Publishing the Amendments Effected by Presidential Decree No. 1457 to Title IV (Specific Taxes) of the National Internal Revenue Code of 1977

August 15, 1978 REVENUE MEMORANDUM CIRCULAR NO. 076-78 SUBJECT : Publishing the Amendments Effected by Presidential Decree No. 1 457 to Title IV (Specific Taxes) of the National Internal Revenue Co de of 1977 TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there is quoted hereunder certain sections of Title IV (Specific Taxes) of the National Internal Revenue Code of 1977 as amended by Presidential Decree No. 1457: "Section 18. Section 135 of the National Internal Revenue Code of 1977 is hereby amended to read as follows: aisa dc 'SEC. 135. Payment of specific tax on domestic products . Specific tax on domestic products shall be paid by the manufacturer, producer, owner, or person having possession of the same; and, except as otherwise especially allowed, such taxes shall be paid immediately before removal from the place of production: Provided , however, That specific taxes on locally manufactured petroleum products levied under Section 153, 155 and 156 of this title, except lubricating oil and grease, shall be paid within fifteen (15) days from the date of removal thereof from the place of production. 'If the specific tax on petroleum products is not paid within the time specified above, the amount of tax shall be increased by twenty-five per centum the increment to be a part of the tax and the entire amount shall be subject to interest at the rate of fourteen per cent per annum . 'Locally manufactured petroleum products produced and stocked by the Philippine National Oil Company pursuant to the national policy of maintaining adequate strategic fuel reserves shall be excluded from these provisions and may continue to remain bonded. 'Except in the case of petroleum products as hereinabove mentioned, if the specific tax on any locally manufactured article is not paid before removal from the place of production, except as otherwise especially allowed, such tax shall be increased by twenty-five per centum , the increment to be a part of the tax and entire amount shall be payable upon demand or within the period specified therein: Provided , That any failure to pay upon demand or within the period specified therein, such tax plus surcharge shall be subject to interest at fourteen per centum per annum computed from date the demand has been duly served or received or such specified date until the actual payment is made: Provided , Further , That the payment of the tax plus surcharge and interest due on the untaxed articles shall not constitute a valid defense in the forfeiture of such untaxed articles under Section 182 or in any prosecution for violation of Section 184 of this Code.' "Section 19. Section 136 of the National Internal Revenue Code of 1977 is hereby amended to read as follows: 'SEC. 136. Payment of specific tax on imported articles . Specific taxes on imported articles shall be paid by the owner or importer to the customs officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customhouse, or by the person who is found in possession of articles which are exempt from specific tax other than those to whom the same are lawfully issued. 'If the specific tax on imported articles has not been paid in accordance with law and implementing regulations, the tax on said articles shall be subject to a surcharge of twenty-five per centum , the increment to be a part of the tax, and the entire amount shall be payable upon demand or within the period specified therein: Provided , That in case of failure to pay upon demand or within the period specified therein, such tax plus surcharge shall be subject to interest at fourteen per centum per annum computed from date the demand has been duly served or received or such specified date until the actual payment is made: Provided , further, that the payment of the tax plus surcharge and interest due on the untaxed articles shall not constitute a valid defense in the forfeiture of such untaxed articles under Section 182 or in any prosecution for violation of Section 184 of this Code.' "Section 20. Sub-paragraph (12) of paragraph (b), Section 149 is hereby deleted and repealed and sub-paragraph (13) is hereby renumbered as (12) to read as follows: '(12) If the cigarettes are of foreign manufacture, regardless of the retail price per pack, on each thousand, eighty pesos.' "Section 21. Section 160 of the National Internal Revenue Code of 1977 is hereby amended to read at follows: 'SEC. 160. Records to be kept by manufacturers . Assessment based thereon. Manufacturers of articles subject to specific tax shall keep such records as are required by regulations recommended by the Commissioner and approved by the Secretary of Finance, and such records, whether of raw materials received into the factory or of articles produced therein shall be deemed public and official documents for all purposes. 'The records of raw materials kept by such manufacturers may be used as evidence by which to determine the amount of specific taxes due from them, and whenever the amounts of raw materials received into any factory exceeds the amount of manufactured or partially manufactured products on hand and lawfully removed from the factory, plus waste removed or destroyed, and a reasonable allowance for unavoidable loss in manufacture, the Commissioner may assess and collect the tax due on the products which should have been produced from the excess. 'The specific tax due on the products as determined and assessed in accordance with this Section shall be payable upon demand or within the period specified therein. In case of failure to pay upon demand or within the period specified, the amount of tax due shall be increased by twenty-five per centum , the increment to be a part of the tax and the entire amount shall be subject to interest at the rate of fourteen per centum per annum computed from date the demand has been duly served or received or such specified date until the actual payment is made.'" Features of the Amendments : aisa dc The amendments introduced by Presidential Decree No. 1457 relating to Title IV (Specific Taxes) of the Tax Code of 1977 consist of the following: 1) Imposition of the 25% surcharge for non-payment of specific tax on: a) domestic products by the manufacturer , producer , owner , or possessor thereof (except as otherwise especially allowed) immediately before removal from the place of production, in accordance with the general provisions and subject to the proviso of Section 135 as regards locally manufactured petroleum products taxed under Sections 153, 155 and 156 of Title IV, except lubricating oil and grease; and b) imported articles by the owner or importer , or any person found in possession of tax-exempt articles other than those to whom the same are lawfully issued , before the release of such articles from the customhouse, in accordance with Section 136 and implementing regulations. 2) Further charging of interest at 14% per annum on the entire amount of unpaid specific tax due on domestic and imported articles plus 25% surcharge thereon, computed from the date of service or receipt of demand or such specified date until actual payment is made. 3) The payment of the tax plus surcharge and interest due on untaxed domestic and imported articles shall not constitute a valid defense in the case of: a) forfeiture of such untaxed articles under Section 182 or b) in any prosecution for violation of Section 184 of the Tax Code. 4) Imposition of 25% surcharge on unpaid deficiency specific tax determined and assessed in accordance with Section 160 and further charging of interest at 14% per annum on the entire amount of unpaid tax plus surcharge, computed from the date of service or receipt of demand or such specified date until the actual payment is made. 5) The deletion and repeal of sub-paragraph (12) of Section 149(b) heretofore imposing a tax increment of 120% per thousand of locally manufactured cigarettes, wrapped or packed with the use of machine or any mechanical contrivance at any stage of the wrapping or packing thereof; and defining, for that purpose, mechanically wrapped or packed cigarettes. With the repeal of sub-paragraph (12), sub-paragraph (13), prescribing the specific tax on imported cigarettes, had to be renumbered as sub-paragraph (12) and thereby, maintaining the numerical sequence of all the numbered sub-paragraphs under Section 149(b). Effectivity Date : All the foregoing amendments to Sections 135, 136, 149 (b) and 160 under Title IV of the National Internal Revenue Code of 1977, as amended, took effect on August 5, 1978, the date of the publication of Presidential Decree No. 1457 in the newspapers. All internal revenue officers, particularly those charged with the enforcement of existing specific tax laws and their implementing regulations and other revenue personnel concerned are hereby enjoined to give this Revenue Memorandum Circular a wide publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner