AMENDING CERTAIN PROVISIONS OF THE LOCAL TAX CODE ENACTED UNDER PRESIDENTIAL DECREE NO. 231, DATED JUNE 28, 1973.

• Number: Presidential Decree No. 426
• Sections: 28

Preamble

WHEREAS, the Local Tax Code enacted under Presidential

Decree No. 231 took effect on July 1, 1973; and

WHEREAS, there is an imperative necessity to enact

amendatory measures to make the Local Tax Code more responsive and

attuned to the changing patterns of business and economic trends and

thereby transform it into a more effective instrument by which local

governments may generate urgently needed revenues without unduly

disturbing price levels in the domestic market;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers in me vested by the Constitution,

do hereby decree, order and make as part of the law of the land the

following amendments to the Local Tax Code:

Section 1

SECTION 1. a. Paragraphs (a), (p), (r), (f-1), (k-1),

and (p-1) of Section 3 of the Local Tax Code shall read as follows:

"SEC. 3. Definitions. — When used in this Code —

"(a) Agricultural product includes the yield of the soil

such as corn, rice, wheat, rye, hay, coconuts, sugar cane, tobacco, root

crops, vegetables, fruits, flowers, etc and their by-products; ordinary

salt; all kinds of fish; poultry; and livestock and animal products,

whether in their original form or when preserved in a more convenient

and marketable form through the simple processes of freezing drying

salting, smoking, and stripping.

"x x x

"(p) Hotel includes any house or building or portion

thereof in which any person or persons may be regularly harbored or

received as transients or guests. A hotel shall be considered as living

quarters and shall have the privilege to accept any number of guests and

to serve food to the guests therein.

"x x x

"(r) License or Permit is a right or permission granted

in accordance with law by a competent authority to engage in some

business or occupation or to engage in some transaction.

"(f-1) Public market refers to any place, building or

structure of any kind designated as such by the local board or council,

except public streets, plazas, parks and the like.

"(k-1) Services means the duties, work or functions

performed or discharged by a government officer, or by a private person

contracted by the Government, as the case

"x x x

"(p-1) Wharfage means a fee assessed against the cargo of

a vessel engaged in foreign or domestic trade based on the quantity,

weight or measure received and/or discharged by such vessel."

The following definitions of terms are hereby adopted for

inclusion in Section 3 of the Local Tax Code:

"(r-1) Boarding house includes any house where boarders

are accepted for compensation by the week or by the month, and where

meals are served to boarders only.

"(s-1) Business agent (Agente de negocios)

includes all persons who act as agents of others in the transaction of

business with any public officer, as well as those who conduct

collecting, advertising, employment, or private detective agencies.

"(t-1) Cabaret/Dance hall includes any place or

establishment where dancing is permitted to the public in consideration

of any admission, entrance, or any other fee paid on, before or after

the dancing, and where professional hostesses or dancers are employed.

"(u-1) Carinderia refers to any public eating place where

foods already cooked are served at a price.

"(v-1) Collecting agency includes any person other than a

practicing attorney-at-law engaged in the business of collecting or

suing debts or liabilities placed in his hands, for said collection or

suit, by subscribers or customers applying and paying therefor; while a

'Mercantile Agency' is any person engaged in the business of gathering

information as to the financial standing ability, or credit of persons

engaged in business, and reporting the same to subscribers or to

customers applying and paying therefor.

"(w-1) Compounder comprises every person who, without

rectifying, purifying, or refining distilled spirits, shall, by mixing

such spirits, wine, or other liquor with any materials except water,

manufacture any intoxicating beverage whatever.

"(x-1) Contractor is deemed synonymous with the term

'Builder' and, hence, any person who undertakes or offers to undertake

or purports to have the capacity to undertake or submits a hid, to, or

does himself or by or through others, construct, alter, repair, add to,

subtract from, improve, move, wreck or demolish by building, highway,

road, railroad, excavation or other structure, project, development or

improvement, or to do any part thereof, including the erection of

scaffolding or other structures or works in connection therewith. The

term contractor includes subcontractor and specialty contractor.

"A 'General Engineering Contractor' is a person whose principal

contracting business is in connection with fixed works requiring

specialized engineering knowledge and skill, including the following

divisions or subjects: irrigation, drainage, water power, water supply,

flood control, inland waterways, harbors, docks and wharves, shipyards

and ports, dams, hydroelectric projects, levees, river control and

reclamation works, railroads, highways, streets and roads, tunnels,

airports and airways, waste reduction plants, bridges, overpasses,

underpasses and other similar works, pipelines and other system for the

transmission of petroleum and other liquid or gaseous substances, land

leveling and earth moving projects, excavating, grading, trenching,

paving and surfacing work.

"A 'General Building Contractor' is a person whose principal

contracting business is in connection with any structure built, being

built, or to be built, for the support, shelter and enclosure of

persons, animals, chattels or movable property of any kind, requiring in

its construction the use of more than two unrelated building trades or

crafts, or to do or superintend the whole or any part thereof. Such

structure includes sewers and sewerage disposal plants and systems,

parks, playgrounds and other recreational works, refineries, chemical

plants, and similar industrial plants requiring specialized engineering

knowledge and skill, powerhouses, power plants and other utility plants

and installations, mines and metallurgical plants, cement and concrete

works in connection with the above-mentioned fixed works.

"A person who merely furnishes materials or supplies without

fabricating them into, or consuming them in the performance of the work

of the general building contractor does not necessarily fall within this

definition.

"A 'Specialty Contractor' is a person whose operations pertain

to the performance of construction work requiring special skill and

whose principal contracting business involves the use of specialized

building trades or crafts.

"(y-1) Dancing school includes any establishment where

ballroom dancing is taught and permitted to the public in consideration

of an enrollment, admission, membership, or any other fees.

"(z-1) Distillers of spirits comprises all who distill

spirituous liquors by original and continuous distillation from mash,

wort, wash, sap, or syrup through continuous closed vessels and pipes

until the manufacture thereof is complete.

"(a-2) Lending investor includes all persons who make a

practice of lending money for themselves or others at interest.

