regional Trial Court shall decide the appeal within one (1) year from the filing thereof. Pending final resolution of the disputed area prior to the dispute shall be maintained and continued for all legal purposes.  

CHAPTER 2. — Local Initiative and Referendum 

SECTION 120.    Local Initiative Defined. — Local initiative is the legal process whereby the registered voters of a local government unit may directly propose, enact, or amend any ordinance.

SECTION 121.    Who May Exercise. — The power of local initiative and referendum may be exercised by all registered voters of the provinces, cities, municipalities, and barangays.

 SECTION 122.    Procedure in Local Initiative. — (a) Not less than one thousand (1,000) registered voters in case of provinces and cities, one hundred (100) in case of municipalities, and fifty (50) in case of barangays, may file a petition with the sanggunian concerned proposing the adoption, enactment, repeal, or amendment of an ordinance.  

(b)        If no favorable action thereon is taken by the sanggunian concerned within thirty (30) days from its presentation, the proponents, through their duly authorized and registered representatives, may invoke their power of initiative, giving notice thereof to the sanggunian concerned.  

(c)        The proposition shall be numbered serially starting from Roman numeral I. The Comelec or its designated representative shall extend assistance in the formulation of the proposition.  

(d)        Two (2) or more propositions may be submitted in an initiative.  

(e)        Proponents shall have ninety (90) days in case of provinces and cities, sixty (60) days in case of municipalities, and thirty (30) days in case of barangays, from notice mentioned in subsection (b) hereof to collect the required number of signatures.

(f)         The petition shall be signed before the election registrar. or his designated representatives, in the presence of a representative of the proponent, and a representative of the sanggunian concerned in a public place in the local government unit, as the case may be. Stations for collecting signatures may be established in as many places as may be warranted.

 (g)        Upon the lapse of the period herein provided, the Comelec, through its office in the local government unit concerned, shall certify as to whether or not the required number of signatures has been obtained. Failure to obtain the required number defeats the proposition.  

(h)        If the required number of signatures is obtained, the Comelec shall then set a date for the initiative during which the proposition shall be submitted to the registered voters in the local government unit concerned for their approval within sixty (60) days from the date of certification by the Comelec, as provided in subsection (g) hereof, in case of provinces and cities, forty-five (45) days in case of municipalities, and thirty (30) days in case of barangays. The initiative shall then be held on the date set, after which the results thereof shall be certified and proclaimed by the Comelec.

 SECTION 123.    Effectivity of Local Propositions. — If the proposition is approved by a majority of the votes cast, it shall take effect fifteen (15) days after certification by the Comelec as if affirmative action thereon had been made by the sanggunian and local chief executive concerned. If it fails to obtain said number of votes, the proposition is considered defeated.  

SECTION 124.    Limitations on Local Initiative. — (a) The power of local initiative shall not be exercised more than once a year.  

(b)        Initiative shall extend only to subjects or matters which are within the legal powers of the sanggunian to enact.  

(c)        If at any time before the initiative is held, the sanggunian concerned adopts in toto the proposition presented and the local chief executive approves the same, the initiative shall be cancelled. However, those against such action may, if they so desire, apply for initiative in the manner herein provided.  

SECTION 125.    Limitations upon Sanggunians. — Any proposition or ordinance approved through the system of initiative and referendum as herein provided shall not be repealed, modified or amended by the sanggunian concerned within six (6) months from the date of the approval thereof, and may be amended, modified or repealed by the sanggunian within three (3) years thereafter by a vote of three-fourths (3/4) of all its members: Provided, That in case of barangays, the period shall be eighteen (18) months after the approval thereof.  

SECTION 126.    Local Referendum Defined. — Local referendum is the legal process whereby the registered voters of the local government units may approve, amend or reject any ordinance enacted by the sanggunian.  

The local referendum shall be held under the control and direction of the Comelec within sixty (60) days in case of provinces and cities, forty-five (45) days in case of municipalities and thirty (30) days in case of barangays.  

The Comelec shall certify and proclaim the results of the said referendum.  

SECTION 127.    Authority of Courts. — Nothing in this Chapter shall prevent or preclude the proper courts from declaring null and void any proposition approved pursuant to this Chapter for violation of the Constitution or want of capacity of the sanggunian concerned to enact the said measure.  

BOOK II

LOCAL TAXATION AND FISCAL MATTERS

TITLE ONE. — LOCAL GOVERNMENT TAXATION

CHAPTER 1 — GENERAL PROVISIONS 

SECTION 128.    Scope. — The provisions herein shall govern the exercise by provinces, cities, municipalities, and barangays of their taxing and other revenue-raising powers.  

SECTION 129.    Power to Create Sources of Revenue. — Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units.  

SECTION 130.    Fundamental Principles. — The following fundamental principles shall govern the exercise of the taxing and other revenue-raising powers of local government units:

 (a)        Taxation shall be uniform in each local government unit;  

(b)        Taxes, fees, charges and other impositions shall:  

(1)        be equitable and based as far as practicable on the taxpayer's ability to pay;  

(2)        be levied and collected only for public purposes;  

(3)        not be unjust, excessive, oppressive, or confiscatory;  

(4)        not be contrary to law, public policy, national economic policy, or in the restraint of trade;  

(c)        The collection of local taxes, fees, charges and other impositions shall in no case be let to any private person;

 (d)        The revenue collected pursuant to the provisions of this Code shall inure solely to the benefit of, and be subject to the disposition by, the local government unit levying the tax, fee, charge or other imposition unless otherwise specifically provided herein; and,  

(e)        Each local government unit shall, as far as practicable, evolve a progressive system of taxation.  

SECTION 131.    Definition of Terms. — When used in this Title, the term:  

(a)        “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.

The phrase “whether in their original form or not” refers to the transformation of said products by the farmer, fisherman, producer or owner through the application of processes to preserve or otherwise to prepare said products for market such as freezing, drying, salting, smoking, or stripping for purposes of preserving or otherwise preparing said products for market;  

(b)        “Amusement” is a pleasurable diversion and entertainment. It is synonymous to relaxation, avocation, pastime, or fun;  

(c)        “Amusement Places” include theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or viewing the show or performances;  

(d)        “Business” means trade or commercial activity regularly engaged in as a means of livelihood or with a view to profit;  

(e)        “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 laws, or rules and regulations thereunder;  

(f)         “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;  

(g)        “Charges” refers to pecuniary liability, as rents or fees against persons or property;  

(h)        “Contractor” includes persons, natural or juridical, not subject to professional tax under Section 139 of this Code, 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 such contractor or his employees.  

As used in this Section, the term “contractor” shall include general engineering, general building and specialty contractors as defined under applicable laws; filling, demolition and salvage works contractors; proprietors or operators of mine drilling apparatus; proprietors or operators of dockyards; persons engaged in the installation of water system, and gas or electric light, heat, or power; proprietors or operators of smelting plants, engraving, plating, and plastic lamination establishments; proprietors or operators of establishments for repairing, repainting, upholstering, washing or greasing of vehicles, heavy equipment, vulcanizing, recapping and battery charging; proprietors or operators of furniture shops and establishments for planing or surfacing and recutting of lumber, and sawmills under contract to saw or cut logs belonging to others; proprietors or operators of dry cleaning or dyeing establishments, steam laundries, and laundries using washing machines; 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; proprietors or operators of establishments or lots for parking purposes; proprietors or operators of tailor shops, dress shops, milliners and hatters, beauty parlors, barbershops, massage clinics, sauna, Turkish and Swedish baths, slenderizing and building saloons and similar establishments; photographic studios; funeral parlors; proprietors or operators of hotels, motels, and lodging houses; proprietors or operators of armature and stevedoring, warehousing, or forwarding establishments; master plumbers, smiths, and house or sign painters; printers, bookbinders, lithographers; 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 and advertisements; business agents, private detective or watchman agencies, commercial and immigration brokers, and cinematographic film owners, lessors and distributors.  

(i)         “Corporation” includes partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuestas en participacion), associations or insurance companies but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal, and other energy operations pursuant to an operating or consortium agreement under a service contract with the government. General professional partnership 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.  

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;  

(j)         “Countryside and Barangay Business Enterprise” refers to any business entity, association, or cooperative registered under the provisions of Republic Act Numbered Sixty-eight hundred ten (R.A. No. 6810), otherwise known as “Magna Carta For Countryside And Barangay Business Enterprises (Kalakalan 20)”;

 (k)        “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;  

(l)         “Fee” means a charge fixed by law or ordinance for the regulation or inspection of a business or activity;  

(m)       “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;  

(n)        “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 deposits or advance payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person excluding discounts if determinable at the time of sales, sales return, excise tax, and value-added tax (VAT);  

(o)        “Manufacturer” includes 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 have been put in its original condition, 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, 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 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;  

(p)        “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;  

(q)        “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, fork-lifts, 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;  

(r)        “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 their respective municipalities;  

(s)        “Operator” includes the owner, manager, administrator, or any other person who operates or is responsible for the operation of a business establishment or undertaking;  

(t)         “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 this Title;  

(u)        “Persons” means every natural or juridical being, susceptible of rights and obligations or of being the subject of legal relations;  

(v)        “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;  

(w)       “Retail” means a sale where the purchaser buys the commodity for his own consumption, irrespective of the quantity of the commodity sold;  

(x)        “Vessel” includes every type of boat, craft, or other artificial contrivance used, or capable of being used, as a means of transportation on water;  

(y)        “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; and  

(z)        “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.  

SECTION 132.    Local Taxing Authority. — The power to impose a tax, fee, or charge or to generate revenue under this Code shall be exercised by the sanggunian of the local government unit concerned through an appropriate ordinance.  

