Publishing Batas Pambansa Blg. 82, "An Act Further Amending Sections 145, 146, 147, 181 and 186 of the National Internal Revenue Code and for Other Purposes"

September 17, 1980 REVENUE MEMORANDUM CIRCULAR NO. 49-80 SUBJECT : Publishing Batas Pambansa Blg. 82, "An Act Further Amending Sections 145, 146, 147, 181 and 186 of the National Internal Revenue Code and for Other Purposes" TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, quoted hereunder are pertinent portions of Batas Pambansa Blg. 82: "Sec. 1. Section 145 of the National Internal Revenue Code of 1977, as amended, is hereby further amended to read as follows. "Sec. 145. Specific tax on distilled spirits . On distilled spirits there shall be collected, subject to the provisions of Section one hundred thirty-nine of this Code, except as hereinafter provided, specific taxes as follows: cd i "(a) If produced domestically from locally produced raw materials, per proof liter, two pesos and forty 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, one peso and fifty-six centavos; "(b) If imported or produced from imported raw materials, per proof liter, thirty-five pesos. "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 substance either in the 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 except compounded liquors taxed under Section 146 of this Code. "'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. 2. Section 146 of the same Tax Code, as amended, is hereby further amended to read as follows: "Sec. 146. Specific tax on wines and compounded liquors . - On wines and imitation wines and compounded liquors 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), two pesos; if imported, four pesos and forty centavos; "(c) Still wines containing more than fourteen per centum of alcohol, four pesos; if imported, eight pesos and eighty centavos; "Imitation wines containing more than twenty-five per centum of alcohol shall be taxed as distilled spirits; "(d) Compounded liquors containing seventeen and one-half per centum of alcohol or less, ninety-six centavos; "(e) Compounded liquors containing more than seventeen and one-half per centum of alcohol, but not more than twenty-five per centum thereof, one pesos and thirty-four centavos; cdt "(f) Compounded liquors containing more than twenty-five per centum of alcohol, but not more than thirty-two and one-half per centum thereof, one peso and seventy-two centavos; "(g) Compounded liquors containing more than thirty-two and one-half per centum of alcohol, but not more than forty per centum thereof, two pesos and ten centavos; and "(h) Compounded liquors containing more than forty per centum of alcohol, two pesos and sixty-six centavos. "For the purpose of this Section, 'compounded liquors' as prescribed under subparagraphs (d), (e), (f), (g), and (h) of this Section, the amount of specific tax paid on the distilled spirits used in the compounding of such intoxicating beverage shall be credited against the tax due on the compounded liquors as soon as they are in existence as such. "For the purpose of this Section, "compounded liquors" shall include any intoxicating beverage whatever, concocted by or resulting from the mixture of or addition to distilled spirits, either before or after rectification, of any coloring matter, flavoring extract or essence or other kind of wine, liquor or other ingredient." "Sec. 3. Section 147 of the same Code is hereby further amended to read as follows: "Sec. 147. 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, one peso and twenty centavos: Provided , That if the fermented liquor is imported the tax shall be increased by one hundred per centum ." cdt "Sec. 4. Section 181 of the same Tax Code is hereby amended to read as follows: "Sec. 181. Unlawful use of denatured alcohol . Any person who, for the purpose of manufacturing any beverage, uses denatured alcohol or alcohol specially denatured to be used for motive power or withdrawn under bond for industrial uses or alcohol knowingly misrepresented to be denatured to be unfit for oral intake, or who knowingly sells or offers for sale any beverage made in whole or in part from such alcohol, or who uses such alcohol for the manufacture of liquid medicinal preparations taken internally, or knowingly sells or offers for sale such preparations containing as an ingredient such alcohol, shall on conviction be fined not less than ten thousand pesos and imprisoned for not less than six years and one day. If the violator is an alien, he shall be liable for deportation. "Any person who shall unlawfully recover, or attempt to recover by distillation or other process any denatured alcohol or who knowingly sells or offers for sale, conceals, or otherwise disposes of alcohol so recovered or redistilled shall be subject to the same penalties imposed under this Section. "Sec. 5. Section 186 of the same Code is hereby amended to read as follows: "Sec. 186. Shipment or removal of liquor or tobacco products under false name or brand or as an imitation of any existing or otherwise known product name or brand . Any person who ships, transports or removes spirituous, compounded or fermented liquors, wines, or any manufactured products of tobacco under any other than the proper name or brand known to the trade as designating the kind and quality of the contents of the cask, bottle or package containing the same, or as an imitation of any existing or otherwise known product name or brand, or causes such act to be done, shall on conviction be subject to a fine of not less than ten thousand pesos and imprisonment of not less than six years and one day; and in addition, the article or articles so transported or removed shall be forfeited. If the violator is an alien, he shall be liable for deportation. "Sec. 6. Fifty percent of the increase in the rates provided by this Act shall take effect upon approval of this Act and the full amount shall take effect on April 1, 1981. "Sec. 7. This Act shall take effect