"(b-2) Manufacturers of cigars or cigarettes includes

those whose business it is to make or manufacture cigars or cigarettes

or both for sale or who employ others to make or manufacture cigars or

cigarettes for sale; but the term does not include artisans or

apprentices employed to make cigars or cigarettes from materials

supplied by the employer, the latter being lawfully engaged in the

manufacture of cigar and cigarettes.

"(c-2) Manufacturer of tobacco includes every person

whose business it is to manufacture tobacco or snuff, or who employs

others to manufacture tobacco or snuff, whether such manufacture be by

cutting, pressing, grinding, or rubbing any raw or leaf tobacco or

otherwise preparing raw or leaf tobacco, or manufactured or partially

manufactured tobacco and snuff, or putting up for consumption scraps,

refuse, or stems of tobacco resulting from any waste by sifting,

twisting, screening, or by any other process.

"(d-2) Money shop is an extension service unit of a

banking institution usually operating in public markets with authority

to accept money for deposit and extend short-term loans for specific

purposes.

"(e-2) Real estate broker includes any person, other than

a real estate salesman as hereinafter defined, who for another, and for

a compensation or in the expectation or promise of receiving

compensation, (1) sells or offer, for sale offers to buys or

improvements thereon; (4) or shall be employed by or on behalf of the

owner or owners of lots or other parcels of real estate at a stated

salary, on commission or otherwise, to sell such real estate or any

parts thereof in lots or parcels. ‘Real estate salesman' means any

natural person regularly employed by a real estate broker to perform in

behalf of such broker any or all of the functions of a real estate

broker. One act of a character embraced within the above definition

shall constitute the person performing or attempting to perform the same

real estate broker But the foregoing definitions do not include a

person who shall directly perform any of the acts aforesaid with

reference to his own property, where such acts are performed in the

regular course of or as an incident to the management of such property;

nor shall they apply to persons acting pursuant to a duly executed power

of attorney from the owner authorizing final consumption by performance

of a contract conveying real estate by sale, mortgage or lease; nor

shall they apply to any receiver, trustee or assignee in bankruptcy or

insolvency, or to any person acting pursuant to the order of any court;

nor to a trustee selling under a deed of trust. 'Real estate dealer'

includes any person engaged in the business of buying, selling,

exchanging, leasing, or renting property, as principal and holding

himself out as a full or part-time dealer in real estate or as an owner

of rental property or properties rented or offered to rent for an

aggregate amount of one thousand pesos or more a year. Any person shall

be considered as engaged in business as real estate dealer by the mere

fact that he is the owner or sublessor of property rented or offered to

rent for an aggregate amount of one thousand pesos or more a year:

Provided, however, That an owner of sugar lands subject to tax under

Commonwealth Act Numbered Five Hundred and Sixty-Seven shall not be

considered as a real estate dealer under this definition.

"(f-2) Rectifier comprises every person who rectifies,

purifies, or refines distilled spirits or wines by any process other

than by original and continuous distillation from mash, wort, wash, sap,

or syrup through continuous closed vessels and pipes until the

manufacture thereof is complete. Every wholesale or retail liquor dealer

who has in his possession any still or mash tub, or who keeps any other

apparatus for the purpose of distilling spirits, or in any manner

refining distilled spirits, shall also be regarded as a rectifier and as

being engaged in the business of rectifying.

"(g-2) Repacker of wines or distilled spirits includes

all persons who remove wines or distilled spirits from the original

container for repacking and selling the same at wholesale.

"(h-2) Restaurant refers to any place which provides food

to the public and accepts orders from them at a price. This term

includes caterers.

"(i-2) Retail dealer in fermented liquor includes every

person, except retail dealers in tuba, basi, and tapuy, who for himself

or on commission sells or offers for sale fermented liquor in quantities

of five liters or less at any one time and not for resale.

"(j-2) Retail leaf tobacco dealer includes every person

who for himself or on commission sells leaf tobacco or offers the same

for sale to any person except a registered dealer in leaf tobacco or a

manufacturer of cigars, cigarettes, or manufactured tobacco; but the

term does not include a planter or producer so far as concern the sale

of leaf tobacco of his own production.

"(k-2) Retail liquor dealer includes every person, except

a retail vino dealer, who for himself or on commission sells or offers

for sale wine or distilled spirits (other than denatured alcohol) in

quantities of five liters or less at any one time and not for resale.

"(l-2) Retail vino dealer includes every person who for

himself or on commission sells or offers for sale only domestic

distilled spirits in quantities of five liters or less at any one time

and not for resale.

"(m-2) Stockbroker includes all persons whose business it

is, for themselves as such brokers or for other brokers, to negotiate

purchases or sales of stock, bonds, exchange, bullion, coined money,

bank notes, promissory notes, or other securities; but does not include

underwriters for one or more investment companies as defined in the

Investment Company Act. 'Dealer in securities’ includes all persons who

for their own account arc engaged in the sale of stock, bonds exchange,

bullion, coined money, bank notes, promissory notes, or other

securities.

"(n-2) Wholesale dealer in fermented liquors means any

one who for himself or on commission sells or offers for sale fermented

liquors in larger quantities than five liters at any one time, or who

sells or offers for sale such fermented liquors (excluding tuba, basi,

tapuy and similar domestic fermented liquors) for the purpose of resale,

regardless of quantity.

"(o-2) Wholesale dealer of distilled spirits and wines comprehends

every person who for himself or on commission sells or offers for sale

wines or distilled spirits in larger quantities than five liters at any

one time, or who sells or offers the same for sale for the purpose of

resale irrespective of quantity.

"(p-2) Wholesale tobacco dealer comprehends every person who for

himself or on commission sells or offers for sale cigars, cigarettes or

manufactured tobacco in larger quantities than two hundred cigars,

eight hundred cigarettes or five kilos of manufactured tobacco at any

one time, or who sells or offers the same for the purpose of resale,

regardless of quantity; 'retail tobacco dealer' comprehends every person

who for himself or on commission sells or offers for sale not more than

two hundred cigars, not more than eight hundred cigarettes, or not more

than five kilos of manufactured tobacco at any one time and not for

resale."

