Section 20. Title IV of the National Internal Revenue Code is hereby amended to read as follows:

“TITLE IV – EXCISE TAXES

“Chapter I – General Provisions

“SEC. 109. Article subject to excise taxes. -Excise taxes apply to articles manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported, but not to anything locally produced or manufactured which shall be removed for exportation and is actually exported without returning to the Philippines, whether so exported in its original state or as an ingredient or part of any manufactured articles or products. In case of importations, excise taxes shall be in addition to the customs duties, if any.

“For purposes of this Title, excise taxes herein imposed and based on weight or volume capacity or any other physical unit of measurement shall be referred to as ‘specific tax’ and an excise tax herein imposed and based on selling price or other specific value of the article be referred to as ‘ad valorem tax.’

“SEC. 110. Payment of excise taxes on domestic products. – [a] Persons liable; time for payment. – Unless otherwise especially allowed, excise taxes on domestic products shall be paid by the manufactured or producer before removal from the place of production: Provided, however, That excise tax on locally manufactured petroleum products levied under Section 128 of this Title shall be paid within fifteen [15] days from the date of removal thereof from the place of production. Should domestic products be removed from the place of production without the payment of other tax, the owner or person having possession thereof shall be liable for the tax due thereon.

“[b] Determination of gross selling price of articles subject to ad valorem tax. – The price at which the articles are sold at wholesale in the place of production or through their sales agents to the public shall constitute the gross selling price. If the manufacturer also sells or allows to be sold at wholesale in another establishment of which he is the owner or in the profits of which he has an interest, the wholesale price in such establishment shall constitute the gross selling price. Should such price be less than the cost of manufacture plus expenses incurred until the articles are finally sold, then a proportionate margin of profits, not less than 10% of such manufacturing cost and expenses, shall be added to constitute the gross selling price.

“[c] Manufacturer’s or producer’s sworn statement. – Every manufacturer or producer of articles or products subject to excise taxes shall file with the Commissioner on the date or dates designated by the latter, and as often as may be required, a sworn statement showing among other information, the different articles or products manufactured or produced and their corresponding gross selling price or market value, together with the cost of manufacture or production plus expenses incurred or to be incurred until the articles or products are finally sold.

“SEC. 111. Payment of excise taxes on imported articles. – [a] Persons liable. – Excise taxes on imported articles shall be paid by the owner or importer to the customs officers, conformably with the regulations of the Ministry of Finance and before the release of such articles from the custom house, or by the person who is found in possession of articles which are exempt from the excise taxes other than those legally entitled to exemption.

“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.

“[b] Rate and basis of the excise tax on imported articles. – Unless otherwise specified, imported articles shall be subject to the same rates and basis of excise taxes applicable to locally manufactured articles.

“SEC. 112. Mode of computing contents of cask or package. – Every fractional part of a proof liter equal to or greater than a half liter in a cask or package containing more than one liter shall be taxed as a liter, and any smaller fractional part shall be exempt; but any package of spirits the total contents of which are less than a proof liter shall be taxed as one liter.

“Chapter II – Exemption or Conditional Tax-Free Removal of Certain Articles

“SEC. 113. Removal of wines and distilled spirits for treatment of tobacco leaf. – Upon permit from the Commissioner and subject to the regulations of the Ministry of Finance, manufacturers of cigars and cigarettes may withdraw from bond, free of excise tax local and imported wines and distilled spirits in specific quantities and grades for use in the treatment of tobacco leaf to be used in the manufacture of cigars and cigarettes; but such wines and distilled spirits must first be suitably denatured.

“SEC. 114. Domestic denatured alcohol. – Domestic alcohol of not less than one hundred eighty degrees proof [ninety percent absolute alcohol] shall when suitably denatured and rendered unfit for oral intake, be exempt from the specific tax prescribed in Section 121: Provided, however, That such denatured alcohol shall be subject to tax under Section 165 of this Code: Provided, further, That if such alcohol is to be used for motive power, it shall be taxed under Section 128[a] [4] of this Code.

“SEC. 115. Petroleum products sold to foreign international carriers. – Petroleum products sold to an international carrier for its use or consumption outside of the Philippines, shall not be subject to excise taxes; Provided, That the country of said carrier exempts from similar taxes petroleum products sold to Philippine carriers.

“SEC. 116. Denaturation, withdrawal and use of denatured alcohol. – Any person who produces, withdraws, sells, transports or knowingly uses, or is in possession of denatured alcohol, or articles containing denatured alcohol in violation of laws or regulations now or hereinafter in force pertaining thereto shall be required to pay the corresponding tax, in addition to the penalties provided for under Title XI of this Code.