SECTION 133.    Common Limitations on the Taxing Powers of Local Government Units. — Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:  

(a)        Income tax, except when levied on banks and other financial institutions;  

(b)        Documentary stamp tax;

 (c)        Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided herein;  

(d)        Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs fees, charges and dues except wharfage on wharves constructed and maintained by the local government unit concerned;

 (e)        Taxes, fees, and charges and other impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees, or charges in any form whatsoever upon such goods or merchandise;

(f)         Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen;  

(g)        Taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively from the date of registration;  

(h)        Excise taxes on articles enumerated under the national Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products;

 (i)         Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided herein;

 (j)         Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in this Code;

 (k)        Taxes on premiums paid by way or reinsurance or retrocession;  

(l)         Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles;  

(m)       Taxes, fees, or other charges on Philippine products actually exported, except as otherwise provided herein; 

(n)        Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and cooperatives duly registered under R.A. No. 6810 and Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938) otherwise known as the “Cooperative Code of the Philippines” respectively; and  

(o)        Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units.  

CHAPTER 2 — SPECIFIC PROVISIONS ON THE TAXING AND OTHER

REVENUE-RAISING POWERS OF LOCAL GOVERNMENT UNITS

ARTICLE I

Provinces 

SECTION 134.    Scope of Taxing Powers. — Except as otherwise provided in this Code, the province may levy only the taxes, fees, and charges as provided in this Article.  

SECTION 135.    Tax on Transfer of Real Property Ownership. (a) The province may impose a tax on the sale , donation, barter, or on any other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of the one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher. The sale, transfer or other disposition of real property pursuant to R.A. No. 6657 shall be exempt from this tax.  

(b)        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 cancelling an old tax declaration and issuing a new one in place thereof, Notaries public shall furnish the provincial treasurer with a copy of any deed transferring ownership or title to any real property within thirty (30) days from the date of notarization.  

It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein imposed within sixty (60) days from the date of the execution of the deed or from the date of the decedent's death.

SECTION 136.    Tax on Business of Printing and Publication. — 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.  

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.  

The receipts from the printing and/or publishing of books or other reading materials prescribed by the Department of Education, Culture and Sports as school texts or references shall be exempt from the tax herein imposed.  

SECTION 137.    Franchise Tax. — Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction.  

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 thereon, as provided herein.  

SECTION 138.    Tax on Sand, Gravel and Other Quarry Resources. — The province may levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction.  

The permit to extract sand, gravel and other quarry resources shall be issued exclusively by the provincial governor, pursuant to the ordinance of the sangguniang panlalawigan.  

The proceeds of the tax on sand, gravel and other quarry resources shall be distributed as follows:  

(1)        Province — Thirty percent (30%);  

(2)        Component City or Municipality where the sand, gravel, and other quarry resources are extracted — Thirty percent (30%); and  

(3)        Barangay where the sand, gravel, and other quarry resources are extracted — Forty percent (40%).

 SECTION 139.    Professional Tax. — (a) The province may levy an annual professional tax on each person engaged in the exercise or practice of his profession requiring government examination at such amount and reasonable classification as the sangguniang panlalawigan may determine but shall in no case exceed Three hundred pesos (P300.00).

 (b)        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 national or local tax, license, or fee for the practice of such profession.  

(c)        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.  

(d)        The professional tax shall be payable annually, on or before the thirty-first (31st) day of January. Any person first beginning to practice a profession after the month of January must, however, pay the full tax before engaging therein. A line of profession does not become exempt even if conducted with some other profession for which the tax has been paid. Professionals exclusively employed in the government shall be exempt from the payment of this tax.

 (e)        Any person subject to the professional tax shall write in deeds, receipts, prescriptions, reports, books of account, plans and designs, surveys and maps, as the case may be, the number of the official receipt issued to him.  

SECTION 140.    Amusement Tax. — (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts from admission fees.  

(b)        In the case of theaters 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.  

(c)        The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and oratorical presentations, except pop, rock, or similar concerts shall be exempt from the payment of the tax hereon imposed.

 (d)        The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax. In case of fraud or failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interest and penalties as it may deem appropriate.  

(e)        The proceeds from the amusement tax shall be shared equally by the province and the municipality where such amusement places are located.  

SECTION 141.    Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain Products. — (a) The province may levy an annual fixed tax for every truck, van or any vehicle used by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other products as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers, whether directly or indirectly, within the province in an amount not exceeding Five hundred pesos (P500.00).  

(b)        The manufacturers, producers, wholesalers, dealers and retailers referred to in the immediately foregoing paragraph shall be exempt from the tax on peddlers prescribed elsewhere in this Code.  

ARTICLE II

Municipalities 

SECTION 142.    Scope of Taxing Powers. — Except as otherwise provided in this Code, municipalities may levy taxes, fees, and charges not otherwise levied by provinces.  

SECTION 143.    Tax on Business. — The municipality may impose taxes on the following businesses: (a) On 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, in accordance with the following schedule:  

With gross sales or receipts for the                              Amount of Tax

preceding calendar year in the amount of:                        Per Annum

       Less than 10,000.00                                                    165.00

P   10,000.00 or more but less than              15,000.00          220.00

     15,000.00 or more but less than              20,000.00          202.00

     20,000.00 or more but less than              30,000.00          440.00

     30,000.00 or more but less than              40,000.00          660.00

     40,000.00 or more but less than              50,000.00          825.00

     50,000.00 or more but less than              75,000.00       1,320.00

     75,000.00 or more but less than            100,000.00       1,650.00

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

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

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

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

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

   750,000.00 or more but less than         1,000,000.00     10,000.00

1,000,000.00 or more but less than          2,000,000.00     13,750.00

2,000,000.00 or more but less than          3,000,000.00     16,500.00

3,000,000.00 or more but less than          4,000,000.00     19,000.00

4,000,000.00 or more but less than          5,000,000.00     23,100.00

5,000,000.00 or more but less than          6,500,000.00     24,375.00

6,500,000.00 or more                         at a rate not exceeding

                                                  thirty-seven and a half percent

                                                  (37½%) of one percent (1%)

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

With gross sales or receipts for the                      Amount of Tax

preceding calendar year in the amount of:                        Per Annum

        Less than 1,000.00                                          18.00

P     1,000.00 or more but less than         P     2,000.00           33.00

       2,000.00 or more but less than                3,000.00           50.00

       3,000.00 or more but less than                4,000.00           72.00

       4,000.00 or more but less than                5,000.00         100.00

       5,000.00 or more but less than                6,000.00         121.00

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

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

       8,000.00 or more but less than              10,000.00         187.00

     10,000.00 or more but less than              15,000.00         220.00

     15,000.00 or more but less than              20,000.00         275.00

     20,000.00 or more but less than              30,000.00         330.00

     30,000.00 or more but less than              40,000.00         440.00

     40,000.00 or more but less than              50,000.00         660.00

     50,000.00 or more but less than              75,000.00          990.00

     75,000.00 or more but less than            100,000.00       1,320.00

   100,000.00 or more but less than            150,000.00       1,870.00

   150,000.00 or more but less than            200,000.00       2,420.00

   200,000.00 or more but less than            300,000.00       3,300.00

   300,000.00 or more but less than            500,000.00       4,400.00

   500,000.00 or more but less than            750,000.00       6,600.00

   750,000.00 or more but less than         1,000,000.00       8,800.00

1,000,000.00 or more but less than          2,000,000.00     10,000.00

2,000,000.00 or more                                                   at a rate not

                                                                                  exceeding

                                                                                fifty percent

                                                                              (50%) of one

                                                                               percent (1%).  

 (c)        On exporters, and on manufacturers , millers, producers, wholesalers, distributors, dealers or retailers of essential commodities enumerated hereunder at a rate not exceeding one-half (1/2) of the rates prescribed under subsection (a), (b) and (d) of 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.

 (d)        On retailers.  

With gross sales or receipts                    Rate of Tax

for the preceding calendar year of:            per annum

P400,000.00 or less                                      2%

more than P400,000.00                                  1%

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

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

With gross receipts for the

(f)         On banks and other financial institutions, at a rate not exceeding fifty percent (50%) of one percent (1%) on the gross receipts of the preceding calendar year derived from interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale of property, insurance premium.  

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

(h)        On any business, not otherwise specified in the preceding paragraphs, which the sanggunian concerned may deem proper to tax: Provided, That on any business subject to the excise, value-added or percentage tax under the National Internal Revenue Code, as amended, the rate of tax shall not exceed two percent (2%) of gross sales or receipts of the preceding calendar year.  

The sanggunian concerned may prescribe a schedule of graduated tax rates but in no case to exceed the rates prescribed herein.  

SECTION 144.    Rates of Tax within the Metropolitan Manila Area. — The municipalities within the Metropolitan Manila Area may levy taxes at rates which shall not exceed by fifty percent (50%) the maximum rates prescribed in the preceding Section.  

SECTION 145.    Retirement of Business. — A business subject to tax pursuant to the preceding sections shall, upon termination thereof, submit a sworn statement of its gross sales or receipts for the current year. If the tax paid during the year 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.  

SECTION 146.    Payment of Business Taxes. — (a) The taxes imposed under Section 143 shall be payable for every separate or distinct establishment or place where business subject to the tax is conducted and one line of business does not become exempt by being conducted with some other business for which such tax has been paid. The tax on a business must be paid by the person conducting the same.  

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

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

SECTION 147.    Fees and Charges. — The municipality may impose and collect such reasonable fees and charges on business and occupation and, except as reserved to the province in Section 139 of this Code, on the practice of any profession or calling, commensurate with the cost of regulation, inspection and licensing before any person may engage in such business or occupation, or practice such profession or calling.  

SECTION 148.    Fees for Sealing and Licensing of Weights and Measures. — (a) The municipality may levy fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan.  

(b)        The sangguniang bayan shall prescribe the necessary regulations for the use of such weights and measures, subject to such guidelines as shall be prescribed by the Department of Science and Technology. The sanggunian concerned shall, by appropriate ordinance, penalize fraudulent practices and unlawful possession or use of instruments of weights and measures and prescribe the criminal penalty therefor in accordance with the provisions of this Code. Provided, however, That the sanggunian concerned may authorize the municipal treasurer to settle an offense not involving the commission of fraud before a case therefor is filed in court, upon payment of a compromise penalty of not less than Two hundred pesos (P200.00).  