Section 2

SEC. 2. Section 5 of the Local Tax Code shall read as

follows:

"SEC. 5. Common limitations on the taxing powers of

local governments. — The exercise of the taxing powers of provinces,

cities, municipalities and barrios shall extend to the imposition of

the following:

"x x x

"(b) Taxes on forest concessions and forest products when sold

domestically by the concessionaire himself;

"x x x

"(e) Taxes on the business 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 otherwise provided

in this Code, and taxes or fees for the registration of motor vehicles

and for the issuance of all kinds of licenses or permits for the driving

thereof;

"x x x

"(g) Taxes of any kind on banks and insurance companies except

as otherwise provided in this Code;

"x x x

"(k) Taxes or fees on agricultural products when sold by the

farmer, fisherman, poultry- or animal-raiser himself;

"(l) Percentage tax on sales;

"(m) Taxes on mines; mining operations; and minerals, mineral

products, and their by-products when sold domestically by the operator;

"(n) Taxes on cooperatives duly organized and registered with

the proper government office; and

"(o) Taxes of any kind on the national and local governments."

Section 3

SEC. 3. Section 7 of the Local Tax Code shall read as

follows:

"SEC. 7. Tax on transfer of real property, ownership.

— 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 exceeding one-fourth of one percent of the total

consideration involved in the acquisition of the property or its

assessed value, whichever is higher, or in the absence of a specific

consideration, the assessed value of the property.

"The transfer of real property ownership pursuant to Republic

Act No. 3844, as amended, shall be exempt from this tax.

"The Register of Deeds of the province concerned shall, before

registering any deed, require the presentation of the evidence of

payment of this tax. In appropriate cases, the Provincial Assessor shall

also 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 within thirty days from the date of

notarization before him of any deed transferring ownership or title to

any real property with a copy of such deed.

"Real property, for purposes of this tax, refers only to lands,

buildings, and machineries intended by the owner of the land or building

for an industry or work which may be carried on in a building or on a

piece of land and which tend directly to meet the needs of the said

industry or works. Buildings refer to all kinds of structure more or

less permanently attached to a piece of land, excluding those which arc

merely superimposed on the soil.

"It shall be the duty of the buyer, donee, transferee or heir to

pay the tax herein imposed within one year from the date of the

execution of the deed as regards sale, barter, donation or any other

mode of transferring ownership, or from the date of the decedent's death

in the case of transfer by succession."

Section 4

SEC. 4. Section 10 of the Local Tax Code shall read as

follows:

"SEC. 10. Sand and gravel tax. — The province may

levy and collect a tax of not exceeding seventy-five centavos per cubic

meter of ordinary stones, sand, gravel, earth and other materials

extracted from public and private lands of the Government or from the

beds of seas, lakes, rivers, streams, creeks, and other public waters

within the jurisdiction of the province. The municipality where the

materials are extracted shall share in the proceeds of the tax herein

authorized at a rate of not less than thirty percent thereof as may be

determined by the Provincial Board.

"The permit to extract the materials shall be issued by the

Director of Mines or his duly authorized representative and the

extraction thereof shall be governed by regulations issued by the

Director of Mines."

Section 5

SEC. 5. The last paragraph of Section 13 of the Local Tax

Code shall read as follows:

"SEC. 13. Amusement tax on admission. — x x x

"x x x

"The taxes hereinabove imposed shall be due and payable within

the first twenty days of the month next following that for which they

are due, by the proprietor, lessee, or operator concerned, and such

taxes to be determined on the basis of a true and complete return of the

amount of gross receipts derived during the preceding month. II the tax

is not paid within the time fixed hereinabove, the taxpayer shall be

subject to such surcharges, interests and penalties prescribed by this

Code. In case of willful neglect to file the return and pay the tax

within the time required or in case fraudulent return is filed or a

false return is willfully made, the taxpayer shall be subject to a

surcharge of fifty percent of the correct amount of the tax due in

addition to the interest and penalties provided by this Code."

Section 6

SEC. 6. There is hereby added to the last paragraph of

Section 7

SEC. 7. A new Section to be known as Section 15-A is

hereby inserted after Section 15 of the Local Tax Code to read as

follows:

"SEC. 15-A. Annual fixed tax per delivery truck or van

of manufacturers or producers of, or dealers in, certain products. -

Manufacturers or producers of, or dealers in, distilled spirits,

fermented liquors, soft drinks, cigars, and cigarettes delivering or

distributing their products to sales outlets, or selling to consumers,

whether directly or indirectly, within the province shall be subject to

an annual fixed tax of not exceeding, seventy-five pesos per delivery

truck or van payable to the province.

"Manufacturers or producers of, or dealers in, products other

than distilled spirits, fermented liquors, soft drinks, cigars, and

cigarettes, delivering or distributing their products to sales outlets,

or selling to consumers, whether directly or indirectly, within the

province shall be subject to an annual fixed tax of not exceeding fifty

pesos per delivery truck or van payable to the province.

"The manufacturers, producers, and dealers referred to in the

foregoing paragraphs shall be exempt from the tax on peddlers prescribed

in Section 15 of this Code and from any municipal permit fee or other

regulatory fees. The province, however, may still levy and collect from

said manufacturers, producers, and dealers a permit fee in accordance

with Section 36 of this Code, which in no case shall exceed twenty pesos

per annum regardless of the number of vehicles used by the business

within the province."

Section 8

SEC. 8. Paragraph (e) of Section 17 of the Local Tax Code

is hereby amended to read as follows:

"SEC. 17. Specific limitations on power. — Except

as otherwise provided in this Code, the province shall not levy the

following:

"x x x

"(e) Municipal fees and charges under Section 20 of this Code,

except those enumerated under numbers 1, 2, 3, 4, 7 and 8 of paragraph

(g) thereof."

