Publishing Presidential Decree No. 1155 Increasing the Specific Taxes on Distilled Spirits, Wines and Fermented Liquors, Amending Thereby Sections 133, 134 and 135, National Internal Revenue Code, as amended

June 6, 1977 REVENUE MEMORANDUM CIRCULAR NO. 14-77 SUBJECT : Publishing Presidential Decree No. 1155 Increasing the Specific Taxes on Distilled Spirits, Wines and Fermented Liquors, Amending Thereby Sections 133, 134 and 135, National Internal Revenue Code, as amended TO : All Internal Revenue Officers and others concerned For the information and guidance of all concerned, quoted hereunder are pertinent portions of Presidential Decree No. 1155 increasing the specific taxes on distilled spirits, wines and fermented liquors: SECTION 1. Sections 133, 134 and 135 of the National Internal Revenue Code, as amended, are hereby further amended to read as follows: "SEC. 133. Specific tax on distilled spirits . On distilled spirits there shall be collected, subject to the provisions of Section one hundred and twenty-eight of this Code, except as hereinafter provided, specific taxes as follows: "(a) If produced domestically from locally produced raw materials, per proof liter, one peso and ten centavos: Provided , That if produced in a pot still or other similar primary distilling apparatus, by a distiller producing not more than one hundred liters a day, containing not more than fifty per centum of alcohol by volume, per proof liter, seventy-eight centavos; "(b) If imported or produced from imported raw materials, per proof liter, twenty-seven pesos and fifty centavos. "This tax shall be proportionally increased for any strength of the spirits taxed over proof spirits; and the tax shall attach to this substance as soon as it is in existence as such, whether it be subsequently separated as pure or impure spirits, or be immediately or at any subsequent time transformed into any other substances either in process of original production or by any subsequent process. "Spirits" or "distilled spirits" is the substance known as ethyl alcohol, ethanol, or spirits of wine, including all dilutions and mixtures thereof, from whatever source by whatever process produced, and shall include whisky, brandy, rum, gin and vodka, and other similar products or mixtures. "Proof spirits" is liquor containing one-half of its volume of alcohol of a specific gravity of seven thousand nine hundred and thirty-nine ten thousandths at fifteen degrees centigrade. A proof liter means a liter of proof spirits. "SEC. 134. Specific tax on wines . On wines and imitation wines there shall be collected, per liter of volume capacity, the following taxes: "(a) Sparkling wines, regardless of proof, twelve pesos; if imported, twenty-six pesos and forty centavos; (b) Still wines containing fourteen per centum of alcohol or less (except those manufactured from locally grown raw materials), one peso; if imported, two pesos and twenty centavos; and (c) Still wines containing more than fourteen per centum of alcohol, two pesos; if imported, four pesos and forty centavos. Imitation wines containing more than twenty-five per centum of alcohol shall be taxed as distilled spirits. SECTION 135. Specific tax on fermented liquors . On beer, lager beer, ale, porter, and other fermented liquors (except tuba, basi, tapuy and similar domestic fermented liquors), there shall be collected, on each liter of volume capacity, fifty centavos: Provided , That if the fermented liquor is imported, the tax shall be increased by one hundred per centum . "SECTION 2. This Decree shall take effect immediately." aisa dc Features of the Amendment 1. The rates of specific tax on distilled spirits prescribed under Section 133 of the Tax Code have been increased by ten per cent (10%) across-the-board, except on distilled spirits popularly known as "lambanog" produced by small distillers, as follows: Old Rate New Rate Increase (a) If produced domestically from locally produced raw materials per proof liter P1.00 P1.10 P0.10 If produced in a pot still or other similar primary distilling apparatus, by distiller producing not more than 100 liters a day, containing not more than 50% of alcohol by volume, per proof liter 0.78 0.78 None (b) If imported or produced from imported raw materials, per proof liter 25.00 27.50 2.50 The tax imposed under Section 133 shall be proportionally increased for any strength of the spirits taxed over proof spirits and shall attach to this substance (distilled spirits) as soon as it is in existence as such, whether it be subsequently separated as pure or impure spirits, or be immediately or at any subsequent time transformed into any other substances either in process of original production or by any subsequent process. 2. The rates of tax on wines and imitation wines have been increased as follows: Old Rate New Rate Increase (a) Sparkling wines, regardless of proof, per liter of volume capacity P12.00 P12.00 None If imported, p er liter of volume capacity P24.00 P26.40 P2.40 (b) Still wines containing 14% of alcohol or less (except those manufactured from locally grown raw materials), per liter of volume capacity 1.00 1.00 None If imported, per liter of volume capacity 2.00 2.20 0.20 (c) Still wines containing more than 14% of alcohol, per liter of volume capacity 2.00 2.00 None If imported, per liter of volume capacity 4.00 4.40 0.40 Imitation wines containing more than 25% of alcohol shall be taxed as distilled spirits (Section 133). 3. The tax on fermented liquors (beer, lager beer, ale, porter, and other fermented liquors, except tuba, basi, tapuy and similar domestic fermented liquors) has been increased by 25% as follows: Old Rate New Rate Increase Per liter of volume capacity P0.40. P0.50 P0.10 4. Aside from increasing the rates of specific tax on distilled spirits, another striking amendment is the restoration of an old provision of Section 133 that was inadvertently deleted under Pres. Decree No. 69 which provides that specific tax shall attach to this substance, meaning distilled spirits, as soon as it is in existence as such, whether it be subsequently separated as pure or impure spirits, or be immediately or at any subsequent time transformed into any other substances either in process of original production or by any subsequent process. That provision is very relevant in the enforcement and collection of specific tax on distilled spirits which is a volatile substance like some petroleum products such as gasoline and similar products of distillation. If the tax does not attach to distilled spirits as soon as it is in existence as such, alcohol producers can easily attribute any loss beyond the reglementary allowance due to excessive evaporation, when in reality the missing quantity could have been surreptitiously removed from the distillery premises without payment of specific tax due on distilled spirits allegedly lost due to natural causes like evaporation. Moreover, the restored provision will make the distillers more cautious in the handling and storage of alcohol to which the tax attaches the moment it is in existence as such regardless of any subsequent process they may undertake to transform said alcohol into any other substance or substances. 5. One other salient feature of subject Pres. Decree is the restoration of the exemption from specific tax of the following previously tax-exempt articles: a) Still wines containing 14% or less alcohol, manufactured from locally grown raw materials (Sec. 134, NIRC, as amended); and b) Tuba, basi, tapuy and similar domestic fermented liquors (Sec. 135, NIRC, as amended). 6. The new specific tax rates prescribed under Pres. Decree No. 1155 are effective as of the close of business hours, June 3, 1977, when the President signed the said Decree in public at the inauguration of the new BIR Building in Diliman, Quezon City. Consequently, the new rates of specific tax shall apply to removals of the articles subject thereto made after 5:00 PM, June 3, 1977. All internal revenue officers charged with the enforcement of alcohol tax laws and others concerned should give this Revenue Memorandum Circular as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8