SECTION 149.    Fishery Rentals, Fees and Charges. — (a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rentals, fees or charges therefor in accordance with the provisions of this Section.  

(b)        The sangguniang bayan may:  

(1)        Grant fishery privileges to erect fish corrals, oysters, mussels or other aquatic beds or bangus fry areas, within a definite zone of the municipal waters, as determined by it: Provided, however, That duly registered organizations and cooperatives of marginal fishermen shall have the preferential right to such fishery privileges: Provided, further, That the sangguniang bayan may require a public bidding in conformity with and pursuant to an ordinance for the grant of such privileges: Provided, finally, That in the absence of such organizations and cooperatives or their failure to exercise their preferential right, other parties may participate in the public bidding in conformity with the above cited procedure.  

(2)        Grant the privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other species and fish from the municipal waters by nets, traps or other fishing gears to marginal fishermen free of any rental, fee, charge or any other imposition whatsoever.  

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

Provided, however, That the sanggunian 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 this Code: Provided, finally, That the sanggunian concerned shall have the authority to prosecute any violation of the provisions of applicable fishery laws.  

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

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

 (1)        Thirty percent (30%) of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located; and

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

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

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

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

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

(e)        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.  

ARTICLE III

Cities 

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

The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes.  

ARTICLE IV

Barangays 

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

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

(b)        Service Fees or Charges. — Barangays may collect reasonable fees or charges for services rendered in connection with the regulations or the use of barangay-owned properties or service facilities such as palay, copra, or tobacco dryers.  

(c)        Barangay Clearance. — No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted. For such clearance, the sangguniang barangay may impose a reasonable fee. The application for clearance shall be acted upon within seven (7) working days from the filing thereof. In the event that the clearance is not issued within the said period, the city or municipality may issue the said license or permit.  

(d)        Other fees and Charges. — The barangay may levy reasonable fees and charges:  

(1)        On commercial breeding of fighting cocks, cockfights and cockpits;  

(2)        On places of recreation which charge admission fees; and  

(3)        On billboards, signboards, neon signs, and outdoor advertisements.  

ARTICLE V

Common Revenue-Raising Powers 

SECTION 153.    Service Fees and Charges. — Local government units may impose and collect such reasonable fees and charges for services rendered.  

SECTION 154.    Pubic Utility Charges. — Local government units may fix the rates for the operation of public utilities owned, operated and maintained by them within their jurisdiction.  

SECTION 155.    Toll Fees or Charges. — The sanggunian concerned may prescribe the terms and conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier, or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local government unit concerned: Provided, That no such toll fees or charges shall be collected from 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.  

ARTICLE VI

Community Tax 

SECTION 156.    Community Tax. — Cities or municipalities may levy a community tax in accordance with the provisions of this Article.  

SECTION 157.    Individuals Liable to Community Tax. — Every inhabitant of the Philippines eighteen (18) years of age or over who has been regularly employed on a wage or salary basis for at least thirty (30) consecutive working days during any calendar year, or who is engaged in business or occupation, or who owns real property with an aggregate assessed value of One thousand pesos (P1,000.00) or more, or who is required by law to file an income tax return shall pay an annual additional tax of Five pesos (P5.00) and an annual additional tax of One peso (P1.00) for every One thousand pesos (P1,000.00) of income regardless of whether from business, exercise of profession or from property which in no case shall exceed Five thousand pesos (P5,000.00).  

In the case of husband and wife, the additional tax herein imposed shall be based upon the total property owned by them and the total gross receipts or earnings derived by them.  

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

(1)        For every Five thousand pesos (P5,000.00) worth of real property in the Philippines owned by it during the preceding year based on the valuation used for the payment of real property tax under existing laws, found in the assessment rolls of the city or municipality where the real property is situated — Two pesos (P2.00); and  

(2)        For every Five thousand pesos (P5,000.00) of gross receipts or earnings derived by it from its business in the Philippines during the preceding year — Two pesos (P2.00).  

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

SECTION 159.    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.  

SECTION 160.    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.  

SECTION 161.    Time for Payment; Penalties for Delinquency. — (a) The community tax shall accrue on the first (1st) day of January of each year which shall be paid not later than the last day of February of each year. If a person reaches the age of eighteen (18) years 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.  

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 or after the same date, shall not be subject to the community tax for that year.  

(b)        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.  

If the tax is not paid within the time prescribed above, there shall be added to the unpaid amount an interest of twenty-four percent (24%) per annum from the due date until it is paid.  

SECTION 162.    Community Tax Certificate. — A community tax certificate shall be issued to every person or corporation upon payment of the community tax. A community tax certificate may also be issued to any person or corporation not subject to the community tax upon payment of One peso (P1.00).  

SECTION 163.    Presentation of Community Tax Certificate On Certain Occasions. — (a) When an individual subject to the community tax acknowledges any document before a notary public, takes the oath of office upon election or appointment to any position in the government service; receives any license, certificate. or permit from any public authority; pays any tax or free; receives any money from any public fund; transacts other official business; or receives any salary or wage from any person or corporation with whom such transaction is made or business done or from whom any salary or wage is received to require such individual to exhibit the community tax certificate.  

The presentation of community tax certificate shall not be required in connection with the registration of a voter.  

(b)        When, through its authorized officers, any corporation subject to the community tax receives any license, certificate, or permit from any public authority, pays any tax or fee, receives money from public funds, or transacts other official business, it shall be the duty of the public official with whom such transaction is made or business done, to require such corporation to exhibit the community tax certificate.  

(c)        The community tax certificate required in the two preceding paragraphs shall be the one issued for the current year, except for the period from January until the fifteenth (15th) of April each year, in which case, the certificate issued for the preceding year shall suffice.  

SECTION 164.    Printing of Community Tax Certificates and Distribution of Proceeds. — (a) The Bureau of Internal Revenue 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.  

The proceeds of the tax shall accrue to the general funds of the cities, municipalities and barangays except a portion thereof which shall accrue to the general fund of the national government to cover the actual cost of printing and distribution of the forms and other related expenses. The city or municipal treasurer concerned shall remit to the national treasurer the said share of the national government in the proceeds of the tax within ten (10) days after the end of each quarter.  

(b)        The city or municipal treasurer shall deputize the barangay treasurer to collect the community tax in their respective jurisdictions: Provided, however, That said barangay treasurer shall be bonded in accordance with existing laws.  

(c)        The proceeds of the community tax actually and directly collected by the city or municipal treasurer shall accrue entirely to the general fund of the city or municipality concerned. However, proceeds of the community tax collected through the barangay treasurers shall be apportioned as follows:  

(1)        Fifty percent (50%) shall accrue to the general fund of the city or municipality concerned; and  

(2)        Fifty percent (50%) shall accrue to the barangay where the tax is collected.  

CHAPTER 3 — COLLECTION OF TAXES 

SECTION 165.    Tax Period and Manner of Payment. — Unless otherwise provided in this Code, the tax period of all local taxes, fees and charges shall be the calendar year. Such taxes, fees and charges may be paid in quarterly installments.  

SECTION 166.    Accrual of Tax. — Unless otherwise provided in this Code, all local taxes, fees, and charges shall accrue on the first (1st) day of January of each year. However, new taxes, fees or charges, or changes in the rates thereof, shall accrue on the first (1st) day of the quarter next following the effectivity of the ordinance imposing such new levies or rates.  

SECTION 167.    Time of Payment. — Unless otherwise provided in this Code, all local taxes, fees, and charges shall be paid within the first twenty (20) days of January or of each subsequent quarter, as the case may be. The sanggunian concerned may, for a justifiable reason or cause, extend the time for payment of such taxes, fees, or charges without surcharges or penalties, but only for a period not exceeding six (6) months.  

SECTION 168.    Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. — The sanggunian may impose a surcharge not exceeding twenty-five (25%) of the amount of taxes, fees or charges not paid on time and an interest at the rate not exceeding two percent (2%) per month of the unpaid taxes, fees or charges including surcharges, until such amount is fully paid but in no case shall the total thirty-six (36%) months.  

SECTION 169.    Interests on Other Unpaid Revenues. — Where the amount of any other revenue due a local government unit, except voluntary contributions or donations, is not paid on the date fixed in the ordinance, or in the contract, expressed or implied, or upon the occurrence of the event which has given rise to its collection, there shall be collected as part of that amount an interest thereon at the rate not exceeding two percent (2%) per month from the date it is due until it is paid, but in no case shall the total interest on the unpaid amount or a portion thereof exceed thirty-six (36) months.  

SECTION 170.    Collection of Local Revenue by Treasurer. — All local taxes, fees, and charges shall be collected by the provincial, city, municipal, or barangay treasurer, or their duly authorized deputies.

The provincial, city or municipal treasurer may designate the barangay treasurer as his deputy to collect local taxes, fees, or charges. In case a bond is required for the purpose, the provincial, city or municipal government shall pay the premiums thereon in addition to the premiums of bond that may be required under this Code.  

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

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

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

CHAPTER 4 — CIVIL REMEDIES FOR COLLECTION OF REVENUES 

SECTION 172.    Application of Chapter. — The provisions of this Chapter and the remedies provided hereon may be availed of for the collection of any delinquent local tax, fee, charge, or other revenue.

 SECTION 173.    Local Government's Lien. — Local taxes, fees, charges and other revenues constitute a lien, superior to all liens, charges or encumbrances in favor of any person, enforceable by appropriate administrative or judicial action, not only upon any property or rights therein which may be subject to the lien but also upon property used in business, occupation, practice of profession or calling, or exercise of privilege with respect to which the lien is imposed. The lien may only be extinguished upon full payment of the delinquent local taxes fees and charges including related surcharges and interest.  