Section 9

SEC. 9. Paragraphs (a), (b), (c), (d), (e), (g), (h), (m),

(n), (o), and (q) of Section 19 of the Code are hereby modified to read

as follows:

"SEC. 19. Tax on business. — The municipality may

impose taxes on businesses, except on those for which fixed taxes are

provided in this Code:

"(a) On manufacturers, importers, or producers of any article of

commerce of whatever kind or nature, including brewers, distillers,

rectifiers, repackers, and compounders of liquors, distilled spirits

and/or wines in accordance with the following schedule:

"With gross sales for the preceding

calendar year in the amount of:

Amount of Tax

per annum

Less than P10,000.00

P150.00

P10,000.00 or more but less than

—

P15,000.00

200.00

P15,000.00 or more but less than

—

20,000.00

275.00

P20,000.00 or more but less than

—

30,000.00

400.00

P30,000.00 or more but less than

—

40,000.00

600.00

P40,000.00 or more but less than

—

50,000.00

750.00

P 50,000.00 or more but less than

—

75,000.00

1,200.00

P 75,000.00 or more but less than

—

100,000.00

1,500.00

P 100,000.00 or more but less than

—

150,000.00

2,000.00

P 150,000.00 or more but less than

—

200,000.00

2,500.00

P 200,000.00 or more but less than

—

300,000.00

3,500.00

P 300,000.00 or more but less than

—

500,000.00

5,000.00

P 500,000.00 or more hut less than

—

750,000.00

7,500.00

P 750,000.00 or more but less than

—

1,000,000.00

10,000.00

P1,000,000.00 or more but less than

—

2,000,000.00

12,500.00

P2,000,000.00 or more but less than

—

3,000,000.00

15,000.00

P3,000,000.00 or more but less than

—

4,000,000.00

18,000.00

P4,000,000.00 or more but less than

—

5,000,000.00

21,000.00

P5,000,000.00 or more but less than

—

7,000,000.00

24,000.00

P7,000,000.00 or more but less than

—

9,000,000.00

27,000.00

P9,000,000.00 or more but less than

—

12,000,000.00

30,000.00

P12,000,000.00 or more but less than

—

15,000,000.00

33,000.00

P15,000,000.00 or more but less than

—

18,000,000.00

36,000.00

P18,000,000.00 or more but less than

—

20,000,000.00

40,000.00

"For every P500,000.00 in excess of P20,000,000.00 but not

more than P50,000,000.00

500.00

"For every P500,000.00 in excess of P50,000,000.00

250.00

"(A-1) On Retailers, Independent Wholesalers and Distributors In

Accordance With the Following Schedules:

"With gross sales for the preceding

calendar year in the amount of:

Amount of Tax

per annum

"Less than P 1,000.00

P15.00

P 1,000.00 or more but less than

—

P2,000.00

30.00

2,000.00 or more but less than

—

3,000.00

45.00

3,000.00 or more but less than

—

4,000.00

65.00

4,000.00 or more but less than

—

5,000.00

90.00

5,000.00 or more but less than

—

6,000.00

110.00

6,000.00 or more but less than

—

7,000.00

130.00

7,000.00 or more but less than

—

8,000.00

150.00

8,000.00 or more but less than

—

10,000.00

170.00

10,000.00 or more but less than

—

15,000.00

200.00

15,000.00 or more but less than

—

20,000.00

250.00

20,000.00 or more but less than

—

30,000.00

300.00

30,000.00 or more but less than

—

40,000.00

400.00

40,000.00 or more but less than

—

50,000.00

600.00

50,000.00 or more but less than

—

75,000.00

900.00

75,000.00 or more but less than

—

100,000.00

1,200.00

100,000.00 or more but less than

—

150,000.00

1,700.00

150,000.00 or more but less than

—

200,000.00

2,200.00

200,000.00 or more but less

than

—

300,000.00

3,000.00

300,000.00 or more but less than

—

500,000.00

4,000.00

500,000.00 or more but less than

—

750,000.00

6,000.00

750,000.00 or more but less than

—

1,000,000.00

8,000.00

"For every P100,000.00 in excess of P1 million

100.00

"As used herein, the term Independent Wholesaler means a

person, other than a manufacturer, producer or importer, who buys

commodities for resale to persons other than the end-users regardless of

the quantity of the transaction.

"(A-2) On All Exporters In Accordance With the Following

Schedule:

"With gross sales for the preceding

calendar year in the amount of:

Amount of Tax

per annum

Below P1 million

P1,000.00

1 M or more but less than P 5M

2,000.00

5 M or more but less than 10M

3,000.00

10 M or more but less than 20M

5,000.00

20 M or more but less than 30M

7,000.00

30 M or more but less than 50M

10,000.00

50 M or more but less than 75M

15,000.00

75 M or more but less than 100M

20,000.00

“For every P1M over P100M

P 200.00

“(A-3) Tax ceilings. — The imposition of the graduated

fixed taxes prescribed in paragraphs A, A-1 and A-2 above shall not

exceed the ceiling prescribed hereunder:

Class of

Municipalities

1st & 2nd class

3rd & 4th class

5th class & below

Initial Years of

Implementation Up To December 31, 1975,

—

70% of the maximum

—

55% of the maximum

—

40% of the maximum

Third and Fourth Calendar Years,

—

85% of the maximum

—

70% of the maximum

—

55% of the maximum

Fifth Calendar Years and thereafter,

—

100% of the

maximum

—

85% of the

maximum

—

70% of the

maximum

“(A-4) Essential commodities. — The tax on the business of

manufacturing, producing, importing, wholesaling, or retailing of the

essential commodities enumerated hereunder shall be one-hall of the

rates that may be prescribed by the local boards or councils under

paragraphs A, A-1, and A-2 in relation with paragraph A-3 above for

other businesses:

Wheat flour, meat, milk, dairy products, locally manufactured

canned goods and other preserved foodstuffs, sugar, salt and other

agricultural, marine and fresh-water products;

Cooking oil, cooking gas, and firewood;

Laundry soap, medicine and household remedies;

Locally manufactured ordinary fabrics;

Agricultural implements, fertilizers, and insecticides;

Poultry feeds and other animal feeds; and

Other commodities covered by the Price Control Law:

Provided, however, That should any commodity mentioned above be no

longer subject to price control, the same shall be taxable at the rates

prescribed in paragraphs A, A-l, and A-2 in relation with paragraph A-3

above.

"(A-5) Rice and corn. — The tax on the business of

importing, wholesaling, or retailing of, or dealing in, rice and corn,

including rice and corn millers also engaged in the wholesaling or

retailing of said cereals, shall be one-fourth of the maximum rates

prescribed under paragraph A-1 above and shall be uniform for all

classes of municipalities as an exception to paragraph A-3 above.

