Local Treasury Operations Manual 2nd Edition

2019 LOCAL TREASURY OPERATIONS MANUAL 2ND EDITION RECEIPTS FROM COLLECTION OF TAXES, FEE AND CHARGES, AND FROM OTHER FUND SOURCES DEPARTMENT OF FINANCE BUREAU OF LOCAL GOVERNMENT FINANCE Manila, Philippines Local Treasury Operations Manual (LTOM),2nd Edition Second Printing, 2020. Printed in the Philippines Published by the Bureau of Local Government Finance ISBN: 978-971-94098-8-5 Copyright Bureau of Local Government Finance, 2019 Telefax: +632 522-8771/527-2803 Web: www.blgf.gov.ph E-mail: [emailprotected] All rights reserved. No part of this book may be reproduced in any form or by any means without the express permission of the copyright owner and the publisher. BOOK II Receipts from Collection of Taxes, Fee and Charges, and from Other Fund Sources INTRODUCTION LTOM Book II describes and enumerates the taxing powers of provinces, cities, and municipalities, as well as the sources of revenues to support their operations. This Book provides relevant provisions and procedures in the collection of revenues and receipts, as well as illustrations and samples. It also provides illustrations and samples for better understanding of the flow of processes. This Book consists of three (3) Chapters including Forms and Annexes, viz. : Chapter 1 Taxing Powers of Local Government Units (LGUs) Chapter 2 Sources of Income Chapter 3 Collection Procedures SECTION 36. Definition of Terms . A. Actual Use refers to the principal purpose for which the property is principally or predominantly utilized by the person in possession thereof. [Sec. 199 (b), LGC] B. Agricultural Land refers to 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, commercial or industrial land. [Sec. 199 (d), LGC] C. 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. 1. The phrase "whether in their original form or not" refers to the transformation of said products by the farmer, fisherman, producer or owner through the application of processes to preserve or otherwise to prepare the said products for the market such as freezing, drying, salting, smoking, or stripping for purposes of preserving or otherwise preparing said products for the market. [Sec. 31 (a), LGC] 2. To be considered an agricultural product whether in its original form or not, its transformation must have been undertaken by the farmer, fisherman, producer or owner. 3. Agricultural products ,as defined, include those that have undergone not only simple but even sophisticated processes employing advanced technological means in packaging like dressed chicken or ground coffee in plastic bags or styropor or other packaging materials intended to process and prepare the products for the market. 4. The term "by-products" shall mean those materials which in the cultivation or processing of an article remain over, and which are still of value and marketable, like copra cake from copra or molasses from sugar cane. [Art. 220 (a), IRR, Implementing Sec. 131 (a), LGC] D. Branch or Sales Office refers to a fixed place in a locality which conducts the operations of the business as an extension of the principal office. However, offices used only as display areas of the products where no stocks or items are stored for sale, although orders for the products may be received thereat, are not branch or sales offices as herein contemplated. A warehouse which accepts orders and/or issues sales invoices independent of a branch with sales office shall be considered as a sales office. [Art. 243 (a) (2), IRR implementing Sec. 150, LGC] E. Charges refer to pecuniary liability, as rents or fees against persons or property. (Sec. 131 (g), LGC) F. Experimental Farms refer to agricultural lands utilized by a business or corporation to conduct studies, test, researches or experiments involving agricultural, agri-business, marine or aquatic, livestock, poultry, dairy and other similar products for the purpose of improving the quality and quantity of goods or products. G. Exporter means any person, natural or juridical, licensed to do business in the Philippines, engaged directly or indirectly in the production, manufacture or trade of products or services which earns at least fifty percent (50%) of its normal operating revenues from the sale of its products or services abroad for foreign currency: Provided, That in the case of services, the same shall be limited to information technology services, construction services and other services as defined jointly by the DOF and the DTI. Services rendered by overseas contract workers are not covered by the definition. (Sec. 4 (a),RA 7844 or the Export Development Act of 1994) H. Fee means a charge fixed by law or ordinance for the regulation or inspection of a business or activity. [Sec. 131 (l), LGC] I. Franchise is a right or privilege, affected with public interest which is conferred upon private persons or corporations, under such terms and conditions as the government and its political subdivisions may impose in the interest of public welfare, security, and safety. [Sec. 131 (m), LGC] J. 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). [Sec. 131 (h), LGC] K. Income refers to all revenues and receipts collected or received forming the gross accretions of funds of the local government units (LGUs). L. Principal Office refers to the head or main office of the business appearing in the pertinent documents submitted to the Securities and Exchange Commission, or the Department of Trade and Industry (DTI),or other appropriate agencies as the case may be. [Art. 243 (a) (1), IRR implementing Sec. 150, LGC] M. Plantation refers to a tract of agricultural land planted to trees or seedlings whether fruit bearing or not, uniformly spaced or seeded by broadcast methods or normally arranged to allow highest production. For purposes of this Article, inland fishing ground shall be considered as plantation. [Art. 243 (a) (4), IRR implementing Sec. 150, LGC] N. Receipts refer to income realized from operations and activities of the local government or are received by it in the exercise of its corporate functions consisting of charges for services rendered, conveniences furnished, or the price of a commodity sold, as well as loans, contributions or aids from other entities, except provisional advances for budgetary purposes. (Sec. 36, Chapter 1, Volume 1, GAAM) O. Revenue refers to income derived from the regular system of taxation enforced under authority of law or ordinance, and, as such, accrues more or less regularly every year. (Sec. 36, Chapter 1, Volume 1, GAAM) P. Warehouse refers to a building utilized for the storage of products for sale and from which goods or merchandise are withdrawn for delivery to customers or dealers, or by persons acting in behalf of the business. A warehouse that does not accept orders and/or issue sales invoices as aforementioned shall not be considered a branch or sales office. [Art. 243 (a) (3), IRR implementing Sec. 150, LGC] CHAPTER 1 Taxing Powers of the Local Government Units (LGUs) SECTION 37. Power of LGUs to Create Sources of Revenue . A. Each LGU shall have the power to create its own sources of revenues and to levy taxes, fees and charges subject to the provisions of the Code, consistent with the basic policy of local autonomy. Such taxes, fees and charges shall accrue exclusively to the local governments. (Sec. 129, LGC) B. The revenue collected pursuant to the provisions of the LGC shall inure solely to the benefit of, and be subject to disposition by the LGU levying the tax, fee, charge or other impositions unless otherwise specifically provided in the LGC. [Sec. 130 (d), LGC] C. Local revenue is generated only from sources expressly authorized by law or ordinance, and collection thereof shall at all times b acknowledged properly. (Sec. 305 (c), LGC) D. All monies officially received by a local government officer in any capacity or on any occasion shall be accounted for as local funds, unless otherwise provided by law. (Sec. 305 (d), LGC) SECTION 38. Fundamental Principles of Taxing and Other Revenue Raising Powers of LGUs . The following fundamental principles shall govern the exercise of the taxing and other revenue-raising powers of the LGUs. A. Taxation shall be uniform in each LGU. [Sec. 130 (a), LGC] 1. Equality and uniformity in local taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate within the territorial jurisdiction of the taxing authority of LGU and not necessarily in comparison with other units although belonging to the same political subdivision. In fine, uniformity is required only within the geographical limitation of the taxing authority (p. 416, Tax Law and Jurisprudence, Second Edition, Vitug and Acosta) .Thus, if the tax is a municipal tax, it must be uniform throughout the municipality (Notes on Sec. 130, LGC; p. 20, Philippine Law on Local Government Taxation, Volume 1, Third Edition, Ursal, 2010) .The uniformity required is only within the territorial jurisdiction of a province, a city, a municipality or a barangay. [Art. 219 (a), IRR, implementing Sec. 130 (a), LGC] . 2. A tax is considered uniform when it operates with the same force and effect in every place where the subject may be found. Where the statute or ordinance applies equally to all persons, firms and corporations placed in similar situations, there is no infringement of the rule on equality. Inequalities which result from the singling out of one particular class, in respect to other classes, for taxation and exemption infringe no constitutional limitation. (p. 416, Tax Law and Jurisprudence, Second Edition, Vitug and Acosta) 3. Uniformity is not equivalent to equality in taxation (p. 23, Phil. Law on Local Government Taxation, Volume One, Third Edition, Ursal, 2010) .The Supreme Court ruled, "It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or equality under all circumstances, or negate the authority to classify the object of taxation. The classification made in the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not deemed satisfied unless: a. It is based upon substantial distinctions which make the real differences; b. These are germane to the purpose of the legislation or ordinance; c. The classification applies, not only to present conditions, but, also, to future conditions substantially identical to those of the present; and d. The classification applies equally to all those who belong to the same class." B. Taxes, fees, charges and other impositions shall: 1. Be equitable and based as far as practicable on the taxpayer's ability to pay; [Sec. 130 (b) (1), LGC] NOTE Equitability is characterized by equity. It means being fair to all concerned and that is without prejudice, favor or vigor entailing undue hardship. It is the word fairness that best describes equitable. If the tax is excessive, it is not fair. When the tax discriminates, aside from violating the rule of uniformity, it is not fair. If the tax is in restraint of trade (that is, discourages investors),it is not fair. The taxpayer's ability to pay must be considered. It cannot be absolute or it cannot be based on a hard and fast rule. Ability to pay is more equated with the progressive system of taxation, that is, the more you earn, the more tax you pay. Taxation must be based, as far as practicable, on ability to pay. (p. 209, Local Government Code, Annotated, Nolledo) The question as to when a tax is said to be "equitable," is related to the distribution of the tax burden itself. Thus, the most equitable tax system is that which is most closely in conformity with the standards of equity in the distribution of real income. (p. 24, Philippine Law on Local Government Taxation, Volume One, Third Edition, Ursal, 2010) 2. Be levied and collected only for public purposes; [Sec. 130 (b) (2), LGC] NOTE Public purpose requires that the proceeds of taxation are used to support the existence of the local government or the pursuit of its governmental objectives. (Local Government Code, Annotated, Nolledo) The tax should be designed to support the services of the government and the recognized public needs. The tax must affect the area as a community rather than as individual. (Local Government Code, Annotated, Nolledo) 3. Not be unjust, excessive, oppressive, or confiscatory; [Sec. 130, (b) (3), LGC] NOTE The tax must be reasonable in order not to be unjust or oppressive. (Local Government Code, Annotated, Nolledo) 4. Not be contrary to law, public policy, national economic policy, or in restraint of trade; [Sec. 130 (b) (4), LGC] NOTE A tax is contrary to law if it is a tax beyond the authority of an LGU to impose. (Nolledo, Local Government Code, Annotated) Thus, a local ordinance, to be valid, must not contravene the Constitution or any statute; not to be unfair or oppressive; not be partial or discriminatory; not prohibit but may regulate trade; be general and consistent with public policy; and not unreasonable. (US vs. Abendan, 24 Phil. 165) A tax must not be in restraint of trade and that it must not deter the free flow of commerce in the country, and cause considerable increase in the price of commodities, to the prejudice of the consuming public. [Sec. 130 (e),Local Government Taxation, Annotated, Ursal] 5. The collection of local taxes, fees, charges and other impositions, shall in no case, be let to any private person; [Sec. 130 (c), LGC] 6. In no case can the National Government share in local taxes even if provided by law. The Constitution provides that local taxes, fees and charges shall accrue exclusively to the local governments; (Sec. 5, Art. X, 1987 Constitution) 7. Each LGU shall, as far as practicable, evolve a progressive system of taxation [Sec. 130 (e), LGC] .A progressive tax is one where the tax rate increases as the tax base increases. In the case of tax on business, manufacturers pay more taxes per annum as their gross sales or receipts for the preceding year increases. (Local Government Taxation, Volume One, Third Edition, Ursal, 2010) SECTION 39. Power of LGUs to Levy Taxes, Fees or Charges . A. LGUs may exercise the power to levy taxes, fees, or charges on any base or subject not otherwise specifically enumerated in the LGC or taxed under the provisions of the National Internal Revenue Code (NIRC), 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. (Sec. 186, LGC) B. The city and municipality may impose and collect such reasonable fees and charges on business and occupation, and except as reserved to the province in Sec. 139 of the LGC, on the practice of any profession or calling, commensurate with the cost of regulation, inspection and licensing before any person may engage in such business or occupation, or practice such profession or calling. (Sec. 147, LGC) To ensure uniform procedure in setting reasonable fees and charges as provided for by the provisions of RA No. 7160, and in order to set a balance between recovering the cost of service and the ease of doing business in compliance with RA No. 11032, DOF-DILG JMC No. 2019.01 dated 14 May 2019, issued by the Secretary of Finance and the Secretary of the Interior and Local Government, provides the guidelines for the review, adjustment, setting and/or adoption of reasonable regulatory fees and charges of local government units. (Annex 9) NOTE For details on the implementation of DOF-DILG JMC No. 2019.01, refer to BLGF Memorandum Circular No. 020.2019, dated 02 September 2019, providing for the Local Fees and Charges (LFC) Toolkit on the Review, Setting, and/or Adoption of Reasonable Local Fees and Charges. SECTION 40. Authority to Adjust Tax Rates . LGUs shall have the authority to adjust the tax rates not oftener that once every five (5) years but in no case shall such adjustment exceed ten percent (10%) of the rates fixed under the LGC. (Sec. 191, LGC) NOTE However, while x x x City may rectify and amend their old tax ordinance in order to give full implementation of the LGC, it, however, cannot impose a straight 1.25% at its initial implementation of the LGC in so far as retailers are concerned. x x x City should, at the very least, start with 1% (the minimum tax rate) as provided under Sec. 143(d) of the LGC. x x x. Considering that 11 years had already elapsed from its implementing in 2006, x x x City could adjust its tax rate twice now which will make its adjusted tax rate for retailers pegged at 1.2%, in accordance with Sec. 191 of the LGC. To clarify, from 2006-2011 (first 5 years), the initial tax rate should start with 1%; from 2011-2016 (next five years) 1.1%, thus, for the years 2017-2021, the adjustment is 1.21%. Clearly, the aforementioned jurisprudence is illustrative that the upward adjustment of tax rates in accordance with Sec. 191 of the LGC shall be reckoned with the existing tax rate imposed by the LGU under a duly enacted ordinance. However, for this purpose, x x x City should pass an ordinance to give effect to the above discussed tax adjustments. x x x. (G.R. No. 211093, 06 June 2017) SECTION 41. Valid Tax Ordinances and Revenue Measures . A. The power to impose a tax, fee or charge or to generate revenue under the LGC shall be exercised by the sanggunian of the LGU concerned through an appropriate ordinance. (Sec. 132, LGC) B. For any revenue ordinance to be valid, it must conform to the provisions of Chapter 5, Title I, Book II of the LGC, which define both substantive and procedural requirements thereof. C. As in all revenue measures, it is up to the particular local government to enact the necessary revenue ordinance that would enable it to avail of its power to impose a given tax, fees, charges and other impositions. D. Procedures and the Role of the Local Treasurer in the Adoption/Approval of Local Revenue Measures/Code. E. Procedural Requirements for a Tax Ordinance and Revenue Measures 1. Written Notices to Interested or Affected Parties In addition to the foregoing requirement on publication or posting, the sanggunian concerned shall cause the sending of written notices of the proposed ordinance, enclosing a copy thereof, to the interested or affected parties operating or doing business within the territorial jurisdiction of the LGU concerned. [Art. 276 (b) (2), IRR, implementing Sec. 188, LGC] Information must reach those that shall be directly affected by the imposition. For example, when the measure is on business tax, the LGU may invite the business community in the public hearing. To ensure compliance with the requirement, sending of written notices is necessary. The notice/s shall specify the date or dates and venue of the public hearing or hearings. [Art. 276 (b) (3), IRR, implementing Sec. 188, LGC] 2. Public Hearing a. The initial public hearing shall be held not earlier than ten (10) days from the sending out of notice/s, or the last day of publication, or date of posting thereof, whichever is later. [Art. 276 (b) (3), IRR, implementing Sec. 188, LGC] b. Public hearings shall be conducted for the purpose prior to the enactment of the tax ordinance or revenue measure. (Sec. 187, LGC) c. At the public hearing/s, all affected or interested parties shall be accorded an opportunity to appear and present or express their views, comments and recommendations, and such public hearings shall continue until all issues have been presented and fully deliberated upon and/or a consensus is obtained, whether for or against the enactment of the proposed tax ordinance or revenue measure. [Art. 276 (b) (4), IRR, implementing Sec. 188, LGC] d. The secretary of the sanggunian concerned shall prepare the minutes of such public hearing and shall attach to the minutes the position papers, memoranda and other documents submitted by those who participated. [Art. 276 (b) (5), IRR, implementing Sec. 188, LGC] e. No tax ordinance or revenue measure shall be enacted or approved in the absence of a public hearing duly conducted in the manner herein prescribed. [Art. 276 (c), IRR, implementing Sec. 188, LGC] 3. Approval of Ordinances a. If the Local Chief Executive (LCE) concerned approves the same, he/she shall affix his/her signature on each and every page thereof. [Sec. 54 (a), LGC] b. The LCE may veto any ordinance of the sangguniang panlalawigan, sangguniang panlungsod, or sangguniang bayan on the ground that it is ultra vires or prejudicial to the public welfare, stating his/her reasons therefor in writing [Sec. 55 (a), LGC] ,and return the same to the sanggunian, which may proceed to reconsider the same. [Sec. 54 (a), LGC] c. The veto shall be communicated by the LCE 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/she had signed it. [Sec. 54 (b), LGC] d. The LCE may veto an ordinance or resolution only once. [Sec. 55 (c), LGC] e. The sanggunian concerned may override the veto of the LCE by two-thirds (2/3) vote of all its members, thereby making the ordinance or resolution effective for all legal intents and purposes. [Sec. 54 (a), LGC] 4. Publication of Tax Ordinances and Revenue Measures (a) 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. (Sec. 188, LGC) (b) If the tax ordinance or revenue measure contains penal provisions, the gist of such ordinance or revenue measure shall be published in a newspaper of general circulation within the province where the local sanggunian concerned belongs. In the absence of any newspaper of general circulation within the province, posting of such ordinance or measure shall be made in accessible and conspicuous public places in all municipalities and cities of the province to which the sanggunian enacting the ordinance or revenue measure belongs. (Art. 276, IRR, implementing Sec. 188, LGC) 5. Effectivity of Tax Ordinances or Revenue Measures The tax ordinances or revenue measures take effect upon compliance with the above procedural and substantive requirements. In case the effectivity of any tax ordinance or revenue measure falls on any date other than the beginning of the quarter, the same shall be considered as falling at the beginning of the next ensuing quarter and the taxes, fees, or charges due shall begin to accrue therefrom. [Art. 276 (a), IRR, LGC] 6. Furnishing of Copies of Tax Ordinances and Revenue Measures Copies of all provincial, city and municipal tax ordinances and revenue measures shall be furnished the respective local treasurers for public dissemination. (Sec. 189, LGC) 7. Review of Tax Ordinances or Revenue Measures The LGC provides the following cautionary steps wherein tax ordinances or revenue measures of component cities and municipalities are reviewed by the sangguniang panlalawigan, and ordinances of barangays by the sangguniang panlungsod or sangguniang bayan: a. Review of Component City and Municipal Ordinances or Resolutions by the Sangguniang Panlalawigan i. Within three (3) days after approval, the secretary to the sangguniang panlungsod or sangguniang bayan shall forward to the sangguniang panlalawigan for review, copies of approved revenue ordinances and resolutions. [Sec. 56 (a), LGC] ii. Within thirty (30) days after receipt of copies of such revenue 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/her comments or recommendations, which may be considered by the sangguniang panlalawigan in making its decision. [Sec. 56 (b), LGC] iii. If the sangguniang panlalawigan finds that such an ordinance or resolution is beyond the power conferred upon the sangguniang 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. [Sec. 56 (c), LGC] iv. The review by the sangguniang panlalawigan of the component city and municipal revenue ordinances is limited to determining the legality thereof or if the same exceed the powers conferred upon by law to the sangguniang panlungsod or sangguniang bayan. Exceeding such powers is ultra vires and amounts to usurpation of the legislative functions of the city or municipal councils. v. The review by the sangguniang panlalawigan is in the nature of legislative check and it is a measure by which the provincial government exercises its power of general supervision over component units. vi. 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. [Sec. 56 (d), LGC] vii. Pending review by the higher council, a revenue ordinance continues to be in force and effect. viii. Declaration of invalidity of the revenue ordinance is equivalent to disapproval thereof. ix. The signature of the governor is required in relation to the resolution adopted by the sangguniang panlalawigan, approving or disapproving the revenue ordinance or resolution enacted by the sangguniang bayan or sangguniang panlungsod. b. Review of Barangay Ordinances by the Sangguniang Panlungsod or Sangguniang Bayan i. 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. ii. 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. iii. 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. [Sec. 57, LGC] SECTION 42. Taxing Powers of Provinces . Except as otherwise provided in the LGC, the province may levy only the taxes, fees, and charges specifically reserved to provinces, as follows: (Sec. 134, LGC) A. Tax on Transfer of Real Property Ownership (Sec. 135, LGC) ; B. Tax on Business of Printing and Publication (Sec. 136, LGC) ; C. Franchise Tax (Sec. 137, LGC) ; D. Tax on Sand, Gravel and Other Quarry Resources (Sec. 138, LGC) ; E. Professional Tax (with required government examination) (Sec. 139, LGC) ; F. Amusement Tax (Sec. 140, LGC, as amended by Republic Act (RA) No. 9640, 21 May 2009) ; G. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain Products (Sec. 141, LGC) ; H. Real Property Tax (Sec. 232, LGC) ; I. Additional Levy on Real Property for the Special Education Fund (SEF) (Sec. 235, LGC) ; J. Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC) ; K. Special Levy on Lands Benefited by Public Works, Projects or Improvements Funded by LGU concerned (Sec. 240, LGC) ; L. Service Fees and Charges (Sec. 153, LGC) ; M. Public Utility Charges (Sec. 154, LGC) ;and N. Toll Fees or Charges (Sec. 155, LGC) . SECTION 43. Taxing Powers of Cities . A. Except as otherwise provided in the LGC, 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 the LGC. B. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes. (Sec. 151, LGC) C. The city may levy and collect a percentage tax on any business not otherwise specified under paragraphs (a) to (g), Article 232, IRR of the LGC, at rates not exceeding three percent (3%) of the gross sales or receipts of the preceding calendar year. (Art. 237, IRR implementing Sec. 151, LGC) D. A city may levy local business tax in addition to local franchise tax at the same time. (G.R. No. 213136, 5 September 2018) E. Cities may levy the following taxes, fees and charges: 1. Tax on Transfer of Real Property Ownership (Sec. 135, LGC) ; 2. Tax on Business of Printing and Publication (Sec. 136, LGC) ; 3. Franchise Tax (Sec. 137, LGC) ; 4. Tax on Sand, Gravel and Other Quarry Resources (excluding component cities) (Sec. 138, LGC) ; 5. Professional Tax (Sec. 139, LGC) ; 6. Amusement Tax (Sec. 140, LGC, as amended by RA 9640, 21 May 2009) ; 7. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain Products (Sec. 141, LGC) ; 8. Tax on Business (Sec. 143, LGC) ; 9. Community Tax (Sec. 156, LGC) ; 10. Real Property Tax (Sec. 232, LGC) ; 11. Additional Levy on Real Property for the Special Education Fund (Sec. 235, LGC) ; 12. Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC) ; 13. Special Levy on Lands Specially Benefited by Public Works, Projects or Improvements (Sec. 240, LGC) ; 14. Socialized Housing Tax (RA 7279 & LFC 1-97) ; 15. Fees and Charges on Business and Occupation (Sec. 147, LGC) ; 16. Fees for Sealing and Licensing of Weights and Measures (Sec. 148, LGC) ; 17. Fishery Rentals, Fees and Charges (Sec. 149, LGC) ; 18. Service Fees and Charges (Sec. 153, LGC) ; 19. Public Utility Charges (Sec. 154, LGC) ;and 20. Toll Fees or Charges (Sec. 155, LGC) . SECTION 44. Taxing Powers of Municipalities . Except as otherwise provided in the LGC, municipalities may levy taxes, fees and charges not otherwise levied by provinces (Sec. 142, LGC) ,as follows: A. Tax on Business (Sec. 143, LGC) ; B. Community Tax (Sec. 156, LGC) ; C. Special Levy on Lands Specially Benefited by Public Works, Projects or Improvements (Sec. 240, LGC); D. Fees and Charges on Business and Occupation (Sec. 147, LGC) ; E. Fees for Sealing and Licensing of Weights and Measures (Sec. 148, LGC) ; F. Fishery Rentals, Fees and Charges (Sec. 149, LGC) ; G. Service Fees and Charges (Sec. 153, LGC) ; H. Public Utility Charges (Sec. 154, LGC) ;and I. Toll Fees or Charges (Sec. 155, LGC) . SECTION 45. Taxing Powers of the Municipality within the Metropolitan Manila Area (MMA) . A. The municipality within MMA may levy taxes on businesses enumerated under Article 232, IRR implementing Sec. 143 of the LGC, at rates not exceeding fifty percent (50%) of the maximum rates prescribed for said businesses. [Art. 236 (a), IRR implementing Sec. 144, LGC] B. The municipality may levy and collect taxes which may be imposed by the province at the rates not exceeding those prescribed therein. [Art. 236 (b), IRR implementing Sec. 144, LGC] C. Real Property Tax (Sec. 232, LGC) ; D. Additional Levy on Real Property for the Special Education Fund (SEF) (Sec. 235, LGC) ; E. Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC) ; F. In the case of the basic real property tax, the municipality within MMA may fix a uniform rate not exceeding two percent (2%) of the assessed value of real property. [Sec. 233 (b), LGC] SECTION 46. Common Limitations on the Taxing Powers of LGUs . Unless otherwise provided in the LGC, 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 otherwise provided in the LGC; 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 LGU concerned; E. Taxes, fees and charges and other impositions upon goods carried into or out of, passing through, the territorial jurisdictions of LGUs 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 (BOI) 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 (NIRC), 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 in the LGC; 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 the LGC; 1 K. Taxes on premiums paid by way of 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 charges on Philippine products actually exported, except as otherwise provided in the LGC; N. Taxes, fees, or charges on Countryside and Barangay Business Enterprises and Cooperatives duly registered under RA No. 6810 2 and RA No. 6938, 3 as amended by RA 9520; and O. Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units. (Sec. 133, LGC) SECTION 47. Collection of Taxes . A. Tax Period and Manner of Payment Unless otherwise provided in the LGC, the tax period of all local taxes, fees and charges shall be the calendar year. Such taxes, fees and charges may be paid in quarterly installments. (Sec. 165, LGC) B. Accrual of Tax Unless otherwise provided in the LGC, 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. (Sec. 166, LGC) C. Time of Payment Unless otherwise provided in the LGC, 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. (Sec. 167, LGC) D. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges The Sanggunian may impose a surcharge not exceeding twenty-five percent (25%) of the amount of taxes, fees or charges not paid on time and an interest at the rate not exceeding two percent (2%) per month of the unpaid taxes, fees or charges including surcharges, until such amount is fully paid but in no case shall the total interest on the unpaid amount or portion thereof exceed thirty-six (36) months. (Sec. 168, LGC) E. Interest on other Unpaid Revenues Where the amount of any revenue due an LGU, 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. (Sec. 169, LGC) F. 