SECTION 174.    Civil Remedies. — The civil remedies for the collection of local taxes, fees, or charges, and related surcharges and interest resulting from delinquency shall be:  

(a)        By administrative action thru distraint of goods, chattels, or effects, and other personal property of whatever character, including stocks and other securities, debts, credits, bank accounts, and interest in and rights to personal property, and by levy upon real property and interest in or rights to real property; and

 (b)        By judicial action.  

Either of these remedies or all may be pursued concurrently or simultaneously at the discretion of the local government unit concerned.  

SECTION 175.    Distraint of Personal Property. — The remedy by distraint shall proceed as follows:  

(a)        Seizure — Upon failure of the person owing any local tax, fee, or charge to pay the same at the time required, the local treasurer or his deputy may, upon written notice, seize or confiscate any personal property belonging to that person or any personal property subject to the lien in sufficient quantity to satisfy the tax, fee, or charge in question, together with any increment thereto incident to delinquency and the expenses of seizure. In such case, the local treasurer or his deputy shall issue a duly authenticated certificate based upon the records of his office showing the fact of delinquency and the amounts of the tax, fee, or charge and penalty due. Such certificate shall serve as sufficient warrant for the distraint of personal property aforementioned, subject to the taxpayer's right to claim exemption under the provisions of existing laws. Distrained personal property shall be sold at public auction in the manner hereon provided for.  

(b)        Accounting of distrained goods. — The officer executing the distraint shall make or cause to be made an account of the goods, chattels or effects distrained, a copy of which signed by himself shall be left either with the owner or person from whose possession the goods, chattels or effects are taken, or at the dwelling or place or business of that person and with someone of suitable age and discretion, to which list shall be added a statement of the sum demanded and a note of the time and place of sale.  

(c)        Publication — The officer shall forthwith cause a notification to be exhibited in not less than three (3) public and conspicuous places in the territory of the local government unit where the distraint is made, specifying the time and place of sale, and the articles distrained. The time of sale shall not be less than twenty (20) days after the notice to the owner or possessor of the property as above specified and the publication or posting of the notice. One place for the posting of the notice shall be at the office of the chief executive of the local government unit in which the property is distrained.  

(d)        Release of distrained property upon payment prior to sale — If at any time prior to the consummation of the sale, all the proper charges are paid to the officer conducting the sale, the goods or effects distrained shall be restored to the owner.

 (e)        Procedure of sale — At the time and place fixed in the notice, the officer conducting the sale shall sell the goods or effects so distrained at public auction to the highest bidder for cash. Within five (5) days after the sale, the local treasurer shall make a report of the proceedings in writing to the local chief executive concerned.  

Should the property distrained be not disposed of within one hundred and twenty (120) days from the date of distraint, the same shall be considered as sold to the local government unit concerned for the amount of the assessment made thereon by the Committee on Appraisal and to the extent of the same amount, the tax delinquencies shall be cancelled.

 Said Committee on Appraisal shall be composed of the city or municipal treasurer as chairman, with a representative of the Commission on Audit and the city or municipal assessor as members.

(f)         Disposition of proceeds — The proceeds of the sale shall be applied to satisfy the tax, including the surcharges, interest, and other penalties incident to delinquency, and the expenses of the distraint and sale. The balance over and above what is required to pay the entire claim shall be returned to the owner of the property sold. The expenses chargeable upon the seizure and sale shall embrace only the actual expenses of seizure and preservation of the property pending the sale, and no charge shall be imposed for the services of the local officer or his deputy. Where the proceeds of the sale are insufficient to satisfy the claim, other property may, in like manner, be distrained until the full amount due, including all expenses, is collected.  

SECTION 176.    Levy on Real Property. — After the expiration of the time required to pay the delinquent tax, fee, or charge, real property may be levied on before, simultaneously, or after the distraint of personal property belonging to the delinquent taxpayer. To this end, the provincial, city or municipal treasurer, as the case may be, shall prepare a duly authenticated certificate showing the name of the taxpayer and the amount of the tax, fee, or charge, and penalty due from him. Said certificate shall operate with the force of a legal execution throughout the Philippines. Levy shall be effected by writing upon said certificate the description of the property upon which levy is made. At the same time, written notice of the levy shall be mailed to or served upon the assessor and the Register of Deeds of the province or city where the property is located who shall annotate the levy on the tax declaration and certificate of title of the property, respectively, and the delinquent taxpayer or, if he be absent from the Philippines, to his agent or the manager of the business in respect to which the liability arose, or if there be none, to the occupant of the property in question.  

In case the levy on real property is not issued before or simultaneously with the warrant of distraint on personal property, and the personal property of the taxpayer is not sufficient to satisfy his delinquency, the provincial, city or municipal treasurer, as the case may be, shall within thirty (30) days after execution of the distraint, proceed with the levy on the taxpayer's real property.  

A report on any levy shall, within ten (10) days after receipt of the warrant, be submitted by the levying officer to the sanggunian concerned.  

SECTION 177.    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 who fails to issue or execute the warrant of distraint or levy after the expiration of the time prescribed, or who is found guilty of abusing the exercise thereof by competent authority shall be automatically dismissed from the service after due notice and hearing.  

SECTION 178.    Advertisement and Sale. — Within thirty (30) days after the levy, the local treasurer shall proceed to publicly advertise for sale or auction the property or a usable portion thereof as may be necessary to satisfy the claim and cost of sale; and such advertisement shall cover a period of at least thirty (30) days. It shall be effected by posting a notice at the main entrance of the municipal building or city hall, and in a public and conspicuous place in the barangay where the real property is located, and by publication once a week for three (3) weeks in a newspaper of general circulation in the province, city or municipality where the property is located. The advertisement shall contain the amount of taxes, fees or charges, and penalties due thereon, and the time and place of sale, the name of the taxpayer against whom the taxes, fees, or charges are levied, and a short description of the property to be sold. At any time before the date fixed for the sale, the taxpayer may stay they proceedings by paying the taxes, fees, charges, penalties and interests. If he fails to do so, the sale shall proceed and shall be held either at the main entrance of the provincial, city or municipal building, or on the property to be sold, or at any other place as determined by the local treasurer conducting the sale and specified in the notice of sale.  

Within thirty (30) days after the sale, the local treasurer or his deputy shall make a report of the sale to the sanggunian concerned, and which shall form part of his records. After consultation with the sanggunian, the local treasurer shall make and deliver to the purchaser a certificate of sale, showing the proceeding of the sale, describing the property sold, stating the name of the purchaser and setting out the exact amount of all taxes, fees, charges, and related surcharges, interests, or penalties: Provided, however, That any excess in the proceeds of the sale over the claim and cost of sales shall be turned over to the owner of the property.  

The local treasurer may, by ordinance duly approved, advance an amount sufficient to defray the costs of collection by means of the remedies provided for in this Title, including the preservation or transportation in case of personal property, and the advertisement and subsequent sale, in cases of personal and real property including improvements thereon.

 SECTION 179.    Redemption of Property Sold. — Within one (1) year from the date of sale, the delinquent taxpayer or his representative shall have the right to redeem the property upon payment to the local treasurer of the total amount of taxes, fees, or charges, and related surcharges, interests or penalties from the date of delinquency to the date of sale, plus interest of not more than two percent (2%) per month on the purchase price from the date of purchase to the date of redemption. Such payment shall invalidate the certificate of sale issued to the purchaser and the owner shall be entitled to a certificate of redemption from the provincial, city or municipal treasurer or his deputy.  

The provincial, city or municipal treasurer or his deputy, upon surrender by the purchaser of the certificate of sale previously issued to him, shall forthwith return to the latter the entire purchase price paid by him plus the interest of not more than two percent (2%) per month herein provided for, the portion of the cost of sale and other legitimate expenses incurred by him, and said property thereafter shall be free from the lien of such taxes, fees, or charges, related surcharges, interests, and penalties.

The owner shall not, however, be deprived of the possession of said property and shall be entitled to the rentals and other income thereof until the expiration of the time allowed for its redemption.  

SECTION 180.    Final Deed to Purchaser. — In case the taxpayer fails to redeem the property as provided herein, the local treasurer shall execute a deed conveying to the purchaser so much of the property as has been sold, free from liens of any taxes, fees, charges, related surcharges, interests, and penalties. The deed shall succinctly recite all the proceedings upon which the validity of the sale depends.  

SECTION 181.    Purchase of Property By the Local Government Units for Want of Bidder. — In case there is no bidder for the real property advertised for sale as provided herein, or if the highest bid is for an amount 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 and within two (2) days thereafter shall make a report of his proceedings which shall be reflected upon the records of his office. It shall be the duty of the Registrar of Deeds concerned upon registration with his office of any such declaration of forfeiture to transfer the title of the forfeited property to the local government unit concerned without the necessity of an order from a competent court.  

Within one (1) year from the date of such forfeiture, the taxpayer or any of his representative, may redeem the property by paying to the local treasurer the full amount of the taxes, fees, charges, and related surcharges, interests, or penalties, and the costs of sale. If the property is not redeemed as provided herein, the ownership thereof shall be fully vested on the local government unit concerned.

SECTION 182.    Resale of Real Estate Taken for Taxes, Fees, or Charges. — The sanggunian concerned may, by ordinance duly approved, and upon notice of not less than twenty (20) days, sell and dispose of the real property acquired under the preceding section at public auction. The proceeds of the sale shall accrue to the general fund of the local government unit concerned.

 SECTION 183.    Collection of Delinquent Taxes, Fees, Charges or other Revenues through Judicial Action. — The local government unit concerned may enforce the collection of delinquent taxes, fees, charges or other revenues by civil action in any court of competent jurisdiction. The civil action shall be filed by the local treasurer within the period prescribed in Section 194 of this Code.  

SECTION 184.    Further Distraint or Levy. — The remedies by distraint and levy may be repeated if necessary until the full amount due, including all expenses, is collected.