"(A-6) Situs of the tax. — For purposes of collection of

this tax, manufacturers and producers maintaining or operating branch or

sales offices elsewhere shall record the sale in the branch or sales

office making the sale and the tax thereon shall accrue to the local

government where the branch or sales office is located. In eases where

there is no such branch or sales office in the locality where the sale

is effected, the sale shall be duly recorded in the principal office

along with the sales made in said principal office. Sixty percent of all

sales recorded in the principal office shall be taxable by the local

government where the principal office is located, while the remaining

forty percent shall be deemed as sales made in the factory and shall be

taxable by the local government where the factory is located.

In cases where a manufacturer or producer has two or more

facilities situated in different localities, the forty percent sales

allocation mentioned in the next preceding paragraph shall be prorated

among the localities where the factories are situated in proportion to

their respective volumes of production during the period for which the

tax is due.

The foregoing sales allocation shall be applied irrespective of

whether or not sales are made in the locality where the factory is

situated.

"(b) On cafes, cafeterias, ice cream and other refreshment

parlors, restaurants, soda fountain bars, carinderias or food caterers:

"With gross sales and/or

receipts for the preceding

calendar year in the amount of:

Amount of Tax

per annum

"x x x"

"x x x"

"(c) On all business establishments principally rendering or

offering to render services, x x x ;

"Shops for planning or surfacing and recutting of lumber and

sawmills under contract to saw or cut logs belonging to others; dyeing

establishments; milliners and hatters; blacksmiths; slendering and body

building saloons; furniture repair shops; shoe repair shops; house

and/or sign painters;

"Business agents and other independent contractors (juridical or

natural) not included among individuals subject to the occupation tax

under Section 12 of this Code, and whose activity consists essentially

of the sale of all kinds of services for a fee;

"General engineering, general building, and specialty

contractors, filling, demolition and salvage work contractors and

proprietors or operators of bulldozers and other heavy equipment made

available to others for considerations; persons engaged in the

installation of water system, and gas or electric light, heat or power;

proprietor or operators of smelting plants, engraving plants and plating

establishments;

"Stevedoring; arrastre services;

"Commercial and immigration brokers; and cinematographic film

owners, lessors or distributors;

"With gross sales for the

preceding

calendar

year in

the amount of:

Amount of Tax

per annum

"Less than P5,000.00

P25.00

P 5,000.00 or more but less than

P10,000.00

56.00

10,000.00 or more but less than

15,000.00

95.00

15,000.00 or more but less than

20,000.00

150.00

20,000.00 or more but less than

30,000.00

250.00

30,000.00 or more but less than

40,000.00

350.00

40,000.00 or more but less than

50,000.00

500.00

50,000.00 or more but less than

75,000.00

800.00

75,000.00 or more but less than

100,000.00

1,200.00

100,000.00 or more but less than

150,000.00

1,800.00

150,000.00 or more but less than

200,000.00

2,400.00

200,000.00 or more but less than

250,000.00

3,300.00

250,000.00 or more but less than

300,000.00

4,200.00

300,000.00 or more but less than

400,000.00

5,600.00

400,000.00 or more but less than

500,000.00

7,500.00

"For every P10,000.00 in

excess of P500,000.00

50.00

"(C-1) Should a contractor undertake to furnish the materials and

labor in the construction work, the costs of such materials and labor

shall be deducted from his gross receipts for the purpose of determining

the tax due from him under paragraph (C) above.

"General Provisions. —

"In the case of a newly started business falling under

paragraphs A, A-l, A-2, B or C provided hereinabove, the tax shall be

fixed by the quarter. The initial tax for the quarter in which the

business starts to operate shall not exceed one-fourth of one-tenth of

one percent of the capital investment.

However, in the succeeding quarter or quarters, in case the

business opens before the last quarter of the year, the tax shall be

based on the gross sales for the preceding quarter of one-fourth of the

rate fixed therefor by the pertinent schedule as may be applied in

relation with paragraphs A-3, A-4 and A-5 above. In the succeeding

calendar year, regardless of when the business started to operate, the

tax shall be based on the gross sales for the preceding calendar year,

or any fraction thereof, as provided by the same schedule.

"In cases where a person conducts or operates two or more of the

related businesses mentioned in any one of said paragraphs A, A-l, A-2,

B or C, which are subject to the same rate of imposition, the

computation of the tax shall be based on the combined total gross sales

of the said two or more related businesses.

"In cases where a person operates any of the businesses

mentioned in any one of paragraphs A, A-l, A-2, B or C above together

with any of the businesses for which fixed taxes are provided in this

Code, the sales or receipts of the latter shall not be included in the

sales or receipts of the former for the purpose of computing the taxes

due under said paragraphs.

"A business subject to the graduated fixed tax based on gross

sales and/or receipts shall, upon termination thereof, submit a sworn

statement of its gross sales and/or receipts for the current year. If

the tax paid during the year be less than the tax due on said current

year gross sales and/or receipts, the difference shall be paid before

the business is considered officially retired.

Special Provisions

"Tax Credit. — In cases where the tax imposed on any

business exceeded 70% of the maximum rate prescribed therefor under

Section 10

SEC. 10. There are hereby inserted new paragraphs after

paragraph (q) of Section 19 of the Code to be known as paragraphs (r)

and (s) which shall read as follows:

"(r) Tax on the business of operating privately owned public

markets based on gross receipts for the preceding quarter at the

following rates:

Gross quarterly receipt

Amount of Tax per annum

"Less than P5,000.00

P125.00

P5,000.00 or more but less

than P10,000.00

250.00

10,000.00 or more but less

than 20,000.00

500.00

20,000.00 or more but less

than 30,000.00

750.00

30,000.00 or more but less

than 40,000.00

1,000.00

40,000.00 or more but less

than 50,000.00

1,250.00

50,000.00 or

more but less than 60,000.00

1,500.00

60,000.00 or more but less

than 70,000.00

1,750.00

70,000.00 or more but less

than 80,000.00

2,000.00

80,000.00 or more but less

than 90,000.00

2,250.00

90,000.00 or more but less

than 100,000.00

2,500.00

"For every P1,000.00 in excess of P100,000.00

20.00

"In the case of newly started privately owned public market,

the tax shall not be less than the minimum of P125.00 prescribed above

for the initial quarter of operations,

"(s) Operators or owners of rice or corn mills engaged mainly in

the milling of rice and corn belonging to other persons shall be

subject to annual graduated fixed tax based upon total capacity per

machine in accordance with the following schedule:

