Amending Certain Sections of the NIRC of 1977 As Amended

June 11, 1978

PRESIDENTIAL DECREE NO. 1457

AMENDING CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1977, AS AMENDED, AND FOR OTHER PURPOSES

WHEREAS, there is a need to further amend certain provisions of the National Internal Revenue Code of 1977, as amended, to make it more responsive to current conditions; casia

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree the following:

SECTION 1. Certain sections of the National Internal Revenue Code of 1977, as amended, are hereby further amended, the corresponding amendments being hereto attached.

SECTION 2. The aforementioned amendments are incorporated herein by reference and shall be deemed integral parts of this Decree. aisa dc

SECTION 3. The Secretary of Finance shall, upon recommendation of the Commissioner of Internal Revenue, promulgate the rules and regulations for the implementation of this Decree.

SECTION 4. All existing laws, rules and regulations inconsistent herewith are hereby repealed, amended or modified accordingly.

SECTION 5. This Decree shall take effect immediately upon approval.

DONE in the City of Manila, this 11th day of June, in the year of Our Lord, Nineteen Hundred and Seventy-Eight. cd i

ANNEX TO PRESIDENTIAL DECREE NO. 1457 AMENDING CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1977 WHICH FORMS AN INTEGRAL PART OF THE SAID DECREE

  Paragraph (e) of Section 20 of the National Internal Revenue Code is hereby amended to read as follows:

"(e) (1). The term "nonresident citizen" means one who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein.

"(2) A citizen leaving the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a more or less permanent basis and contract workers whose contract of employment are renewed from time to time within or during the taxable year under such circumstances as to require them to be physically present abroad most of the time during the taxable year, shall be considered as a nonresident citizen for such taxable year with respect to the income he derived from foreign sources from the date he actually departed from the Philippines.

"(3) A citizen who has been previously considered as nonresident citizen and who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines shall likewise be treated a nonresident citizen for the taxable year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival in the Philippines.

"(4) The taxpayer shall submit proof to the Commissioner of Internal Revenue to show his intention of leaving the Philippines to reside permanently abroad or to return to and reside in the Philippines as the case may be for purposes of this section."

SECTION 2.  Paragraph (a) of Section 24 of the National Internal Revenue Code is hereby amended to read as follows:

"SEC. 24. Rates of tax on corporations. —

(a) Tax on domestic corporations. — . . .

"xxx xxx xxx

"Private educational institutions, whether stock or non-stock, shall pay a tax of ten per cent of their taxable net income from the operation of the school, related school activities, and on their passive investment income consisting of interest, dividends, royalties, and the like: Provided, however, That dividends received by a private educational institution, whether stock or non-stock, from a domestic corporation shall be subject to the inter-corporate dividends tax under subsection (c) hereof."

SECTION 3.  Sub-paragraph (1) of paragraph (b) of Section 24 of the Tax Code is hereby amended to read as follows:

"(b) Tax on foreign corporations. — (1) Non resident corporations. — A foreign corporation not engaged in trade or business in the Philippines shall pay a tax equal to thirty-five per cent of the gross income received during each taxable year from all sources within the Philippines as interest, dividends, rents, royalties (including remunerations for technical services), salaries, premiums, annuities, emoluments or other fixed or determinable annual, periodical or casual gains, profits and income, and capital gains:

Provided, however, That —

"(i) xxx xxx xxx

"(ii) xxx xxx xxx

"(iii) xxx xxx xxx

"(iv) xxx xxx xxx

"(v) xxx xxx xxx

"(vi) xxx xxx xxx

"(vii) Rentals, charter and other fees payable to non-resident lessors of aircraft, machineries and other equipments shall be subject to a final tax not less than five per cent (5%) but more than ten per cent (10%) to be fixed and determined by President upon recommendation of the Secretary of Finance: Provided, however, That the rate of seven and one-half per cent (7-1/2%) shall be imposed on such rentals, charter and other fees until such time as the President shall have prescribed the rates appropriate for each category of property. The return and payment of final tax shall be made in accordance with Sections 53 and 54 of this Code."

SECTION 4. Paragraph (e) of Section 27 of the National Internal Revenue Code is hereby amended by deleting the second paragraph therefrom and transposing the same after paragraph (1) of the same section, to read as follows:

"Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit, regardless of the disposition made of such income, shall be subject to tax imposed under this Code."

SECTION 5. Paragraph (a) of Section 30 is hereby amended to read as follows:

"SEC. 30. Deductions from gross income. — In computing net income there shall be allowed as deductions —

(A) Expenses. — (1) Business expenses. (A) In general. — All ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; travelling expenses while away from home in the pursuit of a trade or business, rentals or other payments required to be made as a condition to the continued use or possession, for the purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity.

(B) Entertainment expenses for individuals. — In the case of an individual who derives compensation income, the maximum amount of ordinary and necessary trade or business entertainment expenses deductible from such compensation income shall not exceed ten per cent (10%) of such compensation income. For purposes of this paragraph, the term "compensation income", means all remunerations for services performed by an employee for his employer, including the cash value of all remunerations paid in any medium other than cash, unless specifically excluded from gross income under existing laws. The name which the remuneration for services is designated is immaterial. Thus, salaries, fees, bonuses, commissions, profit-sharing, pensions, retirement pay, allowances in connection with his employment, and all forms of benefits given to the employee in consideration of services rendered to his employer constitute compensation income.

(C) Substantiation requirements for entertainment, amusement or recreation. — No deductions otherwise allowable under this paragraph shall be allowed for any item —

(i) Activity. — With respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, unless the taxpayer establishes that the item was directly related to, or, in the case of an item directly preceding or following a substantial and bona fide business discussion (including business meetings at a convention or otherwise), that such item was associated with, the active conduct of the taxpayer's trade or business, or

(ii) Facility. — With respect to a facility used in connection with an activity referred to in subparagraph (A), unless the taxpayer establishes that the facility was used primarily for the furtherance of the taxpayer's trade or business and that the item was directly related to the active conduct of such trade or business.

For purposes of applying this subparagraph, dues or fees paid to any social, athletic or sporting club or organization shall be treated as items with respect to facilities.

In no case shall an entertainment, amusement or recreational expense which is contrary to public policy or for immoral purposes be allowed as a deduction.

SECTION 6. Subparagraph (1) of paragraph (b) of Section 30 of the National Internal Revenue Code is hereby amended to read as follows:

"1. In general. — The amount of interest paid or accrued within a taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations the interest upon which is exempt from taxation as income under this Title: Provided, however, That interest on deposits paid by authorized agent banks of the Central Bank of the Philippines to depositors shall be allowed as a deduction only if it is shown that the tax on such interest was withheld and paid in accordance with the provisions of Sections 53 and 54 of this Code."

SECTION 7. Paragraph (b) of Section 30 is hereby amended by adding a new subparagraph (3) to read as follows:

"(3) No deduction shall be allowed in respect of interest otherwise deductible under the preceding subparagraphs —

"(A) If within the taxable year an individual taxpayer reporting income on the cash basis incurs an indebtedness on which an interest is paid in advance through discount or otherwise: Provided, however, That such interest shall be allowed as a deduction in the year the indebtedness is paid: And Provided, further, That if the indebtedness payable in periodic amortizations, the amount of interest which corresponds to the amount of the principal amortized or paid during the year shall be allowed as deduction in such taxable year.