SECTION 185.    Personal Property Exempt from Distraint or Levy. — The following property shall be exempt from distraint and the levy, attachment or execution thereof for delinquency in the payment of any local tax, fee or charge, including the related surcharge and interest:  

(a)        Tools and implements necessarily used by the delinquent taxpayer in his trade or employment;  

(b)        One (1) horse, cow, carabao, or other beast of burden, such as the delinquent taxpayer may select, and necessarily used by him in his ordinary occupation;  

(c)        His necessary clothing, and that of all his family;  

(d)        Household furniture and utensils necessary for housekeeping and used for that purpose by the delinquent taxpayer, such as he may select, of a value not exceeding Ten thousand pesos (P10,000.00);  

(e)        Provisions, including crops, actually provided for individual or family use sufficient for four (4) months;  

(f)         The professional libraries of doctors, engineers, lawyers and judges;  

(g)        One fishing boat and net, not exceeding the total value of Ten thousand pesos (P10,000.00), by the lawful use of which a fisherman earns his livelihood; and  

(h)        Any material or article forming part of a house or improvement of any real property.  

CHAPTER 5 — MISCELLANEOUS PROVISIONS 

SECTION 186.    Power To Levy Other Taxes, Fees or Charges. — Local government units may exercise the power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing conducted for the purpose.  

SECTION 187.    Procedure for Approval and Effectivity of Tax, Ordinances and Revenue Measures; Mandatory Public Hearings. — The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.  

SECTION 188.    Publication of Tax Ordinances and Revenue Measures. — Within ten (10) days after their approval, certified true copies of all provincial, city, and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation: Provided, however, That in provinces, cities and municipalities where there are no newspapers of local circulation, the same may be posted in at least two (2) conspicuous and publicly accessible places.  

SECTION 189.    Furnishing of Copies of Tax Ordinances and Revenue Measures. — Copies of all provincial, city, and municipal and barangay tax ordinances and revenue measures shall be furnished the respective local treasurers for public dissemination.  

SECTION 190.    Attempt to Enforce Void or Suspended Tax Ordinances and revenue measures. — The enforcement of any tax ordinance or revenue measure after due notice of the disapproval or suspension thereof shall be sufficient ground for administrative disciplinary action against the local officials and employees responsible therefor.  

SECTION 191.    Authority of Local Government Units to Adjust Rates of Tax Ordinances. — Local government units shall have the authority to adjust the tax rates as prescribed herein not oftener than once every five (5) years, but in no case shall such adjustment exceed ten percent (10%) of the rates fixed under this Code.  

SECTION 192.    Authority to Grant Tax Exemption Privileges. — Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary.  

SECTION 193.    Withdrawal of Tax Exemption Privileges. — Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.  

CHAPTER 6 — TAXPAYER'S REMEDIES 

SECTION 194.    Periods of Assessment and Collection. — (a) Local taxes, fees, or charges shall be assessed within five (5) years from the date they became due. No action for the collection of such taxes, fees, or charges, whether administrative or judicial, shall be instituted after the expiration of such period: Provided, That. taxes, fees or charges which have accrued before the effectivity of this Code may be assessed within a period of three (3) years from the date they became due.  

(b)        In case of fraud or intent to evade the payment of taxes, fees, or charges, the same may be assessed within ten (10) years from discovery of the fraud or intent to evade payment.

 (c)        Local taxes, fees, or charges may be collected within five (5) years from the date of assessment by administrative or judicial action. No such action shall be instituted after the expiration of said period: Provided, however, That, taxes, fees or charges assessed before the effectivity of this Code may be collected within a period of three (3) years from the date of assessment.  

(d)        The running of the periods of prescription provided in the preceding paragraphs shall be suspended for the time during which:  

(1)        The treasurer is legally prevented from making the assessment of collection;  

(2)        The taxpayer requests for a reinvestigation and executes a waiver in writing before expiration of the period within which to assess or collect; and  

(3)        The taxpayer is out of the country or otherwise cannot be located.  

SECTION 195.    Protest of Assessment. — When the local treasurer or his duly authorized representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the surcharges, interests and penalties. Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the assessment shall become final and executory. The local treasurer shall decide the protest within sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly or partially the assessment. However, if the local treasurer finds the assessment to be wholly or partly correct, he shall deny the protest wholly or partly with notice to the taxpayer. The taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from the lapse of the sixty (60) day period prescribed herein within which to appeal with the court of competent jurisdiction otherwise the assessment becomes conclusive and unappealable.  

SECTION 196.    Claim for Refund of Tax Credit. — No case or proceeding shall be maintained in any court for the recovery of any tax, fee, or charge erroneously or illegally collected until a written claim for refund or credit has been filed with the local treasurer. No case or proceeding shall be entertained in any court after the expiration of two (2) years from the date of the payment of such tax, fee, or charge, or from the date the taxpayer is entitled to a refund or credit.  

TITLE TWO. — REAL PROPERTY TAXATION

CHAPTER 1. — GENERAL PROVISIONS 

SECTION 197.    Scope. — This Title shall govern the administration, appraisal, assessment, levy and collection of real property tax.  

SECTION 198.    Fundamental Principles. — The appraisal, assessment, levy and collection of real property tax shall be guided by the following fundamental principles:  

(a)        Real property shall be appraised at its current and fair market value;  

(b)        Real property shall be classified for assessment purposes on the basis of its actual use;  

(c)        Real property shall be assessed on the basis of a uniform classification within each local government unit;  

(d)        The appraisal, assessment, levy and collection of real property tax shall not be let to any private person; and  

(e)        The appraisal and assessment of real property shall be equitable.  

SECTION 199.    Definitions. — When used in this Title:

 (a)        “Acquisition Cost” for newly-acquired machinery not yet depreciated and appraised within the year of its purchase, refers to the actual cost of the machinery to its present owner, plus the cost of transportation, handling, and installation at the present site;  

(b)        “Actual Use” refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof;  

(c)        “Ad Valorem Tax” is a levy on real property determined on the basis of a fixed proportion of the value of the property;  

(d)        “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;  

(e)        “Appraisal” is the act or process of determining the value of property as of a specified date for a specific purpose;  

(f)         “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;

 (g)        “Assessment Level” is the percentage applied to the fair market value to determine the taxable value of the property;  

(h)        “Assessed Value” is the fair market value of the real property multiplied by the assessment level. It is synonymous to taxable value;  

(i)         “Commercial Land” is land devoted principally for the object of profit and is not classified as agricultural, industrial, mineral, timber, or residential land;

 (j)         “Depreciated Value” is the value remaining after deducting depreciation from the acquisition cost;  

(k)        “Economic Life” is the estimated period over which it is anticipated that a machinery or equipment may be profitably utilized;  

(l)         “Fair Market Value” is the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy;  

(m)       “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;  

(n)        “Industrial Land” is land devoted principally to industrial activity as capital investment and is not classified as agricultural, commercial, timber, mineral or residential land;  

(o)        “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 the 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;  

(p)        “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;  

(q)        “Reassessment” is the assigning of new assessed values to property, particularly real estate, as the result of a general, partial, or individual reappraisal of the property;

 (r)        “Remaining Economic Life” is the period of time expressed in years from the date of appraisal to the date when the machinery becomes valueless;  

(s)        “Remaining Value” is the value corresponding to the remaining useful life of the machinery;  

(t)         “Replacement or Reproduction Cost” is the cost that would be incurred on the basis of current prices, in acquiring an equally desirable substitute property, or the cost of reproducing a new replica of the property on the basis of current prices with the same or closely similar material; and  

(u)        “Residential Land” is land principally devoted to habitation.  

SECTION 200.    Administration of the Real Property Tax. — 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.  

CHAPTER 2 — APPRAISAL AND ASSESSMENT

OF REAL PROPERTY 

SECTION 201.    Appraisal of Real Property. — 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 this Code.  

SECTION 202.    Declaration of real Property by the Owner or Administrator. — It shall be the duty of all persons, natural or juridical, owning or administering real property, including the improvements therein, within a city or municipality, or their duly authorized representative, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of their property, whether previously declared or undeclared, taxable or exempt, which shall be the current and fair market value of the property, as determined by the declarant. Such declaration shall contain a description of the property sufficient in detail to enable the assessor or his deputy to identify the same for assessment purposes. The sworn declaration of real property herein referred to shall be filed with the assessor concerned once every three (3) years during the period from January first (1st) to June thirtieth (30th) commencing with the calendar year 1992.  

SECTION 203.    Duty of Person Acquiring Real Property or Making Improvement Thereon. — It shall also be the duty of any person, or his authorized representative, acquiring at any time real property in any municipality or city or making any improvement on real property, to prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of subject property, within sixty (60) days after the acquisition of such property or upon completion or occupancy of the improvement, whichever comes earlier.  

SECTION 204.    Declaration of Real Property by the Assessor. — When any person, natural or juridical, by whom real property is required to be declared under Section 202 hereof, refuses or fails for any reason to make such declaration within the time prescribed, the provincial, city or municipal assessor shall himself declare the property in the name of the defaulting owner, if known, or against an unknown owner, as the case may be, and shall assess the property for taxation in accordance with the provision of this Title. No oath shall be required of a declaration thus made by the provincial, city or municipal assessor.  

SECTION 205.    Listing of Real Property in the Assessment Rolls. — (a) In every province and city, including the municipalities within the Metropolitan Manila Area, there shall be prepared and maintained by the provincial, city or municipal assessor an assessment roll wherein shall be listed all real property, whether taxable or exempt, located within the territorial jurisdiction of the local government unit concerned. Real property shall be listed, valued and assessed in the name of the owner or administrator, or anyone having legal interest in the property.  

(b)        The undivided real property of a deceased person may be listed, valued and assessed in the name of the estate or of the heirs and devisees without designating them individually; and undivided real property other than that owned by a deceased may be listed, valued and assessed in the name of one or more co-owners: Provided, however, That such heir, devisee, or co-owner shall be liable severally and proportionately for all obligations imposed by this Title and the payment of the real property tax with respect to the undivided property.  

