Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Section one hundred twenty-five of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 125. 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 regulations of the Department 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 specific tax other than those to whom the same is lawfully issued excepting persons in possession of an article resulting from a single isolated transaction done in good faith, where the value of said article does not exceed one hundred pesos."

SEC. 2. Section one hundred twenty-seven of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 127. Tax on preparations containing distilled spirits as chief ingredient.—Medical preparations, flavoring extracts, and all other preparations, except toilet preparations, of which, excluding water, distilled spirits form the chief ingredient, shall be subject to the same tax as such chief ingredient.

"Upon permit from the Collector of Internal Revenue and subject to the regulations of the Department of Finance, manufacturers of cigars and cigarettes may withdraw from bond free of tax local and imported wine 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 wine or distilled spirits must first be suitably denatured."

SEC. 3. Section one hundred twenty-eight of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 128. Exemption in favor of .domestic denatured alcohol.—Domestic alcohol of not less than one hundred eighty degrees proof (ninety per centum absolute alcohol) may, when denatured, be withdrawn from a registered distillery or bonded warehouse without the prepayment of the specific tax prescribed in section one hundred thirty-three, for the purpose of being used for fuel, or light, or for use generally in the arts, industries, hospitals, sanitaria, and clinics, or for research or experimental purposes, or for the official use of the Government of the Republic of the Philippines or its instrumentalities or political subdivisions."

SEC. 4. Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended by inserting between section one hundred twenty-eight and section one hundred twenty-nine the following new section:

"SEC. 128-A. Denaturation, withdrawal and use of denatured alcohol.—Any person who produces, withdraws, sells, transports or knowingly uses denatured alcohol, or articles containing denatured alcohol in violation of laws or regulations now or hereafter in force pertaining thereto shall be required to pay the corresponding tax, in addition to the penalties provided for under Chapter III of this Title."

SEC. 5. Section one hundred twenty-nine of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 129. Removal of spirits or cigars under bond.—Spirits requiring rectification may be removed from the place of their manufacture to some other establishment for the purpose of rectification without the prepayment of the specific tax, provided the distiller removing such spirits and the rectifier receiving them shall file with the Collector of Internal Revenue their joint bond conditioned upon the future payment by the rectifier of the specific tax that may be due on any finished product; and 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 specific tax, provided the manufacturer shall file with the Collector of Internal Revenue his bond conditioned upon the future payment of the specific tax that may be due on the finished product: And provided, further, That in cases where alcohol has already been rectified either by original and continuous distillation or by re-distillation 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."

SEC. 6. Section one hundred thirty-two of Common, wealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 182. Removal of tobacco products without pre-payment of tax.—Products of tobacco entirely unfit for chewing or smoking may be removed free of tax for agricultural or industrial use, under such conditions as may be prescribed in the regulations of the Department of Finance and stemmed leaf tobacco, fine-cut shorts, the refuse of fine-cut chewing tobacco, re-refuse, scraps, cuttings, clippings, stems or midribs, and sweepings of tobacco may be sold in bulk as raw material by one manufacturer directly to another, under such conditions as may be prescribed in the regulations of the Department of Finance without the prepayment of the tax.

" 'Stemmed leaf tobacco' as herein used means leaf tobacco which has had the stem or midrid removed. The term does not include broken leaf tobacco."

SEC. 7. Section one hundred thirty-three of Commonwealth Act Numbered Four hundred sixty-six, as amended is hereby further amended to read as follows:

"SEC. 133. Specific tax on distilled spirits.—On distilled spirits there shall be collected subject to the provisions of section one hundred and twenty-eight of this Act, except as hereinafter provided, specific taxes as follows:

"(a) If produced from sap of the nipa, coconut, cassava, camote, or buri palm, or from the juice, syrup, or sugar of the cane, per proof liter, seventy centavos;

"(b) If produced from any other materials, per proof liter, ten pesos.

"This tax shall be proportionally increased for any strength of the spirits taxed over proof spirits.