"Corn mill, not exceeding one hundred cavans per

twelve-hour capacity

P 15.00

"Corn mill, exceeding one hundred cavans per twelve-hour

capacity

22.50

" ‘Kiskisan' type, not exceeding one hundred cavans of palay

per twelve-hour capacity

25.00

" 'Kiskisan' type, exceeding one hundred cavans of palay per

twelve-hour capacity

37.50

" 'Cono' of not exceeding one hundred cavans of palay per

twelve-hour capacity

100.00

" 'Cono' of not exceeding two hundred cavans of palay per

twelve-hour capacity

200.00

" 'Cono' of not exceeding three hundred cavans of palay per

twelve-hour capacity

300.00

" 'Cono' of not exceeding four hundred cavans of palay per

twelve-hour capacity

450.00

" 'Cono’ of not exceeding five hundred cavans of palay per

twelve-hour capacity

650.00

" 'Cono' of not exceeding six hundred cavans of palay per

twelve-hour capacity

900.00

" 'Cono' of not exceeding seven hundred cavans of palay per

twelve-hour capacity

1,250.00

" 'Cono' of not exceeding eight hundred cavans of palay per

twelve-hour capacity

1,600.00

" 'Cono' of not exceeding nine hundred cavans of palay per

twelve-hour capacity

2,000.00

" 'Cono' of not exceeding one thousand cavans of palay per

twelve-hour capacity

2,400.00

" 'Cono' of over one thousand cavans of palay per

twelve-hour capacity

2,800.00

Section 11

SEC. 11. Paragraph (c) of Section 21 of the Code shall read

as follows:

"SEC. 21. Fishery rental or fees. — x x x

x x x"

(c) Issuance of individual licenses in case no

bidders opt to lease fishing zone. — x x x

"(1)

Fish corrals erected in the sea:

Annual Fee

Less than 3 meters deep

P 30.00

3 meters deep or more but less than 5 meters deep

60.00

5 meters deep or more but less than 8 meters deep

200.00

8 meters deep or more but less than 10 meters deep

360.00

10 meters deep or more but less than 15 meters deep

500.00

15 meters deep or more

800.00

x x x

"(4)

Fish corrals or fishpens in inland fresh waters:

With an area of less than 500 square meters

P 100.00

With an area of 500 square meters or more but less than

1,000 square meters

200.00

With an area of 1,000 square meters or more but less than

5,000 square meters

360.00

With an area of 5,000 square meters or more but less than

10,000 square meters

500.00

With an area of 10,000 square meters or more

800.00

Section 12 Section 23 of the Code shall read as follows: "SEC. 23. Scope of power.

SEC. 12. Section 23 of the Code shall read as follows:

"SEC. 23. Scope of power. — Except as otherwise

provided in this Code, the city may levy and collect, among others, any

of the taxes, fees and other impositions that the province or the

municipality may levy and collect. The exercise of the taxing powers of

the city extends to the taxes, fees and other impositions mentioned in

Sections 12, 13, 14, 15, 15-A and 16 of this Code which the city shall

also impose and collect, to the exclusion of the national and municipal

governments.

"The rates of the taxes, or other impositions that the city

shall fix may exceed the maximum rates allowed for the province or

municipality by not more than fifty percent, except the rates of the

taxes and fees provided in Sections 12, 13, 14, 15-A, and 19(A-5) in

Chapter II of this Code which shall be uniform for the city and the

province or municipality, as the case may be.

"'Tax ceilings. — The imposition of the graduated fixed

taxes provided for under paragraphs A, A-l, A-2 and A-4, all of Section

19 of the Code as herein amended, as read in relation with this Section,

shall not exceed the ceilings prescribed hereunder:

Class of City

1st-A, 1st, 2nd

& 3rd class

4th class & Below

Initial Years of

Implementation Up to December 31, 1975,

—

70% of the maximum

—

55% of the maximum

Third and fourth calendar Year,

—

85% of the maximum

—

70% of the maximum

Fifth calendar year and thereafter,

—

100% of the

maximum

—

85% of the

maximum

"(b) Situs of the tax. — For purposes of collection of

the tax on the businesses mentioned in paragraphs A, A-1, A-2, A-4 and

A-5, all of Section 19 of the Code as herein amended, as read in

relation with this Section, the provisions of paragraph A-6 of this Code

also as herein amended shall apply.

"The general provisions under Section 19 of this Code as herein

amended pertaining to newly started businesses; related businesses

falling under paragraphs A, A-1, A-2, B or C of Section 19

aforementioned; those subject to graduated rates operated along with

businesses subject to fixed rates; and those terminating their

operations during the current year, us well as the special provisions

for tax credits, shall likewise apply to chartered fides. However, in

the case of a newly started business, the city may exceed by not more

than fifty percent the maximum rate prescribed for newly started

businesses under Section 19 of this Code, as amended.

"Thirty percent of the percentage taxes on sales pertaining to

the first quarter of the calendar year 1974 that may have been collected

by cities under Section 23 of the Code as originally provided if they

have imposed the maximum of one and two percent of the sales of

essential and nonessential commodities, respectively, shall be granted

as tax credits to the taxpayers concerned. In the application of the

said tax credits to the future business tax obligations of the same

taxpayers, all the special provisions under Section 19 of the Code as

herein amended shall also govern."

Section 13 Section 24 of the Code shall read as follows: "SEC. 24. Additional taxing powers.

SEC. 13. Section 24 of the Code shall read as follows:

"SEC. 24. Additional taxing powers. —

The city may levy any tax, fee or other imposition not specifically

enumerated or otherwise provided for in this Code, subject to the

provisions of Sections 49 and 50 of this Code as herein amended."

Section 14

Section 14 of the Local Tax Code the following provisions:

"SEC. 14. Fees for sealing and licensing of weights

and measures. — The province shall levy fees for the sealing and

licensing of weights and measures in accordance with the following

schedule:

" x x x.