“SEC. 117. Removal of spirits or cigars under bond. – Spirits requiring rectification may be removed from the place of production to some other establishment for the purpose of rectification without the prepayment of the excise tax: Provided, the distiller removing such spirits and the rectifier receiving them shall file with the Commissioner their joint bond conditioned upon the payment by the rectifier of the excise tax due on the finished products: Provided, further, That in cases where alcohol has already been rectified either by original and continuous distillation or by redistillation is further re-rectified, no loss for rectification and handling shall be allowed and the rectifier thereof shall pay the specific tax due on such losses. Cigars may be removed by a manufacturer of tobacco products owning and operating a branch factory separate from his principal factory, from the branch factory to the principal factory, for exportation, without the prepayment of the excise tax, provided that a bond is filed with the Commissioner conditioned upon the payment of the excise tax that may be due on the finished product.

“SEC. 118. Removal of fermented liquors to bonded warehouse. – Any brewer may remove or transport from his brewery or other place of manufacture to a bonded warehouse used by him exclusively for the storage or sale in bulk of fermented liquors of his own manufacture, any quantities of such fermented liquors, not less than one thousand liters at one removal, without payment of the tax thereon under a permit which shall be granted by the Commissioner. Such permit be cancelled or destroyed in such manner as the Commissioner may prescribe. Thereafter, the manufacturer of such fermented liquors shall pay the tax in the same manner and under the same penalty and liability as when paid at the brewery.

“SEC. 119. Removal of damaged liquors free of tax. – When any fermented liquor has become sour or otherwise damaged so as to be unfit for use as such, brewers may sell and, after securing a special permit from the Commissioner, under such conditions as may be prescribed in the regulations of the Ministry of Finance remove the same without the payment of tax thereto, in cask or other packages, distinct from those ordinarily used for fermented liquors, each containing not less than one hundred seventy-five liters with a note of their contents permanently affixed thereon.

“SEC. 120. Removal of tobacco products without prepayment of tax. – Products of tobacco entirely unfit for agricultural or industrial use, under such conditions as may be prescribed in the regulations of the Ministry of Finance. Stemmed leaf tobacco, fine-cut shorts, the refuse of fine-cut chewing tobacco, scraps, cuttings, clippings, stems or midribs, and sweepings of tobacco may be sold in bulk as raw materials by one manufacturer directly to another, without payment of the tax under such conditions as may be prescribed in the regulations of the Ministry of Finance.

“‘Stemmed leaf tobacco, as herein used means leaf tobacco which has had the stem or midrib removed. The term does not include broken leaf tobacco.

“Chapter III – Excise Tax on Alcohol Products

“SEC. 121. Distilled spirits. – On distilled spirits, there shall be collected, subject to the provisions of Section 114 of this Code, specific taxes as follows:

“[a] If produced from sap of nipa, coconut, cassava, camote or buri palm or from the juice, syrup or sugar of the cane, provided such materials are produced commercially in the country where they are processed into distilled spirits, per proof liter, four pesos: 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 produced from raw materials other than those enumerated in the preceding paragraph, per proof liter, thirty five pesos; and

“[c] Medicinal preparations, flavoring extracts, and all other preparations, except toilet preparations, of which, excluding water, distilled spirits from the chief ingredient, shall be subject to the same tax as such chief ingredient.

“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 transformed into any other substance either in the process of original production or by any subsequent process.

“‘Spirit or distilled spirits’ is the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions, purifications 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 122 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 [0.7939] at fifteen degrees centigrade. A proof liter means a liter of proof spirits.

“SEC. 122. Compounded liquors. – There shall be levied, assessed and collected an ad valorem tax of four percent of the manufacturer’s gross selling price or market value of locally compounded liquors.

“For the purpose of this section, compounded liquor 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 of other kind of wine, liquor or other ingredient. Locally manufactured imitation wines shall be considered as compounded liquor.

“SEC. 123. Wines. – On wines there shall be collected per liter of volume capacity, the following taxes:

“[a] Sparkling wines regardless of proof, twenty six pesos;

“[b] Still wines containing fourteen percent of alcohol by volume or less, four pesos; and

“[c] Still wines containing more than fourteen percent of alcohol by volume, eight pesos.

“Fortified wines containing more than twenty-five percent of alcohol by volume shall be taxed as distilled spirits. Fortified wines shall mean natural wines to which distilled spirits are added to increase their alcoholic strength.

“SEC. 124. Specific and ad valorem tax on fermented liquors. – [a] Specific tax. – 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 eighty centavos.

“[b] Ad valorem tax. – In addition to the specific tax herein imposed there shall be levied, assessed and collected an ad valorem tax equivalent to five percent of the brewer’s selling price, net of specific tax, of the products enumerated under subsection [a] hereof.

