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

SECTION 1. Subparagraphs (3) and (4), paragraph B, Section one hundred and thirty-seven of Commonwealth Act Numbered Four hundred and sixty-six, as amended, is hereby further amended to read as follows:

"SEC. 137

"(B) * * *

(3) On cigarettes made of leaf tobacco other than Philippine grown flue-cured and/or re-dried Virginia type tobacco and imported Virginia type tobacco, without the use of added liners and/or protective films such as aluminum foils, cellophane, polypropylene and/or other materials of similar nature, of eighty-one millimeters or less in length, packed in thirty cigarettes or more per pack, on each thousand, three pesos: Provided, That if the length exceeds eighty-one millimeters, the tax shall be increased by fifty per centum; Provided, further, That if the length exceeds one hundred twenty-one millimeters, the tax shall be increased by one hundred per centum, but if added liners and/or protective films such as aluminum foils, cellophane, polypropylene and/or materials of similar nature are used, on each thousand, the tax shall be four pesos if the length does not exceed eighty-one millimeters which shall be increased by fifty per centum if the length exceeds eighty-one millimeters and by one hundred per centum, if the length exceeds one hundred twenty-one millimeters. If the cigarettes under this subparagraph are packed in twenty cigarettes or less per pack and the length does not exceed eighty-one millimeters, on each thousand the tax shall be four pesos: Provided, That if the length exceeds eighty-one millimeters, the tax shall be increased by fifty per centum: Provided, further, That if the length exceeds one hundred twenty-one millimeters, the tax shall be increased by one hundred per centum.

"Leaf tobacco out of which cigarettes under subparagraphs (1), (2) and (3) of this paragraph are manufactured or made are hereby classified as Class A, B, and C, respectively. Cigarettes so made or manufactured must indicate on their packs or packages, in print and in a distinctive manner as may be provided by the Commissioner of Internal Revenue, the class of their leaf tobacco contents.

"Failure to comply with this requirement, or any false designation or false advertisement of the class of tobacco contents, shall constitute an offense punishable with the same penalties prescribed in Section One Hundred Seventy-four of this Act."

"(4) If the cigarettes are mechanically wrapped or packed, the tax provided for in subparagraphs (1), (2) and (3), as the case may be, paragraph B, of this section, 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.

"(5) If the cigarettes are manufactured purely out of imported leaf tobacco, the tax provided for in subparagraph (2), paragraph (B) of this section shall apply and shall be increased by one hundred and twenty per centum per thousand cigarettes.

"Any provision of Republic Act Numbered Twelve hundred eighty-seven to the contrary notwithstanding, any process of chemical treatment of tobacco leaves shall not be allowed.

"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 Commissioner of Internal Revenue on the date or dates designated by the latter, a sworn statement showing the maximum wholesale price 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 Commissioner 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 Commissioner of Internal Revenue, on the date or dates designated by the latter, a sworn statement showing the quantity and value of sun-dried, flue-cured and/or re-dried or imported Virginia-type tobacco or other types of tobacco purchased, imported or manufactured; the brand or brands of cigarettes manufactured or imported; their corresponding length in millimeters; whether containing flue-cured tobacco; whether the cigarettes are mechanically wrapped or packed; and indicating the names and addresses of the person or persons from which purchased. Every dealer of Philippine-grown sun-dried Virginia tobacco or Philippine-grown flue-cured and/or re-dried tobacco shall, likewise file with the Commissioner of Internal Revenue a statement of the quantity and value of sun-dried or flue-cured and/or re-dried Philippine grown Virginia-type tobacco produced by him and the names and addresses of his purchasers of the products. 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 such pack bears the inscription "for export to the Philippines.

"Every cigarette manufacturer must certify to their actual daily production with an indication of their manufacturing capacity and audited by reputable independent auditing firm as a basis of total yearly production for specific tax purposes,

"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 Commissioner of Internal Revenue with the approval of the Secretary of Finance may prescribe.

"Any dealer, manufacturer or importer who, in violation of this section, knowingly misdeclares or misrepresents in his report the type of tobacco sold, purchased or manufactured, and the tobacco contents or manufactured, and the tobacco contents of manufactured or imported cigarettes or makes any false statement thereon or violates any provision of this section shall upon conviction be required to pay five times the amount of the tax evaded and punished by a fine of not less than one thousand pesos nor more than ten thousand pesos and by imprisonment of not less than three years nor more than six years,

"If the violator is an alien, he shall in addition be automatically deported after paying the fine and serving imprisonment.

"Any official or employee of the Bureau of Internal Revenue who knowingly misclassifies the leaf tobacco or connives or countenances or assists in the violation of any provision of this section shall, in addition to administrative and criminal penalties, be dismissed from the service and forfeit all his retirement privileges."

SEC. 2. This Act shall take effect upon its approval.

Approved,

GIL J. PUYAT	CORNELIO T. VILLAREAL
President of the Senate	Speaker of the House of Representatives
Finally passed by the Senate on September 23, 1972.	This Act, which originated in the House of Representatives, was finally passed by the same on September 23, 1972.

ELISEO M. TENZA	INOCENCIO B. PAREJA
Secretary of the Senate	Secretary of the House Representatives

Approved: October 23, 1972