FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
FIRST REGULAR SESSION 
) 
SENATE 
Senate Bill No. {I2 
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INTRODUCED BY SENATOR VICENTE C. SaTTa III 
EXPLANATORY NOTE 
Before the enactment of Republic Act No. 7160, otherwise 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 tirne 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 government 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. 
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I~ENTE C. S TTO III 
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FIFTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
) 
FIRST REGULAR SESSION 
) 
SENATE 
Senate BIll iNo. 42 
INTRODUCED BY SENATOR VICENTE C. SaTTa III 
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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) 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 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: 
(1) {TEN PERCENT (10%)} of all sales 
recorded in the prinCipal office shall be taxable by 
the city or municipality where the principal office is 
located; and 
(2) {NINETY PERCENT (90%)} 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. 
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(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%)} 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 provision 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. 
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