Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2616
HOUSE BILL No.

Introduced by HON. RUTH MARIANO-HERNANDEZ

EXPLANATORY NOTE

This bill aims to correct the current situation of local taxation that is detrimental to local
governments with regard to the treatment of the situs of the tax.

The current law on local taxation as stipulated in the Local Government Code already
recognizes and imposes the situs rule on taxation but further modifications are needed
to attain fairness 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.

Aone hundred percent share of all sales or transactions to Local Government Units
(LGUs) is proposed so long as such the sales or transactions occur within the area of the
LGU concerned.

This measure shall essentially expunge the present thirty (30) percent share of the LGU
where the principal place of business is located.

This bill is anchored on a progressively equitable distribution of revenues; based on the
fact that most principal places of businesses are located in the highly urbanized cities of
our nation, such as those in Metro Manila.

This measure is within the constitutional mandate of making our LGUs autonomous and
self-sustaining government bodies.

In view of the foregoing, the immediate passage of this Bill is earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 2616

Introduced by HON. RUTH MARIANO-HERNANDEZ

AN ACT
RATIONALIZING LOCAL TAXATION AMENDING FOR THE PURPOSE SECTION 150,
CHAPTER 1, TITLE ONE, BOOK II OF REPUBLIC ACT NO. 7160, AS AMENDED,
OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

Section 1. Section 150, Chapter 1, Title One, Book II of Republic Act No. 7160, as.
amended, is hereby further amended to read as follows:

"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 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, 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.

[(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:

(4) 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


(5) 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.]

[(] (B) In case of a plantation located at a place other than the
place where the factory is located, [said seventy percent (70%)] THE
SALE OR TRANSACTION 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.

[(@] (©) In case where a manufacturer, assembler, producer,
exporter or contractor has two (2) or more factories, project offices,
plants, or plantations located in different localities, the [seventy
percent (70%)] SALE OR TRANSACTION 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 volume or 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, project office, plant or plantation is located.”

Section 2. The Secretaries of the Department of Finance, the Department of Budget and
Management and the Department of Interior and Local Government, and the Presidents
of the different Ligas shall promulgate the required rules and regulations for the speedy
and effective implementation of this Act.

Section 3. If any provision or part hereof is held invalid or unconstitutional, the
remainder of the law or the provision not otherwise affected shall remain valid and
subsisting.

Section 4. All laws, presidential decrees, executive orders, proclamations, department
orders, memorandum circulars, administrative rules and regulations which are
inconsistent with the provisions of this Act are hereby amended, modified, superseded
or repealed accordingly.

Section 5. This Act shall take effect fifteen (15) days from its publication in the Official
Gazette or at least two newspapers of national circulation.

Approved,