OF THE PHILIPPINES 
First Regular Session 
Per 
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Enrllt 
(In substitution of SBN 1815, in consideration of HBN 3174) 
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Prepared by the Committee with Senator{ FS?G and Recto as author! thereof. 
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AN ACT 
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INCREASING THE EXCISE TAX RATES IMPOSED ON ALCOHOL AND 
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TOBACCO PRODUCTS, AMENDING FOR THE PURPOSE SECTIONS 141,142, 
143,144,145 AND 288 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, 
AS AMENDED 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
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SECTION 1. Section 141 of the National Internal Revenue Code of 1997, as 
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amended, is hereby further amended to read as follows: 
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"SEC. 141. Distilled Spirits. - On distilled spirits, there shall be collected, 
subject to the provisions of Section 133 of this Code, excise taxes as follows: 
(A) If produced from the sap of nipa, coconut, cassava, camote, or buri 
palm or from the juice, syrup or sugar of the cane, [provided such materials ar 
produced commercially in the country where they are processed into distilled 
spirits, per proof liter, Eight Pesos (P8.00): Provided, That if produced in a pot 
still or other similar primary distilling apparatus by a distiller producing not 
more than one hundred (100) liters a day, containing not more than fifty percent 
(50%) of alcohol by volume, per proof liter, Four pesos (P4.OO)l ELEVEN PESOS 
AND SIXTY-FIVE CENTAVOS 0'11.65); 
(b) If produced from raw materials other than those enumerated in the 
preceding paragraph, the tax shall be in accordance with the net retail price per 
bottle of seven hundred fifty milliliter (750 ml.) volume capacity (excluding the 
excise tax and the value-added tax) as follows: 


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(1) Less than Two hundred and fifty pesos (P250) - [Seventy Five Pesos 
(P75)l ONE HUNDRED TWENTY-SIX PESOS (P126.00), per proof liter; 
(2) Two hundred and fifty pesos (P250) up to Six hundred and seventy 
five 
pesos (P675) - [One hundred and fifty pesos (P15O)l TWO 
HUNDRED FIFTY-TWO PESOS (P252.00), per proof liter; and 
(3) More than Six hundred and seventy five pesos (P675) - [Three 
hundred pesos (P3OO)l FIVE HUNDRED FOUR PESOS (P504.00), per 
proof liter. 
(c) Medicinal 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. 
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. 
'Spirits or distilled spirits' is the substance known as ethyl alcohol, ethanol 
or spirits of wine, including all dilutions, purifications and mixtures ther 
from whatever source, by whatever process produced, and shall include wh; 
brandy rum, gin and vodka, and other similar products or mixtures. 
'Proofspirits' is liquor containing one-half (1/2) 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 (15oC). A 'proof liter' means a 
liter of proof spirits. 
[The rates of tax imposed under this Section shall be increased by twelve 
percent (12%) on January 1,2000.1 
[New brands shall be classified according to their current net retail price.] 
[For the above purpose, 'n] 'Net retail price' shall mean the price at which 
the distilled spirit is sold on retail in ten (10) major supermarkets in Metro 