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. (Sec. 170, LGC) CHAPTER 2 Sources of Income TAX REVENUES SECTION 48. Professional Tax . An annual tax on each person engaged in the exercise or practice of profession or calling, such as but not limited to: lawyers; certified public accountants; doctors of medicine; architects; civil, electrical, chemical, mechanical, structural, industrial, mining, sanitary, metallurgical and geodetic engineers; marine surveyors; doctors of veterinary science; dentist; professional appraisers; connoisseurs of tobacco; actuaries; interior decorators, designers, real estate service practitioners (RESP),( i.e. ,real estate consultants, real estate appraisers and real estate brokers) requiring government licensure examination given by the Real Estate Service pursuant to Republic Act No. 9646 insurance agents and actuaries, and all professions requiring government licensure examination regulated by the Professional Regulations Commission, Supreme Court, etc. (Sec. 139, LGC, Revenue Regulations 11-2018) The collection and administration of the professional tax shall be guided by the following: A. The amount of professional tax shall not exceed Php300.00, or the rate provided under a duly enacted local ordinance, subject to adjustment not exceeding ten percent (10%) every five (5) years. [Local Finance Circular (LFC) No. 001.2019, 12 June 2019] B. Every person legally authorized to practice his/her profession shall pay the professional tax to the province, city or the lone municipality within MMA where he/she practices his/her profession or where he/she maintains his/her principal office in case he/she practices his/her profession in several places: Provided, however, that such person who has paid the corresponding professional tax shall be entitled to practice his/her 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. [Sec. 139 (b), LGC] C. The professional tax shall be payable annually, on or before the thirty-first (31st) day of January. Any person first beginning to practice a profession after the month of January must, however, pay the full tax before engaging therein. [Sec. 139 (d), LGC] The Sanggunian concerned may, for a justifiable reason or cause, extend the time of payment of such taxes, fees, or charges without surcharges or penalties, but only for a period not exceeding six (6) months. (Sec. 167, LGC, LFC No. 001.2019) D. Any individual or corporation employing a person subject to professional tax shall require payment by that person of the tax on his/her profession before employment and annually thereafter, as may be provided under a duly enacted local ordinance. [Sec. 139 (c), LGC] E. A line of profession does not become exempt even if conducted with some other profession for which the tax has been paid. [Sec. 139 (d), LGC] For example, a lawyer who is also a Certified Public Accountant (CPA) must pay the professional tax imposed on lawyers and that fixed for CPAs, if he/she is to practice both professions. [Art. 228 (f), IRR implementing Sec. 139, LGC] F. Professionals exclusively employed in the government shall be exempt from the payment of this tax [Sec. 139 (d), LGC] ,unless he/she has been duly authorized to practice the profession outside of his/her official business. (LFC No. 001.2019) G. Exemption from Payment of Business Permit .A business permit is issued primarily to regulate the conduct of business or trade. However, an LGU cannot, through the issuance of such permit regulate the practice of a profession, which is within the exclusive domain of the agency or office specifically empowered by law to supervise and regulate the profession. Unless covered under Section 7 of LFC No. 001.2019, a professional who has paid his/her professional tax shall be exempt from the payment of business permit fee in the operation of his/her clinic or office. However, a professional shall still be required to secure a business permit, at no cost, from the concerned LGU during the registration of office/clinic and renewal thereof, subject to a duly enacted local ordinance. H. Applicability of Local Business Tax on Professionals . If, upon verification, a professional is actually engaged in selling, trading or distributing of any articles of commerce of whatever kind, or involved in the function of trade, or undertake any business activity that does not constitute the practice of profession, pursuant to applicable law/s governing the practice of such profession, he/she shall be liable to pay the annual local business tax (LBT) to the city or municipality concerned, pursuant to the applicable rates provided under Secs. 143 and 146 of the LGC, and as may be provided under a duly enacted local ordinance. The professional concerned shall likewise be subject to the payment of business permit fee during the registration of the office/clinic and the renewal thereof. A separate recording of the transactions shall be maintained by said professional. I. Payment of Service Fees and Charges .LGUs may impose and collect other applicable fees and charges ( i.e. ,garbage fee, sanitary inspection fee, occupancy permit fee, etc.),the amount of which shall be reasonable commensurate to the cost of regulation or provision of service, as may be provided under a duly enacted local ordinance; provided, however, that no service charge shall be based on capital investments or gross sales or receipts of the persons or business liable therefor. (LFC No. 001.2019 dated 12 June 2019) J. Documentation Requirements: 1. Upon Payment of Tax For purposes of collecting the tax, the Provincial/City Treasurer or his/her duly authorized representative shall require from such professionals their current annual registration cards issued by competent authority before accepting payment of their professional tax for the current year. The Professional Regulation Commission (PRC) shall likewise require the professionals' presentation of proof of payment before registration of professionals or renewal of their licenses. [Art. 228 (f), IRR implementing Sec. 139, LGC] 2. On Transaction Documents of Practicing Professionals 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/her. [Sec 139 (e), LGC] SECTION 49. Community Tax . Cities or municipalities may levy a community tax in lieu of the former residence tax levied and collected under Sec. 38 of P.D. No. 231, as amended. Accordingly, all cities and municipalities shall enact, for the purpose, a local tax ordinance to take effect 1 January 1992. For purposes of enacting a local tax ordinance levying the community tax, the conduct of a public hearing provided for under Sec. 186 of the LGC, shall be dispensed with. (Art. 245, IRR implementing Sec. 156, LGC) A. Imposition of Community Tax The levy or imposition of community tax by a city or municipality shall be governed by the following rules and procedural guidelines: 1. Individuals liable for the payment of the Community Tax: a. 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; b. An individual who is engaged in business or occupation; c. An individual who owns real property with an aggregate assessed value of One Thousand Pesos (P1,000.00) or more; and d. An individual who is required by law to file an income tax return. [Art. 246 (a), IRR, implementing Sec. 157, LGC] 2. Rate of Community Tax Payable by Individuals: a. The rate of the annual community tax that may be levied and collected from said individuals shall be Five Pesos (P5.00) plus an additional tax of One Peso (P1.00) for every One Thousand Pesos (P1,000.00) of income 4 regardless of whether from business, exercise of profession, or from property but which, in no case, shall exceed Five Thousand Pesos (P5,000.00). b. In case of husband and wife, each of them shall be liable to pay the basic tax of Five Pesos (P5.00),but the additional tax imposable on the husband and wife shall be One Peso (P1.00) for every One Thousand Pesos (P1,000.00) of income from the total property owned by them and/or the total gross receipts or earnings derived by them. [Art. 246 (b), IRR implementing Sec. 157, LGC] 3. Juridical Persons Liable for the Payment of the Community Tax Every corporation, no matter how created or organized, whether domestic or resident foreign, engaged in or doing business in the Philippines shall pay community tax of Five Hundred Pesos (P500.00) and an additional tax, which, in no case, shall exceed Ten Thousand Pesos (P10,000.00) in accordance with the following schedule: a. For every Five Thousand Pesos (P5,000.00) worth of real property in the Philippines, owned by the juridical entity during the preceding year, based on the assessed value used for the payment of the real property tax under existing laws Two Pesos (P2.00);and b. For every Five Thousand Pesos (P5,000.00) of gross receipts or earnings derived from the business in the Philippines during the preceding year Two Pesos (P2.00). c. The dividends received by a corporation from another corporation shall, for the purpose of the additional tax, be considered as part of the gross receipts or earnings of said corporation. [Art. 246 (c), IRR implementing Sec. 158, LGC] B. Exemptions The following are exempt from the community tax: 1. Diplomatic and consular representatives; and 2. Transient visitors when their stay in the Philippines does not exceed three (3) months. (Sec. 159, LGC) C. Place of Payment The community tax shall be paid in the place of residence of the individual, or in the place where the principal office of the juridical entity is located (Sec. 160, LGC) .The following are the guidelines for the place of payment of the community tax: 1. The community tax shall be paid in the city or municipality where the residence of the individual is located, or in the city or municipality where the principal office of the juridical entity is located [Art. 246 (e) (1), IRR implementing Sec. 160, LGC] .Thus, a sales office or branch office is not liable to pay community tax in the city or municipality where it is located. (Sec. 2, Office of the President MC No. 153, s. 1992, 04 June 1992) 2. It shall be unlawful for any City or Municipal Treasurer to collect the community tax outside the territorial jurisdiction of the city or the municipality. [Art. 246 (e) (2), IRR implementing Sec. 160, LGC] 3. Any person, natural or juridical, who pays the annual community tax to a city or municipality other than the city or municipality where his/her residence, or principal office in the case of juridical persons, is located shall not anymore pay the community tax. (Sec. 2, Office of the President MC No. 153, 04 June 1992; BLGF 1st Indorsement, 26 July 1993) D. Time for Payment Guidelines as to when the community tax shall be paid: 1. The community tax shall accrue on the first (1st) day of January of each year and shall be paid not later than the last day of February of each year. 2. If a person reaches the age of eighteen (18) years or otherwise loses the benefit of exemption on or before the last day of June, he/she shall be liable for the community tax on the day he/she 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/she shall have twenty (20) days to pay the community tax without becoming delinquent. 3. Persons who come to reside in the Philippines or reach the age of eighteen (18) years on or after the first (1st) day of July of any year, or who cease to belong to an exempt class on or after the same date, shall not be subject to the community tax for that year. 4. Corporations established and organized on or before the last day of June shall be liable for the community tax for that year. But corporations established and organized on or before the last day of March shall have twenty (20) days within which to pay the community tax without becoming delinquent. Corporations established and organized on or after the first day of July shall not be subject to the community tax for that year. (Sec. 161, LGC) E. Penalties for Late Payment If the tax is not paid within the time prescribed above, there shall be added to the unpaid amount an interest of twenty-four percent (24%) per annum from the due date until it is paid. (Sec. 161, LGC) It is clarified, however, that the phrase "until it is paid" must be interpreted in accordance with the limitations of the LGC on other unpaid revenues imposed by the local government, which in no case shall the total interest on the unpaid amount or portion thereof exceed thirty-six (36) months. Thus, for community tax, the penalty shall not go beyond 36 months or seventy-two percent (72%) of the unpaid amount. (BLGF MC No. 01-001-2017, 05 January 2017) F. Issuance of Community Tax Certificate (CTC) A CTC shall be issued to every person or corporation upon payment of the community tax. It may also be issued to any person or corporation not subject to the community tax upon payment of One Peso (P1.00) (Sec. 162, LGC) G. Printing of Community Tax Certificate The Bureau of Internal Revenue (BIR) shall cause the printing of CTCs and distribute the same to the cities and municipalities through the City and Municipal Treasurers in accordance with prescribed regulations. [Art. 249, IRR implementing Sec. 164 (a), LGC] H. Collection of the Community Tax by Barangay Treasurers The tax ordinance levying the community tax shall authorize the City or Municipal Treasurer to deputize the Barangay Treasurers to collect the community tax in their respective jurisdictions. Said deputation, however, shall be limited to the community tax payable by individual taxpayers and shall be extended only to Barangay Treasurers who are properly bonded in accordance with existing laws. [Art. 250, IRR implementing Sec. 164 (b), LGC] I. Allocation of Proceeds of the Community Tax The proceeds of the community tax actually and directly collected by the City or Municipal Treasurer shall accrue entirely to the General Fund of the city or municipality concerned. However, proceeds of the community tax collected through the Barangay Treasurers shall be apportioned as follows: 1. Fifty percent (50%) shall accrue to the General Fund of the city or municipality concerned; and 2. Fifty percent (50%) shall accrue to the barangay where the tax is collected. [Art. 251, IRR implementing Sec. 164 (c), LGC] SECTION 50. Real Property Tax (RPT) . The ad valorem tax is a levy on real property determined on the basis of a fixed proportion of the value of the property. [Sec. 199 (c), LGC] A province or city or a municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not specifically exempted under the LGC. A. Fundamental Principles The appraisal, assessment, levy and collection of RPT shall be guided by the following fundamental principles: 1. Real property shall be appraised at its current and fair market value. [Sec. 198 (a), LGC] All real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in the locality where the property is situated. The Department of Finance (DOF) shall promulgate the necessary rules and regulations for the classification, appraisal, and assessment of real property pursuant to the provisions of the LGC. (Sec. 201, LGC) 2. Real property shall be classified for assessment purposes on the basis of its actual use. [Sec. 198 (b), LGC] 3. Real property shall be assessed on the basis of a uniform classification within each LGU [Sec. 198 (c), LGC] .To this end, Provincial, City, and the Municipal Assessors of the municipality within the MMA shall prepare a schedule of fair market values for the different classes of real property situated within their respective LGUs for enactment by ordinance of the sanggunian concerned. (Sec. 212, LGC) 4. The appraisal, assessment, levy and collection of RPT shall not be let to any private person. [Sec. 198 (d), LGC] 5. The appraisal and assessment of real property shall be equitable. [Sec. 198 (e), LGC] B. Administration of the Real Property Tax 1. The provinces and cities, including the municipality within MMA, shall be primarily responsible for the proper, efficient and effective administration of the RPT, subject to the rules and regulations governing the classification, appraisal and assessment of real property issued by the DOF. 2. Accordingly, the DOF and the provincial governments shall exercise the authority to review and examine on a continuing basis, property assessment and real property tax records to ensure the proper implementation hereof and determine compliance with existing laws and regulations. (Art. 291, IRR, implementing Sec. 200, LGC) ILLUSTRATION Administration of real property tax, as contemplated under Sec. 200 of the LGC, refers to the sequential process in the administration of real property tax which starts from the tax mapping phase, through property valuation and tax determination phases, to a final tax collection phase. The distribution and disbursement of the tax proceeds collected is not part of the real property tax administration cycle. (BLGF Letter to the Provincial Governor of Nueva Vizcaya, 07 January 2013) C. Rates of Levy 1. A province or city or municipality within MMA shall fix a uniform rate of basic RPT applicable to their respective jurisdiction as follows: a. For provinces not exceeding one percent (1%) of the assessed value; and b. For cities, or municipality of MMA not exceeding two percent (2%) of the assessed value. No public hearing shall be required before the enactment of a local tax ordinance levying the basic RPT. (Art. 324, IRR, Implementing Sec. 233, LGC) 2. For Renewable Energy (RE) developers Special Realty Tax Rates on Equipment and Machinery of a Registered RE Developer actually and exclusively used for RE facilities not exceeding one and a half percent (1.5%) of their original cost less accumulated normal depreciation or net book value. [Sec. 15 (c), RA 9513 or an Act Promoting the Development, Utilization and Commercialization of Renewable Energy Resources and For Other Purposes] NOTE Municipalities outside Metro Manila Area have no power to enact an ordinance levying real property tax, as such power and authority is vested only upon their respective provinces. (BGLF 1st Indorsement, 05 May 1994) D. Exemptions from Payment of Real Property Tax The following are exempted from payment of the RPT: 1. Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person. [Sec. 234 (a), LGC] Political subdivisions of the Republic of the Philippines are the autonomous regions, provinces, sub-provinces, cities, municipalities and barangays. (Sec. 4, Book I, EO No. 292) Government-Owned and Controlled Corporations (GOCCs) are not considered political subdivisions. 2. 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. [Sec. 234 (b), LGC] Charitable institutions are those whose principal aim is to give of its material substance or time to benefit those who are in need of such assistance, or will be benefited by such gift or expenditure in some other way than simply by an improvement of morals. Generally, the exemption of charitable institutions is expressly or impliedly limited to property devoted to charitable purposes and does not include property belonging to such institutions not used for secular or non-charitable purposes, such as property used to create revenue. (DOF Assessment Regulations No. 3-75, 10 February 1975) NOTE On NGCP's Franchise . The Central Board of Assessment Appeals (CBAA) should determine whether the subject properties of the National Grid Corporation of the Philippines (NGCP) are used in connection with its franchise. If the subject properties are used in connection with NGCP's franchise, then NGCP is exempt from paying real properties on the subject properties. If the subject properties are not used in connection with NGCP's franchise, then the assessment level should be based on actual use, in accordance with Sec. 218 (a-c) of the LGC. (GR No. 213157, 10 August 2016) On GSIS. The appraisal and assessment of the real properties of the Government Service Insurance System (GSIS) shall be guided by the following: That all real properties of the GSIS are exempt from the payment of real property tax. 1. That if the beneficial use thereof has been granted or enjoyed by a taxable person/entity, the liability for the payment of the real property tax shall be shouldered by the beneficial user; and 2. That in case the beneficial user fails to pay the real property tax, the property cannot in any event, be subject of a public auction sale notwithstanding its realty tax delinquency. [BLGF Memorandum Circular (MC) No. 19-2014, 25 April 2014] On PPA. The Decision of the Supreme Court in the case of 'MIAA vs. City of Paranaque' categorically specified that Philippine Ports Authority (PPA) is not a government-owned or controlled corporation but an instrumentality of the National Government thus, the real properties thereof are exempt from the payment of the real property tax. However, it is emphasized that when the beneficial use of these properties has been granted, for consideration or otherwise, to taxable entities, such property becomes taxable. (BLGF MC No. 101-2013 dated 13 November 2013) On SSS. The appraisal and assessment of the real properties of the Social Security System (SSS) shall be guided by the following: 1. That all real properties of the SSS are exempt from RPT; 2. That if the beneficial user thereof has been granted to or is allowed to be enjoyed by a taxable person or entity other than the SSS, the payment of RPT shall be borne by the beneficial user; and 3. That in case the beneficial user thereof fails to pay the RPT due thereon, the property in issue cannot in any manner be the subject of a sale through public auction. (BLGF MC No. 023.22018, 13 November 2018) 3. All machineries and equipment that are actually, directly and exclusively used by local water districts and GOCCs engaged in the supply and distribution of water and/or generation and transmission of electric power. [Sec. 234 (c), LGC] 4. All real properties owned by duly registered cooperatives as provided under RA No. 6938 5 as amended by RA No. 9520. [Sec. 234 (d), LGC] 5. Machinery and equipment used for pollution control and environmental protection. [Sec. 234 (e), LGC] 6. Except as provided herein, any exemption from payment of RPT previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all GOCCs are hereby withdrawn upon the effectivity of the LGC. [Sec. 234, LGC] E. Collection of Real Property Tax (RPT) 1. Date of Accrual of RPT The RPT for any year shall accrue on the first (1st) day of January and from that date, it shall constitute a lien on the property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatsoever, and shall be extinguished only upon the payment of the delinquent tax. (Sec. 246, LGC) 2. Responsibility of Local Treasurers to Collect The collection of RPT with interest thereon and related expenses, and the enforcement of the remedies provided for in Title 2, Book II of the LGC, or any applicable rules and regulations shall be the responsibility of the City or Municipal Treasurer concerned. (Sec. 247, LGC) 3. Where RPT may be Paid RPT shall be paid to the Office of the City or Municipal Treasurer of the city or municipality where the real property is located. Property owners, however, at their option or convenience, may pay their RPT at the Office of the Provincial Treasurer of the province to which the municipality where the property is located, belongs. (Art. 338, IRR, implementing Sec. 247, LGC) Real property taxes for properties located in a city or a municipality within MMA, shall be paid with the Office of the City or Municipal Treasurer concerned. 4. Deputation of Barangay Treasurers The City or Municipal Treasurer may deputize the Barangay Treasurer to collect all taxes on real property located in the barangay: provided, that the Barangay Treasurer is properly bonded for the purpose. Provided, further, that the premium on the bond shall be paid by the city or municipal government concerned. [Sec. 247, LGC] 5. Assessor to Furnish Local Treasurer with Assessment Roll The provincial, city or municipal assessor shall prepare and submit to the treasurer of the LGU, 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 (Sec. 248, LGC) ,notwithstanding cases where the Assessor's records are computerized and the same are directly and operationally connected to the Office of the Provincial, City or Municipal Treasurer in the form of Local Area Networking (LAN). 6. 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 on any other tax levied under Title Two-Real Property Taxation, post the notice of dates when the tax may be paid without interest at a conspicuous and publicly accessible place at the city or municipal hall. Said notice shall likewise be published in a newspaper of general circulation in the locality once a week for two (2) consecutive weeks. (Sec. 249, LGC) 7. Payment of Real Property Taxes in Installments a. The owner of the real property or the person having legal interest therein may pay the basic RPT and the additional tax for SEF due thereon, without interest, in four (4) equal installments, to be due and payable as follows: 1st Installment on or before the thirty-first (31st) day of March 2nd Installment on or before the thirtieth (30th) day of June 3rd Installment on or before the thirtieth (30th) day of September 4th Installment on or before the thirty-first (31st) day of December (Sec. 250, LGC) b. In the implementation of the installment scheme in the collection of RPT, the following shall be observed: i. Payment of RPT 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. ii. The date for the payment without interest of any other tax imposed under Title 2, Book II of the LGC shall be prescribed by the sanggunian concerned. iii. Excluded from the above schedule of installment payments is the special levy on properties benefited by development, the payments of which shall be governed by the schedule specified in the enabling ordinance enacted by the sanggunian concerned. (Sec. 250, LGC) NOTE The payment of quarterly installments, having been fixed by law, cannot be extended by way of a local ordinance. (BLGF 2nd Indorsement to the Treasurer of Iloilo City, 14 June 1994) F. Tax Discount for Advanced and Prompt Payment 1. Prompt payments may be given a discount of ten percent (10%),while advanced payments may be entitled to the maximum discount of 20%. (Art. 342, IRR, implementing Sec. 251, LGC) 2. The tax discount rates shall be specified in an appropriate and duly enacted ordinance enacted by the sanggunian of the LGU concerned. In the absence of an ordinance, the discounts shall not be granted. NOTE Anent the proper accounting treatment of advance payments of real property taxes consisting of the basic tax (RPT) and the additional Special Education Fund (SEF), x x x they shall be recognized as Deferred RPT and Deferred SEF, respectively. These advance collections are not yet income of the Local Government Unit (LGU) rather, they are still considered liabilities until such time that the taxes for which they are paid become due. (COA letter dated 21 January 2019 to BLGF Executive Director) G. Assessment of Property Subject to Back Taxes 1. Real property declared for the first time shall be assessed for the period during which it would have been liable but in no case for more than ten (10) years prior to the date of initial assessment. 2. Provided, however, that such taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period. 3. Provided further that the total tax liability shall include the current year in addition to the ten (10) years back taxes. 4. 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 until such taxes are fully paid. (Sec. 222, LGC) H. Repayment of Excessive Collections 1. When an assessment of the basic RPT, or any other tax levied under Title 2, Book II of the LGC, 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. 2. The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60) days from receipt thereof. In case the claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided in Chapter 3, Title 2, Book II of the LGC. (Sec. 253, LGC) 3. In case of tax credit, a Certificate of Tax Credit shall be issued to the property owner or to the person having legal interest therein. NOTE Tax refund may be applicable under the following circumstances: - No existing property in which to apply the tax credit. - When the property that was taxed has been declared exempt. - If the amount of tax paid is more than the annual tax due. Tax credit may be applicable under the following circumstances: - There is an existing property in which to apply the tax credit. - When the property is not exempt. Tax credit certificate is not transferable. In case of tax refund for prior years, the Local Treasurer shall ensure budget appropriation and authority for payment of prior year obligation. I. Interest on Delinquent RPT In case of failure to pay the basic RPT or any other tax levied under Title 2, Book II of the LGC, upon the expiration of the periods as provided in Sec. 250 of the same Code, or when due, as the case may be, shall subject the taxpayer to the payment of interest at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid: Provided, however, that in no case shall the total interest on the unpaid tax or portion thereof exceed thirty six (36) months. (Sec. 255, LGC) NOTE Unpaid real property tax that accrued prior to 1 January 1992 are imposed an interest of 2% per month, with a maximum of 24% per year, in accordance with the law then in force, which was PD No. 464. While unpaid real property tax that accrued on 1 January 1992 onwards are imposed an interest of 2% per month, but not exceeding 36 months or a maximum rate of 72%, in accordance with the governing law which is RA No. 7160, which repealed PD No. 464. (2nd Indorsement to the ICO-Regional Director, Region XII, Cotabato City, 20 December 2010) Note: Refer to Book IV for sample computation J. Remedies for the Collection of RPT 1. Administrative and Judicial Remedies When the RPT and any other tax levied such as: Annual Ad Valorem Tax, Additional Levy on Real Property for the Special Education Fund (SEF),Additional Ad Valorem Tax on Idle Lands, and Special Levy by Local Government Units, under Title 2, Book II of the LGC, becomes delinquent, the LGU concerned, through the Office of the Provincial or City Treasurer, or the Municipal Treasurer of the municipality within MMA, may avail of remedies by administrative or judicial action. a. The Administrative Remedies which are summary in nature are: i. Levy on Real Property; and ii. Sale of Real Property at Public Auction. b. The judicial remedy is availed of in the court of appropriate jurisdiction. 2. The foregoing remedies are cumulative, simultaneous and unconditional, that is, any or all of them or a combination thereof may be resorted to and the use of one remedy shall not be a bar against the institution of the others. Formal demand for the payment of the delinquent taxes and penalties due is not a prerequisite to such remedies. The Notice of Delinquency required under Sec. 254 of the LGC shall be sufficient for the purpose. (Art. 347, IRR, implementing Sec. 256, LGC) K. Local Government's Lien The basic RPT and any other tax levied under Title Two, Book II of the LGC, constitute a lien on the real property subject to tax. Such lien is 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. (Sec. 257, LGC) L. Treasurer to Certify Delinquencies Remaining Uncollected The provincial, city or municipal treasurer or his/her deputy shall prepare a certified list of all RPT delinquencies which remained uncollected or unpaid for at least one (1) year in his/her jurisdiction, and a statement of the reason or reasons for such non-collection or non-payment, and shall submit the same to the sanggunian concerned on or before the thirty-first (31st) of December of the year immediately succeeding the year in which the delinquencies were incurred, with a request for assistance in the enforcement of the remedies for collection provided in the LGC. (Sec. 269, LGC) ILLUSTRATION The Certified list of RPT delinquencies as of 31 December 2018 shall be submitted to the sanggunian on or before the 31st of December 2019. M. Guidelines in Determining Delinquency 1. Taxpayers are delinquent if they fail to pay their taxes within the period fixed by statute or executive order. (G.R. No. 6133 U.S. v. Estavillo ,19 Phil. 478) 2. Tax delinquencies shall be governed by the provisions of applicable laws then in force and in effect. NOTE Years delinquent Applicable Law Penalty 1992-present RA 7160 2% per month, not to exceed 72% 1986-1991 Sec. 66, PD No. 464 2% per month, not to exceed 24% per annum 1979-1985 PD No. 1621 2% per month, not to exceed 24% per annum NOTE For purposes of computation of the real property taxes due for the years 1986 to 1991, the penalty or interest imposed is two percent on the amount of the delinquent tax for each month of delinquency or fraction thereof but in no case shall the total penalty exceed twenty-four percent per annum of the delinquent tax, pursuant to Sec. 66 of the Real Property Tax Code of 1974 or PD No. 464. However, from 01 January 1992 onwards, the proper basis for the computation of the real property tax payable, including penalties or interests, if applicable, must be the LGC, which took effect on the 1st of January 1992 inasmuch as Sec. 534 thereof had expressly repealed PD No. 464 or the Real Property Tax Code. Sec. 5(d) of the LGC provides that rights and obligations existing on the date of effectivity of the new Code and arising out of contracts or any source of presentation involving an LGU shall be governed by the original terms and conditions of the said contracts or the law in force at the time such contracts were vested. ( The Honorable Secretary of Finance vs. The Honorable Ricardo M. Ilarde, et al. ,GR No. 121782, 09 May 2005) Note: Refer to Book IV for sample computation N. Periods within Which to Collect RPT The basic RPT and any other tax levied under Title 2, Book II of the LGC, shall be collected within five (5) years from the date they become due. No action for the collection of the tax, whether administrative or judicial shall be instituted after the expiration of such period. In case of fraud or intent to evade payment of the tax, such action may be instituted for the collection of the same within ten (10) years from the discovery of such fraud or intent to evade payment. The period of prescription within which to collect shall be suspended for the time during which: 1. The local treasurer is legally prevented from collecting the tax; 2. The owner of the property or the person having legal interest therein requests for re-investigation and executes a waiver in writing before the expiration of the period within which to collect; and 3. The owner of the property or the person having legal interest therein is out of the country or otherwise cannot be located. (Sec. 270, LGC) O. 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/her deputy who fails to issue or execute warrant of levy within one (1) year 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. (Sec. 259, LGC) P. Further Distraint or Levy Levy may be repeated if necessary until the full amount due, including all expenses, is collected. (Sec. 265, LGC) Q. Action Assailing Validity of Tax Sale 1. No court shall entertain any action assailing the validity of any sale at public auction of real property or rights therein under Title 2, Book II of the LGC, 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. 