(c)        The real property of a corporation, partnership, or association shall be listed, valued and assessed in the same manner as that of an individual.  

(d)        Real property owned by the Republic of the Philippines, its instrumentalities and political subdivisions, the beneficial use of which has been granted, for consideration or otherwise, to a taxable person, shall be listed, valued and assessed in the name of the possessor, grantee or of the public entity if such property has been acquired or held for resale or lease.  

SECTION 206.    Proof of Exemption of Real Property from Taxation. — Every person by or for whom real property is declared, who shall claim tax exemption for such property under this Title shall file with the provincial, city or municipal assessor within thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters, title of ownership, articles of incorporation, by-laws, contracts, affidavits, certifications and mortgage deeds, and similar documents.

If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the assessment roll. However, if the property shall be proven to be tax exempt, the same shall be dropped from the assessment roll.  

SECTION 207.    Real Property Identification System. — All declarations of real property made under the provisions of this Title shall be kept and filed under a uniform classification system to be established by the provincial, city or municipal assessor.  

SECTION 208.    Notification of Transfer of Real Property Ownership. — Any person who shall transfer real property ownership to another shall notify the provincial, city or municipal assessor concerned within sixty (60) days from the date of such transfer. The notification shall include the mode of transfer, the description of the property alienated, the name and address of the transferee.

SECTION 209.    Duty of Registrar of Deeds to Appraise Assessor of Real Property Listed in Registry. — (a) To ascertain whether or not any real property entered in the Registry of Property has escaped discovery and listing for the purpose of taxation, the Registrar of Deeds shall prepare and submit to the provincial, city or municipal assessor, within six (6) months from the date of effectivity of this Code and every year thereafter, an abstract of his registry, which shall include brief but sufficient description of the real properties entered therein, their present owners, and the dates of their most recent transfer or alienation accompanied by copies of corresponding deeds of sale, donation, or partition or other forms of alienation.  

(b)        It shall also be the duty of the Registrar of Deeds to require every person who shall present for registration a document of transfer, alienation, or encumbrance of real property to accompany the same with a certificate to the effect that the real property subject of the transfer, alienation, or encumbrance, as the case may be, has been fully paid of all real property taxes due thereon. Failure to provide such certificate shall be a valid cause for the Registrar of Deeds to refuse the registration of the document.

 SECTION 210.    Duty of Official Issuing Building Permit or Certificate of Registration of Machinery to Transmit Copy to Assessor. — Any public official or employee who may now or hereafter be required by law or regulation to issue to any person a permit for the construction, addition, repair, or renovation of a building, or permanent improvement on land, or a certificate of registration for any machinery, including machines, mechanical contrivances, and apparatus attached or affixed on land or to another real property, shall transmit a copy of such permit or certificate within thirty (30) days of its issuance, to the assessor of the province, city or municipality where the property is situated.  

SECTION 211.    Duty of Geodetic Engineers to Furnish Copy of Plans to Assessor. — It shall be the duty of all geodetic engineers, public or private, to furnish free of charge to the assessor of the province, city or municipality where the land is located with a white or blue print copy of each of all approved original or subdivision plans or maps of surveys executed by them within thirty (30) days from receipt of such plans from the Lands Management Bureau, the Land Registration Authority, or the Housing and Land Use Regulatory Board, as the case may be.  

SECTION 212.    Preparation of Schedule of Fair Market Values. — Before any general revision of property assessment is made pursuant to the provisions of this Title, there shall be prepared a schedule of fair market values by the provincial, city and municipal assessor of the municipalities within the Metropolitan Manila Area for the different classes of real property situated in their respective local government units for enactment by ordinance of the sanggunian concerned. The schedule of fair market values shall be published in a newspaper of general circulation in the province, city or municipality concerned or in the absence thereof, shall be posted in the provincial capitol, city or municipal hall and in two other conspicuous public places therein.  

SECTION 213.    Authority of Assessor to Take Evidence. — For the purpose of obtaining information on which to base the market value of any real property, the assessor of the province, city or municipality or his deputy may summon the owners of the properties to be affected or persons having legal interest therein and witnesses, administer oaths, and take deposition concerning the property, its ownership, amount, nature, and value.  

SECTION 214.    Amendment of Schedule of Fair Market Values. — The provincial, city or municipal assessor may recommend to the sanggunian concerned amendments to correct errors in valuation in the schedule of fair market values. The sanggunian concerned shall, by ordinance, act upon the recommendation within ninety (90) days from receipt thereof.  

SECTION 215.    Classes of Real Property for Assessment Purposes. — For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland or special.

The city or municipality within the Metropolitan Manila Area, through their respective sanggunian, shall have the power to classify lands as residential, agricultural, commercial, industrial, mineral, timberland, or special in accordance with their zoning ordinances.  

SECTION 216.    Special Classes of Real Property. — All 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 shall be classified as special.  

SECTION 217.    Actual Use of Real Property as Basis for Assessment. — Real property shall be classified, valued and assessed on the basis of its actual use regardless of where located, whoever owns it, and whoever uses it.  

SECTION 218.    Assessment Levels. — The assessment levels to be applied to the fair market value of real property to determine its assessed value shall be fixed by ordinances of the sangguniang panlalawigan, sangguniang panlungsod or sangguniang bayan of a municipality within the Metropolitan Manila Area, at the rates not exceeding the following:

 (a)        On Lands:

            CLASS                           ASSESSMENT LEVELS

            Residential                                             20%

            Agricultural                                            40%

            Commercial                                           50%

            Industrial                                               50%

            Mineral                                                  50%

            Timberland                                            20%

(b)        On Buildings and Other Structures:  

(1)        Residential

Fair market Value

Over     Not Over                        Assessment Levels

            P  175,000.00                           0%

P   175,000.00       300,000.00                10%

     300,000.00       500,000.00                20%

     500,000.00       750,000.00                25%

     750,000.00     1,000,000.00               30%

  1,000,000.00     2,000,000.00               35%

  2,000,000.00     5,000,000.00               40%

  5,000,000.00   10,000,000.00                50%

10,000,000.00                                        60%

(2)        Agricultural

Fair Market Value

Over                   Not Over          Assessment Levels

                        P 300,000.00                 25%

P 300,000.00        500,000.00                 30%

   500,000.00        750,000.00                 35%

   750,000.00     1,000,000.00                 40%

1,000,000.00     2,000,000.00                 45%

2,000,000.00                                         50%

(3)        Commercial / Industrial

Fair Market Value

Over                 Not Over            Assessment Levels

                        P  300,000.00                30%

P   300,000.00       500,000.00                35%

     500,000.00       750,000.00                40%

     750,000.00     1,000,000.00               50%

  1,000,000.00     2,000,000.00               60%

  2,000,000.00     5,000,000.00               70%

  5,000,000.00   10,000,000.00                75%

10,000,000.00                                        80%

(4)        Timberland

Fair Market Value

Over                 Not Over            Assessment Levels

                        P 300,000.00                 45%

P  300,000.00       500,000.00                 50%

    500,000.00       750,000.00                 55%

    750,000.00    1,000,000.00                 60%

1,000,000.00     2,000,000.00                 65%

2,000,000.00                                         70%

(c)        On Machineries

            Class                                         Assessment Levels

Agricultural                                                        40%

Residential                                                         50%

Commercial                                                       80%

Industrial                                                           80%

(d)        On Special Classes: The assessment levels for all lands buildings, machineries and other improvements;

Actual Use                                 Assessment Level

Cultural                                                 15%

Scientific                                               15%

Hospital                                                15%

Local water districts                                10%

Government-owned or

controlled corporations

engaged in the supply

and distribution of water

and/or generation and

transmission of

electric power                                        10%

SECTION 219.    General Revision of Assessment and Property Classification. — The provincial, city or municipal assessor shall undertake a general revision of real property assessments within two (2) years after the effectivity of this Code and every three (3) years thereafter.  

SECTION 220.    Valuation of Real Property. — In cases where (a) real property is declared and listed for taxation purposes for the first time; (b) there is an ongoing general revision of property classification and assessment; or (c) a request is made by the person in whose name the property is declared, the provincial, city or municipal assessor or his duly authorized deputy shall, in accordance with the provisions of this Chapter, make a classification, appraisal and assessment or taxpayer's valuation thereon: Provided, however, That the assessment of real property shall not be increased oftener than once every three (3) years except in case of new improvements substantially increasing the value of said property or of any change in its actual use.  

SECTION 221.    Date of Effectivity of Assessment or Reassessment. — All assessments or reassessments made after the first (1st) day of January of any year shall take effect on the first (1st) day of January of the succeeding year: Provided, however, That the reassessment of real property due to its partial or total destruction, or to a major change in its actual use, or to any great and sudden inflation or deflation of real property values, or to the gross illegality of the assessment when made or to any other abnormal cause, shall be made within ninety (90) days from the date any such cause or causes occurred, and shall take effect at the beginning of the quarter next following the reassessment.  

SECTION 222.    Assessment of Property Subject to Back Taxes. — Real property declared for the first time shall be assessed for taxes for the period during which it would have been liable but in no case of more than ten (10) years prior to the date of initial assessment: Provided, however, That such taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period.

If such taxes are paid on or before the end of the quarter following the date the notice of assessment was received by the owner or his representative, no interest for delinquency shall be imposed thereon; otherwise, such taxes shall be subject to an interest at the rate of two percent (2%) per month or a fraction thereof from the date of the receipt of the assessment until such taxes are fully paid.  

SECTION 223.    Notification of New or Revised Assessment. — When real property is assessed for the first time or when an existing assessment is increased or decreased, the provincial, city or municipal assessor shall within thirty (30) days give written notice of such new or revised assessment to the person in whose name the property is declared. The notice may be delivered personally or by registered mail or through the assistance of the punong barangay to the last known address of the person to be served.

