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PRESIDENTIAL DECREE NO. 465
PRESIDENTIAL DECREE NO. 465 -
PROVIDING FOR A NEW CLASSIFICATION OF PROVINCES, CITIES AND
MUNICIPALITIES AND FIXING MAXIMUM AMOUNTS EXPENDABLE FOR SALARIES AND
WAGES, AMENDING FOR THE PURPOSE REPUBLIC ACTS NUMBERED FORTY-FOUR
HUNDRED SEVENTY- SEVEN, TWENTY-THREE HUNDRED SIXTY-EIGHT AND
FORTY-THREE HUNDRED FIFTY-EIGHT
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WHEREAS,
pursuant to Section 2 of Republic Act No. 4477, provinces and cities
shall be classified by the Secretary of Finance every four fiscal years
on the basis of the average annual income of the local units as
certified by the Auditor General (now the Chairman, Commission on
Audit); chanroblesvirtualawlibrary
WHEREAS, the Secretary of Finance shall likewise classify all
municipalities every four fiscal years pursuant to Section 4 of
Republic Act No. 2368 and subclassify all first class municipalities
under Section 2 of Republic Act No. 4358;chanroblesvirtualawlibrary
WHEREAS, the minimum annual income of P1.5 million fixed under Republic
Act No. 4477 for first class provinces and cities; and the minimum
annual income of P2.5. million fixed under Republic Act No. 4358 for
first class-1 municipalities, as well as the maximum and minimum ranges
fixed for the other classes are no longer in proportion to the present
income of the local governments;chanroblesvirtualawlibrary
WHEREAS, in view of new issuances and changes in fiscal policies, there
has been a marked and significant increase in the collection of local
revenues; and
WHEREAS, the classification of provinces, cities and municipalities
serves, among other purposes, as basis for fixing the maximum tax
ceilings imposable by the local governments under the Local Tax Code,
as amended by Presidential Decree no. 426;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers in me vested by the Constitution, in order to
provide a more equitable system of classifying provinces, cities and
municipalities that will be commensurate with their respective
revenue-raising capacities, hereby adopt and fix, as it is hereby
adopted and fixed, the following income classifications of provinces,
cities and municipalities;chanroblesvirtualawlibrary
Section 1. Classification of Provinces and Cities. —
Provinces and cities, except Manila and Quezon City, are divided into
five main classes according to their average annual income during the
last four fiscal years, as follows:cralaw:red
(a) First Class. — The provinces and cities that have
obtained as average total revenue of three million pesos or more per
annum;chanroblesvirtualawlibrary
(b) Second Class. — The provinces and cities that
have obtained an average total revenue of one million five hundred
thousand pesos or more but less than three million pesos per annum;chanroblesvirtualawlibrary
(c) Third Class. — the provinces and cities that have
obtained an average total revenue of one million pesos or more but less
than one million five hundred thousand pesos per annum;chanroblesvirtualawlibrary
(d) Fourth Class. — The provinces and cities that
have obtained an average total revenue of five hundred thousand pesos
or more but less than one million pesos per annum; and
(e) Fifth class. — The provinces and cities that have
obtained an average total revenue of less than five hundred thousand
pesos per annum.
Revenue, as used herein, shall be interpreted to mean all income and
receipts accruing to the province or city except unappropriated
balances, proceeds from bond issues, proceeds from or repayment of
loans,d from National Government, private contributions or donations,
return of advances to economic enterprises, sales of fixed assets,
income from sale of real property, prior year's adjustment, and other
receipts not regularly recurring each fiscal year.
Section 2. Classification under this Decree. — Upon
the effectivity of this Decree, and for each period of four consecutive
fiscal years thereafter, the Secretary of Finance shall classify all
provinces and cities, except Manila and Quezon City, which shall remain
as special class cities, on the basis of the average total revenues of
each province or city derived during the last four consecutive fiscal
years immediately preceding such classification according to the
provisions of this Decree as certified by the Chairman, Commission on
Audit; provided, that the first classification shall take effect July
first, nineteen hundred and seventy-four; Provided, further, that a
province or city which has been in existence for a period of less than
four full fiscal years immediately preceding the initial classification
herein provided shall be classified on the basis of its average income
during such lesser number of full fiscal years or year immediately
following its organization as such province or city; and Provided,
finally, That no readjustment of classification shall be made oftener
than once in four consecutive fiscal years after the first
classification provided in this Decree, except in cases of diminishing
revenues when the Secretary of Finance may order at any time the
readjustment of the classification of any province or city in
accordance with the foregoing schedule. chanroblesvirtualawlibrary
Section 3. Subclassification of first class provinces
and cities. — Upon the effectivity of this Decree and after each period
of two consecutive fiscal years thereafter, the Secretary of Finance
shall subclassify all first class provinces and cities according to
their average annual income actually realized from regular sources
during the last two fiscal years immediately preceding the
subclassification, as follows:cralaw:red
(a) First Class-A. — The provinces and, cities that
have obtained an average total revenue of seven million pesos or more
per annum;chanroblesvirtualawlibrary
(b) First Class-B. — The provinces and cities that
have obtained an average total revenue of five million pesos or more
but less than seven million pesos per annum; and
(c) First Class-C. — The provinces and cities that
have obtained an average total revenue of three million pesos or more
but less than five million pesos per annum.