2. Neither shall any court declare a sale at public auction invalid by reason of irregularities or informalities in the proceedings unless the substantive rights of the delinquent owner of the real property or the person having legal interest therein have been impaired. (Sec. 267, LGC) R. Payment of Delinquent Taxes on Property Subject of Controversy In any action involving the ownership or possession of, or succession to, real property, the court may, "motu proprio" or upon representation of the provincial, city or municipal treasurer or his/her deputy, award such ownership, possession, or succession to any party to the action upon payment to the court of the taxes with interest due on the property and all other costs that may have accrued, subject to the final outcome of the action. (Sec. 268, LGC) SECTION 51. Special Provisions . A. Condonation or Reduction of RPT and Interest In case of a general failure of crops or substantial decrease in the price of agricultural or agri-based products, or calamity in any province, city, or municipality, the sanggunian concerned, by ordinance passed prior to the first day of January of any year and upon recommendation of the Local Disaster Coordinating Council, may condone or reduce, wholly or partially, the taxes and interest thereon for the succeeding year or years in the city or municipality affected by the calamity. (Sec. 276, LGC) NOTE The condonation or reduction contemplated under Sec. 276 is prospective in application, meaning, only real property taxes or interests due the succeeding year or years, after any of the abovementioned incidents happened which adversely affected the taxpayer's ability to pay, may be condoned or reduced and not unpaid real property taxes or interests of the past year or years. (BLGF Letter to the City Treasurer of Isabela City, Basilan, 01 June 2011) B. Condonation or Reduction of Tax by the President of the Philippines The President of the Philippines may, when public interest so requires, condone or reduce the RPT and interest for any year in any province or city, or municipality within the Metropolitan Manila Area. (Sec. 277, LGC) ILLUSTRATION The President of the Philippines promulgates Executive Orders (EOs) to effect the policy under Sec. 277 of the LGC. Since 2014, the following EOs were issued by the President pursuant to Sec. 277 of the LGC: (i) EO No. 173, s. 2014, (ii) EO No. 19, s. 2017, (iii) EO No. 60, s. 2018, and (iv) EO No. 88, s. 2019. These EOs reduced all liabilities for real property tax, including any special levies accruing to the Special Education Fund (SEF), on property, machinery and equipment actually and directly used by Independent Power Producers (IPPs) for the production of electricity under Build-Operate-Transfer scheme and similar contracts, whether denominated power purchase agreements, energy conversion agreements or other contractual agreements, with GOCCs, assessed by LGUs and other entities authorized to impose RPT for all years up to the issuance of the EOs, to an amount equivalent to the tax due if computed based on the following: 1. The assessment level to be applied on the fair market value (FMV) of machinery and equipment of the IPP is fifteen percent (15%); 2. The annual depreciation rate of such machinery and equipment shall be at rate of two percent (2%) per annum; and 3. The resulting tax due shall be less any amounts already paid by the IPPs. All interests on RPT delinquencies on such machinery and equipment were ordered condoned and the concerned IPPs were relieved from payment thereof. C. Fees in Court Actions All court actions, criminal or civil, instituted at the instance of the provincial, city or municipal treasurer under the provisions of the LGC, shall be exempt from the payment of court and sheriff's fees. (Sec. 280, LGC) D. Fees in Registration of Papers of Documents on Sale of Delinquent Real Property to Province, City or Municipality All certificates, documents and papers covering the sale of delinquent property to the province, city or municipality, if registered in the Registry of Property, shall be exempt from the documentary stamp and registration fees. (Sec. 281, LGC) E. Penalties for Omission of Property from Assessment or Tax Rolls by Officers and Other Acts 1. Any officer charged with the duty of assessing a real property who willfully fails to assess, or who intentionally omits from the assessment or tax roll any real property which he/she knows to be taxable, or who willfully or negligently underassesses any real property, or who intentionally violates or fails to perform any duty imposed upon him/her by law relating to the assessment of taxable real property shall, upon conviction, be punished by imprisonment of not less than one (1) month nor more than six (6) months, or by a fine of not less than One Thousand Pesos (Php1,000.00) nor more than Five Thousand Pesos (Php5,000.00) or both such imprisonment and fine, at the discretion of the court. 2. The same penalty shall be imposed upon any officer in charged with the duty of collecting the tax due on real property who willfully or negligently fails to collect the tax and institute the necessary proceedings for the collection of the same. 3. Any other officer required to perform acts relating to the administration of the RPT or to assist the assessor or treasurer in such administration, who willfully fails to discharge such duties shall, upon conviction, be punished by imprisonment of not less than one (1) month nor more than six (6) months, or by a fine of not less than Five Hundred Pesos (Php500.00) nor more than Php5,000.00 or both such imprisonment and fine, at the discretion of the court. (Art. 375, IRR of the LGC) F. Penalties for Failure to Dispose of Delinquent Real Property at Public Auction The local treasurer concerned who fails to dispose of delinquent real property at public auction and any other LGU official whose acts hinder prompt disposition of delinquent real property at public auction shall, upon conviction, be subject to imprisonment of not less than 1 month nor more than 6 months, or a fine of not less than Php1,000.00 nor more than Php5,000.00 or both such imprisonment and fine, at the discretion of the court. (Art. 377, IRR of the LGC) SECTION 52. Special Education Fund (SEF) . A province or city, or municipality within MMA, 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 RPT. The proceeds thereof shall exclusively accrue to the SEF. (Sec. 235, LGC) No public hearing shall be required before the enactment of a local tax ordinance levying the additional one percent (1%) SEF tax. (Art. 326, IRR, LGC) The annual tax of one percent (1%) that accrues to the SEF is the maximum rate. LGUs may impose a lower rate. NOTE Having established the propriety of imposing an additional levy for the special education fund at the rate of 0.5%,it follows that there was nothing erroneous in the Municipality of Narra having acted pursuant to Sec. 48 of the Ordinance. Thus, it could not be faulted for collecting from owners of real properties located within its territory an annual tax as special education fund at the rate of 0.5% of the assessed value subject to tax of the property. Likewise, it follows that it was an error for respondent to hold petitioner personally liable for the supposed deficiency in collections. ( Lucena D. Demaala vs. COA ,GR No. 199752, 17 February 2015) SECTION 53. Special Levy on Idle Lands . A province or city, or municipality within MMA, 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 RPT. (Sec. 236, LGC) A. Coverage of Idle Lands For purposes of real property taxation, idle lands shall include the following: 1. 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. 2. 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. 3. Regardless of land area, it shall likewise apply to residential lots in subdivisions duly approved by proper authorities, the ownership of which has transferred to individual owners, who shall be liable for the additional tax provided that individual owners who shall be liable for the additional tax provided 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 the subdivision owner or operator. (Art. 328, IRR of the LGC) B. For this additional tax on idle lands, the following should be observed: 1. Exemption from Tax on Idle Lands A province or city or municipality within the MMA may exempt idle lands from the additional levy by reason of force majeure ,civil disturbance, natural calamity or any cause or circumstance which physically or legally prevents the owner of the property or person having legal interest therein from improving, utilizing or cultivating the same. (Sec. 238, LGC) 2. 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/her area of jurisdiction. For purposes of collection, the Provincial, City or Municipal Assessor shall furnish a copy thereof to the Provincial or City Treasurer who shall notify, on the basis of such record, the owner of the property or person having legal interest therein of the imposition of the additional tax. (Sec. 239, LGC) SECTION 54. Special Levy on Lands Benefited by Public Work Projects . A. It is a special levy on the lands comprised within its territorial jurisdiction specially benefited by public works projects or improvements funded by the LGU concerned. B. The special levy shall not exceed sixty percent (60%) of the actual cost of such projects and improvements, including the costs of acquiring land and such other property in connection therewith. C. The special levy shall not apply to lands exempt from basic RPT and the remainder of land portions of which have been donated to the LGU concerned for the construction of such projects and improvements. (Sec. 240, LGC) D. The tax ordinance imposing the special levy shall: 1. Describe with reasonable accuracy the nature, extent, and location of the public works projects or improvements to be undertaken; 2. State the estimated cost of the public works projects or improvements; 3. Specify the metes and bounds by monuments and lines; and 4. Specify the number of annual installments for the payment of the special levy which in no case shall be less than five (5) years nor more than ten (10) years. 5. The sanggunian concerned shall not be obliged, in the apportionment and computation of the special levy, to establish a uniform percentage of all lands subject to the payment of the tax for the entire district, but it may fix different rates for different parts or sections thereof, depending on whether such land is more or less benefited by the proposed work. (Sec. 241, LGC) 6. Prior to the enactment of an ordinance imposing a special levy, the sanggunian concerned shall: a. Conduct a public hearing thereon; and b. Notify in writing the owners of the real property to be affected or the persons having legal interest therein as to the date and place thereof and afford the latter the opportunity to express their positions or objections relative to the proposed ordinance. (Sec. 242, LGC) E. The special levy 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/her books. (Sec. 243, LGC) F. The special levy shall accrue on the first (1st) day of the quarter next following the effectivity of the ordinance imposing such levy. (Sec. 245, LGC) SECTION 55. Disposition of Proceeds . A. Distribution of Proceeds The proceeds of the basic real property tax, including interest thereon, and proceeds from the use, lease or disposition, sale or redemption of property acquired at a public auction, in accordance with the provisions of Title 2, Book II of the LGC, by the province or city or municipality within the MMA shall be distributed as follows: 1. In the case of Provinces a. Province Thirty-five percent (35%) shall accrue to the General Fund of the province; b. Municipality Forty percent (40%) shall accrue to the General Fund of the municipality where the property is located; and c. Barangay Twenty-five percent (25%) shall accrue to the barangay where the property is located. 2. In the case of Cities a. City Seventy percent (70%) shall accrue to the General Fund of the city; and b. Barangay Thirty percent (30%) shall be distributed among the component barangays of the cities where the property is located in the following manner: i. Fifty percent (50%) shall accrue to the barangay where the property is located; ii. Fifty percent (50%) shall accrue equally to all component barangays of the city. 3. In the case of Municipality within the Metropolitan Manila Area a. Metropolitan Manila Authority Thirty-five percent (35%) shall accrue to the General Fund of the Authority; b. Municipality Thirty-five percent (35%) shall accrue to the General Fund of the municipality where the property is located; c. Barangays Thirty percent (30%) shall be distributed among the component barangays of the municipality where the property is located in the following manner: i. Fifty percent (50%) shall accrue to the barangay where the property is located; and ii. Fifty percent (50%) shall accrue equally to all component barangays of the municipality. (Sec. 271, LGC) B. Release of Barangay Share. The share of each barangay shall be released, without need of any further action, directly to the Barangay Treasurer on a quarterly basis within five (5) days after the end of each quarter and shall not be subject to any lien or holdback for whatever purpose [Sec. 271 (d), LGC] and to such rules as may be prescribed by the Commission on Audit for this purpose. [Art. 362, IRR implementing Sec. 271 (d), LGC] C. Application of Proceeds of the Additional One Percent SEF Tax. The proceeds from the additional one percent (1%) tax on real property accruing to the SEF shall be automatically released to the local school boards; Provided, That in case of provinces, the proceeds shall be divided equally between the provincial and municipal school boards, Provided, however, That the proceeds shall be allocated for the operation and maintenance of public schools, construction and repair of school buildings, facilities and equipment, educational research, purchase of books and periodicals, and sports development as determined and approved by the local school board. (Sec. 272, LGC) NOTE Refer to Book III on the Use of the SEF, under DBM/DepEd/DILG Joint Circular No. 1, 26 May 2017. D. Proceeds of the Tax on Idle Lands. The proceeds of the additional real property tax on idle lands shall accrue to the respective General Fund of the province or city where the land is located. In the case of municipality within the MMA, the proceeds shall accrue equally to the Metropolitan Manila Authority and the municipality where the land is located. (Sec. 273, LGC) Accordingly, the proceeds of this tax shall be treated in the income account as revenue from taxation. (Art. 364, IRR implementing Sec. 273, LGC) E. Proceeds of the Special Levy. The proceeds of the special levy on lands benefited by public works, projects and other improvements shall accrue to the General Fund of the local government unit which financed such public works, projects or other improvements. (Sec. 274, LGC) Accordingly, all income derived from this special levy shall be treated in the income account as revenue from taxation. (Art. 365, IRR implementing Sec. 274, LGC) SECTION 56. 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 one percent (1%) of the total consideration involved in the acquisition of the property, or of the fair market value (FMV) in case the monetary consideration involved in the transfer is not substantial, whichever is higher. [Sec. 135 (a), LGC] B. The FMV as used herein shall be that reflected in the prevailing schedule of fair market values enacted by the sanggunian concerned. [Art. 224 (a), IRR, implementing Sec. 135 (a), LGC] C. The prevailing schedule of fair market value, tax rate, surcharges and interests prescribed in the tax ordinance at the time of death of decedent shall be the basis in computing the subject transfer tax. D. 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 the 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. E. It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein imposed within sixty (60) days from the date of the execution of the deed or from the date of the decedent's death. [Sec. 135 (b), LGC] F. The sale, transfer or other disposition of real property pursuant to RA No. 6657 shall be exempt from this tax [Sec. 135 (a), LGC] . However, transfer of ownership over a land pending issuance of a free patent under Commonwealth Act No. 141, as amended by the Bureau of Lands is subject to this tax. G. Private sector entities and individuals engaged in developing socialized housing projects under RA No. 7279, for the benefit of the underprivileged and homeless are exempted from payment of transfer tax for both raw and completed projects. (Sec. 20, RA 7279) H. Guidelines on the Grant of Relief on Surcharges and Interests on Tax and Transfer of Real Property Ownership in Support of the Estate Tax Amnesty Program (RA No. 11213): 1. The grant of relief shall be imposed only on all surcharges and interests on local transfer tax on estates of decedent/s who died on or before 31 December 2017 and shall be availed by the legal heirs, administrator or executor until 14 June 2021. 2. The grant of relief shall be authorized under a duly enacted local ordinance upon the effectivity of Department of Finance (DOF) Department Circular No. 001-2019. 3. The grant of relief shall be applied to transfer on real property ownership by succession only, and in no case shall apply to other kinds of transfer. 4. Local treasurers shall collect the tax on transfer of real property ownership which shall only be based on the prevailing schedule of fair market value of the subject property at the time of the death of the decedent, and in accordance with the grant of relief that the LGU may authorize pursuant to the circular. (DOF Department Circular No. 001-2019, 5 September 2019) SECTION 57. Local Business Tax . A. The tax on persons or entities in the course of trade or business, such as: 1. 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. [Sec. 143 (a), LGC] a. 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 prepare it for special use or uses to which it could not have been put in its original condition; or b. 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 use of industry; or c. 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 materials or manufactured or partially manufactured products in their original condition could not have been put; and d. Who in addition, alters such raw material or manufactured or partially manufactured products, or combines the same to produce such finished products for the purpose of their sale or distribution to others and not for his/her own use or consumption. [Sec. 131 (o), LGC] 2. On wholesalers, distributors, or dealers [Sec. 143 (b), LGC] Wholesale means a sale where the purchaser buys or imports the commodities for resale to persons other than the end user regardless of the quantity of the transaction. [Sec. 131 (z), LGC] 3. On exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of essential commodities. The following are essential commodities: a. Rice and corn b. Wheat or cassava flour, meat, dairy products, locally manufactures, processed or preserved food, sugar, salt and other agricultural, marine, and fresh water products, whether in their original state or not c. Cooking oil and cooking gas d. Laundry soap, detergents and medicine e. Agricultural implements, equipment and post-harvest facilities, fertilizers, pesticides, insecticides, herbicides and other farm inputs f. Poultry feeds and other animal feeds g. School supplies h. Cement 4. On retailers [Sec. 143 (d), LGC] Retail means a sale where the purchaser buys the commodity for his own consumption, irrespective of the quantity of the commodity sold. [Sec. 131 (w), LGC] 5. On contractors and independent contractors [Sec. 143 (e), LGC] a. Contractor includes persons, natural or juridical, not subject to professional tax under Sec. 139 of the LGC, 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. b. The term "contractor" shall include the following: i. General engineering, general building and specialty contractors; ii. Filling, demolitions and salvage works contractors, proprietors or operators of mine drilling apparatus, proprietors or operators of dockyards; iii. Persons engaged in the installation of water system, and gas or electric light, heat, or power; iv. Proprietors or operators of smelting plants, engraving, plating and plastic lamination establishments; v. Proprietors or operators of establishments for repairing, repainting, upholstering, washing or greasing of vehicles, heavy equipment, vulcanizing, recapping and battery charging; vi. Proprietors or operators of furniture shops and establishments for planning or surfacing and recutting of lumber, and sawmills under contract to saw or cut logs belonging to others; vii. Proprietors or operators of dry-cleaning or dyeing establishments, steam laundries, and laundries using washing machines; viii. 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; ix. Proprietors or operators of establishments or lots for parking purposes; x. 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; xi. Proprietors and operators of hotels, motels and lodging houses; xii. Proprietors or operators of arrastre and stevedoring, warehousing or forwarding establishments; xiii. Master plumbers, smiths, and house or sign painters; xiv. Printers, bookbinders, lithographers; xv. Publishers except those engaged in the publication or printing of any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of advertisements; and xvi. Business agents, private detective or watchman agencies, commercial and immigration brokers and cinematographic film owners, lessors and distributors. [Sec. 131 (h), LGC] 6. On Banks and Other Financial Institutions. [Sec. 143 (f), LGC] Banks and other financial institutions include the following: a. Non-bank financial intermediaries b. Lending investors c. Finance and investment companies d. Pawnshop e. Money shops f. Insurance companies g. Stock markets h. Stock brokers and dealers in securities i. Foreign exchange [Sec. 131 (e), LGC] NOTE Refer to Local Finance Circular (LFC) No. 1-93 dated 16 June 1993, LFC No. 2-07 dated 26 February 2007, as reiterated under BSP Circular Letter No. CL-2017-079 dated 27 December 2017, and BLGF Memorandum Circular No. 016.2018 dated 10 August 2018. 7. On peddlers a. 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. b. 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. [Sec. 131 (t), LGC] c. The LGU may impose tax on peddlers engaged in the sale of any merchandise or article of commerce at a rate not exceeding fifty pesos (Php50.00) per peddler annually. [Sec. 143(g), LGC] 8. Other Businesses On any business not otherwise previously classified 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 (NIRC) as amended, the rate of tax shall not exceed two percent (2%) of gross sales or receipts of the preceding calendar year, [Sec. 143 (h), LGC] and provided further, that in line with existing national policy, any business engaged in the production, manufacture, refining, distribution or sale of oil, gasoline, and other petroleum products shall not be subject to any local tax imposed in this Article. (Art. 232 (h), IRR of the LGC) B. Rates of Tax 1. The municipality within MMA may levy the taxes on businesses enumerated in Article 233 of this Rule at rates which shall not exceed by fifty percent (50%) the maximum rates prescribed for said businesses. 2. The said municipality within MMA, pursuant to Article 275 of this Rule, may levy and collect the taxes which may be imposed by the province under Articles 224, 6 225, 7 226, 8 227, 9 228, 10 229 11 and 230 12 of this Rule at rates not exceeding those prescribed therein. [Art. 236 (b) IRR of the LGC] C. Payment of Local Business Taxes 1. The taxes imposed under Sec. 143 of the LGC 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. [Sec. 146 (a) LGC] The conduct or operation of two (2) or more related businesses provided under Article 232, IRR of the LGC by any one person, natural or juridical shall require the issuance of a separate permit or license to each business. [Art. 242 (a), IRR of the LGC] 2. In cases where a person conducts or operates two (2) or more of the businesses mentioned in Sec. 143 of the LGC 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. [Sec. 146 (b) LGC] 3. In cases where a person conducts or operates two (2) or more businesses mentioned in Sec. 143 of the LGC which are subject to different rates of tax, the gross sales or receipts of each business shall be separately reported for the purpose of computing the tax due from each business. [Sec. 146 (c) LGC] NOTE Refer to Book IV for sample computation. D. Situs of Tax For purposes of collection of taxes, manufacturers, assemblers, repackers, brewers, distillers, rectifiers and compounders of liquor, distilled spirits and wines, millers, producers, exporters, wholesalers, distributors, dealers, contractors, banks and other financial institutions, and other businesses, maintaining or operating branch or sales outlet elsewhere shall record the sale in the branch or sales outlet making the sale or transaction, and the tax thereon shall accrue and shall be paid to the city or municipality where such branch or sales outlet is located. In cases where there is no such branch or sales outlet in the city or municipality where the sale or transaction is made, the sale shall be duly recorded in the principal office and the taxes due shall accrue and shall be paid to such city or municipality. (Sec. 150, LGC) 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. All sales made in a locality where there is a branch or sales office or warehouse shall be recorded in said branch or sales office or warehouse and the tax shall be payable to the city or municipality where it is located. 2. In cases where there is no such branch, sales office or warehouse in the locality where the sale is made, the sale shall be recorded in the principal office along with the sales made by said principal office and the tax shall accrue to the city or municipality where said principal office is located. 3. In cases where there is a factory, project office, plant or plantation in pursuit of business: a. 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 b. 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. LGUs where only experimental farms are located shall not be entitled to the sales allocation herein provided. d. However, on-site sales of commercial quantity made in experimental farms shall be similarly imposed the corresponding tax under Sec. 143 of the LGC, and allocated as herein provided. 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. 4. In the case of a plantation located in a locality other than that where the factory is located, said seventy percent (70%) sales allocation mentioned in item (2) under subparagraph (c) above shall be divided as follows: a. Sixty percent (60%) to the city or municipality where the factory is located; and b. Forty percent (40%) to the city or municipality where the plantation is located. 5. In cases where a manufacturer, assembler, producer, exporter or contractor has two (2) or more factories, project offices, plant, or plantations located in different localities, the seventy percent (70%) sales allocation mentioned in item (2) under sub-paragraph (c) above shall be pro-rated among the localities where the factories, project offices, plants, and plantations are located in proportion to their respective volumes of production during the period for which the tax is due. In the case of project offices of service and other independent contractors, the term "production" shall refer to the cost of projects actually undertaken during the tax period. 6. The sales allocation herein provided shall be applied irrespective of whether or not sales are made in the locality where the factory, project office, plant or plantation is located. In case of sales made by the factory, project office, plant or plantation, the sale shall be covered by items (1) and (2) above. 7. In the case of manufacturers sales made by the factory, project office, plant or plantation, the sale shall be covered by paragraphs (a) and (b) above. 8. The city or municipality where the port of loading is located shall not levy and collect tax imposable under Sec. 143 of the LGC, unless the exporter maintains in said city or municipality its principal office, a branch, sales office or warehouse, factory, plant, or plantation in which case the foregoing rules on the matter shall apply accordingly. 9. The following guidelines shall apply to sales made by route trucks, vans or vehicles: a. For route sales made in the locality where a manufacturer, producer, wholesaler, retailer or dealer has a branch or sales office or warehouse, the sales shall be recorded in that branch, sales office or warehouse and the tax due thereon is paid to the LGU where such branch, sales office or warehouse is located. b. For route sales made in a locality where a manufacturer, producer, wholesaler, retailer or dealer has no branch, sales office or warehouse, the sales shall be recorded in the branch, sales office or warehouse from where the route trucks withdraw their products for sale, and the tax due on such sales is paid to the LGU where such branch, sales office or warehouse is located. c. Based on the foregoing, LGUs where route trucks deliver merchandise cannot impose any tax on said trucks except the annual fixed tax authorized to be imposed by the province under Sec. 141 of the LGC, which cities may likewise impose under Sec. 151 of the same Code, on every delivery truck or van or any motor vehicles used by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, softdrinks, cigars and cigarettes, and other products as may be determined by the sanggunian concerned. [Art. 243, IRR implementing Sec. 150 (b), LGC] NOTE Refer to Book IV for sample computation. SECTION 58. Tax on Sand, Gravel and Other Quarry Resources . A. The province may levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, such as but not limited to marl, marble, granite, volcanic cinders, basalt, tuff and rock phosphate, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction. [Art. 227 (a), IRR, implementing Sec. 138, LGC] B. The following shall govern the administration and collection of this tax: 1. The permit to extract sand, gravel and other quarry resources shall be issued exclusively by the Provincial Governor, pursuant to the ordinance of the sangguniang panlalawigan. [Art. 227 (b), IRR, implementing Sec. 138, LGC] 2. The proceeds of the tax on sand, gravel and other quarry resources shall be distributed as follows: a. Province Thirty percent (30%); b. Component city or municipality where the sand, gravel and other quarry resources are extracted Thirty percent (30%);and c. Barangay where the sand, gravel and other quarry resources are extracted Forty percent (40%). [Art. 227 (c), IRR, implementing Sec. 138, LGC] C. Only quarry resources extracted from public lands are subject to local taxes. Quarry resources extracted from private lands are not within the taxing power of the local government. NOTE The LGU may not invoke the Regalian doctrine to extend the coverage of their ordinance to quarry resources extracted from private lands, for taxes, being burdens, are not to be presumed beyond what the applicable statute expressly and clearly declares, tax statutes being construed strictissimi juris against the government. (GR No. 126232 November 27, 1998) SECTION 59. Tax on Delivery Trucks or Vans . A. It is 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 LGU 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 tax on peddlers referred to in Sec. 143 (g) of the LGC. (Sec. 141, LGC) SECTION 60. Amusement Tax . A. It is a tax collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement. [Sec. 140 (a), LGC] B. The collection and administration of the amusement tax shall be guided by the following: 1. The rate of amusement tax shall not be more than ten percent (10%) of the gross receipts from admission fees. (RA 9640) 2. 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 local treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of the cinematographic films. [Sec. 140 (b), LGC] 3. The holding of operas, concerts, dramas, recitals, paintings, 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 amusement tax, subject to guidelines issued by the Department of Finance (DOF) [Art. 229 (c), IRR implementing Sec. 140 (c), LGC] . The admission fees on resort, swimming pools, bath houses, hot springs and tourist spots are not subject to amusement tax but subject to business tax imposed under Sec. 143 of the LGC, pursuant to the Supreme Court Decision in the case of Pelizloy Corp. vs. Province of Benguet , G.R. No. 183137, 10 April 2013. 4. The sanggunian concerned may prescribe the time, manner, terms and conditions for the payment of tax including the issuance by the proprietor, lessee, or operator of the theater or amusement place of admission tickets. In case of fraud or failure to pay the tax, the sanggunian concerned may impose such surcharges, interests, and penalties as it may deem appropriate. [Art. 229 (d), IRR implementing Sec. 140 (d), LGC] 5. The proceeds of the amusement tax shall be shared equally by the province and the municipality where such amusement places are located. [Sec. 140 (e), LGC] 6. Not only theaters and cinema houses, but all "places of amusement" such as night clubs, cockpits, and the like, are subject to the amusement tax on admission if any amount is charged as entrance fee to the patrons. (p. 77, Philippine Law on Local Government Taxation, Annotated, 2000 edition, Ursal) A golf course cannot be considered a place of amusement. ( Alta Vista and Country Club v. City of Cebu ,G.R. No. 180235, 10 January 2016) 7. For the effective administration of the amusement tax, an administrative provision may be provided in the tax ordinance, requiring proprietors, lessees or operators liable to the amusement tax on admission to: a. Number the admission tickets consecutively and serially; b. Reflect in the admission tickets the name of the amusement place and the fee charged for admission; c. Register ticket rolls or booklets with the Provincial/City Treasurer of the locality where the amusement place is located before issuing the tickets; d. Tear admission tickets into halves, once issued, the first half to be given by the gatekeepers to the customer or patron and the other half to be deposited in a ticket box to be made available for inspection by the Local Treasurer or his/her deputy; and e. Provide a strong and safe ticket box to contain the admission ticket halves, which boxes will be secured with a separate padlock, the only key to which shall be deposited with the Local Treasurer concerned. (p. 110, Phil. Law on Local Government Taxation, Third Edition, Volume One, 2010, Ursal) SECTION 61. Franchise Tax . A. Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise. (Sec. 137, LGC) B. Business franchise tax is imposed on franchise conferred upon by government and its political subdivisions, such as telecommunications and electric power, among others. Business Franchise issued by private persons or juridical entity are not subject to franchise tax. NOTE There is no double taxation when local business tax is imposed in addition to the local franchise tax, as ruled by the Supreme Court, viz. : Petitioner claims that the assessment of business tax in addition to local franchise tax is a case of double taxation. We do not agree. As aptly ruled by the Court of Appeals (CA),the two taxes are not of the same kind and character and can be imposed by the same taxing authority at the same time. First, "business taxes imposed in the exercise of police power for regulatory purposes are paid for the privilege of carrying on a business in the year the tax was paid. It is paid at the beginning of the year as a fee to allow the business to operate for the rest of the year. It is deemed a prerequisite to the conduct of business." A franchise tax, on the other hand is a tax on the privilege of transacting business in the state and exercising corporate franchises granted by the state. It is not levied on the corporation simply for existing as a corporation, upon its property or its income, but on its exercise of the rights or privileges granted to it by the government. it is within this context that the tax enjoying a franchise in Sec. 137 of the LGC should be interpreted and understood. This Court went on further that to be liable for local franchise tax, the following requisites should concur: (1) that one has a "franchise" in the sense of a secondary or special franchise; and (2) that it is exercising its rights or privileges under this franchise within the territory of the pertinent local government unit. Clearly, there can be no double taxation as the two taxes are different nature and imposed for different purposes. Undeniably, both requisites for local franchise tax are also present in this case. (Resolution dated 5 September 2018 on GR No. 213136, Supreme Court, Manila, Third Division) C. The administration and collection of franchise tax shall be governed by the following: 1. Tax Rate and Base of Franchise Tax The LGU may impose a tax on businesses enjoying a franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts which shall include both cash sales and sales on account realized during the preceding calendar year within its territorial jurisdiction, excluding the territorial limits of any city located within the province. [Art. 226 (a), IRR, implementing Sec. 137, LGC] 2. Limitation of the Province to Impose Franchise Tax The province, however, shall not impose the tax on businesses enjoying franchise operating within the territorial jurisdiction of any highly-urbanized or component city located within the province. [Art. 226 (b), IRR, implementing Sec. 137, LGC] 3. Exemption of Public Utility Vehicle Operators with Certification of Public Convenience The term "businesses enjoying franchise" shall not include holders of certificates of public convenience for the operation of public utility vehicles for reason that such certificates are not considered as franchise. [Art. 226 (c), IRR, implementing Sec. 137, LGC] 4. Tax Rate and Base of Franchise Tax for Newly Started Business In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross receipts for the preceding calendar year, or any fraction thereof. [Art. 226 (d), IRR, implementing Sec. 137, LGC] 5. Capital Investment as Basis of the Franchise Tax of a Newly Started Business The capital investment to be used as basis of the tax of a newly started business as herein provided shall be determined in the following manner: a. In the locality where the principal office of the business is located, the paid-up capital stated in the Articles of Incorporation, in case of corporations, or in any similar document in case of other types of business organizations or enterprises, shall be considered as the capital investment. b. Where there is a branch or sales office which commences business operations during the same year as the principal office but which is located in another province or in a city outside the province, the paid-up capital referred to above shall be reduced by the amount of the capital investment made for the said branch or sales office which shall be taxable instead by the province or city where it is located. c. Where the newly-started business is a branch or sales office commencing business operations at a year later than that of the principal office, the capital investment shall mean the total funds invested in the branch or sales office. [Art. 226 (d), IRR, implementing Sec. 137, LGC] NOTE Refer to Book IV for sample computation. SECTION 62. Tax on Printing and Publication . The LGU 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, 13 at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year. A. 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. B. The receipts from the printing and/or publishing of books or other reading materials prescribed by the Department of Education, Culture and Sports (now DepEd) as school texts or references shall be exempt from the tax herein imposed. (Sec. 136, LGC) SECTION 63. Tax Revenues Fines and Penalties . Fines and penalties imposed in relation to: A. Collection of taxes on individual and corporation; B. Collection of real property taxes; and C. Collection of taxes on goods and services. SECTION 64. Share from Internal Revenue Allotment (IRA) . A. Allotment of Internal Revenue Taxes (a) LGUs shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year as follows: 1. On the first year of the effectivity of the LGC, thirty percent (30%); 2. On the second year, thirty-five percent (35%);and 3. On the third year and thereafter, forty percent (40%). (Sec. 284, LGC) NOTE On July 3, 2018, the Supreme Court in G.R. No. 199802 and G.R. No. 208488, modified Sections 284, 285, 286 and 290 of the LGC, including the pertinent provisions of the IRR of the LGC, by deleting the phrase "internal revenue" in said sections. B. In the event that an unmanageable public sector deficit is incurred by the national government, the Secretary of Finance, the Secretary of the Interior and Local Government and the Secretary of Budget and Management shall submit to the President of the Philippines a joint recommendation that will institute necessary adjustments in the IRA of LGUs. C. Upon receipt of the joint recommendation of the Secretary of Finance, the Secretary of the Interior and Local Government and the Secretary of Budget and Management and subject to consultation with the presiding officers of both Houses of Congress and the presidents of the leagues of LGUs, the President of the Philippines shall authorize the necessary adjustments of the total IRA to be distributed among the LGUs for the given year, provided that in no case shall the adjusted amount be less than thirty percent (30%) of the national internal revenue tax collections of the third fiscal year preceding the current fiscal year during which the reduction is to be made. D. Adjustments to the IRA share of LGUs shall be made only after effecting a corresponding reduction of the national government expenditures including cash and non-cash budgetary aids to GOCCs, government financial institutions (GFIs),the Oil Price Stabilization Fund (OPSF) and the Bangko Sentral ng Pilipinas (BSP). (Art. 379, IRR implementing the 2nd and 3rd paragraphs of Sec. 284, LGC) E. The term "budget deficit" means a shortfall of revenues against disbursements while "public sector" refers to the national government itself, plus the fourteen (14) major government corporations, the government financial institutions, all the LGUs, the BSP, the social security institutions and the Oil Price Stabilization Fund. Hence, the sum of the deficits of all these different units within the public sector is what is referred to as the "public sector deficit." (p. 373, Philippine Law on Local Government Taxation, Third Edition, Volume One, Ursal, 2010) F. Public sector deficit means the shortfall of revenues against disbursements of the national government, the fourteen (14) major government corporations, the GFIs, all the LGUs, the BSP, and the social security institutions. G. Allocation to LGUs The total annual IRA due the LGUs shall be allocated among provinces, cities, municipalities and barangays as follows: 1. General Allocation a. Share of all provinces Twenty-Three Percent (23%) b. Share of all cities Twenty-Three Percent (23%) c. Share of all municipalities Thirty-Four Percent (34%) d. Share of all barangays Twenty Percent (20%) 2. Share of Each Province, City and Municipality The share of each province, city, and municipality shall be determined on the basis of the following distribution formula: a. Population Fifty Percent (50%) b. Land Area Twenty-Five Percent (25%) c. Equal Sharing Twenty-Five Percent (25%) 3. Share of Each Barangay a. Every barangay with a population of not less than one hundred (100) inhabitants shall be entitled to an IRA share of not less than Eighty Thousand Pesos (P80,000.00) per annum chargeable against the twenty percent (20%) share of the barangays from the total IRA. b. After deducting the aggregate sum of the individual barangay share of P80,000.00 each from the total twenty percent (20%) allocation for all barangays, the remaining balance of said twenty percent (20%) allocation shall be further distributed to the barangays based on the following formula: i. On the first year of the effectivity of LGC (CY 1992): 1. Population Forty Percent (40%) and 2. Equal Sharing Sixty Percent (60%) ii. On the second year: 1. Population Fifty Percent (50%) 2. Equal Sharing Fifty Percent (50%) iii. On the third year and thereafter: 1. Population Sixty Percent (60%) 2. Equal Sharing Forty Percent (40%) 4. Financial requirements for the initial year of existence of provinces, cities, and municipalities to be created after the effectivity of the LGC shall be specified in the law creating said LGUs. 5. Newly created barangays Financial requirements of barangays created by LGUs after the effectivity of the LGC shall be the responsibility of the LGU concerned. (Art. 382, IRR implementing Sec. 285, LGC) 6. Automatic release of IRA shares The IRA shall be released directly by the Bureau of the Treasury (BTr) to the LGU beneficiaries only through authorized government servicing banks (AGSBs). [General Appropriations Act (GAA)] a. The individual shares in IRA of each LGU shall be automatically released, without the need of any further action, direct to the provincial, city, municipal, or barangay treasurer, as the case may be, on a monthly basis but not beyond five (5) days after the end of each month. i. Compute the specific shares of the LGUs based on the Joint Certifications issued by the collecting agencies and the BTr. ii. Issue to the BTr the pertinent budget release documents, including the list of the specific shares of LGUs, as bases for the transfer of funds to the LGUs through the AGSBs. b. The BTr shall be the recipient of the Special Allotment Release Order (SARO) and Advice of Notice of Cash Allocation Issued (ANCAI) while the corresponding Notice of Cash Allocation (NCA) shall be issued to the AGSBs. The BTr shall issue the disbursement document, i.e. ,Authority to Debit Account (ADA),so as to effect the transfer of IRA and other funds to the LGUs from BTr's MDS sub-account to the depository account of the LGUs, and issue the corresponding Notice of ADA Issued to advise the LGUs accordingly. (DOF-DBM Joint Circular No. 2016-1, 04 January 2016) 7. Exemption to the Lien or Holdback of the IRA Shares The IRA share of LGUs shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose unless otherwise provided in the LGC or other existing laws and loan contracts or project agreements arising from foreign loans and international commitments, such as the premium contributions of LGUs to the GSIS and loans contracted by LGUs under foreign-assisted projects. [Art. 383 (c), IRR implementing Sec. 286, LGC] 8. Mandatory Appropriation for Local Development Projects It shall be mandatory for each LGU to set aside in its annual budgets amounts no less than twenty percent (20%) of its IRA for the year as appropriation for local development projects that are embodied or contained in the local development plans. Copies of the development plans of LGUs shall be furnished the Department of the Interior and Local Government (DILG). (Art. 384, IRR implementing Sec. 287, LGC) 9. Guidelines on Change or Transfer of Depository Bank/Bank Branch/Current Account for IRA a. Request of LGUs for change or transfer of depository bank/bank branch/current account for IRA purposes shall be directly submitted to the BTr-Province/District Office (BTr-PO/DO) concerned for processing and submission to the Regional Director for final action. Request for such change/transfer made by a bank branch or any other party in lieu of the LGU concerned shall not be considered/entertained. b. LGUs shall only be allowed such change/transfer under the following conditions: i. The change/transfer is duly authorized by the local sanggunian ii. LGUs which have outstanding contractual obligations with their present depository banks, shall not request for transfer of their account to another bank unless the LGU concerned has secured prior clearance from its present depository bank. iii. The transfer of depository bank shall be limited to authorized government servicing banks (GSBs) under the Modified Disbursement Scheme (MDS) such as, the Land Bank of the Philippines (LBP),Development Bank of the Philippines (DBP) and Philippine Veterans Bank (PVB). c. Requests for transfer of IRA depository accounts to the PNB shall no longer be considered. However, LGUs shall be allowed to transfer, on their own, local funds from LBP, DBP and PVB as the case may be to PNB to comply with the loan arrangements with the said bank, provided that the same is supported by a duly approved Sanggunian resolution. As such, transfer of depository accounts to the Philippine National Bank (PNB) should have prior approval from the Department of Finance pursuant to Department Order No. 27-05, 9 December 2005. d. Requests of LGUs for change or transfer of depository bank/bank branch/current account shall be supported with the following documents: i. Certified true copy of the Sanggunian resolution authorizing the LGU to change or transfer its IRA depository bank/bank branch/current account; ii. Name of new servicing banks, location and bank account number; and iii. Clearance from present depository bank branch allowing the transfer, in case the LGU has an outstanding loan/contractual obligation with the said bank. e. Change of depository bank shall be approved and implemented only at the beginning of each calendar year. f. Transfer of IRA depository account from one bank branch to another branch of a particular GSB and change current account within the same depository bank shall be approved on a quarterly basis. g. To give BTr-PO/DO sufficient time for evaluation/processing and for effecting changes in their respective IRA database, the LGUs should observe the following deadlines in the submission of their requests to BTr ROs concerned: i. For change or transfer of depository bank/bank branch in the ensuing calendar year: Deadline for submission by LGUs On or before December 7 of the calendar year. Effectivity of approval Beginning of following year ii. For transfer to another bank branch of the same GSB/change of account within the same bank branch for the ensuing quarter: Deadline for submission by LGUs On or before the 7th day of the last month of the current quarter. h. LGUs are advised not to close their existing current account until such time that the LGU concerned has received the approval of the BTr RO on the proposed transfer/change. (BTr Circular No. 01-2017, 28 December 2016) SECTION 65. Share from Expanded Value-Added Tax (VAT) . Value-added tax is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines and on importation of goods into the Philippines. The seller is the one statutorily liable for the payment of the tax but the amount of the tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties, and services at the time of the effectivity of RA No. 9337. A. Share from Excess Collection in Value-Added Tax (VAT) In addition to the IRA, fifty percent (50%) of the national taxes collected by the BIR under Secs. 106 and 108 of the NIRC (formerly Secs. 100, 101 and 102 of the NIRC of 1977) in excess of the increase in collection for the immediately preceding year shall be distributed as follows: 1. Twenty percent (20%) shall accrue to the city or municipality where such taxes are collected and shall be allocated in accordance with Sec. 150 of the LGC; 2. Eighty percent (80%) shall accrue to the national government; and 3. LGUs' share in the incremental collection from VAT pursuant to R.A. 7643, shall be allocated among LGUs entitled to such share in accordance with Sec. 150 of the LGC, to wit: a. If VAT is paid by manufacturers, producers without branch or sales outlets: one hundred percent (100%) to the city or municipality where the business is located; b. If VAT is paid by manufacturers, producers, with factories, project offices, plantations and plants: i. Thirty percent (30%) to the city or municipality where the principal office is located; and ii. Seventy percent (70%) to the city or municipality where the factory, project offices, plant or plantation is located. c. If VAT is paid by manufacturers, producers, exporters where the plantation is located at a place other than the place where the factory is located: i. Thirty percent (30%) to the city or municipality where the principal office is located; ii. Forty-two percent (42%) to the city or municipality where the factory is located; and iii. Twenty-eight percent (28%) to the city or municipality where the plantation is located. d. If VAT is paid by the manufacturers, producers, exporters and has two (2) or more factories, plants, and plantations: i. Thirty percent (30%) to the city or municipality where the principal office is located; ii. Seventy percent (70%) shall be prorated among the localities where the factories, project offices, plants, and plantations are located; and iii. The LGUs share shall be released directly to the LGUs concerned, subject to the approval of special budget pursuant to Sec. 35, Chapter 5, Book VI of EO No. 292 duly supported by the certification of actual VAT collections and remittances under Secs. 106 and 108 of the NIRC of 1997 by the BIR. (Sec. 2, RA No. 7643, implemented by DBM-DOF-DILG Joint Circular No. 1-02, 06 February 2002) B. The share from expanded value-added tax also includes share from VAT in lieu of franchise tax collected from racetrack operations of the Manila Jockey Club (MJCI),Inc. and the Philippine Racing Club, Inc. (PRCI). (COA Circular No. 2015-009, 1 December 2015) Guidelines and Procedure for the Release of the LGU shares from the VAT from MJCI and PRCI. Republic Act Nos. 8407 and 7953 granted to the MJCI and PRCI, respectively, the franchise to operate racetracks where: MJCI and PRCI shall remit to the National Treasury a franchise tax equal to twenty five percent (25%) of their gross earnings from the horse races authorized to be held under their respective franchise which is equivalent to 8 1/2% of the total wager fund or gross receipts on the sale of betting tickets during the racing day allotted as follows: % shares National Government 5/25 Province or city/municipality where racetrack is located 5/25 Philippine Charity Sweepstakes Office (PCSO) for PRCI/ Municipal hospital where the racetrack is located for MJCI/ Philippine 7/25 Anti-Tuberculosis Society 6/25 White Cross (WC) 2/25 C. Procedural Guidelines 1. LGU's Share Computation Gross receipts (8.5% Club's commission) Phpxxxxx VAT Rate (10% or 12% whichever is applicable) 10% or 12% VAT Output Phpxxxxx Less: Input tax Phpxxxxx VAT Due and Payable Phpxxxxx LGU's Percentage Share (5/25) 20% LGU's share Phpxxxxx Note: LGU's share is computed from the 8.5% of Club's commission only 10% VAT rate up to 31 January 2006 12% VAT rate effective 1 February 2006 2. Input Tax is the value-added tax (VAT) due from or paid by a VAT-registered person in the course of his trade or business on importation of goods or local purchase of goods or services, including lease or use of property, from a VAT-registered person. Output Tax means the VAT due on the sale or lease of taxable goods or properties or services by any person liable to pay the tax under Sec. 105 of the NIRC. 3. Responsibilities a. Department of Finance (DOF)-Bureau of Internal Revenue (BIR) For the release of LGU shares for remittances in CY 2008 chargeable against the 2009 General Appropriations Act (GAA) and thereafter: i. For CY 2008 and every year thereafter, prepares the monthly summary of VAT payments of MJCI and PRCI paid/filed with the BIR and forwards copy of the summary to the BTr within 10 days after the end of the month of filing of returns. ii. Submits to Department of Budget and Management (DBM),the duly signed BTr-BIR Joint Certification of VAT payments received by BIR from the MJCI and PRCI and deposited to BTr, together with the computation of the shares of LGUs thereon on or before 30 April 2009 and ensuing year thereafter. For the annual budget preparation (BP) for CY 2009 and for every BP year thereafter: Prepares and submits to Department of Budget and Management (DBM) not later than 15 March 2008 and of each ensuing year, the projected amount representing the VAT payments for the current year for inclusion in the National Expenditure Program (NEP) starting in CY 2009 and for every BP Year thereafter. b. DOF-Bureau of the Treasury (BTr) i. Receives from the BIR the summary of VAT payments of MJCI and PRCI, validates the same from the credit advices received from Authorized Government Depository Banks (AGDBs) and prepares the summary of deposits with the corresponding Journal Entry Voucher (JEV) issued. ii. Consolidates the monthly summary of VAT payments, validates the same from the BTr recorded VAT deposits, prepares the whole year summary with the corresponding JEV issued, and attach the same to the BTr-BIR joint certification. iii. Prepares and signs yearly BTr-BIR Joint Certification showing the reconciled VAT payments received by the BIR from the MJCI and PRCI and deposited to the BTr. iv. Submits to BIR the duly signed BTr-BIR Joint Certification of VAT payments together with the summary of recorded VAT deposits of MJCI and PRCI with the corresponding JEV issued within 15 days from receipt of the summary of VAT payments from the BIR c. Department of Budget and Management i. Includes in the NEP the projections/estimates of VAT payments for income derived by MJCI and PRCI for the current year submitted by the BIR. ii. Releases the shares directly to the LGUs, based on the BIR computation of LGU shares supported by the BIR-BTr Joint Certification on the actual collections made by the BIR and actually deposited to the BTr, as submitted to DBM not later than April 30 of each year, subject to cash programming, budgeting, accounting and auditing rules and regulations. (DOF-DBM Joint Circular No. 2008-1, 16 June 2008) SECTION 66. Share from National Wealth . A. LGUs shall have an equitable share in the proceeds derived from the utilization and development of the national wealth within their respective areas, including sharing the same with the inhabitants by way of direct benefits. (Sec. 289, LGC) B. The term national wealth shall mean all natural resources situated within the Philippine territorial jurisdiction including lands of public domain, waters, minerals, coal, petroleum, mineral oils, potential energy forces, gas and oil deposits, forest products, wildlife, flora and fauna, fishery and aquatic resources and all quarry products. (Art. 386, IRR implementing Sec. 289, LGC) C. LGUs shall, in addition to the IRA, have a share of forty percent (40%) of the gross collection derived by the national government from the preceding fiscal year from the following: 1. Mining taxes, royalties, forestry and fishery charges, and such other taxes, fees, or charges, including related surcharges, interests, or fine, and from its share in any co-production, joint venture or production sharing agreement in the utilization and development of the national wealth within their territorial jurisdiction. 2. Administrative charges enumerated herein accruing to the National Government whether collected by the National Government collecting agencies or, in certain cases, by LGUs. 3. Proceeds from the development and utilization of national wealth where the local government actually collects and automatically retains its share of at least forty percent (40%) of such proceeds shall not form part of the revenue base in the computation of the forty percent (40%) share. (Art. 387, IRR Implementing Sec. 290, LGC) D. Share from Mining Taxes Updated Guidelines and Procedures on the Release of the share of LGUs from the Collections Derived by the National Government. 1. Roles and Responsibilities The following national government agencies shall endeavor to establish and share among themselves on a timely basis, information and an updated database to facilitate the exchange of information needed for the smooth and reliable processing and release of the shares of LGUs from mining taxes. a. The DOF-BIR shall: i. Submit to the DBM, in coordination with DOF, for budget preparation purposes, the estimated or projected mining tax to be collected for the current year and the corresponding forty percent (40%) share of the LGUs on or before March 15 of every year. The said estimated or projected mining tax collection shall be equivalent to the amount of excise tax from the mining industry allocated from the total revenue target of the BIR. ii. Prepare and approve a Joint Certification with the BTr, for budget execution purposes, the actual collections from mining taxes during each calendar quarter and the schedule of the corresponding shares of the beneficiary LGUs. The said certification shall be transmitted to the BTr, for validation and approval purposes within seventy five (75) days and immediately after the end of the calendar quarter. In the preparation of the said schedule of shares of certain LGUs where the mining sites/operations are located in two (2) or more provinces, or in two (2) or more component cities, or in 2 or more barangays, the updated master list of land area officially issued by the Land Management Bureau (LMB) and the updated census of population issued by the National Statistics Office (NSO) shall be adopted as basis in computing the allocable share of the affected LGUs. iii. Determine the correct mining taxes paid and collected during the immediately preceding year based on the estimated and actual volumes and values of the mineral products submitted by the Mines and Geosciences Bureau (MGB). b. The DOF-BTr shall: i. Validate and approve the Joint Certification transmitted by the BIR within thirty (30) days immediately after receipt hereof. The said certification shall be validated from the reports transmitted by the BTr Regional Offices and Authorized Agent/Government Depository Banks. ii. Transmit to the DBM the duly validated and approved Joint Certification within forty five (45) days immediately after the actual receipt of said certification and schedule of LGU shares from the BIR. iii. Furnish the BIR a copy of the validated and approved joint certification accompanied by the summary of recorded mining tax deposits and/or collections and the Journal Entry Voucher issued representing total BIR collections, within fifteen (15) days from transmittal thereof to the DBM. c. The Department of Environment and Natural Resources (DENR): i. The MGB, shall furnish the BIR not later than the end of February, the estimated annual volumes and values of metallic mineral production of mining companies for the current year. ii. In order to assist in the enhancement of the mining tax collections, furnish the BIR not later than the end of March, the actual volumes and values, on a per project basis, of metallic minerals produced during the immediately preceding year. For non-metallic minerals, the actual volumes and values of production, on a per remittance/project during the immediately preceding year, shall be furnished to the BIR not later than the end of October of the ensuing year. iii. Provide the BIR, within sixty (60) days after the end of each quarter, the list of new metallic permittees, actual volumes and values of their respective production and extraction sites. d. Land Management Bureau (LMB),shall furnish the BIR an updated copy of the consolidated master list of land area not later than December 15 of every third year after CY 2001, after coordination with the DBM. e. Department of the Interior and Local Government (DILG)-Bureau of Local Government Supervision (BLGS) shall: i. Prepare and submit to the BIR not later than the 15th day of May, the validated list of actual extraction sites of all non-metallic mineral products with a summary of LGUs where such production/extraction originated. ii. Enjoin the Local Chief Executives (LCEs) to ensure submission by mining permittees of the quarterly production and sales report form to the MGB Regional Offices. iii. Furnish the DBM, BIR and BTr with the updated master list of LGUs during the 1st quarter of each year. f. DBM-Regional Operations and Coordination Service (ROCS) and Regional Offices (ROs) shall: i. Program, for budget preparation purposes, the amount representing the LGUs shares of mining taxes in the budget of the following year, based on the estimated or projected mining taxes to be collected for the current year and the corresponding 40% share of the LGUs submitted by the BIR. ii. Release the shares of the LGUs in the mining taxes by issuing the allotment and the corresponding cash allocation based on the Joint Certification issued by the BIR and BTr of mining tax collections and the schedule of the corresponding shares of the beneficiary LGUs. The funding check shall be deposited to the Government Servicing Banks (GSBs) for direct credit to the account of the beneficiary LGUs. iii. Release the LGU's share based on the Joint Certification issued by the BIR and BTr of mining tax collections during the first three (3) quarters of the calendar year in February of the ensuing year. Releases based on mining taxes collected during the fourth quarter shall be released in May of the ensuing year. 2. Distribution of Shares of LGUs Pursuant to Sec. 292 of the LGC, the 40% share of the LGUs from the preceding year's collections of mining taxes shall be distributed as follows: Particulars % of Distribution Province Component City/ Municipality Highly Urbanized/ Independent Component City Barangay Total Where the natural resources are located in the Province and in one City/Municipality/ Barangay 20 45 35 100 Where the natural resources are located in a highly urbanized or independent component city and in one barangay 65 35 100 Provided, however, that where the natural resources are located in two (2) or more provinces, or in two (2) or more component cities or municipalities, or in two (2) or more highly urbanized or independent component cities or in two (2) or more barangays, their respective shares shall be computed on the basis of: Population: 70 Land Area: 30 3. Funding Source The 40% share of LGUs from the gross mining tax collections derived by the national government from the preceding fiscal year shall be released chargeable against the current year's General Appropriations Act. (DOF-DBM-DILG-DENR JMC No. 2009-1, 31 March 2009) E. Share from Proceeds derived from Hydro-Power Plants, Geothermal and Other Sources of Energy Benefits to Communities Hosting the Generation Facility and Energy Resource Development Projects pursuant to Chapter II, Secs. 289 to 294 of the LGC: 1. Scope of Application The LGU hosting the national wealth shall have an equitable share in the proceeds derived from the utilization and development of national wealth, including sharing the same with the inhabitants by way of direct benefits. 