“Chapter IV – Excise Tax on Tobacco Products

“SEC. 125. Tobacco Products. – There shall be collected a tax of seventy-five centavos on each kilogram of the following products of tobacco:

“[a] tobacco twisted by hand or reduced into a condition to be consumed in any manner other than the ordinary mode of drying and curing;

“[b] tobacco prepared or partially prepared with or without the use of any machine or instruments or without being pressed or sweetened; and

“[c] fine-cut shorts and refuse, scraps, clippings, cuttings, stems and sweepings of tobacco.

“Fine-cut shorts and refuse, scraps, clippings, cuttings, stems and sweepings of tobacco resulting from the handling or stripping of whole leaf tobacco may be transferred, disposed of, or otherwise sold, without prepayment of the specific tax herein provided for under such conditions as may be prescribed in the regulations promulgated by the Ministry of Finance upon recommendation of the Commissioner if the same are to be exported or to be used in the manufacture of other tobacco products on which the excise tax will eventually be paid on the finished product.

“On tobacco specially prepared for chewing so as to be unsuitable for use in any other manner, on each kilogram, sixty centavos.

“SEC. 126. Cigars and cigarettes. – There shall be collected on cigars and cigarettes, the following taxes:

“[a] Cigars. -

“[1] When the manufacturer’s or importer’s wholesale price, less the amount of the tax does not exceed thirty pesos per thousand, on each thousand, two pesos and thirty centavos;

“[2] When the manufacturer’s or importer’s wholesale price, less the amount of the tax exceeds thirty pesos but does not exceed sixty pesos per thousand, on each thousand, four pesos and sixty centavos; and

“[3] When the manufacturer’s or importer’s wholesale price, less the amount of the tax, exceeds sixty pesos per thousand, on each thousand, seven pesos.

“[b] Cigarettes packed in thirties: -

“[1] When the retail price per pack does not exceeded two pesos, on each thousand, three pesos and fifty centavos;

“[2] When the retail price per pack exceeds two pesos, but does not exceed two pesos and forty centavos, on each thousand, six pesos; and

“[3] When the retail price per pack exceeds two pesos and forty centavos, on each thousand, nine pesos.

“[c] Cigarettes packed in twenties: -

“[1] When the retail price per pack does not exceed three pesos and fifty centavos, on each thousand, twelve pesos;

“[2] When the retail price per pack exceeds three pesos and fifty centavos, but does not exceed four pesos and fifty centavos, on each thousand, twenty-five pesos;

“[3] When the retail price per pack exceeds four pesos and fifty centavos, but does not exceed five pesos and sixty centavos, on each thousand, thirty-five pesos;

“[4] When the retail price per pack exceeds five pesos and sixty centavos, but does not exceed six pesos and eighty centavos, on each thousand, forty pesos;

“[5] When the retail price per pack exceeds six pesos and eighty centavos, but does not exceed seven pesos and fifty centavos, on each thousand, fifty seven pesos and fifty centavos;

“[6] When the retail price per pack exceeds seven pesos and fifty centavos, but does not exceed eight pesos, on each thousand, eighty pesos;

“[7] When the retail price per pack exceeds eight pesos, but does not exceed nine pesos, on each thousand, one hundred fourteen pesos; and

“[8] When the retail price per pack exceeds nine pesos, on each thousand, one hundred fifty-one pesos.

“[d] Imported cigarettes. – If the cigarettes are of foreign manufacture, regardless of the retail price or contents per pack, on each thousand, one hundred fifty-one pesos.

“[e] Ad valorem tax on cigarettes. – In addition to the specific tax imposed herein, there shall be levied, assessed and collected an ad valorem tax on cigarettes based on the gross selling price, net of specific tax, as follows:

“[1] On cigarettes packed in 30′s	2%
“[2] On cigarettes packed in 20′s and on imported cigarettes	4%

“[f] Effect of change of rates or classification. – Whenever there is a change of tax rates or classification of cigars and cigarettes, no downward reclassification for tax purposes of any existing brand shall be allowed, and cigars and cigarettes subject to tax at a lower rate before such change shall automatically be subject to the corresponding higher rate or classification.

“In case a manufacturer introduces a new category of cigarettes using a foreign brand or trademark under a licensing agreement, for tax purposes, the maximum retail price of such cigarettes shall in no case be lower than the prevailing maximum retail price of an existing category of cigarettes using a foreign brand or trademark of comparable quality, blend, cost of production and other relevant factors.

“Duly registered and/or existing brands of cigarettes packed in twenties shall not be allowed to be packed in thirties.

“[g] Determination of rates applicable to cigars. – The price at which the various classes of cigars are sold at wholesale in the factory or in the establishment of the importer to the public shall determine the rate of the tax applicable to such cigars. If the manufacturer or importer also sells, or allows to be sold, his cigars at wholesale in another establishment of which he is the owner or in the profits of which he has an interest, the wholesale price in such establishment shall determine the rate of the tax applicable to the cigars therein sold. Should such price be less than the cost of manufacture or importation, such cost and expenses incurred until the cigars are finally sold, plus 10% thereof shall constitute the wholesale price.