"Distilled spirits', as here used, include all substances known as ethyl alcohol, hydrated oxide of ethyl, or spirits of wines, which are commonly produced by the fermentation and subsequent distillatiton of grain, starch, molasses, or sugar, or of some syrup or sap, including all dilutions or mixtures; and the tax shall attach to this substance as soon as it is in existence as such, whether it be subsequently separated as pure or impure spirits, or be immediately or at any subsequent time transformed into any other substances either in process of original production or by any subsequent process.

"Proof spirits' is liquor containing one-half of its volume of alcohol of a specific gravity of seven thousand nine hundred and thirty-nine ten-thousandths at fifteen degrees centigrade. A proof liter means a liter of proof spirits."

SEC. 8. Section one hundred thirty-seven of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 137. Specific tax on cigars and cigarettes.—On cigars and cigarettes there shall be collected 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.

"(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—

"(1) On cigarettes containing Virginia type tobacco and/or flue-cured tobacco of seventy-one millimeters or less in length weighing one and one-fourth kilos or less per thousand, not wrapped in tinfoil, cellophane, fliofilm, plastics, aluminum, polyetheline or polyvinychloride films and wood veneer, waxpaper, or oil paper nor packed in cartons or in tin cans, on each thousand, seven pesos: Provided, That if the length exceeds seventy-one millimeters or if the weight per thousand exceeds one and one-fourth kilos, the tax shall be increased by one hundred per centum.

"(2) On cigarettes containing Virginia type tobacco and/or flue-cured tobacco of seventy-one millimeters or less in length weighing one and one-fourth kilos or less per thousand, wrapped in tinfoil, cellophane, fliofilm, plastics, aluminum, polyetheline or polyvinychloride films and wood veneer, waxpaper, or oil paper or packed in cartons covered with paraffin or waxpaper or in tin cans, on each thousand, eleven pesos: Provided, That if the length exceeds seventy-one millimeters or if the weight per thousand exceeds one and one-fourth kilos, the tax shall be increased by one hundred per centum.

"(3) On cigarettes made of leaf tobacco other than Virginia type tobacco and/or flue-cured tobacco of eighty-one millimeters or less in length weighing one and three-fourth kilos or less per thousand, on each thousand, two pesos and fifty centavos: Provided, That if the length exceeds eighty-one millimeters or the weight per thousand exceeds one and three-fourth kilos, the tax shall be increased by fifty per centum: Provided, further, That if the length exceeds one hundred twenty-one millimeters, on each thousand the tax shall be increased by one hundred per centum.

"(4) If the cigarettes taxable under subparagraphs (1), (2) and (3) hereof are mechanically wrapped or packed, the tax shall be increased by one hundred and twenty per centum per thousand cigarettes.

"Cigarettes shall be considered as mechanically wrapped or packed when at any stage of the wrapping or packing, a machine or any mechanical contrivance shall have been used.

"The maximum 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; and 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 maximum sale price in such establishment shall determine the rate of the tax applicable to the cigars therein sold: Provided, however, That when such maximum wholesale price is less than the cost of manufacture or importations plus all expenses incurred until the cigars are finally sold by the manufacturer or importer, such cost plus expenses shall determine the amount of tax to be applied.

"Every manufacturer or importer of cigars shall file with the Collector of Internal Revenue, on the date or dates designated by the latter, a sworn statement showing the maximum wholesale prices of cigars, together with the cost of manufacture or importation plus expenses incurred or to be incurred until the cigars are finally sold and it shall be unlawful to sell said cigars at wholesale at a price in excess of the one specified in the statement required by this Title without previous written notice to said Collector of Internal Revenue. In the case of imported cigars, the sworn statement required herein shall be accompanied by verified sales invoices of the manufacturers of the cigars as well as the consular invoice issued by a Philippine Consul, should one be available at the place of origin or shipment.