"(B) If both the taxpayer and the person to whom the payment has been made or is to be made are persons specified within any one of the paragraphs of sub-section (b) of Section 31.

SECTION 8. Section 30 (c) (3) (C) of the National Internal Revenue Code is hereby amended to read as follows:

"(C) Partnerships and estates. — In the case of any such individual who is a member of a general professional partnership or a beneficiary of an estate or trust, his proportionate share of such taxes of the general professional partnership or the estate or trust paid or accrued during the taxable year to a foreign country, if his distributive share of the income of such partnership or trust is reported for taxation under this Title."

SECTION 9. Subparagraph (4) of paragraph (a) of Section 37 of the National Internal Revenue Code is hereby amended to read as follows:

"(4) Rentals and royalties. — Rentals and royalties from property located in the Philippines or from any interest in such property, including rentals or royalties for —

"(A) the use of, or the right or privilege to use in the Philippines any copyright, patent, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right;

"(B) the use of, or the right to use in the Philippines any industrial, commercial or scientific equipment;

"(C) the supply of scientific, technical, industrial or commercial knowledge or information;

"(D) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property, or right as is mentioned in paragraph (a) any such equipment as is mentioned in paragraph (b) or any such knowledge or information as is mentioned in paragraph (c); or

"(E) the supply of services by a nonresident person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any brand, machinery or other apparatus purchased from such nonresident person;

"(F) any other amounts paid in consideration of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme; and

"(G) the use of or the right to use —

"(i) motion picture films;

"(ii) films or video tapes for use in connection with television; or

"(iii) tapes for use in connection with radio broadcasting."

SECTION 10. The last sentence of paragraph (e) of Section 37 of the National Internal Revenue Code is hereby amended to read as follows:

". . . Gains, profits, and income derived from the purchase of personal property within and its sale without the Philippines or from the purchase of personal property without and its sale within the Philippines, shall be treated as derived entirely from sources within the country in which sold: Provided, however, That gain from the sale of shares of stock in a domestic corporation shall be treated as derived entirely from sources within the Philippines regardless of where the said shares are sold. The transfer by a nonresident alien or a foreign corporation to anyone of any share of stock issued by a domestic corporation shall not be effected or made in its books unless: (1) the transferor has filed with the Commissioner a bond conditioned upon the future payment by him of any income tax that may be due on the gains derived from such transfer or, (2) the Commissioner has certified that the taxes, if any, imposed in this Title and due on the gain realized from such sale or transfer have been paid. It shall be the duty of the transferor and the corporation the shares of which are sold or transferred to advise the transferee of this requirement.

SECTION 11. Paragraph (a) of Section 65 of the National Internal Revenue Code is hereby amended to read as follows:

"(a) Dividends, interest (other than interest constituting rent as defined in subsection (g) hereof), royalties (other than mineral, oil, or gas royalties), and annuities. The term "royalties", as herein used, includes income from copyrights, patents, and other similar revenues."

SECTION 12. The opening paragraph of Section 100 of the National Internal Revenue Code of 1977, is hereby amended to read as follows:

"SEC. 100. Gross estate. — The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, Provided, however, That in the case of a nonresident decedent who at the time of his death, was not a citizen of the Philippines, only that part of the entire gross estate which is situated in the Philippines shall be included in his taxable estate."

SECTION 13. The title of Section 101 of the National Internal Revenue Code of 1977 is hereby amended and a new paragraph (e) is added thereto to read as follows:

"SEC. 101. Computation of net estate and estate tax. . . .

xxx xxx xxx

"(e) Tax credit for estate taxes paid to a foreign country. — (1) In general. — The tax imposed by this Title shall be credited with the amounts of any estate tax imposed by the authority of a foreign country.

(2) Limitations on credit. The amount of the credit taken under this section shall be subject to each of the following limitations:

(A) The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax against which such credit is taken, which the decedent's net estate situated within such country taxable under this Title bears to his entire net estate; and

(B) The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken, which the decedent's net estate situated outside the Philippines taxable under this Title bears to his entire net estate.

SECTION 14. Section 118 is hereby amended by adding a new paragraph to read as follows:

"If a bank has knowledge of the death of a person who maintained a joint account or deposit jointly with another, it shall not allow any withdrawal by a surviving depositor from the said joint deposit account unless the Commissioner has certified that the taxes imposed thereon by this Title have been paid. For this purpose, all withdrawal slips shall contain a statement to the effect that all of the joint depositors are still living at the time of withdrawal by any one of the joint depositors and such statement shall be under oath by the said depositor."

SECTION 15. Paragraph (c) of Section 119 of the National Internal Revenue Code is hereby amended to read as follows:

"(c) Any executor or administrator who shall deliver or distribute to an heir, legatee, devisee, donee, or beneficiary any real or personal property, credit, right, or franchise, and any officer, manager, or employee of any corporation, firm or association, sociedad anonima, partnership, business or industry who transfers in its books to any new owner any share, obligation, bond, or right, pertaining to an estate or gift or allows the withdrawal of deposits and/or other investments subject to the taxes imposed in this Title without the certification from the Commissioner of actual payment of the corresponding tax, shall be fined in the amount of not more than five thousand pesos or imprisoned for not more than one year, or both.

SECTION 16. A new section is hereby added after Section 123 of the National Internal Revenue Code to be known as Section 123-A, to read as follows:

"SEC. 123-A. Tax credit for donor's taxes paid to a foreign country. (1) In general. — The tax imposed by this Title upon a donor who was a citizen or a resident at the time of donation shall be credited with the amount of any donor's taxes of any character and description imposed by the authority of a foreign country.

(2) Limitations on credit. — The amount of the credit taken under this section shall be subject to each of the following limitations:

(A) The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax against which such credit is taken, which the net gifts situated within such country taxable under this Title bears to his entire net gifts; and

(B) The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken, which the donor's net gifts situated outside the Philippines taxable under this Title bears to his entire net gifts.

SECTION 17. The first paragraph of Section 133 of the National Internal Revenue Code is hereby amended as follows:

"SEC. 133. Definitions. — For the purpose of this Title, the terms 'gross estate' and 'gifts' include real and personal property, whether tangible or intangible, or mixed, wherever situated: Provided, however, That where the decedent or donor was a nonresident alien at the time of his death or donation, as the case may be, his real and personal property so transferred but which are situated outside the Philippines shall not be included as part of his 'gross estate' or 'gross gift': Provided, further, That franchise which must be exercised in the Philippines; shares, obligations, or bonds issued by any corporation or sociedad anonima organized or constituted in the Philippines in accordance with its laws, shares, obligations, or bonds issued by any foreign corporation eighty-five per centum of the business of which is located in the Philippines; shares, obligations, or bonds issued by any foreign corporation if such shares, obligations, or bonds have acquired a business situs in the Philippines; shares or rights in any partnership, business or industry established in the Philippines, shall be considered as situated in the Philippines; and Provided, still further, That no tax shall be collected under this Title in respect of intangible personal property (a) if the decedent at the time of his death, or the donor at the time of the donation was a citizen and resident of a foreign country which at the time of his death or donation did not impose a transfer tax of any character, in respect of intangible personal property of citizens of the Philippines not residing in that foreign country or (b) if the laws of the foreign country of which the decedent or donor was a citizen and resident at the time of his death or donation allows a similar exemption from transfer or death taxes of every character or description in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country."

SECTION 18. Section 135 of the National Internal Revenue Code of 1977 is hereby amended to read as follows:

"SEC. 135. Payment of specific tax on domestic products. — Specific tax on domestic products shall be paid by the manufacturer, producer, owner, or person having possession of the same; and, except as otherwise especially allowed, such taxes shall be paid immediately before removal from the place of production: Provided, however, That specific taxes on locally manufactured petroleum products levied under Sections 153, 155 and 156 of this Title, except lubricating oil and grease, shall be paid within fifteen (15) days from the date of removal thereof from the place of production.

"If the specific tax on petroleum products is not paid within the time specified above, the amount of tax shall be increased by twenty-five per centum the increment to be a part of the tax and the entire amount shall be subject to interest at the rate of fourteen per cent per annum.

"Locally manufactured petroleum products produced and stocked by the Philippine National Oil Company pursuant to the national policy of maintaining adequate strategic fuel reserves shall be excluded from these provisions and may continue to remain bonded.

"Except in the case of petroleum products as hereinabove mentioned, if the specific tax on any locally manufactured article is not paid before removal from the place of production, except as otherwise especially allowed, such tax shall be increased by twenty-five per centum, the increment to be a part of the tax and the entire amount shall be payable upon demand or within the period specified therein: Provided, That any failure to pay upon demand or within the period specified therein, such tax plus surcharge shall be subject to interest at fourteen per centum per annum computed from the date the demand has been duly served or received or such specified date until the actual payment is made: Provided, Further, That the payment of the tax plus surcharge and interest due on the untaxed articles shall not constitute a valid defense in the forfeiture of such untaxed articles under Section 182 or in any prosecution for violation of Section 184 of this Code."

SECTION 19. Section 136 of the National Internal Revenue Code of 1977 is hereby amended to read as follows:

"SEC. 136. 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 the customhouse, or by the person who is found in possession of articles which are exempt from specific tax other than those to whom the same are lawfully issued.

"If the specific tax on imposed articles has not been paid in accordance with law and implementing regulations, the tax on said articles shall be subject to a surcharge of twenty-five per centum, the increment to be a part of the tax, and the entire amount shall be payable upon demand or within the period specified therein: Provided, That in case of failure to pay upon demand or within the period specified therein, such tax plus surcharge shall be subject to interest at fourteen per centum per annum computed from date the demand has been duly served or received or such specified date until the actual payment is made: Provided, further, that the payment of the tax plus surcharge and interest due on the untaxed articles shall not constitute a valid defense in the forfeiture of such untaxed articles under Section 182 or in any prosecution for violation of Section 184 of this Code."

SECTION 20. Subparagraph (12) of paragraph (b) of Sec. 149 is hereby deleted and repealed and subparagraph (13) is hereby renumbered as (12) to read as follows:

"'(12) If the cigarettes are of foreign manufacture, regardless of the retail price per pack, on each thousand, eighty pesos."

SECTION 21. Sec. 160 of the National Internal Revenue Code of 1977 is hereby amended to read as follows:

"SEC. 160. Records to be kept by manufacturers. — Assessment based thereon. — Manufacturers of articles subject to specific tax shall keep such records as are required by regulations recommended by the Commissioner and approved by the Secretary of Finance, and such records, whether of raw materials received into the factory or of articles produced therein shall be deemed public and official documents for all purposes.

"The records of raw materials kept by such manufacturers may be used as evidence by which to determine the amount of specific taxes due from them, and whenever the amounts of raw materials received into any factory exceeds the amount of manufactured or partially manufactured products on hand and lawfully removed from the factory, plus waste removed or destroyed, and a reasonable allowance for unavoidable loss in manufacture, the Commissioner may assess and collect the tax due on the products which should have been produced from the excess.

"The specific tax due on the products as determined and assessed in accordance with this Section shall be payable upon demand or within the period specified therein. In case of failure to pay upon demand or within the period specified, the amount of tax due shall be increased by twenty-five per centum, the increment to be part of the tax and the entire amount shall be subject to interest at the rate of fourteen per centum per annum computed from date the demand has been duly served or received or such specified date until the actual payment is made."

SECTION 22. Subparagraphs (2) and (3) of Section 192 of the National Internal Revenue Code of 1977 are hereby amended to read as follows.

"(2) Persons not subject to percentage tax. — Every person who is not required to pay the percentage tax prescribed under this Title shall pay for each calendar year in which the person shall engaged in business a fixed annual tax based upon his gross annual sales during the preceding calendar year, as follows:

"Twenty pesos, if the amount of the gross annual sales does not exceed two thousand four hundred pesos;

"Forty pesos, if the amount of the gross annual sales exceeds two thousand four hundred pesos but does not exceed ten thousand pesos;

"Eighty pesos, if the amount of the gross annual sales exceeds ten thousand pesos but does not exceed thirty thousand pesos;

"One hundred sixty pesos, if the amount of the gross annual sales exceeds thirty thousand pesos but does not exceed fifty thousand pesos;

"Two hundred fifty pesos, if the amount of the gross annual sales exceeds fifty thousand pesos but does not exceed seventy-five thousand pesos;

"Three hundred fifty pesos, if the amount of the gross annual sales exceeds seventy-five thousand pesos but does not exceed one hundred thousand pesos;

"Five hundred pesos, if the amount of the gross annual sales exceeds one hundred thousand pesos but does not exceed one hundred fifty thousand pesos;

"Nine hundred pesos if the amount of the gross annual sales exceeds one hundred fifty thousand pesos but does not exceed three hundred thousand pesos;

"One thousand six hundred pesos, if the amount of the gross annual sales exceeds three hundred thousand pesos but does not exceed five hundred thousand pesos;

"Three thousand pesos, if the amount of the gross annual sales exceeds five hundred thousand pesos but does not exceed one million pesos;

"Five thousand pesos, if the amount of the gross annual sales exceeds one million pesos but does not exceed one million five hundred thousand pesos;

"Seven thousand pesos, if the amount of the gross annual sales exceeds one million five hundred thousand pesos but does not exceed two million pesos;

"Nine thousand pesos, if the amount of the gross annual sales exceeds two million pesos but does not exceed two million five hundred thousand pesos;

"Eleven thousand pesos, if the amount of the gross annual sales exceeds two million five hundred thousand pesos but does not exceed three million pesos;

Fourteen thousand pesos, if the amount of the gross annual sales exceeds three million pesos but does not exceed four million pesos;

"Eighteen thousand pesos, if the amount of the gross annual sales exceeds four million pesos but does not exceed five million pesos;

"Twenty-two thousand pesos, if the amount of the gross annual sales exceeds five million pesos but does not exceed six million pesos;

"Twenty-six thousand pesos, if the amount of the gross annual sales exceeds six million pesos but does not exceed seven million pesos;

"Thirty thousand pesos, if the amount of the gross annual sales exceeds seven million pesos but does not exceed eight million pesos;

"Thirty-four thousand pesos, if the amount of the gross annual sales exceeds eight million pesos but does not exceed nine million pesos;

"Thirty-eight thousand pesos, if the amount of the gross annual sales exceeds nine million pesos but does not exceed ten million pesos.

