Publishing Presidential Decree No. 753, Further Amending Section 137(b) of the National Internal Revenue Code, as Earlier Amended by PD No. 441-A

August 12, 1975 REVENUE MEMORANDUM CIRCULAR NO. 26-75 SUBJECT : Publishing Presidential Decree No. 753, Further Amending Section 137(b) of the National Internal Revenue Code, as Earlier Amended by PD No. 441-A 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. 753, further amending Section 137(b) of the Tax Code, by raising the statutory maximum retail prices per pack of local cigarettes and cigarettes of local manufacture of foreign brands or trademarks under licensing agreements with the foreign brand or trademark owners; and cigarettes of local manufacture that are mechanically wrapped or packed, and prescribing a new rate of specific tax on cigarettes of foreign manufacture regardless of the retail price per pack or the manner of wrapping or packing thereof. "1. Section 137(b), Title IV, of the National Internal Revenue Code, as amended, is hereby further amended to read as follows: "SEC. 137. Specific tax on cigars and cigarettes . On cigars and cigarettes there shall be collected the following taxes: xxx xxx xxx "(a) Cigars xxx xxx xxx "(b) Cigarettes "1. On cigarettes packed in thirties, the retail price of which per pack does not exceed sixty centavos, on each thousand, three pesos; "2. On cigarettes packed in thirties, the retail price of which per pack exceeds sixty centavos but does not exceed eighty centavos, on each thousand, five pesos; "3. On cigarettes packed in thirties, the retail price of which per pack exceeds eighty centavos but does not exceed one peso and ten centavos, on each thousand, eight pesos; "4. On cigarettes packed in thirties, same shall be packed in round shape only, consisting of thirty sticks for every package or seven hundred fifty sticks for every roll, the latter wrapped in one secondary container; "5. On cigarettes packed in twenties, the retail price of which per pack does not exceed one peso and ten centavos, on each thousand, ten pesos; "6. On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and ten centavos, but does not exceed one peso and forty centavos, on each thousand, sixteen pesos; "7. On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and forty centavos, but does not exceed one peso and seventy centavos, on each thousand, eighteen pesos; 8. On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and seventy centavos, but does not exceed two pesos, on each thousand, twenty pesos; "9. On cigarettes packed in twenties, the retail price of which per pack exceeds two pesos, but does not exceed two pesos and fifty centavos, on each thousand, thirty-two pesos; "10. On cigarettes packed in twenties, the retail price of which per pack exceeds two pesos and fifty centavos, but does not exceed three pesos, on each thousand, forty pesos; "11. On cigarettes packed in twenties, the retail price of which per pack exceeds three pesos, on each thousand, fifty pesos; "12. If the cigarettes of local manufacture are of foreign brands or trade marks and being manufactured locally under licensing agreements with the foreign brand or trade mark owners, the tax shall be increased by fifty per centum per thousand; That any subsequent transfer or alienation of title or right over a cigarette brand or trade mark by a foreign owner to a local manufacturer in whatever manner, for or description shall not affect the rates of tax then prevailing after the effectivity of this Decree; "13. If the cigarettes of local manufacture are mechanically wrapped or packed, the tax shall be increased by one hundred twenty per centum per thousand. Cigarettes shall be considered mechanically wrapped or packed when at any stage of the wrapping or packing thereof, a machine or any mechanical contrivance shall have been used; "14. If the cigarettes are of foreign manufacture regardless of the retail price per pack or the manner of wrapping or packing thereof, on each thousand, eighty pesos. "Cigarettes subject to tax at lower rates before the effectivity of the new tax rates herein prescribed shall be automatically be subject to the corresponding higher rates and there is nothing under this sub-section (b) which allows any downgrade re-classification of tax rates for existing brands of cigarettes duly registered at the time the herein rates became effective. "Duly registered and/or existing brands of cigarettes packed in 20's at the time of the effectivity of the new rates herein prescribed shall not be allowed to be packed in 30's and neither shall any new brand of cigarettes be registered nor allowed to be manufactured if same shall be packed in 30's." FEATURES OF THE AMENDMENTS 1) Pursuant to the amendatory provisions of Presidential Decree No. 753 which took effect on July 27, 1975, the maximum retail prices per pack of locally-manufactured cigarettes shall be as follows: Rate of Maximum Retail Specific Tax Price Per Pack Do not a) Cigarettes packed in 30's Exceeds Exceed P3.00 per M. P0.60 P0.60 P5.00 per M. P0.60 P0.80 P8.00 per M. P0.80 P1.- b) Cigarettes packed in 20's P10.00 per M P1.10 P16.00 per M P1.10 P1.40 P18.00 per M P1.40 P1.70 P20.00 per M P1.70 P2.00 P32.00 per M P2.00 P2.50 P40.00 per M P2.50 P3.00 P50.00 per M P3.00 (New Ta Rate) 2) As indicated above and pursuant to the new decree (PD No. 753), the new specific tax rates and the maximum retail prices per pack of locally-manufactured cigarettes became effective on July 27, 1975; 3) On cigarettes of local manufacture of foreign brands or trade marks under licensing agreement with foreign brand or trade mark owners, the tax shall be increased by 50% per thousand; 4.) On cigarettes of local manufacture that are mechanically wrapped or packed, the tax shall be increased by 120% per thousand; 5) On cigarettes of foreign manufacture, regardless of the retail price per pack or the manner or wrapping or packing thereof, P80.00 per thousand; 6) The decree provides that cigarettes subject to tax at lower rates before the effectivity of the new rates shall be automatically be subject to the corresponding higher rates. Likewise, the decree prohibits any downgrade re-classification of the tax rates for existing brands of cigarettes duly registered at the time the prescribed rates became effective; 7) Finally, duly registered and/or existing brands of cigarettes packed in 20's at the time of the effectivity of the new rates shall not be allowed to be packed in 30's. And no new brand of cigarettes be registered nor allowed to be manufactured if the same shall be packed in 30's. And on cigarettes packed in thirties (30's), the same shall be packed in round shape only, consisting of thirty (30) sticks for every package or seven hundred fifty sticks for every roll, to be wrapped in one secondary container. Any violation of Presidential Decree No. 753 and the provisions of this regulation shall be governed by the penal provisions provided for under Chapter III of Title IV of the National Internal Revenue Code. All internal revenue officers and others concerned are hereby enjoined to give this Revenue Memorandum Circular as wide publicity as possible. MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5