Publishing Republic Act No. 4097, Amending Sections 125 and 174 of the National Internal Revenue Code

March 10, 1965 REVENUE MEMORANDUM CIRCULAR NO. 11-65 SUBJECT : Publishing Republic Act No. 4097, Amending Sections 125 and 174 of the National Internal Revenue Code TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there is quoted hereunder Republic Act No. 4097: "Republic Act No. 4097 "AN ACT TO AMEND SECTIONS ONE HUNDRED TWENTY-FIVE AND ONE HUNDRED SEVENTY-FOUR OF COMMONWEALTH ACT AND NUMBERED FOUR HUNDRED SIXTY-SIX, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES. " Be it enacted by the Senate and House of Representative of the Philippines in Congress assembled : "SECTION 1. Section one hundred twenty-five of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows: 'SEC. 125. 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 custom house, or by the person who is found in possession of articles which are/exempt from specific tax other than those to whom the same is lawfully issued.' "SEC. 2. Section one hundred seventy-four or the same Act, as amended, is hereby further amended to read as follows: "SEC. 174. Unlawful possession or removal of articles subject to specific tax without payment of tax . Any person who is found in possession of articles subject to specific tax, the tax on which has not been paid in accordance with law, or any person who is found in possession of articles which are exempt from specific tax other than those to whom the same is lawfully issued shall be punished by a fine of not less than ten times the amount of the specific tax due on the articles found but not less than two hundred pesos nor more than five thousand pesos and by imprisonment of from four months and one day to four years and two months. Any manufacturer, owner or person in charge of any article subject to a specific tax who removes or allows or procures the unlawful removal of any such article from the place of manufacture or bonded warehouse, upon which article the specific tax has not been paid in the time and manner required, and any person who knowingly aids or abets in the removal of such articles as aforesaid, or conceals the same after illegal removal, shall for the first offense be punished by a fine of not less than ten times the amount of the specific tax due on the articles removed, but not less than five hundred pesos not more than ten thousand pesos and by imprisonment of not less than six months and one day but not more than six years. 'Every manufacture so offending shall, before continuing or resuming business, execute a bond in double the amount of his original bond and containing the same conditions. 'The mere unexplained possession of articles subject to specific tax, the tax on which has not been paid in accordance with law, shall be punishable under this section.' "SEC. 3. This Act shall take effect upon its approval. "Approved, June 19, 1964." Features of the Amendments A. The abovequoted amendatory law deleted from sections 125 and 174 of the Tax Code the phrase "excepting persons in possession of an article resulting from a single isolated transaction done in good faith". As a result of this deletion, all unauthorized persons found in possession of tax-free articles, regardless of the quantity and value thereof, are now liable for the payment of the specific tax due thereon as well as to the penalties imposed by Section 174 of the Tax Code. B. Another amendment to Section 174 is the imposition of heavier penalties, as follows 1. Before the amendment of Section 174 by the abovequoted law, imprisonment was merely on alternative penalty. Those found guilty of illicit possession or manufacture or removal of articles subject to the specific tax were penalized with a fine or imprisonment, or both, depending upon the discretion of the Judge. However, after the amendment of said Section, imprisonment has become a mandatory penalty. Persons found guilty of the aforementioned offenses are now punishable with both fine and imprisonment. Judges no longer have the discretion to impose only fines upon such offenders. By mandate of the law, they must impose upon the offenders both fine and imprisonment. 2. The fine imposable upon those found guilty of illicit possession of articles subject to the specific tax has been increased from not less than three times the amount of the specific tax due on the said articles to ten times thereof, but not less than P200.00 nor more than P5,000.00. 3. The fine imposable on those found guilty of illicit manufacture or removal of articles subject to the specific tax has been increased from five times of the amount of the specific tax on the said articles to ten times thereof but no less than P500.00 nor more than P10,000.00. Enforcement and Publicity Internal revenue officers and others charged with the enforcement of internal revenue laws are hereby enjoined to be guided accordingly and to give this circular as wise a publicity as possible. (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue APPROVED: (SGD.) RUFINO G. HECHANOVA Secretary of Finance