SECTION 224.    Appraisal and Assessment of Machinery. — (a) The fair market value of a brand-new machinery shall be the acquisition cost. In all other cases, the fair market value shall be determined by dividing the remaining economic life of the machinery by its estimated economic life and multiplied by the replacement or reproduction cost.  

(b)        If the machinery is imported, the acquisition cost includes freight, insurance, bank and other charges, brokerage, armature and handling, duties and taxes, plus charges at the present site. The cost in foreign currency of imported machinery shall be converted to peso cost on the basis of foreign currency exchange rates as fixed by the Central Bank.

SECTION 225.    Depreciation Allowance for Machinery. — For purposes of assessment, a depreciation allowance shall be made for machinery at a rate not exceeding five percent (5%) of its original cost or its replacement or reproduction cost, as the case may be, for each year of use: Provided, however, That the remaining value for all kinds of machinery shall be fixed at not less than twenty percent (20%) of such original, replacement, or reproduction cost for so long as the machinery is useful and in operation.  

CHAPTER 3 — ASSESSMENT APPEALS 

SECTION 226.    Local Board of Assessment Appeals. — Any owner or person having legal interest in the property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the provincial or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal.  

SECTION 227.    Organization, Powers, Duties, and Functions of the Local Board of Assessment Appeals. — (a) The Board of Assessment Appeals of the province or city shall be composed of the Registrar of Deeds, as Chairman, the provincial or city prosecutor and the provincial, or city engineer as members, who shall serve as such in an ex officio capacity without additional compensation.  

(c)        The chairman of the Board shall have the power to designate any employee of the province or city to serve as secretary to the Board also without additional compensation.  

(c)        The chairman and members of the Board of Assessment Appeals of the province or city shall assume their respective positions without need of further appointment or special designations immediately upon effectivity of this Code. They shall take oath or affirmation of office in the prescribed form.  

(d)        In provinces and cities without a provincial or city engineer, the district engineer shall serve as member of the Board. In the absence of the Registrar of Deeds, or the provincial or city prosecutor, or the provincial or city engineer, or the district engineer, the persons performing their duties, whether in an acting capacity or as a duly designated officer-in-charge, shall automatically become the chairman or member, respectively, of the said Board, as the case may be.  

SECTION 228.    Meetings and Expenses of the Local Board of Assessment Appeals. — (a) The Board of Assessment Appeals of the province or city shall meet once a month and as often as may be necessary for the prompt disposition of appealed cases. No member of the Board shall be entitled to per diems or traveling expenses for his attendance in Board meetings, except when conducting an ocular inspection in connection with a case under appeal.  

(b)        All expenses of the Board shall be charged against the general fund of the province or city, as the case may be. The sanggunian concerned shall appropriate the necessary funds to enable the Board in their respective localities to operate effectively.

SECTION 229.    Action by the Local Board of Assessment Appeals. — (a) The Board shall decide the appeal within one hundred twenty (120) days from the date of receipt of such appeal. The Board, after hearing, shall render its decision based on substantial evidence or such relevant evidence on record as a reasonable mind might accept as adequate to support the conclusion.  

(b)        In the exercise of its appellate jurisdiction, the Board shall have the power to summon witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoena and subpoena duces tecum. The proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules applicable in judicial proceedings.  

(c)        The secretary of the Board shall furnish the owner of the property or the person having legal interest therein and the provincial or city assessor with a copy of the decision of the Board. In case the provincial or city assessor concurs in the revision or the assessment, it shall be his duty to notify the owner of the property or the person having legal interest therein of such fact using the form prescribed for the purpose. The owner of the property or the person having legal interest therein or the assessor who is not satisfied with the decision of the Board, may, within thirty (30) days after receipt of the decision of said Board, appeal to the Central Board of Assessment Appeals, as herein provided. The decision of the Central Board shall be final and executory.  

SECTION 230.    Central Board of Assessment Appeals. — The Central Board of Assessment Appeals shall be composed of a chairman, and two (2) members to be appointed by the President, who shall serve for a term of seven (7) years, without reappointment. Of those first appointed, the chairman shall hold office for seven (7) years, one member for five (5) years, and the other member for three (3) years. Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall any member be appointed or designated in a temporary or acting capacity. The chairman and the members of the Board shall be Filipino citizens, at least forty (40) years old at the time of their appointment, and members of the Bar or Certified Public Accountants for at least ten (10) years immediately preceding their appointment. The chairman of the Board of Assessment Appeals shall have the salary grade equivalent to the rank of Director III under the Salary Standardization Law exclusive of allowances and other emoluments. The members of the Board shall have the salary grade equivalent to the rank of Director II under the Salary Standardization Law exclusive of allowances and other emoluments. The Board shall have appellate jurisdiction over all assessment cases decided by the Local Board of Assessment Appeals.  

There shall be Hearing Officers to be appointed by the Central Board of Assessment Appeals pursuant to civil service laws, rules and regulations, one each for Luzon, Visayas and Mindanao, who shall hold office in Manila, Cebu City and Cagayan de Oro City, respectively, and who shall serve for a term of six (6) years, without reappointment until their successors have been appointed and qualified. The Hearing Officers shall have the same qualifications as that of the Judges of the Municipal Trial Courts.  

The Central Board Assessment Appeals, in the performance of its powers and duties, may establish and organize staffs, offices, units, prescribe the titles, functions and duties of their members and adopt its own rules and regulations.  

Unless otherwise provided by law, the annual appropriations for the Central Board of Assessment Appeals shall be included in the budget of the Department of Finance in the corresponding General Appropriations Act.  

SECTION 231.    Effect of Appeal on the Payment of Real Property Tax. — Appeal on assessments of real property made under the provisions of this Code shall, in no case, suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal.  

CHAPTER 4. — IMPOSITION OF REAL PROPERTY TAX 

SECTION 232.    Power to Levy Real Property Tax. — A province or city or a municipality within the Metropolitan Manila Area my levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted.  

SECTION 233.    Rates of Levy. — A province or city or a municipality within the Metropolitan Manila Area shall fix a uniform rate of basic real property tax applicable to their respective localities as follows:  

(a)        In the case of a province, at the rate not exceeding one percent (1%) of the assessed value of real property; and  

(b)        In the case of a city or a municipality within the Metropolitan Manila Area, at the rate not exceeding two percent (2%) of the assessed value of real property.  

SECTION 234.    Exemptions from Real Property Tax. — The following are exempted from payment of the real property tax:  

(a)        Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;  

(b)        Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or educational purposes;  

(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;  

(d)        All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and  

(e)        Machinery and equipment used for pollution control and environmental protection.  

Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code.  

CHAPTER 5. — SPECIAL LEVIES ON REAL PROPERTY 

SECTION 235.    Additional Levy on Real Property for the Special Education Fund. — A province or city, or a municipality within the 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 (SEF).  

SECTION 236.    Additional Ad Valorem Tax on Idle Lands. — 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.  

SECTION 237.    Idle Lands, Coverage. — For purposes of real property taxation, idle lands 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 remain uncultivated or unimproved by the owner of the property or person having legal interest therein. Agricultural lands planted to permanent or perennial crops with at least fifty (50) trees to a hectare shall not be considered idle lands. Lands actually used for grazing purposes shall likewise not be considered idle lands.  

(b)        Lands, other than agricultural, located in a city or municipality, more than one thousand (1,000) square meters in area one-half (1/2) of which remain unutilized or unimproved by the owner of the property or person having legal interest therein.  

Regardless of land area, this Section shall likewise apply to residential lots in subdivisions duly approved by proper authorities, the ownership of which has been transferred to individual owners, who shall be liable for the additional tax: Provided, however, That individual lots of such subdivisions, the ownership of which has not been transferred to the buyer shall be considered as part of the subdivision, and shall be subject to the additional tax payable by subdivision owner or operator.  

SECTION 238.    Idle Lands Exempt from Tax. — A province or city or a municipality within the Metropolitan Manila Area may exempt idle lands from the additional levy by reason of force majeure, civil disturbance, natural calamity or any cause or circumstance which physically or legally prevents the owner of the property or person having legal interest therein from improving, utilizing or cultivating the same.  

SECTION 239.    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.  

SECTION 240.    Special Levy by Local Government Units. — 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: Provided, however, That 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 real property in connection therewith: Provided, further, That the special levy shall not apply to lands exempt from basic real property tax and the remainder of the land portions of which have been donated to the local government unit concerned for the construction of such projects or improvements.

SECTION 241.    Ordinance Imposing a Special Levy. — A tax ordinance imposing a special levy shall describe with reasonable accuracy the nature, extent, and location of the public works projects or improvements to be undertaken, state the estimated cost thereof, specify the metes and bounds by monuments and lines and the number of annual installments for the payment of the special levy which in no case shall be less than five (5) nor more than ten (10) years. 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 proposed work. 

SECTION 242.    Publication of Proposed Ordinance Imposing a Special Levy. — Before the enactment of an ordinance imposing a special levy, the sanggunian concerned shall conduct a public hearing thereon; notify in writing the owners of the real property to be affected or the persons having legal interest therein as to the date and place thereof and afford the latter the opportunity to express their positions or objections relative to the proposed ordinance.  

SECTION 243.    Fixing the Amount of Special Levy. — The special levy authorized herein shall be apportioned, computed, and assessed according to the assessed valuation of the lands affected as shown by the books of the assessor concerned, or its current assessed value as fixed by said assessor if the property does not appear of record in his books. Upon the effectivity of the ordinance imposing special levy, the assessor concerned shall forthwith proceed to determine the annual amount of special levy assessed against each parcel of land comprised within the area especially benefited and shall send to each landowner a written notice thereof by mail, personal service or publication in appropriate cases.  

SECTION 244.    Taxpayer's Remedies Against Special Levy. — Any owner of real property affected by a special levy or any person having a legal interest therein may, upon receipt of the written notice of assessment of the special levy, avail of the remedies provided for in Chapter 3, Title Two, Book II of this Code.

 SECTION 245.    Accrual of Special Levy. — The special levy shall accrue on the first day of the quarter next following the effectivity of the ordinance imposing such levy.  

