SIXTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
FIRST REGULAR SESSION 
) 
"13 
JIJL -1 
,1\8 n 
SENATE" 
Senate fliiI No. '. "5 
INTRODUCED BY SENATOR VICENTE C. SOTTO III 
EXPLANATORY NOTE 
Before the enactment of Republic Act No. 7160, othelwise known as "The Local 
Government Code of 1991," a common complaint of local government officials concerned 
the practice of permitting businesses with principal offices in Metro Manila to pay their 
business taxes in the latter despite the fact that most of their earnings come from their 
operations in the provinces, cities or municipalities outside Metro Manila. 
The Local Government Code of 1991 provided the solution of the foregoing 
grievances of the local government officials concerned. However, from the time of its 
effectivity on 01 January 1992, most local government units outside Metro Manila were 
left behind by those inside the metropolis with respect to providing basic services, 
development, and economic growth. 
More than fifteen (15) years have passed, yet there are local gover"ment units 
which did not advance in their income, infrastructure developments and basic services 
facilities and equipment. This bill seeks to address this scenario by proposing an 
amendment to the Local Government Code of 1991, specifically the provision on the "Situs 
of the Tax" under Section 150 thereof. 
Under this legislative measure, the sales tax payment allocation applied to 
manufacturers, assemblers, contractors; producers, and exporters with factories, project 
offices, plants, and plantations in the pursuit of their business will be amended. It is 
proposed that the allocation of sales tax payments to the principal office be reduced and 
that of the municipality or city where the factory, project office, plant or plantation is 
located be increased. 
The foregoing proposal will help out the cities and municipalities outside Metro 
Manila to cope with their financial and infrastructure needs and to provide additional 
source of funding for improving better basic services, thereby attracting investment and 
local migration. In this regard, the Philippines will have more local government units that 
could generate more businesses, job opportunities, tourism and other beneficial programs 
to their respective constituents. 
In view thereof, earnest approval of this bill is requested. 
~ 
J' ;(7fi I \ , 
'Cv1 
iJ.).,N 
VICENTE 
. SOTTO III 
/ 
/ 


~1'1<l1t·, 
'.I~H,;' .,f I~' >,ml .. , 
SIXTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES) 
FIRST REGULAR SESSION 
) 
SENATE 
'13 
JUL -1 
AS :22 
Senate Bill No. -,-5'~ 
INTRODUCED BY SENATOR VICENTE C, SOTTO III 
AN ACT AMENDING SECTION 150 OF REPUBLIC ACT 7160, OTHERWISE 
KNOWN AS "THE LOCAL GOVERNMENT CODE OF 1991", 
Be it enacted by the Senate and the House of Representatives of the Philippines, 
in Congress assembled: 
SECTION 1. Section 150 of Republic Act No. 7160, otherwise known as 
The Local Government Code of 1991, is hereby amended to read as follows: 
"Section 
150, 
(a) 
collection of the taxes under 
For 
purposes 
of 
Section 143 of this 
Code, 
manufacturers, 
assemblers, 
re-packers, 
brewers, distillers, rectifiers and compounders of 
liquor, distilled spirits and wines, millers, producers, 
exporters, 
wholesalers, 
distributors, 
dealers, 
contractors, banks and other financial institutions, 
and other businesses, maintaining or operating 
branch or sales outlet elsewhere shall record the .sale 
in the branch or sales outlet making the sale or 
transaction, and the tax thereon shall accrue and 
shall be paid to the municipality where such 
branch 
or sales outlet is located. In cases where there is no 
such branch 
or 
sales 
outlet 
in 
the 
city 
or 
municipality where the sale or transaction is made, 
the sale shall be duly recorded in the principal office 
and the taxes 
due shall accrue and shall be paid to 
such city or municipality, 
(b) The following sales allocation shall 
apply to manufacturers, assemblers, contractors, 
producers, and exporters with factories, project 
offices, plants, and plantations in the pursuit of their 
business: 
(11 {TEN PERCENT (10%1) of all sales 
recorded in the principal office shall be 
taxable by the city or municipality where 
the principal office is located; and 
(21 {NINETY PERCENT (90%1) of all 
sales recorded in the principal office 
shall 
be 
taxable 
by 
the 
city 
or 


municipality where the factory, project 
office, plant, or plantation is located. 
(c) In case of a plantation located at a 
place other than the place where 
the 
factory 
is 
located, said {NINETY PERCENT (90%)} mentioned in 
subparagraph (b) of subsection (2) above shall be 
divided as follows: 
(1) Sixty percent (60%) to the city or 
municipality where the factory is located; 
and 
(2) Forty percent (40%) to the city or 
municipality where the plantation is 
located. 
(d) 
In 
cases 
where 
a 
manufacturer, 
assembler, producer, exporter or contractor has two 
(2) or more factories, project offices, plants, or 
plantations located 
in 
different 
localities, 
the 
{NINETY. 
PERCENT 
(90%1l 
sales 
allocation 
mentioned in subparagraph (b) of subsection (2) 
above shall be prorated among the localities where the 
factories, project offices, 
plants, and plantations 
are located in proportion to their respective volumes 
of production during the period for which the tax is 
due. 
(e) The foregoing sales allocation shall be 
applied irrespective of whether or not sales are made 
in the locality where the factory, project office, 
plant, 
or plantation is located. 
SECTION 2. Repealing Clause. All laws, executive orders, rules and 
regulations or any part thereof inconsistent herewith are deemed repealed, 
modified or amended accordingly. 
SECTION 3. Separability Clause. In case any provlslOn of this Act is 
declared unconstitutional or invalid, the other provisions hereof which are not 
affected thereby shall continue in full force and effect. 
SECTION 4. Effectivity - This Act shall take effect fifteen (15) days after 
its publication in two (2) national newspapers of general circulation. 
Approved.