SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
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) 
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SENATE 
s. B.No.120 
Introduced by Senator FRANCIS G. ESCUDERO 
EXPLANATORY NOTE 
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JUL -1 
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This bill seeks to achieve fairness in local taxation, especially in treating the situs 
of the tax. 
Albeit, the current law on local taxation as provided for in the Local Government 
Code already recognizes and imposes the situs rule on taxation, it is submitted that 
further modification be had. And this is in the area of tax sharing between and among 
local government units where the principal place of business, branch or sales outlet, 
factory, project office, plant or plantation is located. 
A hundred percent share of all sales or transactions to Local Government Units 
(LGUs) is proposed so long as such sales or transactions occur in the LGU concerned. 
This practically expunges the present thirty percent share of the LGU where the 
principal place of business is located. 
This proposal is anchored on a more equalized distribution of revenues, 
especially since most principal places of business are located in highly urbanized cities 
in the country like those in Metro Manila. 
Moreover, this bill is in consonance with the constitutional mandate of making 
LGUs autonomous and self-sustaining government bodies. 
Thus, the early passage of this measure is sought. 
FRANCIS G. ESCUDERO 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S. B.No120 
Introduced by Senator FRANCIS G. ESCUDERO 
AN ACT 
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JUL -'I P 1 :39 
RATIONALIZNG LOCAL TAXATION AMENDING FOR THAT PURPOSE 
SECTION 150, CHAPTER 1, TITLE ONE, BOOK II OF REPUBLIC ACT NO. 7160, AS 
AMENDEP, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE 
Be it enacted by tire Senate and the House of Representatives of the Philippines in Congress 
assembled: 
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Section 1. 
Section 150, Chapter 1, Title One, Book II of Republic Act No. 7160, 
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as amended, is hereby further amended to read as follows: 
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"SECTION 150. Situs of the Tax. - (a) For purposes of 
collection of the taxes under Section 143 of this Code, 
manufacturers, assemblers, repackers, brewers, distillers, 
rectifiers and compounders of liquor, distilled spirit~ and wines, 
millers, producers, exporters, wholesalers, distributors, dealers, 
contractors, banks and other financial institutions, and other 
businesses, maintain,ing or operating branch or sales outlet, 
FACTORY, PROJECT OFFICE, PLANT OR PLANTATION 
elsewhere shall record the sale in the branch or sales outlet, 
FACTORY,PROJECT OFFICE, PLANT OR PLANTATION 
making the sale or transaction, and the tax thereon shall accrue 
and shall be paid to the municipality where such branch or sales 
outlet, 
FACTORY, 
PROJECT 
OFFICE, 
PLANT 
OR 
PLANTATION is located. In cases where there. is no such 
branch or sales outlet, FACTORY, PROJECT OFFICE, PLANT 
OR PLANTATION 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. 
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[(b) The following sales allocation shall apply to manufacturers, 
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assemblers, contractors, producers, and exporters with factories, 
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project offices, plants, and plantations in the pursuit of their 
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business: 
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(4) Thirty percent (30%) ot all sales recorded in the principal office 
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shall be taxable by the city or municipality where the principal 
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office is located; and 
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(5) Seventy percent (70%) of all sales recorded in the principal office 
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shall be taxable by the city or municipality where the factory, 
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project office, plant, or plantation is located.] 
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[(c)] 1(8) In case of a plantation located at a place other than the place 
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I where the factory is located, [said seventy percent (70%)] THE 
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. SALE OR TRANSACTION mentioned [in subparagraph (b) of 
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subsection (2)] above shall be divided as follows: 
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(1) Sixty percent (60%) to the city or municipality where the factory is 
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located; and 
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(2) Forty percent (40%) to the city or municipality where the plantation 
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is located. 
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[(d)] (C) In case where a manufacturer, assembler, producer, exporter 
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or contractor has two (2) or more factories, project offices, 
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plants, or plarttations located in different localities, the [seventy 
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percent (70%)] SALE OR TRANSACTION mentioned [in 
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subparagraph (b) of subsection (2)] above shall be prorated 
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among the localities where the factories, project offices, plants, 
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and plantations are located in proportion to their respective 
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volume or production during the period for which the tax is 
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due. 
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[(e)] (D) The foregoing [sales allocation] shall be applied irrespective of 
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whether or not sales are made in the locality where the factory, 
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project office, plant or plantation is located." 
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Sec. 2. 
The Secretaries of the Department of Finance, the Department of 
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Budget and Management and the Department of the Interior and Local Government, 
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and the Presidents of the different Ligas shall promulgate the required rules and 
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regulations for the speedy and effective implementation of this Act. 
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Sec. 3. 
If any provision or part hereof is held invalid or unconstitutional, 
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the remainder of the law or the provision not otherwise affected shall remain valid and 
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subsisting. 
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Sec. 4. 
All laws, presidential decrees, executive orders, proclamations 
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and/ or administrative Fegulations which are inconsistent with the provisions of this Act 
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are hereby amended, modified, superseded or repealed accordingly. 
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Sec. 5. 
This Act shall take effect fifteen (15) days from its publication in the 
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Official Gazette or at least two newspapers of national circulation. 
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Approved, 
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