"If the amount of gross annual sales exceeds ten million pesos, the graduated fixed tax shall be thirty-eight thousand pesos plus one thousand pesos for every one million pesos of gross sales, but the tax shall in no case exceed fifty thousand pesos. Every fractional part of one million pesos in excess of ten million pesos shall be disregarded.

"If a merchant is engaged in two or more businesses, one or more of which is subject to and the others exempt from, the percentage tax, he shall pay the graduated fixed annual tax provided above, based on the individual sales of his business not subject to the percentage tax under this Title. The initial graduated fixed annual tax to be paid by the person first engaging in business subject to the said tax shall be twenty pesos."

(3) Other fixed taxes. — The following fixed taxes shall be collected as follows, the amount stated being for the whole year, when not otherwise specified:

"(a) Brewers, ten thousand pesos;

"(b) Distillers of spirits, two thousand pesos, if the production does not exceed one hundred thousand gauge liters; four thousand pesos, if the annual production exceeds one hundred thousand gauge liters but does not exceed two hundred thousand gauge liters; six thousand pesos if the annual production exceeds two hundred thousand gauge liters but does not exceed three hundred thousand gauge liters; eight thousand pesos, if the annual production exceeds three hundred thousand gauge liters but does not exceed five hundred thousand gauge liters; and ten thousand pesos, if the annual production exceeds five hundred thousand gauge liters: Provided, That if the annual production does not exceed ten thousand gauge liters, only one hundred pesos shall be collected.

"(c) Rectifiers of distilled spirits, compounders, and repackers of wines or distilled spirits, two thousand pesos; producers of wines, one hundred pesos;

"(d) Wholesale dealers of distilled spirits and wines —

"1. In the City of Manila, two thousand pesos;

"2. In chartered cities other than Manila, one thousand pesos;

"3. In any other place, five hundred pesos.

"(e) Wholesale dealers in fermented liquors, except basi, tuba and tapuy, four hundred pesos.

"(f) Wholesale peddlers of distilled spirits, four hundred pesos.

"(g) Wholesale peddlers of fermented liquors, four hundred pesos.

"(h) Retail liquor dealers;

"1. In cabarets, day and night clubs, race tracks, cockpits, Jai-Alai, casinos and other similar places, one thousand pesos;

"2. In restaurants, beer gardens, pubs and cocktail lounges, eight hundred pesos;

"3. In retail establishments and other places, three hundred pesos.

"(i) Retail vino dealers, fifty pesos.

"(j) Retail dealers in fermented liquor:

"1. In cabarets, day and night clubs, race tracks, Jai-Alai, casinos and other similar places, eight hundred pesos;

"2. In restaurants, cockpits, beer garden, pubs and cocktail lounges, five hundred pesos;

"3. In retail establishments and other places, one hundred pesos.

"(k) Retail peddlers of distilled spirits, wine and fermented liquors, one hundred pesos.

"(l) Wholesale leaf tobacco dealers, six hundred pesos; owners/proprietors of leaf tobacco redrying plants, one thousand pesos; strippers of leaf tobacco, six hundred pesos.

"(m) Wholesale dealers of cigars cigarettes and other manufactured tobacco products, five hundred pesos.

"(n) Wholesale peddlers of manufactured tobacco products, two hundred pesos.

"(o) Retail leaf tobacco dealers, fifty pesos.

"(p) Retail dealers of cigars, cigarettes and other manufactured tobacco products, fifty pesos.

"(q) Retail peddlers of cigars, cigarettes and other manufactured tobacco products, thirty pesos.

"(r) Manufacturers, importers or exporters of cigars, cigarettes and other manufactured tobacco products —

"1. In the cities of Manila, Quezon, Pasay and Caloocan and in the Province of Rizal, three thousand pesos;

"2. In any other place, one thousand pesos.

"(s) Importers or exporters of leaf tobacco, scrap tobacco and other partially manufactured tobacco products, two thousand pesos.

"(t) Manufacturers or importers of cigarette paper in bobbins or rolls, cigarette tipping papers or cigarette filter tips, two thousand pesos.

(u) Manufacturers or importers of playing cards, saccharine or sodium saccharinate or any of its other derivatives and salts and other artificial sweetening agents, lighter fluid in liquid or gaseous form, matches, fireworks, denatured alcohol for motive power, one thousand pesos.

"(v) Manufacturers, importers, or exporters of petroleum or other manufactured oils and fuels from petroleum, five thousand pesos.

"(w) Manufacturers, producers, or importers of soft drinks or mineral waters, one thousand pesos.

"(x) Wholesale dealers of soft drinks, or other mineral waters, two hundred pesos.

"(y) Wholesale peddlers of soft drinks or other mineral waters, two hundred pesos.

"(z) Dealers in securities, three hundred pesos.

"(aa) Real estate dealers, one hundred fifty pesos, if the annual income from buying, selling, exchanging, leasing, or renting property (whether on their own account as principals or as owners of rental property or properties) does not exceed four thousand pesos;

"Three hundred pesos, if the annual income exceeds four thousand pesos but does not exceed ten thousand pesos;

"Five hundred pesos, if the annual income exceeds ten thousand pesos but does not exceed thirty thousand pesos;

"One thousand pesos, if the annual income exceeds thirty thousand pesos but does not exceed fifty thousand pesos;

"Two thousand pesos, if the annual income exceeds fifty thousand pesos but does not exceed seventy thousand pesos;

"Three thousand pesos, if the annual income exceeds seventy thousand pesos.

"The initial real estate dealer's fixed tax to be paid by the person first engaging in business subject to the said tax shall be one hundred fifty pesos.

"(bb) Stock brokers, real estate brokers, commercial brokers, customs brokers and immigration brokers, one thousand pesos.

"(cc) Owners of race tracks for each day on which races are run on any track, one thousand pesos; owners and operators of off-track establishments for each day on which races are run on any track, fifty pesos.

"(dd) Lending investors —

"1. In chartered cities and first class municipalities, one thousand pesos;

"2. In second and third class municipalities, five hundred pesos;

"3. In fourth and fifth class municipalities and municipal districts, two hundred fifty pesos: Provided, That lending investors who do business as such in more than one province shall pay a tax of one thousand pesos.

"(ee) Cinematographic film owners, lessors or distributors, five hundred pesos.

"(ff) Pawnshops, one thousand pesos.

"(gg) Banks, insurance companies, finance and investment companies doing business in the Philippines and franchise grantees, two thousand pesos.

"(hh) Operators, proprietors or lessees of theaters and cinema houses: first run, one thousand pesos; second run, five hundred pesos.

"(ii) Operators, proprietors or lessees of boxing arenas, swimming pools, bowling alleys and other places of amusement, one hundred and fifty pesos.

"(jj) Operators, proprietors or lessees of resorts, skating rinks and golf links, one thousand pesos.

"(kk) Night clubs and day clubs, one thousand five hundred pesos.

"(ll) Cabarets, one thousand pesos.

"(mm) Jai-Alai, for each day on which games are played, five hundred pesos; for each off-fronton, fifty pesos also for each day Jai-Alai is played.