Section 4. Classification of municipalities. —
Municipalities are divided into six main classes according to their
average annual income during the last four fiscal years, as follows:cralaw:red
(a) First Class. — Municipalities that have obtained
an average total revenue of one million five hundred thousand pesos or
more per annum;chanroblesvirtualawlibrary
(b) Second Class. — Municipalities that have obtained
an average total revenue of one million pesos or more but less than one
million five hundred thousand pesos per annum;chanroblesvirtualawlibrary
(c) Third Class. — Municipalities that have obtained
an average total revenue of five hundred thousand pesos or more but
less than one million pesos per annum;chanroblesvirtualawlibrary
(d) Fourth Class. — Municipalities that have obtained
an average total revenue of three hundred thousand pesos or more but
less than five hundred thousand pesos per annum;chanroblesvirtualawlibrary
(e) Fifth Class. — Municipalities that have obtained
an average total revenue of one hundred thousand pesos or more but less
than three hundred thousand pesos per annum; and
(f) Sixth Class. — Municipalities that have obtained
an average total revenue of less than one hundred thousand pesos per
annum.
Revenue, as used herein, shall be interpreted to mean all income and
receipts accruing to the municipality except unappropriated balances,
proceeds from bond issues, proceeds from or repayment of loans,ds from
the National Government, private contributions or donations, return of
advances to economic enterprises, sales of fixed assets, income from
sale of real property, prior year's adjustment, and other receipts not
regularly recurring each fiscal year. chanroblesvirtualawlibrary
Section 5. Classification under this Decree by the
Secretary of Finance. — Upon the effectivity of this Decree, and for
each period of four consecutive fiscal years thereafter, the Secretary
of Finance shall classify all municipalities on the basis of the
average total revenue of each municipality during the last four
consecutive fiscal years immediately preceding such classification
according to the provisions of this Decree as certified by the
Chairman, Commission on Audit; Provided, That the first classification
shall take effect July first, nineteen hundred and seventy-four;
Provided, further, That a municipality which has been in existence for
a period of less than four full fiscal years immediately preceding the
initial classification herein provided shall be classified on the basis
of its average income during such lesser number of full fiscal years or
year immediately following its organization as such municipality; And
provided, finally, That no readjustment of classification shall be made
oftener than once in four consecutive fiscal years after the first
classification provided in this Decree, except in cases of diminishing
revenues when the Secretary of Finance may order at any time the
readjustment of the classification of any municipality in accordance
with the foregoing schedule.
Section 6. Subclassification of first class
municipalities. — Upon the effectivity of this Decree and after such
period of two consecutive fiscal years thereafter, the Secretary of
Finance shall classify all first class municipalities according to
their average annual income actually realized from regular sources
during the last two fiscal years immediately preceding the
subclassification, as follows: chanroblesvirtualawlibrary
(a) First Class-A. — Municipalities that have
obtained an average total revenue of five million pesos or more per
annum;chanroblesvirtualawlibrary
(b) First Class-B. — Municipalities that have
obtained an average total revenue of three million five hundred
thousand pesos or more but less than five million pesos per annum; and
(c) First Class-C. — Municipalities that have
obtained an average total revenue of one million five hundred thousand
pesos or more but less than three million five hundred thousand pesos
per annum.
Section 7. Maximum Amount Expendable for Salaries and
Wages. — The total annual appropriations for salaries and wages of
provincial, city and municipal officials and employees for one fiscal
year shall not exceed forty-five per cent (45%), in the case of all
first and second class provinces, cities and municipalities, and
fifty-five per cent (55%) in the case of those lower than second class,
of the total annual income actually realized from regular sources
during the next preceding fiscal year or the current fiscal year
estimates from the same sources certified as collectible by the
provincial or city treasurer concerned, which ever is lower. The
appropriations for salaries and wages of officials and employees in the
public schools, hospitals, health and agricultural services, public
utilities, markets and slaughterhouses and other economic enterprises,
owned, operated and maintained by the province, city or municipality,
as well as representation and emergency cost-of- living allowances,
shall not be included in the computation of the maximum amount
expendable for salaries and wages.
The Secretary of Finance, however, may authorize appropriations in
excess of the percentage hereinabove fixed subject to such conditions
as he may impose, but in no case shall the excess in appropriations for
salaries and wages be more than twenty-five per cent (25%) of the
maximum expendable amount nor shall exemption be granted in case of
overdraft or imminence thereof. chanroblesvirtualawlibrary
Section 8. Fixing of the Maximum Annual Salary Rates
of Local Elective and Appointed Officials. — Notwithstanding the new
classification provided for in this decree, the annual salary rates of
local elective and appointive officials shall be determined and fixed
according to the maximum rates prescribed in the salary scales provided
for in Republic Act No. 4477 in the case of municipalities on the basis
of the official classification by the Secretary of Finance of
provinces, cities and municipalities as of June 30, 1973.
Section 9. Repealing Clause. — Section 5 of Republic
Act No. 4477 and Section 4 of Republic Act No. 2368 are hereby
expressly repealed.
This Decree shall form a part of the laws of the land and all laws,
executive orders, administrative orders, rules or regulations or parts
thereof, contrary to or inconsistent with any of the provisions of this
Decree are likewise hereby repealed and/or modified accordingly.
Section 10. Effectivity. — This Decree shall take
effect on July 1, 1974.
DONE in the City of Manila,
this 20th day of May, in the year of Our Lord, nineteen hundred and
seventy-four.
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