"Every manufacturer or importer of cigarettes shall file with the Collector of Internal Revenue, on the date or dates designated by the latter, a sworn statement showing the brand or brands of cigarettes manufactured or imported, their corresponding length in millimeters and weight in kilos per thousand cigarettes, whether containing flue-cured tobacco, wrapped in cellophane or tinfoil, or packed in cartons with paraffin or waxpaper, or in tin cans, and whether the cigarettes are mechanically wrapped or packed. In the case of imported cigarettes, the sworn statement required herein shall, in addition to the above information, be accompanied by a verified commercial invoice of the manufacturer of the cigarettes as well as the consular invoice issued by a Philippine Consul, if any, containing the information that Philippine internal revenue strip stamps have been affixed to each and every pack of cigarettes and that each pack bears the inscription 'For export to the Philippines.'

"If the government of a foreign country permits the revenue stamps of such country to be affixed in the Philippines to tobacco (including cigars) or snuff manufactured in the Philippines and imported into such foreign country, internal revenue stamps of the Philippines may be affixed to tobacco (including cigars) or snuff manufactured in such foreign country to be imported into the Philippines from such foreign country, under such rules and regulations as the Collector of Internal Revenue with the approval of the Secretary of Finance may prescribe."

SEC. 9. Section one hundred forty of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 140. Specific tax on firecrackers.—On all firecrackers, there shall be collected for each kilogram a tax of twenty pesos."

SEC. 10. Subsection (a) of section one hundred forty-seven of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 147. Specific tax on playing cards.—(a) On each pack of cards regardless of the size thereof containing not more than sixty cards, there shall be collected a tax of ten pesos."

SEC. 11. Section one hundred sixty of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 160. Information to be given by manufacturers or importers of any apparatus or mechanical contrivance specifically for the manufacture of articles subject to specific tax and importers, manufacturers or sellers of cigarette paper in bobbins.—Manufacturers and importers of any apparatus or mechanical contrivance specifically for the manufacture of articles subject to specific tax shall, before any such apparatus or mechanical contrivance is removed from the place of manufacture or from the customhouses, give written information to the Collector of Internal Revenue as to the nature and capacity of the same, the time when it is to be removed, and the place for which it is destined, as well as the name of the person by whom it is to be used; and such apparatus or mechanical contrivance shall not be set up nor dismantled or transferred without a permit in writing from the Collector of Internal Revenue.

"A written permit from the Collector of Internal Revenue for importing, manufacturing or selling of cigarette paper in bobbins or rolls is required before any person shall engage in the importation, manufacture, or sale of the said articles. No permit to sell said articles shall be granted unless the name and address of the prospective buyer is first submitted to the Collector of Internal Revenue and approved by him. 'Records showing the stock of the said articles and the disposal thereof by sale to persons with their respective addresses as approved by the Collector of Internal Revenue shall be kept by the seller, and records showing stock of said articles and consumption thereof shall be kept by the buyer, subject to inspection by internal revenue officers.

"It shall be unlawful for any person to have in his possession cigarette paper in bobbins or rolls without the corresponding authority therefor issued by the Collector of Internal Revenue. Any person, importer, manufacturer of cigars and cigarettes, who have in his or its stocks cigarette paper in bobbins or rolls and which are not supported by a permit from the Collector of Internal Revenue shall be fined in an amount of not less than ten thousand pesos and imprisoned for not less than five years."

SEC. 12. Section one hundred sixty-four of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 164. Requirements incident to process of denaturing alcohol.—Where alcohol is withdrawn for denaturing for purposes enumerated in section one hundred twenty-eight of this Code, or as motor fuel, the process of denaturing shall be effected either on the distillery premises or in a bonded warehouse designated by the Collector of Internal Revenue for denaturing purposes only. To such warehouses alcohol may be transferred under bond under conditions prescribed in the regulations of the Department of Finance."