2. Amount of Share of LGUs Any government agency or government-owned or controlled corporation and private corporation or entities engaged in the utilization and development of the national wealth are required to provide share to the host LGUs, based on the preceding fiscal year of the proceeds, based on the following formula, whichever will produce a share higher for the LGU: a. One percent (1%) of the gross sales or receipts of the preceding calendar year; or b. Forty percent (40%) of the national wealth taxes, royalties, fees or charges derived by the government agency or government owned and controlled corporation and privately owned corporation or entities. c. Nature of Benefits i. Eighty percent (80%) of the proceeds shall be applied solely to lower the cost of electricity either through subsidy or non-subsidy scheme or combination of both. 1. Non-subsidy scheme may take the form but not limited to electrification, technical upgrading and rehabilitation of distribution lines to reduce electricity losses, use of energy saving devices, and support of the infrastructure facilities servicing the needs of the public which can all redound to the reduction of the electricity rate of the area. 2. Subsidy scheme will be directly utilized to subsidize the cost of power used by the consumers. This may be applied with or without ceiling or at graduated rates (per KWH per level of consumption) in the following form which the host LGU may choose from: a. Subsidy per customer, an equal or predetermined level or rate of subsidy per qualified customer: i. All consumer types ii. Residential consumer only iii. Other preferred types of consumer combinations such as: commercial, industrial, public, buildings, irrigation/communal water system, street lights, etc. b. Subsidy of power consumption, which amount of subsidy depends on the magnitude of power consumption of qualified consumers: i. All consumer types ii. Residential consumer only iii. Other preferred types of consumer combinations, such as commercial, industrial, public buildings, irrigation/communal water system, streetlights, etc. ii. Twenty Percent (20%) of the proceeds shall be utilized for the development and livelihood projects which shall be appropriated by their respective sanggunian. d. Allocation of Shares The amount of share of the LGUs shall be distributed in the following manner: i. For energy resource located in the province, share shall be appropriated as follows: 1. Host Barangay 35% 2. Host Component City/Municipality 45% 3. Host province 20% ii. For energy resource located in a highly urbanized or independent component city, share shall be appropriated as follows: 1. Host Barangay 35% 2. Host City 65% iii. For energy resource located in two (2) or more provinces, or in two (2) or more municipalities/cities or two (2) or more barangays, their respective shares shall be appropriated on the basis of the following: 1. Population 70% 2. Land Area 30% Where the land area is the area of the host barangays found within the technically delineated energy resource area and where the population refers to the population of host barangays found wholly or partially within the technically delineated energy resource. e. Monitoring i. The DILG shall monitor the compliance of host LGUs. To assist in the monitoring of compliance, all host LGUs of energy projects are required to submit the following: 1. The scheme of electricity rate reduction adopted by the host LGU (with proper documentation) based on the prescription in the DILG-DOE Joint Circular 95-01 dated 31 October 1995 at the start of the use of fund or upon the amendment of scheme by the respective LGU councils. 2. Summary of transactions thirty (30) days after the end of each quarter. The DILG shall furnish the DOE the above information within fifteen (15) days from the date of the reporting period. ii. The COA shall conduct yearly audit of the national wealth proceeds consistent with its responsibility to examine all accounts pertaining to uses of funds and property owned or held in trust by the government or any of its agencies as mandated under Sec. 2 of Presidential Decree No. 1445 of 1976. iii. In the event of violation or non-compliance with the provisions of the DILG-DOE Joint Circular 95-01 and 98-01, and other relevant issuances, the DILG may, upon prior notice and hearing, order the project proponent the non-remittance of the royalty payment to the host LGU concerned pending completion of the investigation of the concerned LGU if the project proponent is a government-owned or controlled corporation; or notify the DBM regarding such violation and order the non-release of the LGU shares if the project proponent is a private company. The unremitted funds shall be deposited in the government bank under escrow. (Rules and Regulations to Implement RA No. 9136, Entitled "Electric Power Industry Reform Act of 2001") SECTION 67. Share in the Proceeds of the Tobacco Excise Tax . The share from excise tax on tobacco products is 15% of the incremental revenue collected from the excise tax on tobacco products under RA No. 8240. It shall be allocated and divided among the provinces producing burley and native tobacco in accordance with the volume of tobacco leaf production. Guidelines on the release and utilization of the shares of LGUs from the collection of excise tax on locally manufactured Virginia-type cigarettes under RA No 7171 and Burley and Native tobacco excise tax pursuant to RA No. 8240, as amended by RA No. 10351. A. Uses of the Fund 1. Shares of LGUs from the Collection of Excise Tax on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171. 14 The fund shall be utilized to advance the self-reliance of the tobacco farmers through: a. Cooperative projects that will enhance better quality of products, increase productivity, guarantee the market and as a whole increase farmers' income; b. Livelihood projects particularly the development of alternative farming systems to enhance farmers' income; c. Agro industrial projects that will enable tobacco farmers in the Virginia tobacco-producing provinces to be involved in the management and subsequent ownership of these projects such as post-harvest and secondary processing like cigarette manufacturing and by-product utilization; and d. Infrastructure projects such as farm-to-market roads. 2. Shares of LGUs from the Collection of Burley and Native Tobacco Excise Tax Pursuant to RA No. 8240, as Amended by RA No. 10351. a. The fund shall be exclusively utilized for programs in pursuit of the following objectives: i. Programs that will provide inputs, training and other support for tobacco farmers who shift to production of agricultural products other than tobacco including, but not limited to, high value crops, spices, rice, corn, sugarcane, coconut, livestock and fisheries; ii. Programs that will provide financial support for tobacco farmers who are displaced or who cease to produce tobacco; iii. Livelihood programs and projects that will promote, enhance, and develop the tourism potential of tobacco-growing provinces; iv. Infrastructure projects such as farm to market roads, schools, hospitals and rural health facilities; and v. Agro-industrial projects that will enable tobacco farmers to be involved in the management and subsequent ownership of projects, such as post-harvest and secondary processing like cigarette manufacturing and by-product utilization. b. The beneficiary LGUs shall submit to the DBM-Regional Office (RO) concerned a list of programs and projects to be implemented, supported by the following: i. Approved sanggunian ordinance or resolution; ii. Mechanism and period of implementation; and iii. Projected or estimated number of beneficiaries. c. In the identification and submission of the list of programs and projects to be implemented, the beneficiary LGUs shall ensure the following: i. The programs and projects to be implemented are included in the Annual Investment Program duly prepared/formulated and endorsed by the local development council and duly approved by the local sanggunian concerned; and ii. In case a program/project is to be undertaken by a cooperative, an authenticated or a certified true copy of the Certificate of Registration from the Cooperative Development Authority is submitted by the cooperative to the LGU prior to the implementation of the program/project. d. Upon receipt of the beneficiary LGU's list of programs and projects to be implemented, together with the necessary supporting documents, the DBM-RO concerned shall endorse the said list to the DBM Central Office (CO). e. The endorsement by the DBM-RO concerned of the LGU's submission of the list of programs and projects together with the necessary supporting documents, shall serve as the basis of the DBM-CO for releasing the corresponding Notices of Cash Allocation (NCA) to the Authorized Government Servicing Banks (AGSBs) and the Advice of NCA Issued (ANCAI) to the BTr. f. Upon receipt of the ANCAI, the BTr shall release the corresponding Authorities to Debit Account (ADA) to the AGSBs. In parallel, the BTr shall inform the beneficiary LGUs of their released shares and the corresponding list of programs and projects to be implemented through the issuance of Notices of Authority to Debit Account issued. g. The release and utilization of the shares of the beneficiary LGU shall be in accordance with the existing cash programming, budgeting, accounting and auditing rules and regulations and other applicable laws, rules and regulations. h. Posting/Reporting Requirements i. The recipient LGU shall prepare quarterly reports on fund utilization and status of program/project implementation, and said reports shall be posted within twenty (20) days from the end of each quarter on the LGU's website, the website established by the DBM for the purpose, and in at least three (3) conspicuous public places in the locality for transparency and accountability, consistent with the Full Disclosure Policy of the DILG. ii. The beneficiary LGUs shall also submit the quarterly reports on funds utilization and status of program/project implementation to the DBM and Bureau of Local Government Finance (BLGF) ROs concerned within thirty (30) days from the end of each quarter. iii. The recipient LGU shall comply with the posting requirements prescribed under RA No. 9184. (DBM Local Budget Memorandum No. 76, 06 October 2017) SECTION 68. Share from Economic Zones . A. PEZA except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: 1. three percent (3%) to the National Government 2. two percent (2%) to be directly remitted to the treasurer's office of the municipality or city where the enterprise is located (Sec. 4, RA No. 8748, amending Sec. 24 of RA No. 7916) B. Special Economic Zone Businesses and enterprises in Special Economic Zones shall pay gross income tax (GIT) as may be provided for by the specific charters. C. The specific provisions of local tax ordinances/revenue codes levying such surcharges and penalties on the late remittance/payment of the 2% LGU share in the 5% GIT of ecozone locators should be in harmony with the provisions of RA 7916, as amended, and RR1-2000, which are the governing laws on the matter. (BLGF MC No. 13-2011, 04 July 2011) SECTION 69. Service Income . Fees and charges collected in the exercise of regulatory powers such as: A. Business Permit Fees All businesses shall obtain a Mayor's Permit before they can engage in any business within a city or municipality. This permit allows them the privilege of conducting their business within the jurisdiction of the city or municipality. NOTE By way of an ordinance, the LGU may impose a Mayor's Permit Fee on electric and/or telecommunication poles/posts owned by public utility companies which are erected on government and/or private lots along government streets, roads, highways and/or alleys. Such fee shall be commensurate with the cost of regulation, inspection and licensing. (G.R. No. 224825, 17 October 2018) B. Building Permit Fees No person, firm or corporation, including any agency or instrumentality of the government, shall erect, construct, alter, repair, move, convert, or demolish any building or structure or cause the same to be done without first obtaining a building permit from the Building Official assigned in the place where the subject building is located or the building work is to be done. (Sec. 301, P.D. 1096) 1. Permits supplementary to a Building Permit shall be applied for and issued by the Building Official. These include Ancillary and the Accessory Permits. a. Ancillary Permits include the following: Architectural Permit; Civil/Structural Permit; Electrical Permit; Mechanical Permit; Sanitary Permit; Plumbing Permit; and Electronics Permit. b. Accessory Permits are issued by the Building Official for accessory parts of the project with very special functions or use which are indicated in the plans and specifications that accompany the building permit application. These may include, among others: bank and records vaults; swimming pools; firewalls separate from the building/structure; towers; silos; smokestacks; chimneys; commercial/industrial fixed ovens; industrial kilns/furnaces; water/waste treatment tanks, septic vaults; concrete and steel tanks; booths, kiosks and stages; and tombs, mausoleums and niches. Accessory Permits are issued by the Building Official for activities being undertaken prior to or during the processing of the building permit. The coverage is spelled out in the accessory permit form including the expiry period. These shall be signed by the concerned owner/applicant and by the concerned professionals. These permits include, among others, ground preparation and excavation, encroachment of foundation to public area, fencing, for fence not exceeding 1.80 meters high, sidewalk construction, temporary sidewalk enclosure and occupancy, erection of scaffolding, erecting, repair, removal of sign; and demolition. (IRR of PD No. 1096 or the National Building Code of the Philippines, 2005 Revised Edition) 2. Except as otherwise provided herein, the Building Official shall be responsible for carrying out the provisions of the National Building Code in the field as well as the enforcement of orders and decisions made pursuant thereto. Due to the exigencies of the service, the Secretary of the Department of Public Works and Highways (DPWH) may designate incumbent Public Works District Engineers, City Engineers and Municipal Engineers to act as Building Officials in their respective areas of jurisdiction. The designation made by the Secretary shall continue until regular positions of Building Official are provided or unless sooner terminated for causes provided by law or decree. (Sec. 205, PD No. 1096) 3. Payment of Related Fees and Charges The corresponding fees and charges shall be collected for services rendered in connection with the processing and issuance of building permit fees, signboard permit fee, plumbing inspection permit fee, sanitary inspection fees, mechanical installation and inspection fees and such other impositions as may be prescribed by the Department of Public Works and Highways from persons, firms and corporations before they are allowed to erect, construct, alter, move, convert or demolish any public or private building or structure within the city/municipality in the exercise of regulatory powers over public buildings and structures. 4. Every Building Official shall keep a permanent record and accurate account of all fees and other charges fixed and authorized by the Secretary to be collected and received under this Code. Subject to existing budgetary, accounting and auditing rules and regulations, the Building Official is hereby authorized to retain not more than twenty (20%) percent of his collection for the operating expenses of his office. The remaining eighty (80%) percent shall be deposited with the provincial, city or municipal treasurer and shall accrue to the General Fund of the province, city or municipality concerned. (Sec. 208, PD No. 1096) 5. Disposition and use of the 20% generated from building permit fees and other charges under the national building code, viz. : a. The collection shall be made by the Local Treasurer, and the Official Receipt shall show the breakdown of the total collections indicating the share of the local government concerned 80% and the share of the national government 20%. (RA 6541-2004, Revised IRR of PD No. 1096) b. The Local Treasurer shall remit and credit five percent (5%) of income to the account of the DPWH Secretary under Special Account No. 154 thru the Bureau of the Treasury (BTr). c. The remittances made by the Local Treasurer to the BTr shall be validated in accordance with Item 2 (g) Sec. 210 of the Revised Implementing Rules and Regulations of PD 1096. d. If there is no discrepancy in the course of validation, the remittance shall be credited to the concerned accounts. Otherwise, the same shall be verified and adjusted immediately by the local treasurer. e. The 15% Office of the Building Official (OBO) fund shall cover all the necessary operating expenses of the OBO, including the purchase of equipment, supplies and materials, traveling expenses, obligation expenses and sheriff's fees and payment of other prior years obligations not adequately funded, subject to existing budgetary auditing rules and regulations. [DPWH-DILG JMC No. 001 dated 04 July 2013] C. Zonal/Location Permit Fees The Local Treasurer shall collect a Zoning Fee for Locational Clearance for all structures to be constructed in the city/municipality in accordance with existing local ordinances in compliance with Housing and Land Use Regulatory Board (HLURB) guidelines (PD No. 957) . D. Tricycle Operators Permit Fees The sangguniang bayan or panlungsod shall, subject to the guidelines prescribed by the Department of Transportation and Communications (now DOTr),enact an ordinance to regulate the operation of tricycles and grant franchises for the operation thereof within the territorial jurisdiction of the municipality or city. [Sec. 447 (a) (3) (vi), LGC] However, the issuance of licenses to tricycle drivers and charging of fees for the registrations of motorcycles are under the jurisdiction of the Land Transportation Office (LTO). E. Fishery Rentals, Fees and Charges Cities and municipalities shall have the exclusive authority to grant fishery privileges in the city/municipal waters and impose rentals, fees or charges therefor in accordance with the provisions of this Section. The sanggunian 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 city/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 sanggunian 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 city/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. 4. 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. (Sec. 149, LGC) F. Fees on Weights and Measures 1. General Provision Every person before using instruments of weights and measures for business, service, commercial, or other transactions with the public within the city/municipality, shall first have them sealed and pay the corresponding fee, fixed under an ordinance, to the City/Municipal Treasurer. 2. Instruments Usually Covered Sealing shall include the following instruments: a. Linear metric measures b. Metric measures of capacity c. Metric instruments of weights d. Apothecary balances of precision e. Scales or balances with complete set of weights 3. For each and every re-testing and re-sealing of weights and measuring instruments including gasoline pumps outside the office upon request of the owner or operator, an additional service charge to be fixed by ordinance for each instrument shall be collected. 4. Exemptions a. All instruments for weights and measures used in government work or maintained for public use by any instrumentality of the government shall be tested and sealed free. b. Dealers of weights and measuring instruments intended for sale. 5. Administrative Provisions a. Unless otherwise provided by ordinance, law or other valid order, the official receipt for the fee issued for the sealing of weights and measures shall serve as a license to use such instrument for one (1) year from the date of sealing, unless deterioration or damage renders the weights and measures inaccurate within the period. b. Unless otherwise provided, the license shall be preserved by the month of the year following its original issuance. Such license shall be preserved by the owner and together with the weights and measures covered by the license shall be presented (exhibited) on demand by the City/Municipal Treasurer or his/her deputies. c. The City/Municipal Treasurer is hereby required to keep full sets of secondary standards which shall be compared with the fundamental standards in the Department of Science and Technology (DOST) annually. When found to be within accepted tolerances, the secondary standards shall be distinguished by label, tag or seal and shall be accompanied by a certificate showing the degree of their variation from the fundamental standards. If the variation is of sufficient magnitude to impair the utility of instrument, it shall be destroyed at the DOST. d. The City/Municipal Treasurer or his/her deputies shall conduct periodic physical inspection and test of weight and measure instruments within the locality. e. Instruments of weight and measure found to be defective beyond repair shall be confiscated in favor of the government and shall be destroyed by the City/Municipal Treasurer in the presence of the City/ Provincial Auditor or his/her representative. 6. The municipality may levy fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan [Sec. 148 (a), LGC] .Cities are similarly empowered to levy such fees (Sec. 151, LGC) . 7. The sanggunian concerned shall prescribe the necessary regulations for the use of such weights and measures, subject to the guidelines prescribed by the DOST. 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 in accordance with the provisions of the LGC. However, the sanggunian may authorize the Local Treasurer to settle an offense not involving the commission of fraud before a case is filed in court, upon payment of a compromise penalty of not less than Two Hundred Pesos (P200.00). [Sec. 148 (b), LGC] 8. The ordinance of the sanggunian concerned may also embody such sanctions as may deem appropriate as regards the use of any weight or measure not properly sealed or licensed in accordance with the foregoing provisions, such as the confiscation of said illegal weight and measure, or the revocation of the permit or license of the business, and/or the filing of appropriate charges against the owner or operator of the business. [Art. 234 (c), IRR implementing Sec. 148, LGC] 9. Fraudulent Practices Relative to Weights and Measures The following acts relating to weights and measures are prohibited: a. for any person other than the official sealer or his/her duly authorized representative to place or attach an official tag, seal, sticker, mark, stamp, brand or other characteristic sign used to indicate that such instrument of weight and measure has officially been tested, calibrated, sealed or inspected; b. for any person to imitate any seal, sticker, mark, stamp, brand, tag or other characteristic sign used to indicate that such instrument of weight or measures has been officially tested, calibrated, sealed or inspected; c. for any person other than the official sealer or his/her duly authorized representative to alter in any way the certificate or receipt given by the official sealer or his/her duly authorized representative as an acknowledgment that the instrument for determining weight or measure has been fully tested, calibrated, sealed or inspected; d. for any person to make or knowingly sell or use any false or counterfeit seal, sticker, brand, stamp, tag, certificate or license or any dye for printing or making the same or any characteristic sign used to indicate that such instrument of weight or measure has been officially tested, calibrated, sealed or inspected; e. for any person other than the official sealer or his/her duly authorized representative to alter the written or printed figures, letters or symbols on any official seal, sticker, receipt, stamp, tag, certificate or license used or issued; f. for any person to use or reuse any restored, altered, expired, damaged stamp, tag certificate or license for the purpose of making it appear that the instrument of weight of measure has been tested, calibrated, sealed or inspected; g. for any person engaged in the buying and selling of consumer products or of furnishing services the value of which is estimated by weight or measure to possess, use or maintain with intention to use any scale, balance, weight or measure that has not been sealed or if previously sealed, the license therefor has expired and has not been renewed in due time; h. for any person to fraudulently alter any scale, balance, weight, or measure after it is officially sealed; i. for any person to knowingly use any false scale, balance, weight or measure, whether sealed or not; j. for any person to fraudulently give short weight or measure in the making of a scale; k. for any person, assuming to determine truly the weight or measure of any article bought or sold by weight or measure, to fraudulently misrepresent the weight or measure thereof; or l. for any person to procure the commission of any such offense above-mentioned by another. 10. Instruments officially sealed at some previous time which have remained unaltered and accurate and the seal or tag officially affixed thereto remains intact and in the same position and condition in which it was placed by the official sealer or his/her duly authorized representative shall, if presented for sealing, be sealed promptly on demand by the official sealer or his/her authorized representative without penalty except a surcharge fixed by law or regulation. (Art. 64, RA 7394, Consumer Act) 11. Penalties a. Any person who shall violate the provisions of paragraphs (a) to (f) and paragraph (l) of Article 64 or its implementing rules and regulations shall, upon conviction, be subject to a fine of not less than Two hundred pesos (P200.00) but not more than One thousand pesos (P1,000.00) or by imprisonment of not more than one (1) year or both upon the discretion of the court. b. Any person who shall violate the provisions of paragraph (g) of Article 64 for the first time shall be subject to a fine of not less than Five hundred pesos (P500.00) or by imprisonment of not less than one (1) month but not more than five (5) years or both, upon the discretion of the court. c. The owner-possessor or user of instrument of weights and measure enumerated in paragraphs (h) to (k) of Article 64 shall, upon conviction, be subject to a fine of not less than Three hundred pesos (P300.00) or imprisonment not exceeding one (1) year, or both, upon the discretion of the court. (Art. 65, RA 7394, Consumer Act) 12. Unlawful possession or use of instrument not sealed before using and not sealed within the period prescribed. a. Any person with the practice of buying or selling goods by weights and/or measures, or of furnishing services the value of which is estimated by weight or measure who has in his/her possession, without permit, any unsealed scale, balance, weight or measure, and any person who uses in any purchase or sale or in estimating the value of any service furnished, any instrument of weight or measure that has not been officially sealed, or if previously sealed, the license therefor has expired and has not been renewed in due time shall be punished by a fine of an amount imposed in the ordinance or by imprisonment for a period prescribed therein, or both at the discretion of the court. b. If, however, such scale, balance, weight or measure, has been officially sealed at some previous time and the seal and tag officially affixed thereto remain intact and in the same position and condition in which they were placed by the official sealer, and the instrument is found not to have been altered or rendered inaccurate but still to be sufficiently accurate to warrant its being sealed without repairs or alterations, such instruments shall, if presented for sealing promptly on demand of an authorized sealer or inspector of weights and measures, be sealed, and the owner, possessor, or user of the same shall be subject to no penalty except a surcharge to be fixed by ordinance plus the regular fee fixed by law for the sealing of an instrument of its class, this surcharge to be collected and accounted for by the City/Municipal Treasurer in the same manner as the regular fees for sealing such instruments. (Commonwealth Act No. 466) 13. Administrative Penalties a. Any person with the practice of buying or selling by weight and measure using unsealed and/or unregistered instrument shall be penalized an amount fixed in an ordinance: i. When correct; and ii. When incorrect, but within tolerable allowance of defect or short measure. b. Failure to produce weight and measure tag or license or certificate upon demand, but the instrument is duly registered: i. When correct; and ii. When incorrect, but within tolerable allowance of defect or short measure. c. Any person found violating any of the above two (2) provisions for the second time shall be fined twice the above penalty. d. Recommendation shall be made to the Mayor for the closure of business establishments using fraudulent weights and measures. G. Registration Fees 1. Civil Registration Fees There shall be collected fees, fixed under an ordinance, for services rendered by the Local Civil Registrar of the city/municipality, pursuant to the prescribed fees of the Philippine Statistics Authority (PSA). 2. Cattle/Animal Registration Fees Cattle Registration Requirements: a. Certificate of Ownership The owner of large cattle is hereby required to register ownership of said cattle with the City/Municipal Treasurer for which a Certificate of Ownership shall be issued to the owner upon payment of a registration fee fixed by an ordinance. b. Certificate of Transfer When large cattle are sold or the ownership is transferred to another person, the sale or transfer shall be registered with the City/Municipal Treasurer. A Certificate of Transfer shall be issued to the purchaser or new owner upon payment of a transfer certificate fee in an amount fixed by ordinance. c. Registration of Owner's Brand The owner of large cattle shall register his/her owner's brand with the City/Municipal Treasurer and pay the brand registration fee provided by ordinance. d. Branding Fee The owner of large cattle is required to pay service fee rendered by the LGU for marking said cattle. H. Registration Plates, Tags and Sticker Fees These are the fees collected from registration plates, tags, and stickers issued by LGUs. I. Clearance and Certification Fees 1. Police Clearance Fees fixed by an ordinance and collected by the City/Municipal Treasurer for each Police Clearance Certificate obtained from the Station Commander of the Philippine National Police (PNP) of the city/municipality. 2. Secretary's Fees Fees fixed in an Ordinance from every person requesting for copies of official records and documents from the offices of the city/municipality. 3. Health Certificate Fee from any person who is given a physical examination by the City/Municipal Health Officer or his/her duly authorized representative, as required by existing ordinances. 4. Real Property Tax Clearance Fees collected for the issuance of certification that the real property tax for a specific period has been paid. 5. Other Clearances and Certifications Fees collected not falling under any of the specific Clearance and Certification Fees. J. Supervision and Regulation Enforcement Fees Fees and charges collected in the supervision and enforcement of laws and regulations, such as traffic enforcement and other LGU regulations and the like. K. Inspection Fees Fees for the conduct of inspections by authorized government officials. This includes health inspection fees, sanitary inspection fees, mechanical inspection fees, etc. L. Verification and Authentication Fees Fees collected for verification of official documents on record. These also include fees collected for issuance of authenticated copies of legal documents such as birth/death/marriage certificates. M. Processing Fees Fees collected for the processing of documents for securing permits/applications. These also include fees for processing birth certificate and other civil registry certificates, permit application and the like. N. Occupation Fee Fees imposed on all individuals employed or practicing their calling which do not require board examinations. O. Fines and Penalties-Service Income These are the fees on fines and penalties imposed for delayed or non-payment of service fees. SECTION 70. Business Income . A. School Fees Fees imposed to students of local universities/colleges and public schools. It includes tuition, registration, affiliation, athletic, cultural, diploma and graduation, transcript of records, library, training, entrance examination fee, comprehensive examination and the like. B. Affiliation Fees Fees collected by local institutions from students undertaking practice of their professions or internships. C. Seminar/Training Fees Fees collected or billed for attendance in short course trainings and seminars. D. Rent Income Income derived from use of government properties/facilities, such as rent/lease of function rooms/buildings, fees on storage, warehousing, use of heavy equipment of other government agencies and receipt of contingent rent. Contingent rent are additional rent income on top of the agreed rate as provided in the lease agreement. E. Communication Network Fees Fees collected from domestic money transfer, social telegram service, two way radio service, public calling service, fixed line telephone service, telegraphic transfer, electronic messaging service and other related services. It includes fees collected for the connection of telephone services and the monthly fees for use of the facility. F. Transportation System Fees Income from the operation of transportation system like trains, buses, watercrafts, aircrafts and the use of land transport system terminals. G. Road Network Fees Fees charged for use of road networks and bridges. H. Waterworks System Fees Income derived from the operation of waterworks system, such as water connection fees, water utilization fees, irrigation fees and the like. I. Power Supply System Fees Income earned from power generation, transmission and distribution. J. Seaport System Fees Fees imposed on vessels for use of port facilities, such as: 1. Loading/discharging of cargoes 2. Embarking/disembarking passengers 3. Bunkering and anchoring at the port 4. Fees charged for cargoes whether for domestic shipment or transshipment 5. Security fee for the transport of containers K. Parking Fees These are fees/charges imposed (fixed and ambulant) on use of public areas as parking fees and the like. L. Receipts from Operation of Hostels/Dormitories and Other Like Facilities These are fees/charges imposed on the use of hostels and dormitories, cottages, guest houses and the like. M. Receipts from Market Operation These are collections from the operation of markets, including rentals of market spaces (fixed and ambulant) and other income-earning facilities of the market. N. Receipts from Slaughterhouse Operation These are collections from the operation of slaughterhouse which includes rentals of spaces for warehousing, livestock, slaughter fees and share from ante/post mortem fees. O. Receipts from Cemetery Operations These are collections from the operations of cemetery which includes rentals of spaces for interment and operation of crematorium and columbary. P. Receipts from Printing and Publication These are the receipts from sale of printed forms, materials or other publications. Q. Sales Revenue It is the income from the sale of merchandise and other inventory items and services in the regular course of business. R. Garbage Fees These are the fees from garbage collection and other environmental and sanitation fees. S. Hospital Fees These are fees/charges for hospital services including medical, dental and laboratory fees. T. Dividend Income It is the Income from dividends earned from equity investment. U. Interest Income It is the interest earned on loans receivable, investments and bank deposits. V. Service Concession Revenue This is the revenue recognized for the allocation of the cost of the asset put up by the operator for use in the service concession agreement. W. Other Service Concession Revenue This is the revenue received from operators of service concession asset in excess of any threshold set for the operator's collections. X. Gains 1. Gain on Foreign Exchange (FOREX) It is the gain in the revaluation of accounts in foreign currency denomination to local currency at balance sheet date. It also includes actual gain realized in the conversion of foreign currency to local currency. 