"The provincial board shall prescribe the necessary regulations

for the use of such weights and measures. It shall also fix the

penalties for fraudulent practices and unlawful possession or use of

instruments of weights and measures, provided that the penalties thereon

do not exceed those prescribed in Chapter VI, Title VIII, of the

National Internal Revenue Code, as amended. The provincial board may, by

ordinance, authorize the provincial treasurer to settle an offense not

involving the commission of fraud before a case therefor is filed in

court upon payment of a compromise penalty of not less than two hundred

pesos nor more than five hundred pesos."

Section 15

SEC. 15. Paragraph (a) of Section 27 of the Code shall read

as follows:

"SEC. 27. Taxes and fees. — x x x

"(a) Stores or retailers with fixed business establishments

whose capital investment is five thousand pesos or less, signs,

signboards, and billboards displayed or maintained in any place exposed

to public view, except those displayed at the place where the profession

or business advertised is conducted."

Section 16

SEC. 16. Paragraph (d) of Section 30 of the Code shall read

as follows:

"SEC. 30. Market Fees. — x x x

"(d) Market entrance fee. — In lieu of the regular market

fees based on the space occupied, a market entrance fee may be imposed

on all transient vendors of any commodity or merchandise being brought

into the public market for sale on the basis of weight, bundle, sack,

can, cartload, or any convenient unit of measure. The amount of entrance

fee to be imposed shall not exceed the amount of market fee that would

be collectible if the fee were charged on the basis of space occupied by

the said commodity or merchandise, as provided in the preceding

Subsection."

Section 17

SEC. 17. Paragraphs (a) and (d) of Section 31 of the Code

shall read as follows:

"SEC. 31. Slaughterhouse fees. — x x x

"(a) Permit fee to slaughter. — Before any animal is

slaughtered for public consumption, a permit therefor shall be secured

from the health officer concerned or his duly authorized representative

thru the treasurer and the corresponding fee collected at a reasonable

rate to be fixed by the local board or council."

x x x

"(d) Requirements for the issuance of a permit for the

slaughter of large cattle. — Upon issuance of the permit required in

subsection (c) of this Section, large cattle shall be slaughtered at

the city/municipal slaughterhouse or in any other place as may be

authorized in the local ordinance. Before the issuance of the permit for

the slaughter of large cattle, the treasurer shall require for branded

cattle the production of the certificate of ownership if the owner is

the applicant, or the original certificate of ownership and the

certificate of transfer showing title in the name of the person applying

for the permit if he is not the original owner."

Section 18 Section 42 of the Code shall read as follows: "SEC. 42. Effectivity of tax ordinance.

SEC. 18. Section 42 of the Code shall read as follows:

"SEC. 42. Effectivity of tax ordinance. — A tax

ordinance shall go into effect on the fifteenth day after its approval

by the local chief executive in accordance with Section 41 of this

Code."

Section 19

Section 19(A) as originally provided in this Code, tax credit shall be

granted to the taxpayer who has paid at least the full amount of the

first quarter installment for the calendar year 1974. The tax credit

herein granted shall be applied to future business tax obligation of the

same taxpayer in not more than four equal quarterly installments as may

be judiciously determined by the Secretary of Finance who shall, for

this purpose, prepare and publish an appropriate schedule therefor upon

promulgation of this Decree.

"In no case, however, shall tax. credit be given to a taxpayer

if the amount of the annual or quarterly tax paid by him during the

first quarter of calendar year 1974 is equal to, or less than, the

annual tax or the highest quarterly tax, as the case may be, paid by him

for the same business in calendar year 1973.

"Any remaining portion of the tax credit herein granted shall be

forfeited in favor of the municipality in the event the business

terminates operations within the locality. As soon as the total amount

credited to the taxpayer pursuant hereto shall have been fully applied,

this provision shall no longer apply.

"For purposes hereof, the taxpayer shall file with the local

treasurer a claim in writing duly supported by evidence of payment on or

before June 30, 1974, after which date no claim for tax credit shall be

entertained.

"(d) On the business of dealers in fermented liquors, distilled

spirits and/or wines:

Amount of tax

per annum

(1)

Wholesale dealers in foreign liquors

P 800.00

(2)

Wholesale dealers in domestic liquors

400.00

(3)

Retail dealers in foreign liquors

200.00

(4)

Retail dealers in domestic liquors

100.00

(5)

Retail dealers in vino liquors

50.00

(6)

Retail dealers in fermented liquors

80.00

(7)

Wholesale dealers in fermented liquors

200.00

(8)

Retail dealers in tuba, basi and/or tapuy

50.00

"(e) Tax on tobacco dealers:

(1)

Retail leaf tobacco dealers

50.00

(2)

Wholesale leaf tobacco dealers

200.00

(3)

Retail tobacco dealers

50.00

(4)

Wholesale tobacco dealers

200.00

"(f) x x x

"(g) On the amusement places wherein the customers thereof actively

participate without making bets or wagers, including but not limited to,

the following:

x x x

"(12) Theaters and cinema houses:

With balcony and orchestra with seating

capacity of less than 500 persons

P600.00

x x x

"Plus: Amusement tax of P0.05 per admission

payable to the municipal treasurer within twenty days next following the

month for which the tax is due as regards operators with fixed

establishment and within ten days next following business day with

respect to itinerant operators.

