NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
(©ffirp 0! r!‘ ■ ' 1
*22 SEP 15 P12-.51
SENATE
S.B. No. 1320
SVkC!:!. .'b.
Introduced by SEN. WIN GATCHALIAN
AN ACT
STRENGTHENING LOCAL TAXATION AND THE FISCAL CAPACITY OF LOCAL 
GOVERNMENT UNITS BY INCREASING THEIR TAX GENERATION 
CAPACITY, AMENDING SECTION 150 OF REPUBLIC ACT NO. 7160, 
OTHERWISE KNOWN AS THE "LOCAL GOVERNMENT CODE OF 1991", AND
FOR OTHER PURPOSES
EXPLANATORY NOTE
The power of local government units (LGUs) to create their own sources of 
revenues and impose taxes, fees and charges, especially on businesses, is provided 
for under the 1987 Constitution and under Book II Local Taxation and Fiscal Matters 
of Republic Act No. 7160 or the Local Government Code (LGC).
Section 150 of the LGC provides for the situs of local taxation as regards the 
income generated by businesses with principal offices, branches, factories, project 
offices, plants, and plantations located in different LGUs. The said section provides for 
sales allocation between the LGUs where these businesses are located for purposes 
of determining the applicable Local Business Taxes (LBT) due from these businesses. 
However, several LGUs are not able to collect LBT from businesses operating within 
their jurisdiction pursuant to the sales allocation provided for under Section 150 of the 
LGC. This is due to the improper monitoring of the list of factories, project offices, 
plants, and plantations operated by these businesses.


The Supreme Court has ruled that local business taxes are to be collected by 
the local government unit where the business is conducted. The rule on situs of 
taxation was created precisely to guarantee that each LGU will receive its fair share of 
taxes from businesses operating within their respective jurisdictions.
Thus, this measure seeks to strengthen the enforcement of Section 150 of the 
LGC, by requiring covered bubinesses/taxpayers to: first, submit certain reports and 
documentary requirements; and second, pay the appropriate LBT pursuant to the 
allocation provided for under Section 150 of the LGC, for the issuance of business 
permits and other applicable licenses or clearances that are necessary In their business 
operations. Such requirement^; will enable LGUs to properly determine the precise 
percentage of the tax due from each pertinent business or taxpayer based on their 
total sales or total revenues recorded. This measure also gives the Bureau of Local 
Government Finance (BLGF) with the supervisory authority in the implementation by 
the LGUs of the intra-revenue sharing mandated in Section 150 of the LGC. In addition, 
this measure proposes to amend the allocation of the right to tax between the city or 
municipality where the principal office, branch or sales outlet is located and the city 
or municipality where the factory, project office, plant from 30% and 70% to 20% 
and 80%, respectively. This provides a more equitable distribution of wealth among 
the different political subdivisions in the country since most principal offices are located 
in highly urbanized cities.
In view of the foregoing, the immediate passage of this bilMs-earnestly sought.
IN GATCHALIAN