SEC. 13. Section one hundred seventy of Commonwealth Act Numbered Four hundred sixty-six, as amended, is Hereby further amended to read as follows:

"SEC. 170. Unlawful practices relative to payment of specific taxes.—Any person who, without express authority from the Collector of Internal Revenue, makes, imports, sells, uses or possesses any die for printing or making internal revenue stamps, labels, tags, or playing cards shall be punished by a fine of not less than three hundred pesos nor more than five thousand pesos or by imprisonment for a term of not less than three months nor more than five years, or both.

"Any person who erases the cancellation marks on any internal revenue stamp which has been previously used or who alters the written or printed figures or letters or cancellation marks on any internal revenue stamp previously used, or who has in his possession any false, counterfeit, restored, or altered internal revenue stamp, label, or tag, or who procures the commission of any such offense by another, shall be fined in a sum of not less than one thousand pesos nor more than five thousand pesos or imprisoned for a term of not less than one year nor more than five years, or both.

"Any manufacturer, dealer, printer, business agent, and any other person who sells or offers for sale any box or other package containing articles subject to the specific tax, having affixed thereto any false, spurious, imitation or counterfeit stamp or label, or stamp or label that has been previously used; or sells from any such fraudulently stamped box, package or container as aforesaid, shall for each such offense, be fined not less than ten thousand pesos nor more than twenty thousand pesos and imprisoned for not less than four years nor more than twelve years and in the case of an alien, he shall be deported after the service of the prison term.

"Any person who gives away or accepts from another, or who sells, buys, or uses any container on which the stamps or labels are not completely destroyed shall for each such offense be fined in a sum of not less than one thousand pesos nor more than five thousand pesos and imprisoned for a term not exceeding one year.

"Any internal revenue officer may destroy any emptied container upon which an internal revenue stamp or official tax-paid label is found still undestroyed."

SEC. 14. Section one hundred seventy-one of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 171. Unlawful use of denatured alcohol.—Any person, who for the purpose of manufacturing any beverage, uses denatured alcohol or alcohol withdrawn under bond for industrial uses, or who knowingly sells any beverage made in whole or in part from such alcohol, or who uses such alcohol for the manufacture of liquid medicinal preparations taken internally, or knowingly sells such preparations containing as an ingredient such alcohol, shall on conviction be fined not less than one thousand pesos and imprisoned for not more than one year.

"Any person who shall unlawfully recover or attempt to recover by re-distillation or other process any denatured alcohol or who knowingly uses, sells, conceals, or otherwise disposes of alcohol so recovered or redistilled shall be subject to the same penalty as provided for by article two hundred sixty-four of the Revised Penal Code."

SEC. 15. Section one hundred seventy-four of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 174. Unlawful possession or removal of articles subject to specific tax without payment of tax.—Any person who is found in possession of articles subject to specific tax, the tax on which has not been paid in accordance with law, or any person who is found in possession of articles which are exempt from specific tax other than those to whom the same is lawfully issued excepting persons in possession of an article resulting from a single isolated transaction done in good faith shall be punished by a fine of not less than three times the amount of the specific tax due on the articles found but not less than two hundred pesos nor more than five thousand pesos or by imprisonment of from four months and one day to four years and two months, or both. Any manufacturer, owner, or person in charge of any article subject to a specific tax who removes or allows or procures the unlawful removal of any such article from the place of manufacture or bonded warehouse, upon which article the specific tax has not been paid in the time and manner required, and any person who knowingly aids or abets in the removal of such articles as aforesaid, or conceals the same after illegal removal, shall for the first offense be punished by a fine of not less than five times the amount of the specific tax due on the article removed, but not less than five hundred pesos nor more than ten thousand pesos and by imprisonment of not less than six months and one day but not more than six years.

"Every manufacturer so offending shall, before continuing or resuming business, execute a bond in double the amount of his original bond and containing the same conditions."

SEC. 16. This Act shall take effect upon its approval.

Approved, August 23, 1956, except Section 8 insofar as it amends Section 137, paragraph (b), subparagraphs (1) and (2), of the National Internal Revenue Code.