"(h) Tax on pawnshops, money shops, lending investors, finance

and investment companies, insurance companies, and banks, any provision

of special laws to the contrary notwithstanding, except the Central Bank

of the Philippines:

(1)

Pawnshops

With capital of —

Amount of Tax

per annum

Less than P50,000.00

P 1,000.00

P50,000.00 or more but less than P100.000.00

1,500.00

P100,000.00 or more but less than P200,000.00

2,000.00

P200,000.00 or more

4,000.00

(2)

Money shops

200.00

(3)

Lending investors

300.00

(4)

Finance and investment companies:

Principal office

2,000.00

For each branch, payable to the municipality where the

branch is located

400.00

(5)

Insurance companies:

Principal office

3,000.00

For each branch, payable to the municipality where the

branch is located

600.00

(6)

Commercial banks:

Principal office

5,000.00

For each branch, payable to the municipality where the

branch is located

1,000.00

(7)

Savings Bank:

Principal office

2,000.00

For each branch, payable to the municipality where the

branch is located

400.00

(8)

Rural Banks

600.00

“(i) X X X

“(j) X X X

“(k) X X X

“(l) X X X

"(m) On real estate dealers:

X X X

"(2)

Lessors of real estate based on gross receipts

for the preceding year, at rates not exceeding the following:

Less than P1,000.00

Exempt

"For every P1,000.00 in excess of P50,000.00 for real

property used for purposes other than residential

P5.00

"For every P5,000.00 in excess of P50,000.00 for real

property used for residential purposes

5.00

"(n) On golf links, P3,000.00 per annum

"(o) On fishponds, fishpens, or fish breeding grounds, per hectare

or fraction thereof, P10.00 per annum

“(p) x x x

"(q) Taxes on billboards, signboards and advertisements:

x x x

"In addition to the taxes provided above under items (1) to (5),

inclusive, for the use of electric or neon lights in billboards per

square meter or portion thereof — P10.00."

Section 20 Section 50 of the Code shall read as follows: "SEC. 50. Tax or fee not provided for.

SEC. 20. Section 50 of the Code shall read as follows:

"SEC. 50. Tax or fee not provided for. — Where the

tux base or tax subject is not similar or comparable to any tax base or

subject specifically mentioned or otherwise provided for in this Code,

the local board or council may impose a tax, fee or other imposition

thereon. No ordinance, however, imposing such a tax or fee shall be

enacted without any public hearing having been held for the purpose. The

Secretary of Finance shall within six months from the date of receipt

of copy of the ordinance review the same and the tax or fee therein

imposed shall accrue, should the ordinance be approved by the Secretary

of Finance, at such date as may be determined and fixed by him."

Section 21 Section 54 of the Code shall read as follows: "SEC. 54. Accrual of the tax.

SEC. 21. Section 54 of the Code shall read as follows:

"SEC. 54. Accrual of the tax. — All local taxes

shall accrue on the first day of January of each year as regards

subjects then liable therefor, but an entirely new tax, or any change in

the rate of an existing tax, provided by an ordinance enacted during

the current year shall accrue at the beginning of the quarter next

following the date of effectivity of the ordinance as provided in

Section 22

SEC. 22. Section 59 of the Code shall read as follows:

"SEC. 59. Examination of books of accounts and

pertinent records of businessmen by provincial or city treasurer. — x

x x Such examination shall be made during regular business hours, not

oftener than once every year for each business establishment. XXX"

x x x

"For this purpose, the forms to be used by the provincial or

city treasurer or his duly authorized deputy shall be prescribed by the

Secretary of Finance."

Section 23

SEC. 23. For the proper implementation of the provisions of

the Local Tax Code as herein amended, special transitory provisions arc

hereby promulgated to read as follows:

"SEC. 64-A. Special transitory provisions. — In

view of the adjustment of the tax rates under paragraphs A, A-l and A-2

and the provisions of paragraph A-3, all of Section 19 of the Code as

herein amended, the taxes, including the percentage taxes, that shall be

collectible by municipalities and cities for the quarter beginning

April 1, 1974 from the businesses covered by Section 19 (A) as

originally provided in this Code shall be as what may be judiciously

determined and fixed in an appropriate circular by the Secretary of

Finance, unless the local tax ordinance in force has fixed a lower rate,

in which case the lower rate shall prevail and be collectible. For this

purpose, all existing tax ordinances of cities and municipalities

imposing taxes on the businesses herein mentioned at rates higher than

what may be fixed therefor by the Secretary of Finance as herein

provided are hereby deemed accordingly adjusted by operation of law.

Local tax ordinances, however, whose enforcement has been extended up to

June 30, 1974 by the Secretary of Finance, pursuant to the provisions

of Section 64 of the Code, shall not be affected and shall continue to

be enforceable until June 30, 1974.

"The taxes hereinabove treated corresponding to the quarter

beginning April 1, 1974 shall be paid not later than May 31, 1974 as an

exception to the provisions of Section 55 of the Code.

"All existing tax ordinances of provinces, cities,

municipalities and barrios shall be deemed ipso facto nullified

on June 30, 1974.

"The local boards or councils shall upon promulgation of this

Decree enact their respective tax ordinances pursuant to the provisions

of the Local Tax Code as herein amended, to take effect not earlier than

July 1, 1974 in conformity with the pertinent general administration

provisions under Chapter III thereof."

Section 24 Effectivity.

SEC. 24. Effectivity. — This Decree shall take

effect upon its approval. All laws, acts, decrees, executive orders,

proclamations and/or administrative regulations, or part or parts

thereof which are inconsistent herewith are hereby repealed and/or

modified accordingly.

Done in the City of Manila, this 30th day of March, in the

year of Our Lord, nineteen hundred and seventy-four.

(Sgd.)

FERDINAND E. MARCOS

President of the Philippines

By the President:

(Sgd.)

ALEJANDRO MELCHOR

Executive Secretary

Section 42

Section 42 of this Code."

Section 14 Section 25 of the Code shall read as follows: "SEC. 25. Specific limitation on power.

SEC. 14. Section 25 of the Code shall read as follows:

"SEC. 25. Specific limitation on power. — Except

as otherwise provided in this Code, the city shall not levy the taxes

and other impositions enumerated in Section 5, Chapter I of this Code as

herein amended."

Section 19

SEC. 19. Section 49 of the Code is amended to read as

follows:

"SEC. 49. Similar tax or fee not specifically

enumerated. — The local board or council may exercise the power to

impose a tax or fee on a tax base or subject similar to those authorized

in this Code but which may not have been specifically enumerated

herein, the rate of which shall in no case exceed that fixed for the

similar tax base or subject. No ordinance, however, imposing such a tax

or fee shall be enacted without any public hearing having been held for

the purpose. The Secretary of Finance shall within six months from the

date of receipt of copy of the ordinance review the same and the tax or

fee therein imposed shall accrue, should the ordinance be approved by

the Secretary of Finance, at such date as may be determined and fixed by

him."