CHAPTER 6. — COLLECTION OF REAL PROPERTY TAX 

SECTION 246.    Date of Accrual of Tax. — The real property tax for any year shall accrue on the first 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.  

SECTION 247.    Collection of Tax. — The collection of the real property tax with interest thereon and related expenses, and the enforcement of the remedies provided for in this Title or any applicable laws, shall be the responsibility of the city or municipal treasurer concerned.  

The city or municipal treasurer may deputize the barangay treasurer to collect all taxes on real property located in the barangay: Provided, That the barangay treasurer is properly bonded for the purpose: Provided, further, That the premium on the bond shall be paid by the city or municipal government concerned.  

SECTION 248.    Assessor to Furnish Local Treasurer with Assessment Roll. — 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 249.    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 Special Education Fund (SEF) or any other date to be prescribed by the sanggunian concerned in the case of any other tax levied under this title, 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.  

SECTION 250.    Payment of Real Property Taxes in Installments. — The owner of the real property or the person having legal interest therein may pay the basic real property tax and the additional tax for Special Education Fund (SEF) due thereon without interest in four (4) equal installments; the first installment to be due and payable on or before March Thirty-first (31st); the second installment, on or before June Thirty (30); the third installment, on or before September Thirty (30); and the last installment on or before December Thirty-first (31st), except the special levy the payment of which shall be governed by ordinance of the sanggunian concerned.  

The date for the payment of any other tax imposed under this Title without interest shall be prescribed by the sanggunian concerned.  

Payments of real property taxes shall first be applied to prior years delinquencies, interests, and penalties, if any, and only after said delinquencies are settled may tax payments be credited for the current period.  

SECTION 251.    Tax Discount for Advanced Prompt Payment. — If the basic real property tax and the additional tax accruing to the Special Education Fund (SEF) are paid in advance in accordance with the prescribed schedule of payment as provided under Section 250, the sanggunian concerned may grant a discount not exceeding twenty percent (20%) of the annual tax due.  

SECTION 252.    Payment Under Protest. — (a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words “paid under protest”. The protest in writing must be filed within thirty (30) days 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.  

(b)        The tax or a portion thereof paid under protest, shall be held in trust by the treasurer concerned.  

(c)        In the event that the protest is finally decided in favor of the taxpayer, the 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.  

(d)        In the event that the protest is denied or upon the lapse of the sixty day period prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II of this Code.  

SECTION 253.    Repayment of Excessive Collections. — When an assessment of basic real property tax, or any other tax levied under this Title, is found to be illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes and interests with the provincial or city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment.  

The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60) days from receipt thereof. In case the claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided in Chapter 3, Title II, Book II of this Code.  

SECTION 254.    Notice of Delinquency in the Payment of the Real Property  

Tax. — (a) When the real property tax or any other tax imposed under this Title becomes delinquent, the provincial, city or municipal treasurer shall immediately cause a notice of the delinquency to be posted at the main 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.  

(b)        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 Section, 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, Title II, Book II of this Code, 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.  

SECTION 255.    Interests on Unpaid Real Property Tax. — In case of failure to pay the basic real property tax or any other tax levied under this Title upon the expiration of the periods as provided in Section 250, 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.  

SECTION 256.    Remedies For The Collection Of Real Property Tax. — For the collection of the basic real property tax and nay other tax levied under this Title, the local government unit concerned may avail of the remedies by administrative action thru levy on real property or by judicial action.  

SECTION 257.    Local Governments Lien. — The basic real property tax and any other tax levied under this Title constitutes a lien on the property subject to tax, superior to all liens, charges or encumbrances in favor 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.  

SECTION 258.    Levy on Real Property. — After the expiration of the time required to pay the basic real property tax or any other tax levied under this Title, real property subject to such tax may be levied upon through the issuance of a warrant on or before, or simultaneously with, the institution of the civil action for the collection of the delinquent tax. The provincial or city treasurer, or a treasurer of a municipality within the Metropolitan Manila Area, as the case may be, when issuing a warrant of levy shall prepare a duly authenticated certificate showing the name of the delinquent owner of the property or person having legal interest therein, the description of the property, the amount of the tax due and the interest thereon. The warrant shall operate with the force of a legal execution throughout the province, city or a municipality, within the Metropolitan Manila Area. The warrant shall be mailed to or served upon the delinquent owner of the real property or person having legal interest therein, or in case he is out of the country or cannot be located, the administrator or occupant of the property. At the same time, written notice of the levy with the attached warrant shall be mailed to or served upon the assessor and the Registrar of Deeds of the province, city or municipality within the Metropolitan Manila Area where the property is located, who shall annotate the levy on the tax declaration and certificate of title of the property, respectively.  

The levying officer shall submit a report on the levy to the sanggunian concerned within ten (10) days after receipt of the warrant by the owner of the property or person having legal interest therein.  

SECTION 259.    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 the issuance thereof, or who is found guilty of abusing the exercise thereof in an administrative or judicial proceeding shall be dismissed from the service.  

SECTION 260.    Advertisement and Sale. — Within thirty (30) days after service of the warrant of levy, the local treasurer shall proceed to publicly advertise for sale or auction the property or a usable portion thereof as may be necessary to satisfy the tax delinquency and expenses of sale. The advertisement shall be effected by posting a notice at the main entrance of the provincial, city or municipal building, and in a publicly accessible and conspicuous place in the barangay where the real property is located, and by publication once a week for two (2) weeks in a newspaper of general circulation in the province, city or municipality where the property is located. The advertisement shall specify the amount of the delinquent tax, the interest due thereon and expenses of sale, the date and place of sale, the name of the owner of the real property or person having legal interest therein, and a description of the property to be sold. At any time before the date fixed for the sale, the owner of the real property or person having legal interest therein may stay the proceedings by paying the delinquent tax, the interest due thereon and the expenses of sale. The sale shall be held either at the main entrance of the provincial, city or municipal building, or on the property to be sold, or at any other place as specified in the notice of the sale.  

Within thirty (30) days after the sale, the local treasurer or his deputy shall make a report of the sale to the sanggunian concerned, and which shall form part of his records. The local treasurer shall likewise prepare and deliver to the purchaser a certificate of sale which shall contain the name of the purchaser, a description of the property sold, the amount of the delinquent tax, the interest due thereon, the expenses of sale and a brief description of the proceedings: Provided, however, That proceeds of the sale in excess of the delinquent tax, the interest due thereon, and the expenses of sale shall be remitted to the owner of the real property or person having legal interest therein.  

The local treasurer may, by ordinance duly approved, advance an amount sufficient to defray the costs of collection thru the remedies provided for in this Title, including the expenses of advertisement and sale.

SECTION 261.    Redemption of Property Sold. — Within one (1) year from the date of sale, the owner of the delinquent real property or person having legal interest therein, or his representative, shall have the right to redeem the property upon payment to the local treasurer of the amount of the delinquent tax, including the interest due thereon, and the expenses of sale from the date of delinquency to the date of sale, plus interest of not more than two percent (2%) per month on the purchase price from the date of sale to the date of redemption. Such payment shall invalidate the certificate of sale issued to the purchaser and the owner of the delinquent real property or person having legal interest therein shall be entitled to a certificate of redemption which shall be issued by the local treasurer or his deputy.  

From the date of sale until the expiration of the period of redemption, the delinquent real property shall remain in possession of the owner or person having legal interest therein who shall be entitled to the income and other fruits thereof.  

The local treasurer or his deputy, upon receipt from the purchaser of the certificate of sale, shall forthwith return to the latter the entire amount paid by him plus interest of not more than two percent (2%) per month. Thereafter, the property shall be free from lien of such delinquent tax, interest due thereon and expenses of sale.  

SECTION 262.    Final Deed to Purchaser. — In case the owner or person having legal interest fails to redeem the delinquent property as provided herein, the local treasurer shall execute a deed conveying to the purchaser said property, free from lien of the delinquent tax, interest due thereon and expenses of sale. The deed shall briefly state the proceedings upon which the validity of the sale rests.  

SECTION 263.    Purchase of Property By the Local Government Units for Want of Bidder. — In case there is no bidder for the real property advertised for sale as provided herein, the real property tax and the related interest and costs of sale the local treasurer conducting the sale shall purchase the property in behalf of the local government unit concerned to satisfy the claim and within two (2) days thereafter shall make a report of his proceedings which shall be reflected upon the records of his office. It shall be the duty of the Registrar of Deeds concerned upon registration with his office of any such declaration of forfeiture to transfer the title of the forfeited property to the local government unit concerned without the necessity of an order from a competent court.  

Within one (1) year from the date of such forfeiture, the taxpayer or any of his representative, may redeem the property by paying to the local treasurer the full amount of the real property tax and the related interest and the costs of sale. If the property is not redeemed as provided herein, the ownership thereof shall be vested on the local government unit concerned.  

SECTION 264.    Resale of Real Estate Taken for Taxes, Fees, or Charges. — The sanggunian concerned may, by ordinance duly approved, and upon notice of not less than twenty (20) days, sell and dispose of the real property acquired under the preceding section at public auction. The proceeds of the sale shall accrue to the general fund of the local government unit concerned.  

SECTION 265.    Further Distraint or Levy. — Levy may be repeated if necessary until the full amount due, including all expenses, is collected.  

SECTION 266.    Collection of Real Property Tax Through the Courts. — The local government unit concerned may enforce the collection of the basic real property tax or any other tax levied under this Title by civil action in any court of competent jurisdiction. The civil action shall be filed by the local treasurer within the period prescribed in Section 270 of this Code.  

SECTION 267.    Action Assailing Validity of Tax Sale. — No court shall entertain any action assailing the validity or any sale at public auction of real property or rights therein under this Title until the taxpayer shall have deposited with the court the amount for which the real property was sold, together with interest of two percent (2%) per month 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 or 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.  

SECTION 268.    Payment of Delinq