immediately." Salient Features of the Amendatory Law : (a) Except for the status quo in rates of taxes on imported distilled spirits which by statutory definition include imported whisky, brandy, rum, gin, vodka and other similar products (except compounded liquors) and sparkling wines of local and foreign manufacture , the rates of specific tax on the other alcoholic products taxable under Sections 145, 146 and 147 have been increased by 100% across-the-board under Batas Pambansa Blg. 82. (b) Aside from the strikingly identical rate of increase in specific taxes on the alcoholic products subject thereto, the amendatory law also provides that "Fifty percent of the increase in the rates provided by this Act shall take effect upon approval of this Act and the full amount shall take effect on April 1, 1981." Consequently, from September 17, 1980, (date of approval of B.P. Blg. 82) until March 31, 1981, one-half (1/2) of the amount of increase in tax rates shall be in force. Starting on April 1, 1981, the full amount of the increase in the rates under the amendatory legislation shall take effect and thereby achieving to the fullest extent the 100% increase in rates of specific tax on alcoholic products as originally provided for under the proposed tax measure. (c) Increase in Rates of Specific Tax (1) Sec. 145. Specific tax on distilled spirits Shown in the following tabulation are the increased rates of tax applicable to distilled spirits effective on the dates prescribed by the amendatory law; New Rate Effective upon Effective Old Law Approval of Law April 1, 1981 Domestic spirits P1.20/p. 1. P1.80/p. 1. P2.40/p. 1. Lambanog .78/p. 1. 1.17/p. 1. 1.56/p. 1. Imported spirits 35.00/p. 1. (no change) (no change) (2) Sec. 146. Specific tax on wines and compounded liquors . Following the same pattern as in the foregoing tabulated rates of specific tax on distilled spirits, the increased rates of tax on wines and compounded liquors and their effective dates are shown hereunde r: New Rate Effective upon Effective Old Rate Approval of Law April 1, 1981 (a) Sparkling wines Local P12.00/liter (no change) (no change) Imported 26.40/liter (no change) (no change) (b) Still wines (14% alcohol or less) Local P1.00/liter P1.50/liter P2.00/liter Imported 2.20/ " 3.30/ " 4.40/ " (NB: - Local still wines manufactured from locally grown raw materials are exempt from specific tax under the amendatory law.) (c) Still wines (Over 14% alcohol) Local P2.00/liter P3.00/liter P4.00/liter Imported 4.40/ " 6.60/ " 8.80/ " Imitation wines containing more than 25% of alcohol shall be taxed as distilled spirits at the new rates and effective on the dates prescribed under the amendatory law. cdt (d) Compounded liquors containing 17-1/2 % alcohol or less P0.48/liter P0.72/liter P0.96/liter (e) containing over 17-1/2 % to 25% alcohol .67/ " 1.005/ " 1.34/ " (f) containing over 25% to 32-1/2 % alcohol .86/" 1.29/" 1.72/" (g) containing over 32-1/2 to 40% alcohol 1.05/ " 1.575/ " 2.10/ " (h) containing over 40% alcohol 1.33/ " 1.995/ " 2.66/ " In computing the specific tax on compounded liquors at the above new rates and effective on the indicated dates under the amendatory law, the amount of specific tax paid on distilled spirits used in the compounding of such intoxicating beverages shall be credited against the tax due on the compounded liquors . cdt (3) Sec. 147. Specific tax on fermented liquors (Beer) In view of the staggering of the increase in rates of tax or fermented liquors, the new rates are shown hereunder: New Rate Effective upon Effective Old Rate Approval of Law April 1, 1981 Local Beer P0.60/liter P0.90/liter P1.20/liter Imported beer 1.20/ " 1.80/ " 2.40/ " (d) Amendments to Certain Penal Provisions To add more teeth to the enforcement of the law and the collection of specific taxes on distilled spirits and intoxicating liquors and as a much stronger deterrent against manufacturers and/or traffickers of illicit alcohol products, heavier penalties have been imposed for certain violations punishable under the following amended Sections of Title IV: Sec. 181. Unlawful use of denatured alcohol . Nature of Violation The use of denatured alcohol or alcohol specially denatured for motive power or withdrawn under bond for industrial uses or alcohol knowingly misrepresented to be denatured to be unfit for oral intake in the manufacture of any beverage or liquid medicinal preparations taken internally; or who knowingly sells or offers for sale any beverage or preparations containing as an ingredient such unlawfully used alcohol. cdt Old Penalty New Penalty Fine not less than P1,000; and Not less than P10,000 and Prison Terms not more than one (1) year Not less than 6 years and 1 day; Plus deportation for alien violators. Nature of Violation Unlawful recovery or attempt to recover by distillation or other process any denatured alcohol; or knowingly selling or offering for sale, concealing or otherwise disposing of alcohol so recovered or redistilled. Old Penalty New Penalty Same penalties under Sec. 264 Same penalty for unlawful of the Rev. Administrative Code. use of denatured alcohol afore-mentioned. Sec. 186. Shipment or removal of liquor or tobacco products under false name or brand or as an imitation of any existing known product name or brand . cdt Old Law The Law, as Amended Did not include shipment or Includes shipment or removal removal of imitation of any of imitation of any known existing known product name or product name or brand as an brand as a punishable violation. offense punishable under Sec. 186. Old Penalty New Penalty A fine of P500.00 and forfeiture A fine of not less than P10,000.00 of articles so transported or and imprisonment of not less than removed. 6 years and 1 day Plus forfeiture of articles so transported or removed. All internal revenue officers and others concerned are hereby enjoined to give this Revenue Memorandum Circular as wide publicity as possible. RUBEN B. ANCHETA Acting Commissioner