"(nn) Operators or owners of rice or corn mills shall be subject to an annual graduated fixed tax based upon total capacity per machine in

"Corn mill not exceeding one hundred
	cavanes per twelve hour capacity	P30.00
"Corn mill, exceeding one hundred cavanes
	per twelve hour capacity	45.00
"Kiskisan' type, not exceeding one hundred
	cavanes of palay per twelve hour capacity	50.00
"Kiskisan' type, exceeding one hundred
	cavanes of palay per twelve hour capacity	75.00
"Cono', of not exceeding one hundred
	cavanes of palay per twelve hour capacity	200.00
"Cono', of not exceeding two hundred
	cavanes of palay per twelve hour capacity	400.00
"Cono', of not exceeding three hundred
	cavanes of palay per twelve hour capacity	600.00
"Cono', of not exceeding four hundred
	cavanes of palay per twelve hour capacity	900.00
"Cono', of not exceeding five hundred
	cavanes of palay per twelve hour capacity	1,300.00
"Cono', of not exceeding six hundred
	cavanes of palay per twelve hour capacity	1,800.00
"Cono', of not exceeding seven hundred
	cavanes of palay per twelve hour capacity	2,500.00
"Cono', of not exceeding eight hundred
	cavanes of palay per twelve hour capacity	3,200.00
"Cono', of not exceeding nine hundred
	cavanes of palay per twelve hour capacity	4,000.00
"Cono', of not exceeding one thousand
	cavanes of palay per twelve hour capacity	4,800.00
"Cono', of over one thousand
	cavanes of palay per twelve hour capacity	5,600.00

"(oo) Proprietors, operators of lessees of cockpits —

"1. In chartered cities and municipalities in the Greater Manila Area, three thousand pesos;

"2. In first and second class municipalities, two thousand pesos;

"3. In third and fourth class municipalities, five hundred pesos;

"4. In fifth, sixth and seventh class municipalities, one hundred pesos."

SECTION 23. Sec. 204 of the National Internal Revenue Code is hereby amended to read as follows:

"SEC. 204. Compensating Tax. — On the commodities, goods, wares, or merchandise brought into the Philippines, there shall be paid by the importer thereof a compensating tax equivalent to the percentage taxes imposed under this Title on original transactions affected by importers or manufacturers. The compensating tax shall be based on the home consumption value or price as defined in Section 193(b) of this Code (excluding internal excise taxes in the country of origin) plus ten (10%) percent of such home consumption value or price, including postage, commission, customs duty and all similar charges, except freight and insurance, and such tax shall be paid before the withdrawal or removal of said commodities, goods, wares or merchandise from the customhouse or the post office: Provided, That in the case of imported automobiles, the compensating tax to be paid shall be determined in accordance with the following schedules:

"If the total landed cost, as described above does not exceed P35,000, the tax shall be 100% of such landed cost;

"If it exceeds P35,000 but does not exceed P40,000 the tax shall be P35,000 plus 125% of the excess over P35,000;

"If it exceeds P40,000 but does not exceed P45,000, the tax shall be P41,250 plus 150% of the excess over $40,000;

"If it exceeds P45,000 but does not exceed P50,000, the tax shall be P48,750 plus 175% of the excess over P45,000;

"If it exceeds P50,000, the tax shall be P57,500 plus 200% of the excess over P50,000.

"The following are not subject to compensating tax:

"(a) Articles subject to the specific taxes under Title IV of this Code and articles to be used by the importer himself in the manufacturer or preparation of articles subject to specific taxes;

"(b) Commodities, goods, wares or merchandise purchased or received by merchants, importers and manufacturers who are subject to tax under Sections 194, 195, 196, 198, 199, 201 or 203 of this Title, where such importations are to be sold, resold, bartered or exchanged or are to be used in the manufacture or preparation of articles for sale, barter, or exchange and are to form part thereof;

"(c) Articles to be used by the importer himself in the manufacture or preparation of articles for export;

"(d) Articles to be used by the importer himself as passenger and/or cargo vessel of more than ten thousand tons, whether coastwise or ocean-going, including engine and spare parts of said vessel;

"(e) Articles brought in by resident, including non-resident citizens coming to resettle in the Philippines, and accompanying them upon their return or arriving within ninety days before or after their arrival.

"(f) Professional instruments and implements, tools of trade, occupation or employment, wearing apparel, domestic animals, and personal and household effects belonging to persons coming to settle for the first time in the Philippines, for their own use and not for barter, sale or exchange accompanying such persons, or arriving within ninety days before or after their arrival, upon the production of evidence satisfactory to the Commissioner, that such persons are actually coming to settle in the Philippines, that the articles were brought from their former place of abode, that change of residence is bona fide: Provided, That no vehicle, vessel, aircraft or merchandise of any kind, machinery or other articles for use in manufacture, shall be classified under this sub-section.

"The provisions of existing laws to the contrary notwithstanding but without prejudice to Presidential Decree No. 1395, exemption from this tax shall be limited to the following:

"1. Those enumerated in this section;

"2. Those granted under Republic Act No. 5186, as amended; Republic Act No. 6135, as amended; Republic Act No. 5490; Republic Act No. 4147; Republic Act No. 4501; Public Act No. 4271, as amended by Republic Act No. 2360.

"3. Those granted in pursuance of or in compliance with international treaties or commitments, such as the ADB-RP Host Agreement (1966), the 1947 Convention on Privileges and Immunities of the United Nations and its Specialized Agencies; the United States Agency for International Development-RP Agreement; the 1947 Military Bases Agreement; and other similar treaties or commitments;

"4. Machineries, equipment, tools for production, plants to convert mineral ores into saleable form, spare parts, supplies, materials, accessories, explosives, chemicals, and transportation and communication facilities imported by and for the use of new mines and old mines which resume operations, when certified to as such by the Secretary of Natural Resources upon the recommendation of the Director of Mines, for a period ending five (5) years from the first date of actual commercial production of saleable mineral products: Provided, That such articles are not locally available in reasonable quantity, quality and price and are necessary or incidental in the proper operation of the mine; and aircrafts imported by agro-industrial companies to be used by them in their agricultural and industrial operations or activities, spare parts and accessories thereof; and

"5. Those that may be granted by the President upon recommendation of the NEDA in the interest of economic development.

"If any article, withdrawn from customhouse or post office without payment of compensating tax, is, within one year from the date of the said withdrawals, used by the importer for other purposes, or should be sold, bartered or exchanged, a written notice of such fact shall be sent to the Commissioner and payment of the corresponding compensating tax or advance sales tax, as the case may be, shall be made by the importer or transferee within ten (10) days from such diversion of use or sale, barter or exchange of the imported article. If the proper tax is not paid within such period, the amount of tax shall be increased by twenty-five per centum, the increment to be a part of the tax and the entire unpaid amount shall be subject to interest at the rate of fourteen per centum per annum.

"In any event where the importer becomes liable for advance sales tax, or in any case where an article is imported or brought into the Philippines without payment of either the compensating or advance sales tax, as the case may be, the tax due on such article shall constitute a lien on the article superior to all other charges or liens, irrespective of the possessor thereof.

