Publishing Presidential Decree No. 820, Increasing the Specific Tax on Distilled Spirits, Wines, and Fermented Liquors, Amending Thereby Sections 133, 134 and 135 of the National Internal Revenue Code, as Earlier Amended by Presidential Decree No. 69

November 24, 1975 REVENUE MEMORANDUM CIRCULAR NO. 42-75 SUBJECT : Publishing Presidential Decree No. 820, Increasing the Specific Tax on Distilled Spirits, Wines, and Fermented Liquors, Amending Thereby Sections 133, 134 and 135 of the National Internal Revenue Code, as Earlier Amended by Presidential Decree No. 69 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. 820, further amending Sections 133, 134 and 135 of the Tax Code, by increasing the rates of specific tax on distilled spirits, wines, and fermented liquors and withdrawing the tax exemption privilege heretofore enjoyed by manufacturers of still wines produced from locally grown raw materials and producers of tuba, basi, tapuy, and other similar domestic fermented liquors: "SECTIONS 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: 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-five pesos. This tax shall be proportionally increased for any strength of the spirits taxes over proof spirits. "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-four pesos; (b) Still wines containing fourteen per centum of alcohol or less, one peso; if imported, two pesos; (c) Still wines containing more than fourteen per centum of alcohol, two pesos; if imported, four pesos. Imitation wines containing more than twenty-five per centum of alcohol shall be taxed as distilled spirits. "SEC. 135. Specific tax on fermented liquors . On beer, lager beer, ale, porter, and other fermented liquors, there shall be collected, on each liter of volume capacity, forty 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." Features of the Amendments 1. Pursuant to the amendatory provisions of Presidential Decree No. 820, effective October 28, 1975, when said Decree was signed and promulgated by His Excellency, President Ferdinand E. Marcos, the rates of specific tax on distilled spirits, wines, and fermented liquors have been increased as follows: Old Rate New Rate Sec. 133 Distilled spirits (a) If produced domestically from locally produced raw materials, per proof liter P0.85 P1.00 If produced in a pot still or other similar primary distilling apparatus, by a distiller producing not more than 100 liters a day, containing not more than 50% alcohol by volume, per proof liter 0.78 0.78 (b) If imported or produced from imported raw materials, per proof liter . 20.00 25.00 Sec. 134 Wines and imitation wines (a) Sparkling wines , regardless of proof, if produced locally, per liter of volume capacity 12.00 12.00 If imported, per liter of volume capacity 15.00 24.00 (b) Still wines containing 14% of alcohol or less, if locally produced per liter of volume capacity 1.00 1.00 If imported, per liter of volume capacity 1.50 2.00 (c) Still wines containing more than 14% of alcohol, if locally produced, per liter of volume capacity 2.00 2.00 If imported, per liter of volume capacity 3.00 4.00 Imitation wines containing more than 25% of alcohol shall be taxed as distilled spirits at applicable rates prescribed under Sec. 133, as amended by Pres. Decree No. 820. Old Rate New Rate Sec. 135 Fermented liquors On beer, lager beer, ale, porter, and other fermented liquors, including tuba, basi, tapuy, and similar domestic fermented liquors, per liter of volume capacity P0.32 P0.40 If imported, per liter of volume capacity, tax is increased by 100% 0.65 0.80 2. With the deletion of certain portions of Sections 134(b) and 135 of the Tax Code, effective October 28, 1975, the following domestic alcoholic products previously exempt from specific tax are subject to the rates of specific tax prescribed under afore-mentioned sections, to wit: Tax Rate Sec. 134(b) Domestic still wines containing 14% of alcohol or less manufactured from locally grown raw materials, per liter of volume capacity P1.00 Sec. 135 Tuba, basi, tapuy, and similar domestic fermented liquors, per liter of volume capacity 0.40 3. Application of the increased rates of specific tax on distilled spirits , wines and fermented liquors . On imported articles . As a rule, the rate of specific tax prevailing at the time the imported articles are withdrawn from customs custody shall apply. Consequently, imported distilled spirits, wines and fermented liquors still under customs custody, whether within the customs zone or in a customs bonded warehouse, as of October 28, 1975, are subject to the increased rates of specific tax pursuant to the statutory amendments introduced by Presidential Decree No. 820. Where the specific tax due on the imported alcoholic products has been paid under the old rate before October 28, 1975, the articles shall be subject to the increased rates if the withdrawal thereof from customs custody is effected on or after October 28, 1975. In cases where a portion of a shipment fully tax paid under the old rate still remains under customs custody as of October 28, 1975, that remaining portion shall be subject to the new rates and the withdrawal thereof may be allowed only upon payment of the deficiency tax due thereon, based on the tax due computed at the new rate less the amount of tax paid under the old rate. In short, in determining the applicability of the new tax rates, the date of withdrawal of the imported articles shall prevail over the date of payment of tax due thereon even though payment was made before the effectivity of the new rates of specific tax. On locally manufactured articles . The rates of specific tax on domestic distilled spirits, wines, and fermented liquors prevailing at the time of removal from the place of production or bonded warehouse shall apply. Consequently, removals from local distilleries, wineries, and breweries made on or after October 28, 1975, are subject to the increased rates of specific tax notwithstanding the possibility that the specific tax due on the articles removed on October 28 and/or 29, 1975, may have been previously paid under the old rates. Analogous to the case of imported articles, the date of removal shall prevail over the date of the payment of tax even though payment was made prior to the effectivity of the new tax rates. 