2. Gain on Sale of Investments It is the gain on sale of government investments such as bonds or securities, etc. Y. Share in the Profit from Joint Venture This is the share of government agencies from profit on joint venture operations. Z. Fines and Penalties Business Income These are charges for delayed payment or non-compliance with business regulatory requirements. (COA Circular No. 2015-009, 1 December 2015) SECTION 71. Share from Philippine Amusement and Gaming Corporation (PAGCOR) . PAGCOR has the rights, privileges and authority to operate and license gambling casinos, gaming clubs and other similar recreation or amusement places, gaming pools, i.e. ,basketball, football, bingo, etc.,except jai-alai, whether on land and sea within the territorial jurisdiction of the Republic of the Philippines; provided that the corporation shall obtain the consent of the LGU that has territorial jurisdiction over the area chosen as the site for any of its operations. The operation of slot machines and other gambling paraphernalia and equipment shall not be allowed in establishments open or accessible to the general public unless the site of these operations are three-star hotels and resorts accredited by the Department of Tourism authorized by the corporation and by the LGU concerned. The LGU has a share in the earnings of PAGCOR. (RA No. 9487, 20 June 2007) SECTION 72. Share from Philippine Charity Sweepstakes Office (PCSO) . A. PCSO is the principal government agency for raising and providing funds for health programs, medical assistance and services, and charities of national character. It is responsible for operating and supervising the charity sweepstakes races, the lottery and other similar activities as a source of funds consistent with its charter. [Executive Order (EO) No. 357, 05 August 1996] B. General Guidelines 1. Approval of Grant to LGUs A proportionate grant from the thirty percent (30%) Lotto Charity Fund in favor of LGUs where lotto tickets are sold, subject to the applicable provisions on the use thereof under RA No. 1169. 2. Sharing of Funds by LGUs The LGUs concerned shall receive their share of the Lotto Charity Fund as follows: a. Municipalities seven percent (7%) to be shared on a 5:2 ratio between the municipality concerned and its province b. Cities five percent (5%) 3. Draw-down Periods For purposes of administrative facility, draw-downs by the LGUs concerned shall be made on a semestral basis, i.e. ,every six (6) months. 4. Availment of the Five Percent (5%) Fund Local non-government organizations (NGOs), institutions and agencies performing charity work shall, at the level of the proper LGU, have access to and may avail of the fund allocated to such LGU subject to limitations as to use as laid down in RA No. 1169. (Executive Order No. 357, 07 October 1996) C. Small Town Lottery (STL) 1. The STL was declared as one of the regular product of the PCSO. It is implemented locally all over the country through Authorized Agent Corporations (AAC). It is a regular game of the PCSO authorized by the national government thru Sec. 1 of RA 1169, as amended. a. The STL refers to the PCSO lottery conducted at the local level, i.e. ,cities, provinces, etc.,involving the collection of bets, issuance of tickets, conduct of draws, payments to winners and remittances. b. Revenue Allocation The gross receipts shall be allocated as follows: I. Gross Sales/Retail Receipts 100.00% Printing Cost 2.00% II. Net Sales 98.00% III. Prize fund (55% of Net Sales) 53.90% Agency Commission (10% of gross sales) 10.00% 10% Withholding Tax from Agency Commission 1.00% Net of Agency Commission 9.00% BIR Taxes (5% of Prize Fund) 2.695% Net of Prize Fund 41.205% IV. Charity Fund (30% of Net Sales) 29.40% City/Municipality 3.00% Congressional District 0.25% Provincial Government 0.75% Philippine National Police 2.50% National Headquarters 0.40% Police Regional Office 0.40% Police Provincial Office 0.60% Operating Fund/Expenses (PCSO) 4.70% Total 98.00% i. 0.50% of the printing cost shall be retained by the AACs, in case printing of the STL tickets shall be undertaken by the AACs. ii. The remaining 1.50% of the printing cost shall be remitted by the AAC to PCSO. c. The PCSO shall enter into an agreement with the LGU, indicating the category of programs for which their allocation may be utilized and the reportorial requirements pertaining to their utilization. d. STL shares allocated for the Provincial Government shall be added to the PCSO Charity Fund in case of STL AACs operating in chartered cities. (PCSO 2016 Revised IRR for the STL Operations of the PCSO) SECTION 73. Other Sources of LGU Income . Benefits to Communities Hosting the Generation Facility and Energy Resource Development Projects Pursuant to Sec. 5 (i) of RA No. 7638 (Department of Energy Act of 1992) A. Scope of Application This rule shall apply to generation facilities and/or energy resource development projects located in all barangays, municipalities, cities, provinces and regions. B. Obligation to Provide Financial Benefits The generation facilities and/or energy resource development facilities, such as, but not limited to the following, are required to provide the financial benefits under Energy Regulations (ER) No. 1-94 of the Department of Energy (DOE): 1. Spin-off facilities of the National Power Corporation (NPC) or their transferees, including generation facilities owned by NPC transferred to the Power Sector Assets and Liabilities Management Corporation (PSALM) and subsequently privatized pursuant to the Act 2. Agus and Pulangui Complexes 3. Facilities owned and operated by NPC-Small Power Utilities Group (SPUG) 4. Facilities under Build-Operate-Transfer (BOT) arrangements and other variants with NPC (NPC Independent Power Producers (IPPs),NPC-SPUG, National Irrigation Administration (NIA),Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) and other government agencies 5. Facilities under BOT arrangement and other variant with Distribution Utilities (IPPs of Distribution Utilities) 6. Self-Generation Facilities 7. Facilities operating in economic zones 8. Integrated energy resource development and generation facilities such as hydro, geothermal and coal C. Beneficiaries Direct benefits shall be provided to the host LGU, especially the community and people affected while equitable preferential benefits shall be provided to host region. Host LGU or host region shall be understood as follows: 1. With respect to generation facilities, in the case of power barges, the host LGU or region is that where the power barge is moored; in all other cases, the host LGU or region is that where the generation facility is physically located. Generation facilities shall not include transmission lines and substations. 2. With respect to energy resource: a. Coal The host LGU or region is that where the producing positive coal reserve is located, as delineated by detailed geophysical, geological and exploration surveys. b. Geothermal The host LGU or region is that where the producing geothermal reservoir is located as delineated by geochemical, geophysical, and exploration surveys. "Producing geothermal reservoir" refers to the subsurface geological environment where the geothermal fluids accumulate and circulate, inclusive of the production and re-injection/recharge zone. c. Hydro The host LGU or region is that where the hydro reservoir is located as delineated by detailed topographic, geological and geo-technical investigations, reservoir and dam height optimization studies, and as delineated by detailed ground surveys. "Hydro reservoir" refers to either a natural lake or an artificial lake created by the impounding of stream flow, runoff and subsurface water including but not limited to intakes, diversion weirs and transbasin underground tunnel to generate power. d. Petroleum/Natural Gas The host LGU or region is that where the producing petroleum/natural gas reservoir is located, as delineated by detailed geochemical, geophysical exploration surveys. D. Nature of Benefits Provided under ER 1-94 1. The generation company and/or energy resource developer shall set aside one centavo per kilowatt-hour (Php0.01/KWh) of the total electricity sales as financial benefit of the host communities of such generation facility, where applicable. a. For a generation facility and/or energy resource located in a non-highly urbanized city, the Php0.01/KWh financial benefit shall be allocated as follows: i. Fifty percent of one centavo per kilowatt hour (Php0.005/KWh) of the total electricity sales shall be set aside as an electrification fund (EF) to be applied in the following radiating order: 1. Designated resettlement area/s 2. Host barangay(s) 3. Host municipality/ies or city/ies 4. Host province/s 5. Host region/s 6. Other areas as may be prioritized/determined by the DOE. ii. Twenty five percent of one centavo per kilowatt hour (Php0.0025/KWh) of the total electricity sales as a development and livelihood fund (DLF) to be applied in the following manner: 1. Designated resettlement area/s 5% 2. Host barangay/s 20% 3. Host municipality/ies or city/ies 35% 4. Host province/s 30% 5. Host region/s 10% In the absence of a designated resettlement area/s, funds allocated for the resettlement shall form part of the host barangay/s. iii. Twenty five percent of one centavo per kilowatt hour (Php0.0025/KWh) of the total electricity sales as a reforestation, watershed management, health and/or environment enhancement fund (RWMHEEF) to be allocated in the following manner: 1. Designated resettlement area/s 5% 2. Host barangay/s 20% 3. Host municipality/ies or city/ies 35% 4. Host province/s 30% 5. Host region/s 10% In the absence of a designated resettlement area/s, funds allocated for the resettlement shall form part of the host barangay/s. b. For a generation facility and/or energy resource located within a highly urbanized city, the Php0.01/KWh financial benefit shall be allocated as follows: i. Seventy five percent of one centavo per kilowatt-hour (Php0.0075/KWh) of the total electricity sales of all generation facilities located in highly urbanized city shall be set aside into one account as a electrification fund (EF) to be applied in the following priority: 1. Designated resettlement area/s 2. Host barangay/s 3. Host city/ies 4. Province/s nearest to the host city/ies 5. Region/s of the host city/ies 6. Host communities of other facilities with insufficient electrification fund 7. Areas traversed by transmission lines and sub-stations of similar facilities 8. Other areas as may be prioritized/determined by the DOE ii. Twelve and one-half percent of one centavo per kilowatt-hour (Php0.00125) as a DLF to be allocated in the following manner: 1. Designated resettlement area/s 10% 2. Host barangay/s 30% 3. Host city/ies 60% iii. Twelve and one-half percent of one centavo per kilowatt-hour (Php0.00125) as a RWMHEEF to be allocated in the following manner: 1. Designated resettlement area/s 10% 2. Host barangay/s 30% 3. Host city/ies 60% In the absence of designated resettlement area/s, funds allocated for the resettlement shall form part of the host barangay/s. c. In case of integrated hydro-electric generation projects with cascading generation facilities, where the generation facilities and energy resources are located in different municipalities/cities or provinces, irrespective of its location, whether located in a highly urbanized city or non-highly urbanized city, allocation of financial benefits shall follow number 4 (a) i, hereof. The host communities of the generation facilities and energy resource development projects shall equally divide said financial benefits. The host municipality/city of the generation facility adjacent to the energy source shall in no case be a host to both said generation facility and energy resource. i. All interest earnings from EF, DLF, RWMHEEF shall be set aside into one trust account to be utilized for the electrification projects of the communities in the following order of priority: 1. Direct host barangay/s, and host municipality/ies or city/ies with insufficient accrued EF 2. Areas traversed by transmission lines, and sub-stations or similar facilities 3. Areas not directly connected to the Grid or national transmission system which include isolated or remote communities 4. Other areas as may be prioritized/determined by the DOE ii. The financial assistance advanced by the generation company and energy resource developer during its pre-operation stage or before the start of the commercial operations for the purpose of securing favorable endorsement from the community and the people affected, after RA 7638 (DOE Law) has become effective shall be credited by the generation company, energy resource developer or their successors-in-interest against the accrued financial benefits based on the following criteria: 1. The projects to be funded under the advance financial assistance should be approved by the DOE consistent with E.R. 1-94. 2. The total financial assistance to be amortized as a rate of twenty percent (20%) from the accrued financial benefits shall be based on the actual amount spent for the project/s validated by the DOE. 3. Amortization of financial assistance shall commence from the next quarter billing, after the DOE has issued a validated report on the actual amount spent for the projects. (Rules and Regulations to Implement RA No. 9136, Entitled "Electric Power Industry Reform Act of 2001") SECTION 74. Local Economic Enterprises (LEE) . LEEs are ventures wholly or partially owned by LGUs that generate revenue/income through the sale of services and goods to meet a perceived constituency demand. An effective LEE is one that contributes to the quality service delivery goals of the LGU. As such, an effective LEE must be designed, set up, operated, and managed in accordance with a well-prepared feasibility study and a detailed business plan that ensures the proposed LEE: A. has clear vision, mission, goals, and objectives that fully respond to a particular constituency need; B. supports the LGU development goals and objectives embodied in its Provincial Development and Physical Framework Plan (PDPFP) if it is a province or Comprehensive Development Plan (CDP) if it is a city/municipality, and its corresponding Local Development Investment Program (LDIP) and Annual Investment Program (AIP); C. augments and does not compete with goods and services provided by the private sector; D. operates under the basic principle of financial self-sufficiency via cost recovery; E. uses a performance-based approach with efficiency and effectiveness in service delivery as requisites; and F. publishes annual performance reports that will provide accountability and transparency. (DBM Manual on the Setting up and Operation of LEE, 2016) SECTION 75. Establishing and Governing the LEE . An enterprise may only be established and operated by virtue of an ordinance duly enacted by the sanggunian. In relation to the imposition and collection of fees and charges, the ordinance shall include provisions on the following: A. Public utility charges/rates for the operation of public utilities owned, operated and maintained by the LGUs within their jurisdiction. (Sec. 154, LGC) ; B. Toll fees or charges for the use of any public road, pier or wharf, waterway, bridge, ferry or telecommunications systems funded and constructed by the LGU concerned. (Sec. 155, LGC; Sec. 47, Volume I, GAAM) ;and C. When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of the tolls, and thereafter the said facility shall be free and open for public use. (Sec. 155, LGC) SECTION 76. Basic Services and Facilities . A. LGUs 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 the LGC. LGUs shall likewise exercise such other powers and discharge such other functions and responsibilities as are necessary, appropriate, or incidental to efficient and effective provision of the basic services and facilities enumerated herein. [Sec. 17 (a), LGC] B. Such basic services and facilities include, but are not limited to the following: 1. For a Barangay a. Agricultural support services which include planting materials, distribution system and operation of farm produce collection and buying stations; b. Health and social welfare services which include maintenance of barangay health center and day-care center; c. Services and facilities related to general hygiene and sanitation, beautification, and solid waste collection; d. Maintenance of katarungang pambarangay; e. Maintenance of barangay roads and bridges and water supply systems; f. Infrastructure facilities such as multi-purpose hall, multi-purpose pavement, plaza, sports center, and other similar facilities; g. Information and reading center; and h. Satellite or public market, where viable. 2. For a Municipality a. Extension and on-site research services and facilities related to agriculture; and fishery activities which include dispersal livestock and poultry, fingerlings, and other seeding materials for aquaculture; palay, corn, and vegetable seed farms, medicinal plant gardens, fruit trees, coconut, and other kinds of seedling nurseries, demonstration farms; quality control of copra and improvement and development of local distribution channels preferably through cooperatives; inter-barangay irrigation systems; water and soil resources utilization and conservation projects; and enforcement of fishery laws in municipal waters including the conservation of mangroves; b. Pursuant to national policies and subject to supervision, control and review of the Department of Environment and Natural Resources (DENR),implementation of community-based forestry projects which include integrated 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; c. Subject to the relevant provisions of Title 5, Book I of the LGC, 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; d. 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; e. Information services which include investments and job placement information systems, tax and marketing information systems, and maintenance of a public library; f. Solid waste disposal system or environmental management system and services or facilities related to general hygiene and sanitation; g. Municipal buildings, cultural centers, public parks including freedom parks, playgrounds, and sports facilities and equipment, and other similar facilities; h. Infrastructure facilities intended primarily to service the needs of the residents of the municipality and which are funded out of municipal funds including, but not limited to municipal roads and bridges, school buildings and other facilities for public elementary and secondary schools; clinics, health centers and other health facilities necessary to carry out health services; communal irrigation, small water impounding projects and other similar projects; fish ports; artesian wells, spring development, rain water collectors and water supply systems; seawalls, dikes, drainage and sewerage, and flood control; traffic signals and road signs; and similar facilities; i. Public markets, slaughterhouses and other municipal enterprises; j. Public cemetery; k. Tourism facilities and other tourist attractions, including the acquisition of equipment, regulation and supervision of business concessions and security services for such facilities; and l. Sites for police and fire stations and sub-stations and the municipal jail. 3. For a Province a. 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; b. Industrial research and development services, as well as the transfer of appropriate technology; c. Pursuant to national policies and subject to supervision, control and review of the DENR, enforcement of forestry laws limited to community-based forestry projects, pollution control law, small-scale mining law, and other laws on the protection of the environment, and mini hydro electric projects for local purposes; d. Subject to the provisions of Title 5, Book 1 of the LGC, health services which include hospitals and other tertiary health services; e. Social welfare services which include programs and projects on rebel returnees and evacuees; relief operations; and, population development services; f. Provincial buildings, provincial jails, freedom parks and other public assembly areas, and other similar facilities; g. Infrastructure facilities intended to service the needs of the residents of the province and which are funded out of provincial funds including, but not limited to, provincial roads and bridges; inter-municipal waterworks, drainage and sewerage, flood control, and irrigation systems; reclamation projects; and similar facilities; h. Programs and projects for low-cost housing and other mass dwellings, except those funded by the Social Security System (SSS),Government Service Insurance System (GSIS),and the Home Development Mutual Fund (HDMF):provided, that national funds for these programs and projects shall be equitably allocated among the regions in proportion to the ratio of the homeless to the population; i. Investment support services, including access to credit financing; j. Upgrading and modernization of tax information and collection services through the use of computer hardware and software and other means; k. Inter-municipal telecommunications services, subject to national policy guidelines; and l. Tourism development and promotion programs. 4. For a City All the services and facilities of the municipality and province, and in addition thereto are the following: a. Adequate communication and transportation facilities; and b. Support for education, police and fire services and facilities; [Sec. 17 (b), LGC] c. Notwithstanding the provisions of sub-section Sec. 17 (b) of the LGC, public works and infrastructure projects and other facilities, programs and services funded by the National Government under the annual General Appropriations Act (GAA), other special laws, pertinent executive orders, and those wholly or partially funded from foreign sources, are not covered under this Section, except in those cases where the LGU concerned is duly designated as the implementing agency for such projects, facilities, programs and services. [Sec. 17 (c), LGC] d. The designs, plans, specifications, testing of materials, and the procurement of equipment and materials from both foreign and local sources necessary for the provision of the foregoing services and facilities shall be undertaken by the LGU concerned, based on national policies, standards and guidelines. (Sec. 17, LGC) SECTION 77. Examples of Government Enterprises . Among the government enterprises known to have been established and operated by LGUs are the following: A. Beach Houses B. Coliseums C. Cold Storage Plants D. Communication and Transportation Facilities E. Cultural Centers F. Electric Power Plants G. Ferries H. Food Terminal Markets I. Health Resorts J. Hospitals K. Irrigation Systems L. Lease of Equipment and Machinery M. Low-Cost Housing and Other Dwelling Projects N. Markets O. Multi-Purpose Hall, Multi-Purpose Pavements and Plazas P. Public Cemeteries Q. Radio Stations R. Sports Complexes and Sports Facilities S. Telephone Systems T. Toll Roads & Bridges U. Tourism Facilities and Other Tourists Attractions V. Waterworks Systems W. Wharves X. Water Supply Systems SECTION 78. Private Sector Participation in the Operation and Management of LGU Enterprises . A. The participation of the private sector in local governance, particularly in the delivery of basic services, shall be encouraged to ensure the viability of local autonomy as an alternative strategy for sustainable development. [Sec. 3 (l), LGC] B. To ensure the active participation of the private sector in local governance, LGUs may, by ordinance, sell, lease, encumber, or otherwise dispose of public economic enterprises owned by them in their proprietary capacity. [Sec. 17 (j), LGC] CHAPTER 3 Collection Procedures SECTION 79. Designation of Collecting Officers . The head of an agency may designate such number of collecting officers or agents as may be deemed necessary. As a general rule, the collection of revenues and receipts shall be done by the regularly appointed collecting officer/treasurer. In local government units, local treasurers are vested by law to collect and receive all monies accruing to their respective jurisdictions whether in the form of collective taxes and other revenues or receipts or trust funds pertaining to other branches or units of the government. (Secs. 170 and 247, LGC) Collectors/tellers may also be designated to assist collecting officers/treasurers and they shall turn over their collections daily to the collecting officer/treasurer concerned. (Sec. 65, Chapter 3, Volume I, GAAM) SECTION 80. Prohibition from Holding Other Positions as Cashier or Treasurer . Government cashiers are prohibited from holding positions as cashiers or treasurers of savings and loan associations or any other association or organization. (Sec. 67, Chapter 3, Volume I, GAAM) SECTION 81. Acknowledgment of Collections . General Guidelines: A. No payment of any nature shall be received by a collecting officer without immediately issuing an official receipt in acknowledgment thereof. [Sec. 69, Chapter 3, Volume I, Government Accounting and Auditing Manual (GAAM)] B. Where mechanical devices are used to acknowledge cash receipts, the Commission on Audit (COA) may approve, upon request, exemption from the use of Accountable Forms. (Sec. 70, Chapter 3, Volume I, GAAM) C. Official receipts are designed to cover a particular kind of collection only. Unless otherwise specifically authorized, an official receipt shall be issued only for the purpose for which it is intended. General forms shall be used only for collections for which no specific form has been authorized. (Sec. 71, Chapter 3, Volume I, GAAM) D. At no instance shall temporary receipts be issued to acknowledge the receipt of public funds. (Sec. 72, Chapter 3, Volume I, GAAM) E. Pre-numbered official receipts shall be issued in strict numerical sequence. In preparing official receipts, all copies of each receipt shall be exact copies of carbon reproductions in all respects of the original. If payment has been tendered in money order or check, the official receipt shall be prepared with the date, number and the amount of such money order, or check together with the purpose for which the payment has been received. The address of the payor shall also be indicated on the official receipt to facilitate communication with him if necessary. (Sec. 73, Chapter 3, Volume I, GAAM) F. Cash tickets issued to transient vendors in the public market to acknowledge market fees shall pertain only to the vendor buying the same and shall be good only for the space or spaces of the market premises to which he is assigned. If a vendor disposes of his merchandise by wholesale to another vendor, the latter shall purchase new tickets if he desires to sell the same merchandise, even if done in the same place occupied by the previous vendor. The name of the vendor, the place and date of issue shall be indicated at the back of the cash tickets issued to a vendor. (Sec. 74, Chapter 3, Volume I, GAAM) SECTION 82. Use of Electronic Official Receipts (eORs) to Acknowledge Collection of Income and Other Receipts of Government . Electronic Collection System is an online facility provided by government agencies that enables debtors, creditors and other clients to pay government dues and charges through a computer or telephone. It is a system for receiving, sending, storing, generating or otherwise processing electronic data messages or electronic documents pertaining to receipt and deposit of government collections. A. All collections shall be acknowledged by the government agency concerned through the issuance of official receipts to establish that these have been received. B. Receipt of collections/revenue through electronic means shall be acknowledged by an electronic official receipt (eOR).eOR refers to a proof of payment generated/issued through Electronic Payment and Collection System (EPCS) with unique or sequential reference numbers that can be validated using the same system. More specifically, the eOR refers to an evidence of payment for collection received by the agency from clients, generated through the agency's electronic collection system. EPCS is a system that accepts and processes electronic payments, authenticates the payor and payee, validates availability of funds and executes the appropriate debit and credit instructions for the fund source and destination accounts, generates and forwards electronic proof of payment or eOR to the payor, or allows secure access thereto and creates, retains and safeguards the resulting detailed electronic transaction records which are accessible by authorized personnel. C. The eORs shall have the following minimum data content: 1. Name of the agency issuing the receipt 2. Location and location code (place where the collection is made and its assigned code) 3. Name of payor (person/entity making the payments) 4. Date and time of receipt (date and time of the collection and issuance of eOR) 5. Nature of collection (such as business tax, fees, charges, assessments, licenses, etc.) 6. Amount received, detailed as to the nature of collection coded as to their subsidiary ledger revenue classification 7. eOR number (a unique and sequential number generated by the system for every eOR issued) 8. Transaction Number (number generated for every transaction accepted by the system which does not necessarily pertain to the generated eOR. It may include cancellation of eOR, inquiry, etc.) 9. Mode of payment (credit card/electronic fund transfer/ATM/G-Cash, etc.) 10. Order of Payment Slip Number or Assessment Number D. Collections of local government units shall be deposited to the accounts in designated authorized government depository bank. E. Collections though electronic system shall be accounted for in the books of the government agency concerned in accordance with existing rules and regulations for receipts and collections. F. To ensure that transactions can be individually and safely processed using online collection system, the government agency concerned shall comply with the provisions of the Joint Department Administrative Order No. 02, S. 2006 issued by the Department of Finance and the Department of Trade and Industry on the "Guidelines Implementing RA No. 8792 on EPCS in Government" or any subsequent amendments thereto. G. The government agency shall provide read/view and print access rights to the Commission on Audit Auditor in the computerized system where online collections are being processed. (COA Circular No. 2013-007, 18 September 2013) SECTION 83. Procedures for Handling Collections Received through the Mail . Collections received through the mail shall be acknowledged, and remitted or deposited, and recorded just like other collections. Basic controls shall, however, be maintained: A. Incoming mail shall be opened by or under the supervision of a responsible officer of the Records Section of the LGU. B. In addition to the usual records maintained for incoming mail, a list shall be prepared by the Records Section of all checks, money orders, warrants, or currency received, listed individually and totaled. The list shall contain spaces for information on the acknowledgment of receipt of the collection as well as its subsequent remittance or deposit with authorized depositories. The list shall be certified correctly by the Chief of the Records Section. C. After accomplishing the list, the Records Section shall immediately deliver the duplicate copy direct to the COA Auditor. The three (3) other copies and the collections and cover letters shall be delivered direct to the Collecting Officer who shall verify the correctness of the list, sign the acknowledgement portion on all 3 copies, and return the last copy to the Records Section. D. The Collecting Officer shall immediately issue an official receipt (OR) for each and every collection on the list. The OR number and the date of issue shall be recorded on the appropriate spaces of the original and triplicate copies of the list. (Sec. 75, Chapter 3, Volume I, GAAM) E. Collections arising therefrom shall also be included in the Report of Collection and Deposits together with the other collections for the day. The prescribed procedures in the turnover of collections and accomplishments of the forms shall likewise be observed. F. The Treasurer shall insure that the OR is correctly and properly recorded in the list. The payor's copy of the OR shall be forwarded to the Records Section which shall mail it back to the payor with a cover letter. The Treasurer, shall, however, forward to the Records Section for mailing, only the OR of cleared checks. In case of dishonored checks, the procedures on dishonored checks in this Manual shall be followed. SECTION 84. Checks Received in Payment for Taxes or Other Indebtedness to the LGU . A. Acceptance of Checks in Payment for Indebtedness An officer charged with the collection of revenue or the receiving of monies payable to the government shall accept payment, for taxes dues or other indebtedness to the government, in the form of checks issued in payment of government obligations, upon proper indorsement and identification of the payee or indorsee. Checks drawn in favor of the government in payment of any such indebtedness shall likewise be accepted by the officer concerned (Sec. 76, Chapter 3, Volume 1, GAAM) . B. Drawing of Checks 1. Checks in payment for indebtedness to the government must be drawn by the payor himself/herself and made payable to the treasurer of the LGU. Only the official title or designation of the official concerned shall be stated as the payee. Under no circumstance shall the following checks be accepted: a. Checks drawn payable to the name of agency head or any of its officers; b. Checks drawn payable to "Cash"; c. Indorsed checks; d. Post-dated checks; and e. Stale checks. (Sec. 77, Chapter 3, Volume I, GAAM) 2. Standard sequence for dates written in numerical format when the date on a check is written in purely numeric form, like in the formats as follows: 11032018 110318 11/03/2018 11-03-2018 11-03-18 11.03.2018 11.03.18 3. Clearing participants shall read the date as 3 November 2018 or as the case may be, regardless of the form or shape of the partition symbol (like an asterisk or double partition line/back slash, small circle or square, etc.) 4. Clearing participants should advise their clients to write the date on their checks in the standard format for which is as follows: "MM-DD-YYYY" or "MM-DD-YY",that is Month-Day-Year sequence. 