"In the case of tax-free articles brought or imported into the Philippines by persons, entities or agencies, exempt from tax which are subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered the importers thereof, and shall be liable for the duty and internal revenue tax due on such importation. The tax due on such article shall constitute a lien on the article itself, superior to all other charges or liens, irrespective of the possessor thereof."

SECTION 24. Items (16) and (17) of Section 205 are hereby amended to read as follows:

"(16) Business agents and other independent contractors, including private detective or watchman agencies, except gross receipts of a pioneer enterprise registered with the Board of Investments under Republic Act No. 5186; and

"(17) Lessors of personal property, except non-resident owners of property subject to the final tax under Section 24(b) (vii) of this Code."

SECTION 25. The last paragraph of Section 205 is hereby amended to read as follows:

"The term 'gross receipts' under this Section means all amounts received by the prime or principal contractor as the total contract price, undiminished by any amount paid to the sub-contractor under a sub-contract arrangement. Any portion of the total contract price which is paid to the subcontractor, shall be excluded from the taxable gross receipts of the sub-contractor."

SECTION 26. Sec. 207 of the National Internal Revenue Code shall be amended as shown hereunder. The amendment however shall become effective only upon order of the President taking into account the authorized rates of transportation fares collectible by common carriers.

"SEC. 207. Percentage tax on carriers and keepers of garages. — Keepers of garages, cars for rent or hire driven by the lessees, transportation contractors, persons who transport passenger or freight for hire, and common carriers by land, air, or water, except owners of bancas and owners of animal-drawn two-wheeled vehicles, shall pay a tax equivalent to two per centum of their quarterly gross receipts.

"'In computing the percentage tax provided in this section, the following shall be considered the minimum quarterly gross receipts in each particular case:

"Autocalesa —
"1.	Manila and other cities	P1,200.00
"2.	Provincial	600.00
"Jeepney for hire —
"1.	Manila and other cities	2,400.00
'2.	Provincial	1,200.00
"Public utility bus —
	Not exceeding 30 passengers	3,600.00
	Exceeding 30 but not exceeding
	50 passengers	6,000.00
	Exceeding 50 passengers	7,200.00
"Taxis —
"1.	Manila and other cities	3,600.00
"2.	Provincial	2,400.00
	"Car for hire (with chauffeur)	3,000.00
	"Car for hire (without chauffeur)	1,800.00

SECTION 27. The third paragraph of Section 210 of the National Internal Revenue Code is hereby amended to read as follows:

"Pending the suspension of the effectivity of Section 34 paragraph (g) of this Code by Presidential Decree No. 1116, any capital gain arising from a stock transaction on which the tax herein imposed has been paid shall not be taken into account in computing net capital gain or loss under Section thirty-four of this Code if (1) both the acquisition and the disposition of said stock by the taxpayer are effected after the effectivity of this Code and (2) the sale, exchange, and transfer is bona fide and the consideration for the transaction represents the substantial fair market value of the stock: Provided, That gains from the sale or exchange of shares of stock acquired by a person in exchange for property where no gain or loss was recognized under the provisions of paragraph (c) (2) of Section 35 of this Code or under any other law, shall be subject to income tax imposed under Title II of this Code. However, any capital loss arising from such transaction shall be taken into account in computing net capital gain in accordance with the provisions of this Code; Provided, That there shall be no capital loss carry-over.

SECTION 28. Sec. 216 of the National Interval Revenue Code is hereby amended to read as follows:

"SEC. 216. Persons subject to tax to issue receipts or sales or commercial invoices; contents of registered receipts or invoices. — All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at five pesos or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of the transaction, quantity, unit cost and description of merchandise or nature of service: Provided, That in the case of sales, receipts or transfers in the amount of one hundred pesos or more, or, regardless of amount, where the sale or transfer is made by producers, manufacturers, importers, wholesalers, or where the receipt is issued to cover payment made as rentals, commissions, compensations or fees, the receipts or invoices shall further show the name, business style, if any, and address of the purchaser, customer, or client. The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the same in his place of business for a period of five years from the date of the invoice or receipt, while the duplicate shall be kept and preserved by the issuer, also in his place of business, for a like period: Provided, That persons subject to tax, whose gross sales, earnings or receipts during the last preceding year exceed thirty thousand pesos shall, for each sale or transaction, issue a receipt or an invoice, irrespective of the value of the article sold or service rendered.

"The Commissioner of Internal Revenue may, in meritorious cases, exempt any person subject to an internal revenue tax from compliance with the provisions of this section. In any event, market vendors selling exclusively domestic meat, fruits, vegetables, games, poultry, fish and other food products are hereby exempted from the provisions of this section.

"The provisions of this section, together with the penal provisions in Presidential Decree No. 1254, shall be posted in a prominent place in the establishment covered by the requirements thereof."

SECTION 29. Sections 223 to 246, except 226 of Title VI of the National Internal Revenue Code are hereby amended to read at follows:

"SEC. 223. Stamp tax on bonds, debentures, and certificates of indebtedness. — On all bonds, debentures, and certificates of indebtedness issued by any association, company or corporation, there shall be collected a documentary stamp tax of sixty-five centavos on each two hundred pesos, or fractional part thereof, of the face value of such documents."

"SEC. 224. Stamp tax on original issue of certificates of stock. — On every original issue, whether on organization, reorganization or for any lawful purpose, of certificates of stock by any association, company, or corporation, there shall be collected a documentary stamp tax of one peso and ten centavos on each two hundred pesos, or fractional part thereof, of the par value of such certificates: Provided, That in the case of the original issue of stock without par value the amount of the documentary stamp tax therein prescribed shall be based upon the actual consideration received by the association, company, or, corporation for the issuance of such stock, and in the case of stock dividends on the actual value represented by each share."

"SEC. 225. Stamp tax on sales agreements to sell, memoranda of sales, deliveries or transfer of bonds, due-bills, certificates of obligation, or shares or certificates of stock. — On all sales, or agreements to sell, or memoranda of sales, or deliveries, or transfer of bonds, due-bills, certificates of obligation, or shares of certificates of stock, in any association, company or corporation, or transfer of such securities by assignment in bank, or by delivery, or by any paper or agreement, or memorandum or other evidences of transfer or sale whether entitling the holder in any manner to the benefit of such bonds, due-bills, certificates of obligation or stock, or to secure the future payment of money, or for the future transfer of any bond, due-bill, certificates of obligation or stock, there shall be collected a documentary stamp tax of twenty-five centavos on each two hundred pesos, or fractional part thereof, of the par value of such bond, due-bill, certificates of obligation or stock: Provided, That only one tax shall be collected on each sale or transfer of stock or securities from one person to another, regardless of whether or not a certificate of stock or obligation is issued, indorsed, or delivered in pursuance of such sale or transfer: And Provided, further, That in the case of stock without par value the amount of the documentary stamp tax herein prescribed shall be equivalent to twenty-five per centum of the documentary stamp tax paid upon the original issue of said stock."

"SEC. 227. Stamp tax on certificates of profits or interest in property or accumulations. — On all certificates of profits, or any certificate or memorandum showing interest in the property or accumulations of any association, company, or corporation, and on all transfers of such certificates or memoranda, there shall be collected a documentary stamp tax of ten centavos on each two hundred pesos, or fractional part thereof, of the face value of such certificate or memorandum."

