Legal basis and amended provisions
- Section 1 amends Section 145 of the National Internal Revenue Code of 1977 (as amended) on specific tax on distilled spirits.
- Section 2 amends Section 146 of the same Code (as amended) on specific tax on wines and compounded liquors.
- Section 3 amends Section 147 of the same Code (as amended) on specific tax on fermented liquors.
- Section 4 amends Section 181 of the same Code on unlawful use of denatured alcohol.
- Section 5 amends Section 186 of the same Code on shipment or removal under false name or brand.
Distilled spirits tax rates and formulas
- Section 145 provides that on distilled spirits there shall be collected specific taxes subject to the provisions of Section 139 of the Code, except as otherwise provided in Section 145.
- If produced domestically from locally produced raw materials, the rate is two pesos and forty centavos per proof liter.
- 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, the rate is one peso and fifty-six centavos per proof liter.
- If imported or produced from imported raw materials, the rate is thirty-five pesos per proof liter.
- Section 145 requires proportional adjustment: the tax is proportionally increased for any strength over proof spirits.
- The tax attaches to the substance as soon as it is in existence as such, even if later separated into pure or impure spirits or transformed during original or subsequent processing.
- “Spirits or distilled spirits” is defined as the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions and mixtures thereof, from whatever source and by whatever process produced; it includes whisky, brandy, rum, gin and vodka, and other similar products or mixtures, except compounded liquors taxed under Section 146.
- “Proof spirits” is defined as liquor containing one-half of its volume of alcohol of a specific gravity of seven thousand nine hundred and thirty-nine ten thousandths at fifteen degrees centigrade, and “proof liter” means a liter of proof spirits.
Wines and compounded liquors tax structure
- Section 146 provides that on wines and imitation wines and compounded liquors, specific taxes are collected per liter of volume capacity according to the alcohol-content and product-type categories.
- Sparkling wines are taxed at twelve pesos; if imported, at twenty-six pesos and forty centavos.
- Still wines containing fourteen per centum of alcohol or less (except those manufactured from locally grown raw materials) are taxed at two pesos; if imported, at four pesos and forty centavos.
- Still wines containing more than fourteen per centum of alcohol are taxed at four pesos; if imported, at eight pesos and eighty centavos.
- Imitation wines containing more than twenty-five per centum of alcohol are taxed as distilled spirits.
- Compounded liquors are taxed by alcohol-content brackets:
- seventeen and one-half per centum or less: ninety-six centavos;
- more than seventeen and one-half per centum but not more than twenty-five per centum: one peso and thirty-four centavos;
- more than twenty-five per centum but not more than thirty-two and one-half per centum: one peso and seventy-two centavos;
- more than thirty-two and one-half per centum but not more than forty per centum: two pesos and ten centavos;
- more than forty per centum: two pesos and sixty-six centavos.
- In computing the specific tax on compounded liquors under subparagraphs (d), (e), (f), (g), and (h), the amount of specific tax paid on the distilled spirits used in compounding is credited against the tax due on compounded liquors as soon as they are in existence as such.
- For purposes of Section 146, “compounded liquor” includes any intoxicating beverage concocted by or resulting from the mixture of or addition to distilled spirits (either before or after rectification) of any coloring matter, flavoring extract or essence, or other kind of wine, liquor or other ingredient.
Fermented liquors tax rates
- Section 147 provides that on beer, lager beer, ale, porter, and other fermented liquors (except tuba, basi, tapuy and similar domestic fermented liquors), specific taxes are collected on each liter of volume capacity at one peso and twenty centavos.
- If the fermented liquor is imported, Section 147 increases the tax by one hundred per centum.
Prohibited acts involving denatured alcohol
- Section 181 penalizes any person who, for the purpose of manufacturing any beverage:
- uses denatured alcohol;
- uses alcohol specially denatured to be used for motive power;
- uses alcohol withdrawn under bond for industrial uses;
- uses alcohol knowingly misrepresented to be denatured to be unfit for oral intake;
- knowingly sells or offers for sale any beverage made wholly or partly from such alcohol; or
- uses such alcohol for manufacturing liquid medicinal preparations taken internally, or knowingly sells or offers for sale such preparations containing as an ingredient such alcohol.
- Upon conviction under Section 181, the penalty is fined not less than ten thousand pesos and imprisoned for not less than six years and one day.
- Section 181 provides that if the violator is an alien, the alien shall be liable for deportation.
- Section 181 also penalizes any person who unlawfully recovers, or attempts to recover by distillation or other process, any denatured alcohol, or who knowingly sells or offers for sale, conceals, or otherwise disposes of recovered or redistilled alcohol, subject to the same penalties.
False branding and unlawful shipment/removal
- Section 186 prohibits any person from shipping, transporting, or removing spirituous, compounded or fermented liquors, wines, or manufactured tobacco products under any name or brand other than the proper name or brand known to the trade designating the kind and quality of the contents of the cask, bottle or package.
- Section 186 also prohibits shipping, transporting, or removing such products under an imitation of any existing or otherwise known product name or brand, or causing such acts to be done.
- Upon conviction, Section 186 imposes a penalty of:
- a fine of not less than ten thousand pesos, and
- imprisonment of not less than six years and one day.
- Section 186 requires forfeiture: the article or articles transported or removed under the prohibited circumstances shall be forfeited.
- Section 186 provides that if the violator is an alien, the alien shall be liable for deportation.
Transitory effectivity of rate increases
- Section 6 provides that 50% of the increase in the rates provided by the Act takes effect upon approval of the Act.
- Section 6 provides that the full amount of the increased rates takes effect on April 1, 1981.
- Section 7 provides immediate effectivity of the Act upon approval, subject to the staged rate-increase rule in Section 6.