5. A check with issue date written entirely in numerals (without clear indication which numerals refer to the month of issue) is deemed to warrant to the drawee bank that the check is neither "stale" nor "post-dated". (Philippine Clearing House Corporation Memo Circular No. 3436, 24 April 2018) C. Issuance of Official Receipt for Payment by Checks Before issuing an Official Receipt, the Collecting Officer shall carefully scrutinize the check presented to him/her and make sure that it is complete and correct particularly as to date, signature or countersignature, and amount in words and figures appearing on the face of the check. The number and the date of the official receipt issued shall be indicated at the back of the check. (Sec. 78, Chapter 3, Volume I, GAAM) D. Non-Acceptance of Checks When a check drawn in favor of the government is not accepted by the drawee bank for any reason, the drawer shall continue to be liable for the sum due and all penalties resulting from delayed payment. (Sec. 79, Chapter 3, Volume I, GAAM) Non-Acceptance of Checks with Erasure, Alteration and/or Deficiency 1. Effective January 4, 2016, any check that shows or indicates on its face any erasure or alteration of the following: a. date; b. name of the payee (whether indicated as "Cash" or "Bearer" or "Holder" or a specific name or any other word or phrase of identification; c. amount in figure/s; d. amount in words; e. signature/s of the drawer/s or the drawer's signatory/ies; f. account name; g. account number; h. check number; or i. Magnetic Ink Character Recognition (MICR) characters. regardless of any signature or initials that appear to indicate authorization of the alteration or erasure OR 2. Any check that does not indicate the following shall no longer be eligible or acceptable for clearing: a. date; b. payee; c. amount payable in figures; d. amount payable in words, except for checks issued by banks (Manager's or Cashier's Checks, Demand Drafts) using a check writer; or e. signature of the Drawer/s (Philippine Clearing House CHOM No. 15-460.A, 02 September 2015) E. Payors with Previously Dishonored Checks Whenever a payor has a record of a previously dishonored private check drawn by him/her in payment of taxes and dues, even if such check has already been settled, any private check presented by him/her shall no longer be accepted. In such case the payor shall be required to pay only in cash or by certified check. The treasurer shall make a list of payors whose checks have been dishonored and shall circularize the list to all collecting officers under his jurisdiction. (Sec. 80, Chapter 3, Vo. 1, GAAM) F. Issuance of a Separate Official Receipt in Case the Amount Due is Less than the Face Value of Check No change shall be given to the payor in the event that the amount of the taxes or dues is less than the face value of the check in payment thereof. The difference shall be receipted for by the issuance of a separate general receipt and shall be accounted for simultaneously with the collection as miscellaneous trust liabilities (deferred income). (Sec. 81, Chapter 3, Volume 1, GAAM) G. Payment by Private Check for Goods Delivered and Services Rendered by Government Agencies. When payment for goods or services is made by private check, no such service shall be rendered or goods delivered by the LGU unless the check in payment thereof has been honored by the drawee bank. (Sec. 82, Chapter 3, Volume I, GAAM) SECTION 85. Handling of Dishonored Checks Received in Payment of Taxes and Other Indebtedness to the Government . A. A check is dishonored either by non-payment or non-acceptance. Dishonor by non-payment occurs when: 1. The check is duly presented for payment and payment is refused or cannot be obtained; 2. Presentment is excused and the check is overdue and unpaid. B. Dishonor by non-acceptance happens when: 1. The check is duly presented for acceptance and such an acceptance as is prescribed by law is refused or cannot be obtained; 2. Presentment for acceptance is excused and the check is not accepted. (COA Revised Cash Examination Manual, 2013) C. General Guidelines 1. Cancellation of Official Receipt a. Upon receipt of the debit memo and the dishonored check(s) from the bank, constructive cancellation of the official receipt covering the dishonored check shall be immediately effected by the Treasurer on the copy in his/her possession. b. The Treasurer shall immediately photocopy the dishonored checks and record as credit in the Cashbook-Cash in Bank and cancel payment in the taxpayer's index card. He/She shall also notify the collector/teller of the dishonor and the cancellation of the official receipt. The collector/teller shall note the cancellation in the triplicate copies of the receipt. The Treasurer shall then inform the Auditor who shall effect the cancellation in the duplicate copy of official receipt, in case the same has already been submitted for audit. c. The Treasurer shall forward the debit memo and the photocopy of the dishonored checks to the Accountant. The Accountant shall cancel the official receipt if still in his/her possession. He/She shall prepare the Journal of Entry Voucher (JEV) taking up the dishonored check by crediting the Cash in Bank account and debiting the appropriate income account. In case of dishonor of check payments for Real Property Tax (RPT) or Special Education Tax (SET),the RPT/SET Receivables and corresponding Deferred RPT/SET Income shall be restored. The accounts Due to LGUs, RPT Income, Cash in Bank and RPT Discount shall be adjusted accordingly. He/She shall furnish the Treasurer with a copy of the duly approved JEV. The Treasurer shall record the JEV number in the Cashbook-Cash in Bank as reference in the entry effecting the cancellation of the dishonored check. [Sec. 57, Chapter 3, Volume 1, Manual on the New Government Accounting System (MNGAS) for LGUs] 2. Notice of Dishonor Sec. 89 of the Negotiable Instruments Law provides that when a negotiable instrument has been dishonored by non-acceptance or non-payment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or indorser to whom such notice is not given is discharged. Notice of dishonor should be given to the drawer (or to the indorser-payor of the government check) to protect the interest of the government. The collecting officer neglecting or failing to give the required notice of dishonor to the drawer, who, as a result thereof is discharged from liability, shall be personally answerable for the resulting loss suffered by the government. (Sec. 85, Chapter 3, Volume 1, GAAM) The Notice of Dishonor shall be prepared in five (5) copies to be distributed as follows: Original Drawer, delivered either personally or by registered mail with return card on the same day of issuance of the Notice of Dishonor. Duplicate Treasurer Triplicate Local Accountant for the preparation of the required Adjustment Journal Entry (AJE) Quadruplicate COA Auditor having audit jurisdiction Quintuplicate Collecting Officer (Sec. 86, Book II, Volume I, GAAM) 3. Action on Dishonored Checks Should the drawer of a dishonored check fails to settle his/her account or deposit the amount sufficient to cover the same within five (5) days from receipt of the notice of dishonor, the head of the local treasury shall immediately transmit the papers to the city or provincial prosecutor for the institution of the necessary criminal action under Article 315 of the Revised Penal Code, as amended by Republic Act No. 4885, and/or BP Blg. 22. The aforementioned provision applies only to cases where the check has been dishonored for lack or insufficiency of funds. Where the check has been dishonored by reason of formal defects, such as lack of countersignature, the treasurer shall take immediate steps to collect the taxes or dues previously paid under the dishonored checks, for which the official receipt covering the checks has been subsequently cancelled and, if necessary, initiate the prompt institution of the corresponding civil action for the collection of the amount involved (Sec. 87, Chapter 3, Volume I, GAAM) . 4. Recording and Reporting of Dishonored Checks by the Local Treasurer Upon receipt of the debit memo and the dishonored check/s from the bank, the Local Treasurer shall photocopy the dishonored checks and immediately record it in the appropriate cashbook with the following explanation: "To take up the Journal Entry Voucher No. _____, dated _______, covering dishonored Check(s) No. _____ for P_______, acknowledged by O.R. No. ______ dated ______." a. The dishonored check and corresponding cancelled official receipt shall also be recorded in the Report of Collections for the current month regardless of whether or not the dishonored check pertains to the previous month. A negative debit entry on the cash column and a negative entry on the distribution column shall be made on the last sheet immediately below the totals with the following explanations: "Cancellation of O.R. No. _____ dated ______ for Php______ on account of dishonor of Check No. _______, per Debit Memo No. ______ dated _______." b. The local treasurer shall forward the debit memo and the photocopy of the dishonored check/s to the local accountant for the preparation of the Journal Entry Voucher (JEV) in three (3) copies. The local accountant shall furnish the local treasurer with a copy of the duly approved JEV for the latter's recording of the JEV No. in the entries previously made in the appropriate Cash in Bank cashbook. The original copy of the JEV taking up the dishonored check/s and the supporting documents shall be submitted to the Auditor concerned and the duplicate copy shall be retained by the local accountant. c. The dishonored check/s and the corresponding cancelled OR shall also be reflected in the individual taxpayer's records/ index cards and other records of collections maintained by the Office of the Local Treasurer. At the end of each month the local treasurer shall prepare a report of dishonored check/s in four (4) copies to be distributed as follows: Original Local Chief Executive Duplicate COA Auditor Triplicate Local Accountant Quadruplicate Local Treasurer's file (Sec. 88, Chapter 3, Volume I, GAAM) 5. Redemption of Dishonored Checks The following rules shall be observed when a dishonored check is redeemed: a. A dishonored check shall be redeemed by tendering payment by way of cash or manager's/cashier's check to the local treasurer or collecting officer concerned. No other mode of payment shall be accepted; b. Upon receipt of the cash or manager's/cashier's check, the collecting officer or local treasurer shall issue an OR for the amount received. The nature of the payment to be indicated shall be the same as that in the previous OR cancelled, with the following notation on the receipt: "Previous payment acknowledged by O.R. No. _____, dated _____, cancelled on (date of notice of dishonor)." Accordingly, the redemption of the dishonored check shall be recorded in the cashbook together with other collections. c. If the payor is liable for the payment of fine or penalty arising from delayed payment, the amount corresponding to the fine or penalty shall also be imposed and collected in addition to the principal tax or dues paid by him/her. (Sec. 89 (c),Volume I, GAAM) .The fine or penalty to be imposed shall be pursuant to the duly approved ordinance of the LGU concerned. d. Upon redemption of the dishonored check in the manner herein prescribed, the collecting officer or local treasurer shall not return the check to the payor concerned unless the latter first surrenders the previous OR issued therefor. If the previous receipt is no longer available, a sworn statement to the effect that it has been lost or misplaced should be submitted by the payor to the collecting officer or local treasurer who shall forthwith cancel the surrendered OR and forward it (or the affidavit) to the accounting office for file with the corresponding report of collections where the cancellation was recorded. e. In the Report of Collections, an asterisk shall be placed opposite the line on which the OR is indicated and a corresponding footnote shall be placed on the last page of the report just below the totals as follows: "Redemption of dishonored check previously acknowledged by O.R. No. _____ dated _____, which was cancelled on ( date of notice of dishonor )." This footnote, together with copy of the new OR and the cancelled original copy of the previous OR (or affidavit) shall be the bases of the accounting unit for making the reversing entry in the proper journal. (Sec. 89, Chapter 3, Volume I, GAAM) 6. Custody of Dishonored Checks. Pending their redemption, dishonored checks shall remain in the custody of the local treasurer, unless the court shall direct otherwise, in which case appropriate receipts should be secured from the officer authorized to take custody of the checks. The local treasurer shall immediately advise transfer of custody of the checks. ( Sec. 90, Chapter 3, Volume I, GAAM) SECTION 86. Control of Official Receipts and Other Accountable Forms . The local treasurer shall be the custodian of all accountable forms requisitioned by the LGU. He/she shall maintain a complete record of the receipt, issue and transfer of accountable forms. (Sec. 24, COA Cir. 92-382, 3 July 1992) . An official receipt is an accountable form held in trust by the collecting officer/treasurer or other person duly authorized to possess or have custody thereof. He/she shall be responsible for its safekeeping, the proper and authorized use or application thereof and reporting of its use and condition; and shall be liable for loss, damage or deterioration occasioned by negligence in the keeping or use thereof (Sec. 91, Chapter 3, Volume I, GAAM) . A. Guidelines in the Procurement of Printing Services 1. All agencies of the government shall engage the services of the National Printing Office (NPO),Bangko Sentral ng Pilipinas (BSP) and Apo Production Unit as recognized government printers (RGPs) for the printing of accountable forms and sensitive, high quality or high volume requirements, subject to the following: a. The recognized government printers shall undertake the printing requirements themselves and shall not sub-contract any portion thereof to other printers; and b. An agency may be allowed to engage private printers for the printing of accountable forms and sensitive, high quality or high volume requirements upon certification by the RGPs that they are unable to service the said requirements. Said engagement of private printers shall be in accordance with Republic Act No. 9184, its Implementing Rules and Regulations, and Government Procurement Policy Board (GPPB) guidelines. (Sec. 23, General Appropriations Act, FY 2019) 2. Procedure on the Procurement of Printing Services a. The procuring entity shall prepare the technical specifications for the accountable forms which shall include, among others, the prescribed security features, output quantity, and target completion time. b. It shall then conduct a market analysis to determine the Approved Budget for the Contract (ABC) taking into consideration the prevailing standard cost for its printing requirements. The procuring entity may seek the assistance of the Presidential Communications Operations Office (PCOO) in determining whether no RGP is capable of undertaking the printing service. Upon determination by the PCOO that no RGP can undertake the printing service due to time constraints and equipment limitations, the procuring entity may engage the services of private printers. c. Thereafter, the procuring entity shall send a Request for Quotation (RFQ) to the RGPs. The quotations received will be evaluated by the procuring entity to determine which among the RGPs is most capable in performing the printing service in the most advantageous terms for the procuring entity. In case the offer submitted by an RGP exceeds the ABC set by the procuring entity, it may request the PCOO to determine whether the offer of the RGP is excessive and set the appropriate rate for such transaction. d. The procuring entity shall then engage the services of the appropriate RGP through an Agency-to-Agency Agreement pursuant to Section 53.5 of the Implementing Rules and Regulations of RA 9184. e. The appropriate RGP engaged by the procuring entity shall directly undertake the printing services for the contracts entered into, and cannot engage, subcontract, or assign any private printer to undertake the performance of the printing service. (GPPB Resolution No. 05-2010) B. Types of Accountable Forms Accountable forms for acknowledging collections are of two classes: 1. The Accountable Forms with Face value consist of the following: Type of Form Utilization a. Accountable Forms No. 55 (55A-F) Cash Tickets For the temporary use of market spaces, parking areas and other income generating activities where the issuance of a regular receipt is not practicable b. Accountable Form No. 52 Certificate of Transfer of Large Cattle Evidence of transfer of large cattle, when issued, it supersedes the original certificate of ownership c. Accountable Form No. 53 Certificate of Ownership of Large Cattle Evidence of original ownership of large cattle d. Accountable Form No. 54 Marriage License Certificate Issued for marriage contract 2. The Accountable Forms without Face Value Accountable forms without specific money value printed on the face of each form consist of the following: Type of Form Utilization a. Accountable Form No. 51 Official Receipt To acknowledge payment of taxes, licenses and other dues or fees to the government for which no special accountable forms have been authorized b. Accountable Form No. 56 Real Property Tax Receipt To acknowledge payment of real property taxes c. Accountable Form No. 57 Slaughter Permit and Fee Receipt Serves as permit as well as an Official Receipt (OR),acknowledging payment for the slaughtering of large cattle d. Accountable Form No. 58 City/Municipal Burial Permit and Fee Receipt This form is prescribed for use of burial permit. When a city/municipal ordinance prescribes a fee therefor, this form shall serve as receipt for the fee collected. e. BIR Form Nos. 0016 and 0017 Community Tax Certificate, For the use of individual taxpayers and corporate entities, respectively f. Checks Serially pre-numbered forms purchased from the servicing bank for disbursements charged against the account (Sec. 493, Volume II, GAAM) C. Inspection of Accountable Forms 1. Upon receipt of accountable forms from the recognized government printers, the Treasurer shall examine carefully each book or pad. He/She shall segregate any book or pad found to contain defects such as incorrect series of numbers, or missing leaves or sheets, etc. and submit it to the Commission on Audit (COA) Auditor together with a statement of the defects or deficiencies noted. 2. The COA Auditor shall examine the book or pad. If he/she finds the defects are due to error in binding or printing, he/she shall make proper notations on the book or on the defective sheet itself. He/She shall also immediately furnish the Treasurer concerned with two copies of the certificate covering his action. The Treasurer shall use this certificate in support of a credit to his account for the missing or defective forms noted by the Auditor. The Auditor shall send two (2) copies of the certificate to the head of the recognized government printer (RGP).These copies shall contain the initials or numbers that are written on the respective card covers of the defective books or pads, or on a slip covering such information for the guidance of the RGP in locating employees responsible for the error or deficiency. (Sec. 94, Chapter 3, Volume I, GAAM) D. Permanent record book for accountable forms 1. Treasurers/collecting officers accountable for receipts/stamps and other accountable form in their possession or in the hands of deputies and other employees entrusted therewith, shall keep adequate permanent record books which should show, among other things, the whereabouts of the accountable forms with which they are charged, the name and title of the officer or employee to whom such forms have been given, and the evidence of the receipt and subsequent sale and issuance of the same. The record books shall contain the following column headings: a. Booklet Number/Quantity (in case of official receipt without money value) b. Serial Number/Total value (in case of official receipt with money value) c. Name (in print) of accountable officer to whom issued d. Signature of accountable officer e. Date received by accountable officer f. Date reported totally used, sold, issued 2. These columns shall be utilized for recording consecutively all accountable forms in the order they are received in the office of the Treasurer. 3. The recording of each batch of accountable forms received shall be headed by data on the invoice number and date, the date the accountable forms were received, the quantity, and the inclusive serial numbers and/or total value of the accountable forms. (Sec. 95, Chapter 3, Volume I, GAAM) E. Name of the agency on the face of the official receipt For purposes of control, all official receipts being used by an agency shall bear the name of the LGU printed or stamped on the face thereof. (Sec. 96, Chapter 3, Volume I, GAAM) F. Issuance of accountable forms to accountable officers Accountable forms shall be issued to bonded officers only in sufficient quantities not to exceed three months use. (Sec. 97, Chapter 3, Volume I, GAAM) G. Report of the Accountable Officer 1. The Report of Accountability for Accountable Forms (RAAF),shall be used to report the quantity of accountable forms received, issued or cancelled by the accountable officer at the end of the month. Treasures/collectors/tellers and other accountable officers shall render this report of accountability for accountable forms at the end of the month for consolidation by the local treasurer. Such report shall also be prepared in case of transfer of office or accountability by the accountable officer. (Sec. 50, Chapter 2, Volume II, MNGAS for LGUs) 2. The Consolidated Report of Accountability for Accountable Forms (CRAAF) shall be prepared by the Treasurer to consolidate the RAAF of accountable officers. The consolidated report accompanied by the individual reports shall be submitted to the COA auditor concerned for verification not later than the fifth day of the ensuing month. (Sec. 51, Chapter 2, Volume II, MNGAS for LGUs) H. Submission to COA Auditor of obsolete, spoiled and cancelled accountable forms 1. Accountable officers shall submit to the COA Auditor all obsolete, spoiled, and cancelled official receipts and other accountable forms for inspection and destruction. Under no circumstances shall accountable officers destroy on their own accountable forms of any description, then be relieved from responsibility. 2. In case of obsolete accountable forms with or without fixed money value, the accountable officer shall submit to the COA Auditor an inventory in four copies. 3. In case of spoiled or damaged accountable forms which have fixed value, the accountable officer shall submit an affidavit in four (4) copies stating: a. The denomination and total value of the forms b. The reason for the damage and the circumstance surrounding the cause of such damage or the reason for cancelling the form, and the name of the officer or employee responsible. 4. The COA Auditor or his/her authorized representative shall promptly inspect and destroy the accountable forms, and make a certificate of such actions below the affidavit or inventory. The destruction shall be witnessed and certified to by the accountable officer and a responsible LGU official. The auditor shall return the affidavit or inventory, with his certificate of destruction, to the accountable officer who will drop the accountable forms destroyed from his Monthly Report of Accountability. The accountable officer shall attach one (1) copy of the certified affidavit or inventory to the Monthly Report of Accountability and retain the other copy for file. The COA Auditor shall keep the original copy. 5. In case of spoiled or cancelled accountable forms which do not bear fixed money values such as printed official receipts, Accountable Form Nos. 51, 56, etc.,the accountable officer shall submit the cancelled original and duplicate copies with the Report of Collections and Deposits (RCD) with such cancellation properly noted on the record. 6. Where the damage or cancellation of accountable forms is due to negligence, or lack of proper care, appropriate proceedings will be instituted against those responsible as the facts in each case may warrant. (Sec. 99, Chapter 3, Volume I, GAAM) I. Immediate issuance of notice of loss of accountable forms 1. Any loss of accountable forms in the custody of collecting officers shall immediately be reported by the accountable officers concerned to the treasurer. The treasurer shall at once issue a circular or notice of such loss for the information and guidance of all concerned to prevent the possible fraudulent use of such accountable forms. The notice to be issued shall specify the kind, quantity and inclusive serial numbers of the lost accountable forms and the place or places where, and approximate date or dates when the same were lost. 2. The circular or notice of loss shall be issued only for accountable forms generally used in all government agencies. In case of accountable forms specially designed for the exclusive use of an agency, the circularization shall be confined within the agency. 3. The treasurer is not precluded from undertaking other measures which may prevent the fraudulent use of the lost accountable forms, like the publication of such loss in newspapers of general circulation. 4. Compliance with the foregoing provisions shall be one of the requirements in the request for relief of accountability for the loss of accountable forms. (Sec. 100, Chapter 3, Volume I, GAAM) SECTION 87. Control of Collections . A. Liability for Loss of Government Funds Every officer accountable for government funds shall be liable for all losses resulting from the unlawful deposits, use or application thereof and for all losses attributable to negligence in the keeping of the same. (Sec. 101, Chapter 3, Volume I, GAAM) B. Prohibition Against the Encashment of Private Checks with Public Funds. At no instance should money in the hands of the Collecting Officer be utilized for the purpose of encashing private checks. A private check is a check drawn by a natural or juridical person other than a government agency. (Sec. 105, Chapter 3, Volume I, GAAM) C. Separation of Personal Money from the Public Funds Local Treasurers and other accountable officers shall keep personal monies separate and distinct from local public funds in their custody and shall not make profit out of public money or otherwise apply the same to any use not authorized by law or ordinance. (Sec. 106, Chapter 3, Volume I, GAAM) SECTION 88. Deposit of Collections . A. The local treasurer shall deposit intact all his/her collections as well as all collections turned over to him/her by the collectors/tellers with the authorized depository bank daily or not later than the next banking day. He/She shall record all deposits made in the cashbook and prepare the Report of Collections and Deposits (RCD). (Sec. 32, Chapter 3, Volume I, MNGAS for LGUs) B. Collection by field collectors shall be verified by the cashier or designated liquidating officer of the field office of the LGU. When travel distance of the field office to the local treasury may expose government funds to the risk of loss while in transit, the cashier or designated liquidating officer, upon authorization by the local treasurer, may deposit the collections in the authorized depository bank near the field office of the LGU (Sec. 33, Chapter 3, Volume I, MNGAS for LGUs) . C. Local treasurers shall maintain depository accounts in the name of their respective LGUs with banks preferably government owned located in or nearest to their respective areas of jurisdiction. Earnings of each depository account shall accrue exclusively thereto. (Sec. 129, Chapter 3, Volume I, GAAM) . D. Local treasurers shall maintain depository accounts for each fund in their custody or administration under such rules and regulations as the Commission on Audit may prescribe (Sec. 130, Chapter 3, Volume I, GAAM) . E. Provinces, cities, municipalities and barangays may deposit with AGDBs, idle funds in the General Fund under time deposit accounts, upon prior authority of the sanggunian and approval of the LCE. (Sec. 21, COA Circular No. 92-382, 03 July 1992) Idle Funds refer to cash which the LGU can freely invest in government securities and/or fixed term deposits with AGDBs, after considering provisions for the coverage of regular and recurring operating expenses like salaries, wages, repairs and maintenance, inventories and supplies, debt servicing, etc. as well as programmed disbursements for capital outlays and other non-recurring expenses, within the context of the cash operating cycle of the LGU. Unremitted collections for, and funds set aside for the payment of obligations to other entities, government, and private, shall not form part of the idle funds. (Sec. 22, COA Circular No. 93-382-A, 17 March 1993) F. Opening of Depository Account 1. Provinces, cities and municipalities shall deposit and maintain government funds with any of the following AGDBs: a. Land Bank of the Philippines (LBP) b. Development Bank of the Philippines (DBP) c. Philippine Postal Savings Bank (PPSB) d. Al Amanah Islamic Investment Bank of the Philippines e. United Coconut Planters Bank (UCPB) authorized to accept funds from LGUs until further notice from the BSP, and subject to limitations that may be prescribed by the Monetary Board f. Philippine Veterans Bank (PVB) authorized to accept funds from LGUs, and subject to limitations prescribed by the Monetary Board 2. Deposits with banks other than those mentioned AGDBs may be allowed without need of BLGF's prior approval if any of the following circumstances exists: a. The aforementioned banks cannot provide the required banking products and services; b. The aforementioned banks or their collection facilities, are not accessible within a twenty (20) kilometer radius; or c. There are security and safety risks. Provided that the following documentary requirements shall be maintained by the LGU concerned: (a) Specific banking products or services required, and Certifications from the AGDBs that the banking products or services cannot be provided; (b) Vicinity map showing the locations and the distance between the LGU and the AGDBs, and the distance between the LGU and the proposed bank; and (c) Report or Certification from the Philippine National Police Provincial Office confirming the existence of the security risk. Provided, further, that depository accounts shall not exceed the following prescribed maximum balances: LGU Income Classification Maximum Maintaining Balance (PhP) Municipality-1st Class 15,000,000.00 Municipality-2nd Class 10,000,000.00 Municipality-3rd Class 7,500,000.00 Municipality-4th Class 5,500,000.00 Municipality-5th Class 3,500,000.00 Municipality-6th Class 2,500,000.00 Barangay 500,000.00 G. When the depository account exceeds the maximum maintaining balance, the LGU shall request for prior approval from the BLGF to open and maintain an account with non-AGDBs upon submission of the following: 1. Letter from the Head of the LGU or its duly designated officer stating: (1) the terms of the deposit, purpose for opening and maintaining an account with the proposed bank, and the specific circumstance; and (2) shall comply with fiscal and financial reporting requirements of the BLGF. 2. Certification from the proposed bank that no elective or appointive government official of the LGU concerned is a director, officer or stockholder of the bank, unless certified that it is the only bank operating in the territorial jurisdiction of the LGU; Copy of the Resolution of the local Sanggunian authorizing the LGU to deposit funds with the proposed bank with the approval of the LCE; and directing the LCE and all concerned with fiscal and financial reporting requirements of the DOF and the BLGF. H. The LGUs shall require the proposed bank to: (i) within one (1) banking day, notify the LGU, if the bank's authority to accept government deposits has been revoked pursuant to relevant laws, issuances, or regulations of the BSP; and (ii) within five (5) banking days, submit to the BSP proof of receipt of such notice. On the last business day of March of every year, the heads of LGUs shall submit the following to the BLGF: (i) a report on its receipt of a notice of revocation of authority from any bank where it maintains an account, if any; and, (ii) a list of its accounts in all banks. I. Where any of the AGDBs establishes or operates a branch or extension office within the territorial jurisdiction or in the locality where the LGU or any of its branches, field offices, departments, divisions or operating units holds or conducts its office or business, or (ii) the exceptional circumstances no longer prevail, whichever comes first, the LGU shall transfer all funds and cash balances to the AGDBs within three (3) banking days. (DOF Department Circular No. 01.2017 dated 11 May 2017, as circularized under BLGF Memorandum Circular No. 07-01-2017, dated 03 July 2017) SECTION 89. Designation of Liquidating Officers . The Local Treasurer may designate Liquidating Officers from among the collectors whenever necessary. A. Collectors/tellers shall turn over their collections to their designated liquidating officers. The Report of Collections and Deposits (RCD) shall however be prepared in five copies, four copies to be submitted to the liquidating officer, the fifth copy to be retained by the Collector/Teller. B. The Liquidating Officer shall perform the procedures for the receipt and verification of collections turned over to him/her. He/She shall also accomplish the RCD in four copies to summarize the collections turned over to him/her by Collectors/Tellers as well as his/her own collections. C. The Liquidating Officer shall turn over intact the cash collections to the Local Treasurer/Cashier together with the originals and two copies of the RCDs of collectors/tellers and duplicates of the official receipts issued. The Local Treasurers/Cashiers shall acknowledge receipt of the cash and all accompanying documents by signing all copies of the RCD of the Liquidating Officer on the certification and receipt portion of the form. The fourth copy of the RCD of the Liquidating Officer and RCDs of collectors/tellers shall be retained by the Liquidating Officer. (Sec. 31, Chapter 3, Volume I, MNGAS for LGUs) SECTION 90. Reporting for Collections and Deposits . A. Collectors/tellers shall issue a receipt to acknowledge collections made. The receipt may be in the form of pre-numbered official receipts or cash tickets and the like. At the close of each business day, these collectors/tellers shall accomplish the Report of Collections and Deposits (RCDs) in four copies. The original and two copies, together with the duplicates of the Official Receipts issued, shall be submitted to the Local Treasurer/Cashier to whom the cash collected shall be turned over. The fourth copy of the RCD shall be retained by the collector/teller concerned. Barangay Treasurers deputized to collect taxes imposed by Provinces/Cities and Municipalities shall follow the same procedures in turning over their collections to the Local Treasurer/Cashier concerned. B. In case of collectors assigned to the field, where travel time from their places of assignment to the Local Treasurer's Office is more than one day, turnover of collection shall be made at least once a week or as soon as the collections reach Php5,000.00 (Sec. 29, Chapter 3, Volume I, MNGAS for LGUs) . C. Recording of Collections in the Cashbook. 