"SEC. 228. Stamp tax on bank checks, drafts, certificates of deposit not bearing interest and other instruments. — On each bank check, draft, or certificate of deposit not drawing interest, or order for the payment of any sum of money drawn upon or issued by any bank, trust company, or any person or persons, companies or corporation, at sight or on demand, there shall be collected a documentary stamp tax of fifteen centavos."

"SEC. 229. Stamp tax on negotiable promissory notes, bills of exchange, drafts, certificates of deposit bearing interest and others not payable on sight or demand. — On all bills of exchange (between points within the Philippines), drafts or certificates of deposits drawing interests, or orders for the payment of any sum of money otherwise than at sight or on demand, or on all negotiable promissory notes, except bank notes issued for circulation, and on each renewal of any such note, there shall be collected a documentary stamp tax of ten centavos on each two hundred pesos, or fractional part thereof, of the face value of any such bill of exchange, draft, certificate of deposit, or note."

"SEC. 230. Stamp tax upon acceptance of bills of exchange and others. — Upon any acceptance or payment of any bill of exchange or order for the payment of money purporting to be drawn in a foreign country but payable in the Philippines, there shall be collected a documentary stamp tax of fifteen centavos on each two hundred pesos, or fractional part thereof, of the face value of any such bill of exchange, or order, or the Philippine equivalent of such value, if expressed in foreign currency."

"SEC. 231. Stamp tax on foreign bills of exchange and letters of credit. — On all foreign bills of exchange and letters of credit (including orders, by telegraph or otherwise, for the payment of money issued by express or steamship companies or by any person or persons) drawn in but payable out of the Philippines in a set of three or more according to the custom of merchants and bankers, there shall be collected a documentary stamp tax of twenty centavos on each two hundred pesos, or fractional part thereof, of the face value of any such bill of exchange or letter of credit, or the Philippine equivalent of such face value, if expressed in foreign currency."

"SEC. 232. Stamp tax on life insurance policies. — On all policies of insurance or other instruments by whatever name the same may be called, whereby any insurance shall be made or renewed upon any life or lives, there shall be collected a documentary stamp tax of thirty-five centavos on each two hundred pesos or fractional part thereof, of the amount issued by any such policy."

"SEC. 233. Stamp tax on policies of insurance upon property. — On all policies of insurance or other instruments by whatever name the same may be called, by which insurance shall be made or renewed upon property of any description, including rents or profits, against peril by sea or on inland waters, or by fire or lightning, there shall be collected a documentary stamp tax of fifteen centavos on each four pesos, or fractional part thereof, of the amount of premium charged: Provided, however, That no documentary stamp tax shall be collected on reinsurance contracts or on any instrument by which cession or acceptance of insurance risks under any reinsurance agreement is effected or recorded."

"SEC. 234. Stamp tax on fidelity bonds and other insurance policies. — On all policies of insurance or bonds or obligations of the nature of indemnity for loss, damage, or liability made or renewed by any person, association, company or corporation transacting the business of accident, fidelity, employer's liability, plate, glass, steam boiler, burglar, elevator, automatic sprinkler, or other branch of insurance (except life, marine, inland, and fire insurance), and all bonds undertaking, or recognizances, conditioned for the performance of the duties of any office or position, for the doing or not doing of anything therein specified, and on all obligations guaranteeing the validity or legality of any bonds or other obligations issued by any province, city, municipality, or other public body or organization, and on all obligations guaranteeing the title to any real estate, or guaranteeing any mercantile credits, which may be made or renewed by any such person, company or corporation, there shall be collected a documentary stamp tax of fifteen centavos on each four pesos, or fractional part thereof, of the premium charged."

"SEC. 235. Stamp tax on policies of annuities. — On all policies of annuities, or other instruments by whatever name the same may be called, whereby an annuity may be made, transferred, or redeemed, there shall be collected a documentary stamp tax of sixty-five centavos on each two hundred pesos, or fractional part thereof, of the capital of the annuity, or should this be unknown, then on each two hundred pesos, or fractional part thereof, of thirty-three and one-third times the annual income."

"SEC. 236. Stamp tax on indemnity bonds. — On all bonds for indemnifying any person, firm, or corporation who shall become bound or engaged as surety for the payment of any sum of money or for the due execution or performance of the duties of any office or position or to account for money received by virtue thereof, and on all other bonds of any description, except such as may be required in legal proceedings, or are otherwise provided for herein, there shall be collected a documentary stamp tax of two pesos and twenty-five centavos."

"SEC. 237. Stamp tax on certificates. — On each certificate of damage or otherwise, and on every other certificate or document issued by any customs officer, marine surveyor, or other person acting as such, and on each certificate issued by a notary public, and on each certificate of any description required by law or by rules or regulations of a public office, or which is issued for the purpose of giving information, or establishing proof of a fact, and not otherwise specified herein, there shall be collected a documentary stamp tax of one peso and fifty centavos: Provided, That in the case of tax clearance certificates, there shall be collected a documentary stamp tax of seventy pesos on each certificate for a first class passenger; forty-five pesos for a second or tourist class passenger; and fifteen pesos for a third class or steerage passenger."

"SEC. 238. Stamp tax on warehouse receipts. — (a) On each warehouse receipt for property held in storage in a public or private warehouse or yard for any other person than the proprietor of such warehouse or yard himself, there shall be collected a documentary stamp tax of ninety centavos: Provided, That no tax shall be collected on each warehouse receipt issued to any one person in any one calendar month covering property the value of which does not exceed two hundred pesos.

"(b) On each hotel receipt issued by keepers of hotels, motels, resthouse, lodging houses or resorts to a guest for lodging, there shall be collected a documentary stamp tax of two pesos: Provided, however, That if the amount of the receipt exceeds twenty pesos, an additional tax of two pesos on each twenty pesos or fractional part thereof shall be collected."

"SEC. 239. Stamp tax on Jai-Alai or horse race tickets. — On each Jai-Alai or horse race ticket, there shall be collected a documentary stamp tax of ten centavos: Provided, That if the cost of the tickets exceeds one peso, an additional tax of ten centavos on every one peso or fractional part thereof shall be collected."

"SEC. 240. Stamp tax on bills of lading or receipts. — On each set of bills of lading or receipts (except charter party) for any goods, merchandise, or effects shipped from one port or place in the Philippines to another port or place in the Philippines (except on ferries across rivers), or to any foreign port, there shall be collected a documentary stamp tax of fifteen centavos, if the value of such goods exceeds five pesos and does not exceed two hundred pesos; thirty-five centavos, if the value exceeds two hundred pesos and does not exceed one thousand pesos; seventy centavos, if the value exceeds one thousand pesos and does not exceed five thousand pesos; two pesos, if the value exceeds five thousand pesos and does not exceed ten thousand pesos; and three pesos and seventy-five centavos, if the value exceeds ten thousand pesos: Provided, however, That freight tickets covering goods, merchandise, or effects carried as accompanied baggage of passengers on land and water carriers primarily engaged in the transportation of passengers are hereby exempt."

"SEC. 241. Stamp tax on proxies. — On each proxy for voting at any election for officers of any company or association, or for any other purpose, except proxies issued affecting the affairs of associations or corporations organized for religious, charitable, or literary purposes, there shall be collected a documentary stamp tax of one peso and fifty centavos."