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
SENATE
S. B. No. 1320
o( I in- ^ firts.-
’ll SEP 15 P12 51
R|-Ctl\:>, j ti-
Introduced by SEN. WIN GATCHALIAN
AN ACT
STRENGTHENING LOCAL TAXATION AND THE FISCAL CAPACITY OF 
LOCAL GOVERNMcNT UNITS BY INCREASING THEIR TAX 
GENERATION CAPACITY, AMENDING SECTION 150 OF REPUBLIC 
ACT NO. 7160, OTHERWISE KNOWN AS THE "LOCAL GOVERNMENT 
CODE OF 1991", AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines 
in Congress assembled:
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SECTION 1. Section 150 of Republic Act No. 7160, otherwise known as
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the Local Government Code of 1991, is hereby amended to read as follows:
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Section 150. Situs of the Tax. -
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(a) XXX XXX XXX
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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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(1) [Thirty percent (30Q/o)] TWENTY PERCENT
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(20%) of all sales recorded in the principal office shall be
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taxable by the city or municipality where the principal office
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is located; and
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(2) [Seventy—percent—(70°/fr)] EIGHTY 
PERCENT (80%) 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 [seventy pereent (70%-)] 
EIGHTY PERCENT (80%) 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 [seventy 
percent (70%)] EIGHTY PERCENT (80%) 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) XXX XXX XXX
(F) FOR THE PROPER ENFORCEMENT OF THIS PROVISION, 
THE TAXPAYERS MENTIONED HEREIN SHALL BE REQUIRED 
TO SUBMIT AUDITED FINANCIAL STATEMENTS FROM THE 
PRECEEDING TWO CALENDAR YEARS OR IN LIEU THEREOF, 
A SWORN DECLARATION OF GROSS SALES OR GROSS 
RECEIPTS, AND ANNUAL INCOME TAX RETURN FROM THE 
PRECEDING TWO CALENDAR YEARS TO THE LOCAL


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GOVERNMENT UNIT WHERE THEIR PRINCIPAL OFFICE, 
BRANCH OR SALES OUTLET, FACTORY, WAREHOUSE, OR 
PLANTATION IS LOCATED, AS THE CASE MAY BE. FURTHER, 
THE TAXPAYERS SHALL SUBMIT A LIST OF ALL ITS 
BRANCHES OR SALES OUTLETS, FACTORIES, PROJECT 
OFFICES, PLANTS, AND PLANTATIONS LOCATED IN 
DIFFERENT LOCAL GOVERNMENT UNITS AND THEIR 
SPECIFIC ADDRESSES FOR THE PROPER DETERMINATION 
OF THE SALES ALLOCATION OF A PARTICULAR LOCAL 
GOVERNMENT UNIT, IN ACCORDANCE WITH THIS SECTION.
NON-SUBMISSION OF THE REQUIREMENTS UNDER THIS 
SECTION OR THE NON-PAYMENT OF TAXES DUE TO A 
PARTICULAR LOCAL GOVERNMENT UNIT PURSUANT TO THE 
SALES ALLOCATION PROVIDED FOR UNDER THIS SECTION 
SHALL CAUSE THE NON-RENEWAL OF THE TAXPAYERS' 
BUSINESS PERMITS.
SEC. 2. Supervisory Role of the Bureau of Local Government Finance 
(BLGF). - In the exercise of its administrative and technical supervision over 
the treasury operations of local government units, the BLGF shall be responsible 
for the correct and efficient implementation of the provisions of this Act, 
particularly on the proper interpretation of Section 150 of the Local Government 
Code (LGC), as amended.
SEC. 3. Capacity Building and Skills Training. - The BLGF shall, in 
coordination with the Philippine Tax Academy, develop and conduct the 
necessary trainings of all local treasurers, local officials, and their staff on the 
implementation of Section 150 of the LGC, with a focus on the assessment of 
local business taxes, and other similar taxes or fees that fall within their duties 
in accordance with existing standards and regulations.


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SEC. 4. Implementing Rules and Regulations. — Within thirty (30) 
calendar days from the effectivity of this Act, the Secretary of Finance, upon 
the recommendation of the Executive Director of the BLGF, shall promulgate 
the necessary rules and regulations for its effective imolementation.
SEC. 5 Separability Clause. - If any provision of this Act is declared invalid 
or unconstitutional, the provisions not affected thereby shall remain in full force 
and effect.
SEC. 6. Repealing Clause. - All laws, presidential decrees, executive 
orders, presidential proclamations, rules and regulations or parts thereof 
contrary to or inconsistent with this Act are hereby repealed or modified 
accordingly.
SEC. 7. Effectivity Clause. - This Act shall take effect fifteen (15) days 
after its publication in the Official Gazette or in a newspaper of general 
circulation.
Approved,