1. The Local Treasurer/Cashier shall record in his/her cashbook all collections received by him/her. He/She shall provide in his/her cashbook columns for the accounts Cash-In-Treasury and Cash-In-Bank. The Cash-In-Treasury account shall be debited with collections received and credited with the collections deposited with the authorized depository bank. The Cash-In-Bank account shall be debited with the deposits of collections with the bank and credited with withdrawals from the depository account (COA Circular No. 92-382, 03 July 1992) . 2. The Treasurer/Cashier shall maintain the following cashbooks: a. Cashbook Cash in Treasury shall be used to record collections (Debit Column) and deposits to the bank (Credit Column) based on the RCD. The cashbook shall be maintained by the Treasurer by fund and shall be updated and balanced daily. The Accountable Officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook. He/She shall likewise accomplish the following certification in the cashbook: I HEREBY CERTIFY that the foregoing is a correct and complete record of the cash transactions had by me in my capacity as Treasurer/Cashier of ____________________ during the period from __________, 20__ to ____________, 20__, inclusive, as indicated in the corresponding columns. Signature over Printed Name ______________, 20__ Deposits shall also be recorded in the debit column of the Cashbook-Cash in Bank. (Sec. 26, Volume II, MNGAS for LGUs) b. Cashbook Cash in Bank shall be used to record deposits of collections (Debit Column).The cashbook shall be maintained by bank account and by fund and shall be updated and balanced daily. The Accountable Officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook. He/She shall likewise accomplish the following certification in the cashbook: I HEREBY CERTIFY that the foregoing is a correct and complete record of the cash transactions had by me in my capacity as Treasurer/Cashier of ____________________ during the period from ___________, 20__ to ____________, 20__, inclusive, as indicated in the corresponding columns. Signature over Printed Name ________________, 20__ (Sec. 27, Volume II, MNGAS for LGUs) c. Cashbook Cash Advances The accountable officer shall maintain a cashbook for cash advances to record the cash advances received (Debit Column) and payments, refunds and adjustments (Credit Column) and the balance (Balance Column).The Accountable Officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook. He/She shall likewise accomplish the following certification in the cashbook: I HEREBY CERTIFY that the foregoing is a correct and complete record of the cash transactions had by me in my capacity as Disbursing Officer of ______________________ during the period from __________, 20__ to ____________, 20__, inclusive, as indicated in the corresponding columns. Signature over Printed Name _______________, 20__ (Sec. 28, Volume II, MNGAS for LGUs) SECTION 91. Receipt and Collection Process . The following is the summary of receipt and collection process in the LGU: PROCESS PERSON/UNIT RESPONSIBLE 1. Receive payment from taxpayers/creditors and issue Official Receipts (OR).Prepare Report of Collections and Deposits (RCDs).Remit to the Liquidating Officer (LO),if one is designated, or to the Local Treasurer Collector/Teller 2. Check remittances and verify Accountable Forms (AF) of Collectors/Tellers. Consolidate collections and remit to the Local Treasurer/Cashier. Prepare RCD. Liquidating Officer 3. Receive remitted collections, consolidate the same and prepare RCD. Record in the cashbook Cash-In-Treasury. Local Treasurer 4. Deposit collections in the appropriate bank account per authorized depository bank. Record deposit in the cashbook Cash-In-Bank. Local Treasurer 5. Forward RCD to the Accounting Unit with copies of ORs and validated deposit slips. Local Treasurer 6. Prepare Journal Entry Voucher (JEV) and record in the Cash Receipt Journal Accountant ANNEX 9 DILG-DOF Joint Memorandum Circular (JMC) No. 2019-01 May 17, 2019 ANNEX 10 Requirements of a Valid Ordinance In the case of Magtajas Cagayan de Oro vs. Pryce Properties Corp. & PAGCOR 234 SCRA 255, the Supreme Court ruled that an ordinance must conform to the following substantive requirements to be valid: A. It must not contravene the Constitution or any statute. LGUs do not have the inherent power to tax. The inherent power belongs to the State and is merely a legislative. As such, tax ordinances must always yield to a legislative act which is superior, having been enacted by the State. (p. 445b, The Revised Philippine Constitution, Volume 1, 1983 edition, Bernas) The sanggunian exercises only delegated legislative powers conferred on them by Congress as the national law-making body. As mere agents, LGUs are vested with the power of subordinate legislation. The delegate cannot be superior to not exercise powers higher than those of the principal. Local government cannot undo acts of Congress from which they derived their powers and negate by mere ordinance the mandate of the statute. ( Pablo P. Magtajas, et al. vs. Pryce Properties Corp. Inc., et al. , G.R. No. 111097, 20 July 1994) The constitution is a written instrument agreed upon by the people, as the absolute rule of action and decision for all departments and officers of the government and in the opposition, to which any act or rule of any department or officer of the government, or even of the people themselves, will altogether be void. (Cooley, Constitutional Limitation 3) Underscoring supplied, "It is, in other words, the supreme written law of the land." (The 1987 Constitution of the Republic of the Philippines: A Commentary, 1996, Bernas) B. It must not be unfair or oppressive. A tax ordinance is fair when it is equitable. It is equitable when it is just, reasonable, and proportionate to one's ability to pay. The progressive system of taxation is one good example of equitable taxation since it increases as the tax base increases. It is oppressive when it is unreasonably burdensome, unjustly severe, or harsh. C. It must not be partial or discriminatory. What is being espoused is uniformity of tax application. A tax is uniform when it operates with the same force and effect in every place where the subject of it is sound. The uniformity rule requires merely a geographical and not intrinsic uniformity. A tax is not unconstitutional simply because it is not intrinsically equal and uniform in its operation upon individuals. In other words, the uniformity rule does not prohibit classification for purposes of taxation (The Constitution of the Republic of the Philippines: A Commentary, 1988, Bernas) .However, the classification must be based upon real and substantial differences between the persons, property or privileges and those not taxed must bear some reasonable relation to the object or purpose of legislation or to some governmental policy of legitimate end of governmental action. (See pp. 79-80, Taxation in the Philippines, Volume 1, Matic). In Pepsi Cola vs. Butuan ,the Supreme Court ruled that classification is permitted if (1) the standards used are not arbitrary but reasonable and substantial; (2) the classification is germane to achieve the purpose of the legislation; (3) the classification present and future conditions, other circumstances being equal; and (4) the classification applies equally to all those belonging to one class. D. It must not prohibit but only regulate trade. A provision under Sec. 133 (e) of the LGC prohibits LGUs from imposing taxes on goods carried in or out of the municipalities. The rationale is to allow the free flow of commerce in the country and thus, avoid causing an increase in the prices of commodities to the consuming public. (DOF Provincial Circular, Unnumbered, 17 April 1947, cited in Philippine Law on Taxation, 2000 Ed.,Ursal) 1. In the case of Wise & Co. vs. City of Manila ,G.R. No. L9957, 25 April 1958, the Court declared as invalid a tax ordinance requiring the inspection of, and charging of a fee therefore, meat coming from outside city limits. 2. In Saldana vs. City of Iloilo ,G.R. No. L-10470, 27 September 1957, the Court declared as a forbidden export tax an inspection fee on every hog, cattle and carabao transported to other places. 3. The DOF likewise had directed municipal treasurers of Palawan to desist from charging outgoing fee in the transport of rice and corn from one municipality to another. (DOF 3rd Endorsement to the Provincial Treasurer of Palawan, 07 July 1987) E. It must be generally consistent with public policy. Public policy is defined in Black's Law Dictionary as "that principle of the law which holds that no subject can lawfully do that which has a tendency to be injurious or against the public good." The term "policy," in turn, is defined as "the general principles by which government is guided in the management of public affairs, or the legislature, in its measures." Thus, since the local councils exercise only delegated legislative powers conferred on them by Congress as the national law-making body, the ordinances they enact must be consistent with the policies declared by Congress through the measures it enacted, as well as be harmonized with the national government's policies enshrined in executive orders and other administrative issuances. F. It must not be unreasonable. A tax is said to be unreasonable when it is unjust, excessive, oppressive or confiscatory. It is: 1. Unjust when it is deficient in justice and fairness; 2. Excessive when it is characterized by whatever is notably higher than what is, reasonable, proper, usual, necessary and equitable; 3. Oppressive when it is unreasonably burdensome, unjustly severe, or harsh; and 4. Confiscatory when it amounts to undue seizure or forfeiture of private property in favor of the public treasury. (Sec. 3, PD 231) The question of reasonableness of tax rates is open to judicial inquiry, but, much is left to the discretion of the municipal authorities in setting the tax rates. Courts in fact go slow in writing off an ordinance as unreasonable unless the amount is so excessive as to be prohibitive. As a rule, Courts consider the municipal conditions as a whole and the nature of business made subject to the imposition as factors in determining the reasonableness of tax rates ( Victorias Milling Co.,Inc. vs. Municipality of Victorias ,G.R. No. L-21183, 27 September 1968) . A tax ordinance, however, does not become oppressive simply because it carries a penal clause imposing a fine or imprisonment, neither does it become unconstitutional because it subjects the taxpayers to criminal prosecution for non-payment. ( Villanueva vs. City of Iloilo ,G.R. No. L-262521, 28 December 1968) ANNEX 11 Local Revenue Tool Kit for Philippine LGUs (Annex G of a Local Revenue Toolkit for Philippine LGUs, Guidelines on Provincial/Local Planning and Expenditure Management, NEDA/ADB, 2007) The LGC provides LGUs with powerful resource mobilization tools that can be grouped into five distinct classes of potential revenue sources. These are: I. Land-based Tools II. Community Activity-based Tools III. Infrastructure-based Tools IV. Debt-based Tools V. Revenue Sharing-based Tools Most of these tools are being effectively used by rapidly growing LGUs in the Philippines, Thailand and Indonesia. Under the LGC, the province, as a political and corporate unit of government serves as a dynamic mechanism for the "effective governance" and development of component cities and municipalities within its territorial jurisdiction. I. Land-Based Tools These are potential revenue sources that rely on the real property (land and improvements) resources of LGUs. A. Basic Real Property Tax (Sec. 232, LGC) .This is a yearly ad valorem tax on real property such as land, building, plant, machinery and equipment, and other improvements. The maximum tax is 2% of the assessed value of real properties which is a percentage of the fair market value of real property. The LGC prescribes the graduated schedule of assessment for agricultural, residential, and other real property classification. LGUs are required to prepare and update every three years a schedule of fair market values for all classes of real property. B. SEF (Sec. 235, LGC) .This is an additional yearly ad valorem tax on real property. The amount of tax is 1% of the assessed value of real property and is collected together with the basic real property tax. C. Tax on Transfer of Real Property (Sec. 135, LGC) . This tax is imposed on any mode of transferring title of ownership of real property from one person to another, such as through sale, barter or donation. The amount of tax is 75% of 1% of the total consideration or fair market value, whichever is higher, and is payable within 60 days from the execution of the deed. Sale or transfer under the Comprehensive Agrarian Reform Program is exempt from this tax. (Applicable only to cities and provinces) D. Idle Land Tax (Sec. 236, LGC) .This is a yearly ad valorem tax on idle land and is in addition to the basic real property tax and SEF. The maximum amount of tax is 5% of the assessed value of property. Idle lands include agricultural lands more than one hectare in area, one half of which remains uncultivated or unimproved; non-agricultural lands more than 1,000 square meters in area, one-half of which remain unutilized or unimproved; and residential lots in subdivision, regardless of area. (Applicable only to cities, provinces, and Metro Manila municipality) E. Public Land Use Tax (Sec. 234a, LGC) .An LGU may collect real property tax on government lands which are used for the private benefit of individuals or corporations. For example, concessionaires or business establishments within government properties such as the lands of the Air Transportation Office may be levied real property taxes on government lands they occupy. F. Land Sale of Foreclosed Real Properties (Secs. 257, 258 and 260, LGC) .Local taxes, fees and charges constitute a lien on real properties owned by a taxpayer. An LGU may foreclose on the properties of delinquent taxpayers and sell these properties through public auction. In the absence of bidders, or if the bids are not enough to pay the tax obligation, including interests and penalties, the LGU treasurer will purchase the property for the LGU. G. Land Investment .An LGU may acquire and develop land using its ordinary corporate powers (Sec. 18, LGC) ,though purchase of foreclosed real properties (Sec. 263, LGC) or through joint ventures (Sec. 302, LGC) with the private sector, or through build-operate and transfer (BOT) scheme. Such investment in land development provides direct revenues to the LGU in terms of profits upon disposition and in terms of enhanced property value and higher property tax base. H. Land Reclassification (Sec. 20, LGC) .An LGU may reclassify 15% for highly urbanized and independent component cities, 10% for component cities and first- to third-class municipalities, 5% for fourth- to sixth-class municipalities of existing agricultural lands for other uses which are deemed to have greater economic value. I. Land Development Permit Fee .The regulation of land development and subdivisions is one of the devolved functions to LGUs. In the exercise of the functions, LGUs may impose development permit fees, to cover the cost service in the process of issuance of a permit. Alternatively, LGUs may base the development permit fee on the financial impact or economic benefits to be derived from such a permit. J. Tax on Sand, Gravel and other Quarry Resources (Sec. 138, LGC) .This is an ad valorem tax on ordinary stones, sand, gravel, earth and other quarry resources extracted from public lands or from beds of seas, lakes, rivers, streams, creeks, and other public waters within an LGU's territorial jurisdiction. The tax should be no more than 10% of the fair market value in the locality per cubic meter. (Applicable only to cities and provinces) In addition to the land-based tools provided by the 1991 LGC, Sec. 43 of RA 7279, also known as the Urban Development and Housing Act (UDHA), allows all LGUs to levy a 0.5% socialized housing tax on the assessed value of all lands in urban areas in excess of P50,000. The funds can be used to finance social housing projects of the LGU. II. Community Activity-Based Tools These are potential revenue sources that rely on the flow of economic activity within the territorial jurisdiction of an LGU. A. Business Tax (Sec. 143, LGC) . This is a tax imposed on various categories of business operations (manufacturer, retailer, exporter, service, etc.). The tax follows a graduated schedule based on sales or receipts of the preceding year. The LGC prescribes the graduated schedule of tax rates for the categories of business. (Applicable only to cities and municipalities) B. Community Tax (Sec. 156, LGC) .This is a yearly tax on individuals and juridical persons. An individual who is at least 18 years old and is gainfully employed or is engaged in business or occupation or owns real property with assessed value of at least P1,000, pays the community tax to the LGU where he/she resides. The amount of tax is P5 plus P1 for every P1,000 of income from all sources, but not exceeding P5,000. In the case of husband and wife, the additional tax is based on their total combined properties and gross income. (Applicable only to cities and municipalities) C. Franchise Tax (Sec. 137, LGC) .This is a yearly tax imposed on a business enjoying a franchise within the territorial jurisdiction of the LGU. The amount of tax is 75% of 1% of gross receipts realized within the territorial jurisdiction of the LGU during the preceding calendar year, payable within the first 20 days of January and quarterly thereafter. For a newly started business, the amount of tax is 1/20 of 1% of capital investment. (Applicable only to cities and provinces) D. Tax on Business of Printing and Publication (Sec. 136, LGC) .This is a yearly 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. The amount of tax is 50% of 1% of the gross annual receipts of the preceding calendar year. For a newly started business, the amount of tax is 1/20 of 1% of capital investment. (Applicable only to cities and provinces) E. Professional Tax (Sec. 139, LGC) .This tax is imposed on the practice of a profession requiring government examination. The tax is for every profession practiced, i.e. ,a CPA-lawyer who practices both professions must pay for two professions. Professionals working exclusively for the government are exempt. The amount of tax is P300.00 per year and be paid to the LGU where the professional resides. (Applicable only to cities and provinces) F. Amusement Tax (Sec. 140, LGC) .This is a percentage tax on gross receipts from admissions of amusement places such as movie houses, clubs and other places of entertainment. The amount of tax should not exceed 10% of gross receipts (RA No. 9640).The time, manner, terms and conditions for payment are to be prescribed by ordinance. (Applicable only to cities and provinces) G. Annual Fixed Tax on Delivery Trucks or Vans (Sec. 141, LGC) .This is 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 products, as may be determined by the local legislative council to sales outlets or consumers whether directly or indirectly within the LGU's jurisdiction in an amount not exceeding P500. (Applicable only to cities and provinces) H. Fees and Charges (Sec. 147, LGC) .Municipalities and cities may impose such reasonable fees and charges on business and occupation except those reserved to the province under Sec. 139 commensurate with the cost of regulation, inspection and licensing. I. Fees for Sealing and Licensing of Weights and Measures (Sec. 148, LGC) .The local legislative council may levy reasonable fees for the sealing and licensing of weights and measures. (Applicable only to cities and municipalities) J. Fishery Rentals, Fees and Charges (Sec. 149, LGC) .The local legislative council may grant fishery privileges within its territorial waters and impose rentals, fees or charges. (Applicable only to cities and municipalities) K. Service Fees and Charges (Sec. 153, LGC) .LGUs may impose and collect such reasonable fees and charges for services rendered. III. Infrastructure-Based Tools These are potential revenue sources that are based on the "user" or "beneficiary" pay principle, i.e. ,that people or entities like corporations should pay for the use of or benefits derivable from public infrastructure. These tools are primarily cost recovery mechanisms for infrastructure projects. However, they can be converted to loan equivalents for purposes of raising credit finance for infrastructure projects. A. Special Levy by LGUs (Sec. 240, LGC) .This is a tax imposed on lands specially benefited by public works projects which are funded by the local government. Public works projects which provide benefits to adjacent lands are roads, drainage, power transmission lines, water distribution lines and telecommunication lines. Benefits include appreciation in value, increased economic/commercial activities, reduced maintenance costs of property improvements, etc. The maximum amount of tax to be generated from a special levy is 60% of the actual project costs, which include cost of land and other real properties acquired in connection with the project. The tax liability is allocated among the real properties affected by the project in proportion to the benefits to be derived. The tax may be paid in yearly installment over at least 5 years but not more than 10 years. B. Toll Fees or Charges (Sec. 155, LGC) .The local legislative body may prescribe the terms and conditions and fix the rate of toll fees or charges for the use of any public road, pier, waterway, bridge and ferry, including telecommunication systems funded and constructed by the LGU. Toll fees should be commensurate with the economic benefits derived by users of the facilities. C. Public Utility Charges (Sec. 154, LGC) .LGUs may fix the rates for the operation of public utilities owned, operated and maintained by them within their jurisdiction. IV. Debt-Based Tools These are tools that allow LGUs to secure debt finance for so-called "income-generating projects" and to make investments in financial debt instruments like securities-Treasury bills, commercial papers, and shares of stocks. A. Debt Financing (Secs. 297-302, LGC) .LGUs may borrow money directly from the financial/banking system commercial or government or other sources or through the flotation of bonds in the financial markets to fund development projects. An LGU may use its real property as collateral for such loans. In addition to loans, credits, deferred payment schemes, bond and security issues, and other forms of indebtedness, cities are allowed to enter into Build-Operate-Transfer (BOT) agreements with the private sector. B. Financial Investment (Sec. 18, LGC) .LGUs may invest in public or private financial instruments. Excess or idle funds may generate additional revenues through bank time deposits. V. Revenue Sharing-Based Tools These are tools based on national government revenues shared with LGUs as provided for in the LGC. A. Share in Mining, Fishery, and Forestry Taxes (Sec. 290, LGC) .In addition to its IRA, LGUs shall have a 40% share in the gross collection derived by the national government from the preceding fiscal year from mining taxes, royalties, forestry and fishery charges, and such other taxes, fees, or charges plus any share that may accrue to it in any co-production, joint venture or production sharing agreement in the utilization and development of the national wealth within their territorial jurisdiction. B. Share in the Gross Sales or Taxes of GOCCs (Sec. 291, LGC) .LGUs may share in the gross sales or taxes of a government-owned or controlled corporation (GOCC),if it is engaged in the development and utilization of natural resources located in a LGU. 1. Eighty percent, however, of the proceeds derived from the development and utilization of hydropower, geothermal, and other sources of energy shall be applied solely to lower the cost of electricity in the LGU where such energy sources are located. (Sec. 294, LGC) 2. The share of the LGU is 1% of the gross sales of the preceding year or 50% of the mining taxes, royalties, forestry and fishery charges, and such other taxes, fees and charges, including related surcharges, interests, or fines the government agency or GOCC would have paid if it were not exempt. Table G.1. Probable Infrastructure Financing Options for Philippine LGUs Over the Next 3 Years Next 6 Years Over 6 Years Regular Tax Sources (Property and Business Taxes) Concessions Additional National Revenue Sharing Conveyance of Development Rights Special Assessments Other Special Taxes and Charges like congestion charges, higher vehicle ownership fees Debt Instruments including Bonds Development Impact Fees Tax Incentives and Government Guarantees Land Readjustment User Fees and Charges Source: Annex G. A LOCAL REVENUE TOOL KIT FOR PHILIPPINE LGUs, Guidelines on Provincial/Local Planning and Expenditure Management, NEDA/ADB, 2007 ANNEX 12 Cashbook (Cash In Treasury) ANNEX 13 Cashbook (Cash In Bank) ANNEX 14 Cash Book (Cash Advance) LTOM Form No. 1 Cashbook (Collector) LTOM Form No. 2 Cashbook [Liquidating Officer (LO)] ANNEX 15 Notice of Dishonor ____________________ ____________________ ____________________ Sir/Madam: You are hereby notified that your check issued by _______________ Name of Servicing Bank ,with Check No.:__________, dated __________, in the amount of Php____________________, paid to us and acknowledged by our Official Receipt No.:_______________, dated ____________ has been deposited but was dishonored and returned to us due to ________________________________________________________. In view thereof, we have today, reversed the payment recorded and reinstated your liability in the same manner as if you had never tendered any payment. Please settle your account in cash or by certified check to the undersigned within five (5) days from receipt of this notice. Otherwise, we will be constrained to institute criminal action against you as may be warranted under Article 315 of the Revised Penal Code and Batas Pambansa Blg. 22. Very truly yours, ________________________ Local Treasurer Note: The last paragraph applies only to cases where the cause of dishonor of the check is lack or insufficiency of funds. Where the check is dishonored by reason of defect inform, such as incomplete signature or the like. ANNEX 16 Report of Accountability for Accountable Forms (RAAF) ANNEX 17 Consolidated Report of Accountability for Accountable Forms (CRAAF) ANNEX 18 Report of Collections and Deposits (RCD) ANNEX 19 DOF Department Circular No. 01-2017 May 11, 2017 ANNEX 20 BLGF Memorandum Circular No. 07-01-2017 July 3, 2017 Footnotes 1. City of Manila, et al. vs. Hon. Angel Valera Colet, et al.,G.R. No. 120051, 10 December 2014. 2. KALAKALAN Bilang 20. 3. Cooperative Code of the Philippines. 4. Secs. 1A, 2b, Administrative Order No. 260,16 January 1992. The sanggunians of all cities and municipalities including those comprising the Metropolitan Manila Area, shall enact, effective as of 1 January 1992, their respective tax ordinances levying the community tax at the following schedules: A. For individual taxpayers 1. Basic Tax Php5.00 2. Additional tax not exceeding Php5,000.00 for the following: a. x x x b. Salaries or gross receipts or earnings derived from the exercise of profession or the pursuit of any occupation during the preceding year Php1.00 for every Php1,000.00. 5. Cooperative Code of the Philippines. 6. Tax on Transfer of Real Property Ownership. 7. Tax on Business of Printing and Publication. 8. Franchise Tax. 9. Tax on Sand, Gravel, and Other Quarry Resources. 10. Professional Tax. 11. Amusement Tax. 12. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers or Retailers in Certain Products. 13. Printing of newspapers, magazines and other periodicals, books and brochures, music and music manuscripts, maps, atlases, posters, advertising catalogues, prospectuses and other printed advertising, postage stamps, taxation stamps, documents of title, cheques and other security papers, registers, albums, diaries, calendars, business forms and other commercial printed matter, personal stationery and other printed matter by letterpress, offset, photogravure, flexographic and other printing presses, duplication machines, computer printers, embossers, etc.,including quick printing. Printing directly into textiles, plastic, glass, metal, wood and ceramics (except silk-screen printing on textiles and wearing apparel).The material printed is typically copyrighted. Printing on labels or tags (lithographic, gravure printing, flexographic printing, others). This class excludes: Silk screen-printing on textiles and wearing apparel; Manufacture of paper articles, such as binders; Publishing of printed matter; Photocopying of documents. (Philippine Standard Industrial Classification (PSIC), 2009, Class Code 1811) 14. RA No. 7171 "An Act to Promote the Development of the Farmer in the Virginia Tobacco Producing Provinces."