"SEC. 242. Stamp tax on powers of attorney. — On each power of attorney to perform any act whatsoever, except acts connected with the collection of claims due from or accruing to the Government of the Republic of the Philippines, or the government of any province, city or municipality, there shall be collected a documentary stamp tax of one peso: Provided, however, That on each power of attorney which authorizes another to administer, sell, lease, or otherwise dispose of the property or a principal, there shall be collected a documentary stamp tax of two pesos."

"SEC. 243. Stamp tax on leases and other hiring agreements. — On each lease, agreement, memorandum, or contract for hire, use or rent of any lands or tenements, or portions thereof, there shall be collected a documentary stamp tax at the following rates:

"(a) If executed for not more than one year, two pesos.

"(b) If executed for more than one year and not more than three years, four pesos and fifty centavos.

"(c) If executed for more than three years, nine pesos."

"SEC. 244. Stamp tax on mortgages, pledges, and deeds of trust. — On every mortgage or pledge of lands, estate, or property, real or personal, heritable or movable, whatsoever, where the same shall be made as a security for the payment of any definite and certain sum of money lent at the time or previously due and owing or forborne to be paid being payable, and on any conveyance of land, estate, or property whatsoever, in trust or to be sold, or otherwise converted into money which shall be and intended only as security, either by express stipulation or otherwise, there shall be collected a documentary stamp tax at the following rates:

"(a) When the amount for which the mortgage or deed of trust is given exceeds one thousand pesos and does not exceed three thousand pesos, three pesos and fifty centavos.

''(b) On each three thousand pesos, or fractional part thereof in excess of three thousand pesos, an additional tax of three pesos and fifty centavos.

''On any mortgage, pledge, or deed of trust, where the same shall be made as a security for the payment of a fluctuating account or future advances without fixed limit, the documentary stamp tax on such mortgage, pledge or deed of trust shall be computed on the amount actually loaned or given at the time of the execution of the mortgage, pledge, or deed of trust. However, if subsequent advances are made on such mortgage, pledge or deed of trust, additional documentary stamp tax shall be paid which shall be computed on the basis of the amount advanced or loaned at the rates specified above: Provided, however, That if the full amount of the loan or credit, granted under the mortgage, pledge or deed of trust, the documentary stamp tax prescribed in this section shall be paid and computed on the full amount of the loan or credit granted."

"SEC. 245. Stamp tax on deeds of sale and conveyance of real property. — On all conveyances, deeds, instruments or writings, other than grants, patents or original certificates of adjudication issued by the Government, whereby any lands, tenements or other realty sold shall be granted, assigned, transferred or otherwise conveyed to the purchaser or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax at the following rates:

"(a) When the consideration, or value received or contracted to be paid for such realty, after making proper allowance of any incumbrance, exceeds two hundred pesos and does not exceed one thousand pesos, two pesos.

"(b) For each additional one thousand pesos, or fractional part thereof in excess of one thousand pesos of such consideration or value, eight pesos.

"When it appears that the amount of the documentary stamp tax payable hereunder has been reduced by an incorrect statement, of the consideration in any conveyance, deed, instrument, or writing subject to such tax, the Commissioner, provincial or city treasurer, or other revenue officer shall from the assessment rolls, reliable source of information, assess the property at its true market value and collect the proper tax thereon.''

"SEC. 246. Stamp tax on charter parties and similar instruments. — On every charter party, contract, or agreement for the charter of any ship, vessel, or steamer, or any letter or memorandum or other writing between the captain, master, or owner, or other person acting as agent of any ship, vessel, or steamer, and any other person or persons for or relating to the charter of any such ship vessel, or steamer, and on any renewal or transfer of such charter, contract, agreement, letter or memorandum, there shall be collected a documentary stamp tax at the following rates:

"(a) If the registered gross tonnage of the ship, vessel or steamer does not exceed three hundred tons, and the duration of the charter or contract does not exceed six months, sixty pesos; and for each month or fraction of a month in excess of six months; an additional tax of nine pesos shall be paid.

"(b) If the registered gross tonnage exceeds three hundred tons and does not exceed six hundred tons, and the duration of the charter or contract does not exceed six months, one hundred forty pesos, and for each month or fraction of a month in excess of six months, an additional tax of eighteen pesos shall be paid.

"(c) If the registered gross tonnage exceeds six hundred tons and the duration of the charter or contract does not exceed six months, two hundred pesos; and for each month or fraction of a month in excess of six months, an additional tax of thirty-six pesos."

SECTION 30. There is hereby added a new Chapter, to be known as Chapter IX under Title VIII of the National Internal Revenue Code, to read as follows:

"Chapter IX — Overseas Communications

"SEC. 290-A. Tax on overseas dispatch, message, or conversation originating from the Philippines. (a) Persons liable. — There shall be collected upon every overseas dispatch, message or conversation transmitted from the Philippines by telephone, telegraph, telewriter exchange, wireless and other communication equipment services, a tax of ten per centum on the amount paid for such services. The tax imposed in this Section shall be payable by the person paying for the services rendered and shall be paid to the person rendering the services who is required to collect and pay the tax within twenty (20) days after the end of each quarter.

"(b) Exemptions. — The tax imposed by this Section shall not apply to —

"(i) Government. — Amounts paid for messages transmitted by the Government of the Republic of the Philippines or any of its political subdivisions or instrumentalities.

"(ii) Diplomatic services. — Amounts paid for message transmitted by any Embassy and Consular offices of a foreign government.

"(iii) International organizations. — Amounts paid for messages transmitted by a public international organization or any of its agencies based in the Philippines enjoying privileges, exemptions and immunities which the Government of the Philippines is committed to recognize pursuant to an international agreement.

"(iv) News services. — Amounts paid for messages from any newspapers, press association, radio or television newspaper broadcasting agency, or newstickers services, to any other newspapers, press association, radio or television newspaper broadcasting agency, or newsticker service or to a bona fide correspondent, which messages deal exclusively with the collection of news items for, or the dissemination of news item through, public press, radio or television broadcasting, or a newsticker service furnishing a general news service similar to that of the public press.

SECTION 31. Section 324 of the National Internal Revenue Code is hereby amended by adding a second paragraph to read as follows:

"Any provision of existing general or special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or entities shall be subject to examination by the Bureau of Internal Revenue for the purpose of ascertaining whether such organizations or entities are complying with the conditions under which they have been granted tax exemptions and their tax liability, if any."

SECTION 32. Section 326 of the National Internal Revenue Code is hereby amended by adding a second paragraph thereto to read as follows:

"The authority of the Secretary of Finance to determine articles similar or analogous to those subject to a rate of sales tax under a certain category enumerated in Sections 194, 196 and 197 of this Code shall be without prejudice to the power of the Commissioner of Internal Revenue to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including rulings on the classification of articles for sales tax and similar purposes."

SECTION 33. Repealing Clause. — Paragraph (d) of Section 8 of Republic Act No. 5487, Section 4 of Republic Act No. 5448 and all other laws, regulations and parts thereof inconsistent with the provisions of this Decree are hereby repealed.

Published in the Official Gazette, Vol. 74 No. 46 Page 10027 on November 13, 1978.