“[h] Printing of rates of tax. – All packs of locally manufactured cigarettes shall bear thereon, in print, the amount of specific tax per pack except those used as samples. No cigarettes shall be allowed to be removed from any factory unless this requirement has been complied with.

“Chapter V – Excise Tax on Petroleum Products

“SEC. 128. Manufactured oils and other fuels. – There shall be collected on refined and manufactured mineral oils and motor fuels, the following excise taxes which shall attach to the articles hereunder enumerated as soon as they are in existence as such:

“[a] For products subject to specific tax only:

“[1] Lubricating oils, per liter of volume capacity, four pesos and fifty centavos;

“[2] Processed gas, per liter of volume capacity, five centavos;

“[3] Greases, waves and petrolatum, per kilogram, four pesos and fifty centavos; and

“[4] On denatured alcohol to be used for motive power, per liter of volume capacity, five centavos: Provided, That unless otherwise provided by special laws, if the denatured alcohol is mixed with gasoline, the excise tax on which has already been paid, only the alcohol content shall be subject to the tax herein prescribed. For purposes of this subsection, the removal of denatured alcohol of not less than one hundred eighty degrees proof [ninety percent absolute alcohol] shall be deemed to have been removed for motive power, unless shown otherwise.

“[b] For products subject to ad valorem tax only:

“[1] Kerosene, fourteen percent;

“[2] Asphalt, fourteen percent; and

“[3] Fuel oil commercially known as diesel fuel oil, and on similar fuel oils, having more or less the same generating capacity, and liquefied petrolatum gas used for motive power, twenty-two percent.

“[c] For products subject to both specific and ad valorem taxes:

	“Specific	“Ad Valorem
“[1] Naptha, regular gasoline and similar products of distillation	P1.575/liter	25%
“[2] Premium and aviation gasoline	P1.49/liter	25%
“[3] Thinners and solvents	P1.491/liter	25%
“[4] Liquified petroleum gas except those used for motive power	P0.572/liter or P1.029/kg	14%
“[5] Aviation turbo fuel	P1.509/liter	25%
“[6] Fuel oil commercially known as bunker fuel oil and oils having more or less the same generating power	P0.443/liter	7%

“The ad valorem tax shall be based on the wholesale posted price, net of specific and domestic ad valorem taxes on the oil product as approved by the Board of Energy.

“SEC. 129. Indigenous petroleum. – There shall be levied, assessed and controlled once only on the first taxable sale, barter, exchange or similar transaction intended to transfer ownership of, or title to, indigenous petroleum, a tax equivalent to twenty-two percent of the fair international market price thereof, such tax to be paid by the buyer or purchaser within fifteen days from the date of actual or constructive delivery to the said buyer or purchaser. The phrase “first taxable sale, barter, exchange or similar transaction” means the transfer of the indigenous petroleum in its original state to a first taxable transferee. The fair international market price shall be determined in accordance with regulations to be promulgated by the Minister of Finance upon recommendation of the Commissioner in consultation with an appropriate government agency.

“For the purpose of this subsection, “indigenous petroleum” shall include locally extracted mineral oil, hydrocarbon gas, bitumen, crude asphalt, mineral gas and all other similar or naturally associated substances with the exception of coal, peat, bituminous shale and/or stratified mineral deposits.

“Chapter VI – Miscellaneous Articles

“SEC. 130. Matches. – There shall be levied, assessed and collected on matches, an ad valorem tax equivalent to ten percent of the manufacturer’s gross selling price.

“SEC. 131. Fireworks. – There shall be collected on all fireworks, a tax of thirty pesos per kilogram. “Fireworks” as herein used shall include firecrackers, sparklers, rockets and similar devices which are exploded or burned to produce noises or brilliant lighting effects.

“SEC. 132. Coal.- There shall be collected, on all coal and coke a tax of fifty pesos per metric ton.

“SEC. 133. Cinematographic Films. – [a] Taxable films. – There shall be collected, once only, on cinematographic film, including television films or tapes in reels, regardless of width, a tax of seventy centavos per linear meter.

“[b] Films not subject to tax. – [1] Educational films or cinematographic films used for visual education, whether manufactured in the Philippines or imported; and

“[2] Any tax-paid cinematographic film subsequent returned to the Philippines or on any negative film or unprinted positive film, and on any reversal film used in amateur photography of sixteen millimeters or less.

“SEC. 134. Video Tapes. – There shall be collected on each processed video-tape cassette, ready for playback, regardless of length, an annual tax of five pesos: Provided, That locally manufactured or imported blank video tape shall be subject to sales tax.

“SEC. 135. Saccharine. – There shall be collected on saccharine, sodium saccharinate and all its derivatives or salts of saccharine and other artificial sweetening agents, a tax of seventy five pesos per kilogram.