4. Taxability of still wines manufactured from locally grown raw materials and tuba , basi , tapuy , and similar domestic fermented liquors . (a) Pending promulgation of implementing revenue regulations governing the operations of local wineries, persons or firms engaged in the local manufacture of wines as of October 28, 1975, shall, within ninety (90) days from said date, undertake to comply with the following requirements: If the establishment is located within any of Revenue Regions Nos. 3-B (Valenzuela, Bulacan), 4-A (Manila), and 4-B (Quezon City) or in the municipality of Apalit, Pampanga, or San Fernando, Pampanga: 1) Personally contact the Chief, Alcohol Tax Division, BIR, Old DBP Building, David & Escolta, Manila, and submit the following: A written application for permit to engage in business as wine manufacturer; Plat and plan of the establishment and its premises, showing the portions thereof where the various processes of production are being undertaken, the places for storage of raw materials and finished products, the office, sanitary facilities and the location of the establishment in relation to the immediate vicinity thereof (Sec. 151, NIRC); Registration of the business with other government agencies as required under existing laws such the Bureau of Commerce, Securities & Exchange Commission, local civil and health authorities; etc. A sworn statement of the quantity of finished products on hand as of the start of business, October 28, 1975, and the production and removals, quantity-wise, on and after said date until the date of the execution of the sworn statement; A surety bond of P10,000.00 as manufacturer of articles subject to specific tax (Sec. 156, NIRC); and Official receipt evidencing payment of annual fixed tax of P100.00 as producer of wine. (Sec. 182(A)(2)(c), NIRC); and Name of owner or manager and/or authorized representative duly empowered to sign for and in behalf of taxpayer on internal revenue matters and facsimiles of signature/initials of owner, manager or authorized representative. 2) If for some valid reasons or justifiable circumstances the wine manufacturer may not be able to fully comply with the foregoing, a written request for the extension of the grace period should be submitted for the approval of the Commissioner of Internal Revenue. 3) If after the expiration of the initial or extended grace period the taxpayer concerned has not as yet fully complied with above requirements, he should not continue carrying on his business as manufacturer of wines. Should he continue his business as such notwithstanding his failure to fully comply with the herein requirements, the taxpayer may be criminally prosecuted under Section 208 of the Tax Code for unlawful permit of business. If the winery establishment is located outside of the Revenue Regions and municipalities aforementioned, the same requirements should be complied with by the taxpayer, except that he should personally contact the Regional Director of the region concerned who shall in turn refer the matter to the Chief, Specific Tax Branch, if any, or to the Chief, Assessment Branch, for immediate processing of the requisite papers and documents and the subsequent transmittal thereof with appropriate recommendations to the Commissioner of Internal Revenue, Attn.: The Chief, Alcohol Tax Division, for final action. (b) In view of the administrative and enforcement difficulties attendant to the collection of specific tax on tuba, basi, tapuy, and similar domestic fermented liquors previously exempt from specific tax and pending promulgation of implementing revenue regulations governing the operations of producers of said taxable articles, all regional directors, particularly in coconut-producing regions, are hereby instructed to undertake an extensive survey in their respective regions with the end in view of: 1) Compiling data on the number of tuba producers and coconut trees devoted to tuba production by municipality; 2) Listing the names and complete permanent addresses of existing tuba producers by municipality and their average daily and monthly productions; and 3) Estimating the tax potentials by municipality and province within the revenue region, determined on the basis of estimated quantity of tuba produced and consumed taxable at P0.40 per volume liter. The results of the survey together with the recommendations on the promulgation of necessary regulations and procedures to be followed for an effective collection of specific tax on said articles now taxable under Section 135 of the Tax Code, as amended by Presidential Decree No. 820, should be submitted to the Commissioner of Internal Revenue, Attention: The Chief, Alcohol Tax Division, not later than January 3, 1976. To facilitate the survey and expedite its completion, the cooperation and assistance of provincial, municipal and Barangay officials should be solicited. All internal revenue officers and others concerned, particularly those charged with the enforcement of specific tax laws, should be guided accordingly, and are hereby enjoined to give this Revenue Memorandum Circular as wide publicity as possible. EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3 APPROVED: PEDRO M. ALMANZOR Acting Secretary of Finance ANNEX 1st Indorsement January 6, 1976 Respectfully returned to the Commissioner of Internal Revenue, Manila, the within Revenue Memorandum Circular No. 42-75 dated November 24, 1975 on the subject "Publishing Presidential Decree No. 820, increasing the specific tax on distilled spirits, wines, and fermented liquors, amending thereby Sections 133, 134 and 135 of the National Internal Revenue Code, as earlier amended by Presidential Decree No. 69," duly approved. PEDRO M. ALMANZOR Acting Secretary