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Manila, excluding the amount intended to cover the applicable excise tax and the 
value added tax [as of October 1, 19961. FOR BRANDS WHICH ARE 
MARKETED OUTSIDE METRO MANILA, THE 'NET RETAIL PRICE' 
SHALL MEAN THE PRICE AT WHICH THE DISTILLED SPIRITS IS SOLD 
IN FIVE (5) MAJOR SUPERMARKETS IN THE REGION EXCLUDING THE 
AMOUNT INTENDED TO COVER THE APPLICABLE EXCISE TAX AND 
THE VALUE-ADDED TAX. 
VARIANTS OF EXISTING BRANDS AND VARIANTS OF NEW 
BRANDS WHICH ARE INTRODUCED IN THE DOMESTIC MARKET 
AFTER THE EFFECTIVITY OF THIS ACT SHALL BE TAXED UNDER THE 
HIGHEST CLASSIFICATION OF ANY VARIANT OF THAT BRAND. 
A 'VARIANT OF A BRAND' SHALL REFER TO A BRAND ON 
WHICH A MODIFIER IS PREFIXED AND/OR SUFFIXED TO THE ROOT 
NAME OF THE BRAND AND/OR A DIFFERENT BRAND WHICH CARRIES 
THE SAME LOGO OR DESIGN OF THE EXISTING BRAND. 
NEW BRANDS SHALL BE CLASSIFIED ACCORDING TO THEIR 
CURRENT SUGGESTED NET RETAIL PRICE. 
'NEW BRAND' SHALL MEAN A BRAND REGISTERED AFTER THE 
DATE OF EFFECTIVITY OF THIS ACT, AND SHALL INCLUDE 
PREVIOUSLY REGISTERED BUT INACTIVE BRANDS OF DISTILLED 
SPIRITS. 
'SUGGESTED NET RETAIL PRICE' SHALL MEAN THE NET RETAIL 
PRICE AT WHICH NEW BRANDS OF LOCALLY MANUFACTURED OR 
IMPORTED 
DISTILLED 
SPIRITS 
ARE 
INTENDED 
BY 
THE 
MANUFACTURER OR IMPORTER TO BE SOLD ON RETAIL IN MAJOR 
SUPERMARKETS OR RETAIL OUTLETS IN METRO MANILA FOR THOSE 
MARKETED NATIONWIDE, AND IN OTHER REGIONS, FOR THOSE 
WITH REGIONAL MARKETS. AT THE END OF THREE (3) MONTHS 
FROM THE PRODUCT LAUNCH, THE BUREAU OF INTERNAL REVENUE 


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SHALL VALIDATE THE SUGGESTED NET RETAIL PRICE AGAINST THE 
NET RETAIL PRICE AS DEFINED HEREIN AND FINALLY DETERMINE 
THE CORRECT TAX BRACKET TO WHICH A PARTICULAR BRAND OF 
DISTILLED SPIRITS SHALL BE CLASSIFIED. 
THE RATES OF TAX IMPOSED UNDER THIS SECTION SHALL BE 
INCREASED BY EIGHT PERCENT (8%) EVERY TWO YEARS STARTING 
ON JANUARY 1,2007 UNTIL JANUARY 1,2011. 
ANY 
DOWNWARD 
RECLASSIFICATION 
OF 
PRESENT 
CATEGORIES, FOR TAX PURPOSES, OF EXISTING BRANDS OF 
DISTILLED SPIRITS DULY RE~ISTERED AT THE TIME OF THE 
EFFECTIVITY OF THIS ACT WHICH WILL REDUCE THE TAX IMPOSED 
HEREIN, OR THE PAYMENT THEREOF, SHALL BE PROHIBITED. 
The classification of each brand of distilled spirits based on the average 
net retail price as of October 1, 1996, as set forth in Annex ‘A’, shall remain in 
force until revised by Congress. 
MANUFACTURERS AND IMPORTERS OF DISTILLED SPIRITS 
SHALL, WITHIN THIRTY (30) DAYS FROM THE EFFECTIVITY OF THIS 
ACT, AND WITHIN THE FIRST FIVE (5) DAYS OF EVERY MONTH 
THEREAFTER, 
SUBMIT 
TO THE 
COMMISSIONER 
A 
SWORN 
STATEMENT OF THE VOLUME OF SALES FOR EACH PARTICULA 
BRAND OF DISTILLED SPIRIT SOLD AT HIS ESTABLISHMENT FOR THE 
THREE-MONTH PERIOD IMMEDIATELY PRECEDING. 
ANY MANUFACTURER OR IMPORTER WHO, IN VIOLATION OF 
THIS SECTION, KNOWINGLY MISDECLARES OR MISREPRESENTS IN 
HIS OR ITS SWORN STATEMENT HEREIN REQUIRED ANY PERTINENT 
DATA OR INFORMATION SHALL, UPON DISCOVERY, BE PENALIZED 
BY A SUMMARY CANCELLATION OR WITHDRAWAL OF HIS OR ITS 
PERMIT TO ENGAGE IN BUSINESS AS MANUFACTURER OR IMPORTER 
OF DISTILLED SPIRITS. 


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ANY CORPORATION, ASSOCIATION OR PARTNERSHIP LIABLE 
FOR ANY OF THE ACTS OR OMISSIONS IN VIOLATION OF THIS 
SECTION SHALL BE FINED TREBLE THE AMOUNT OF DEFICIENCY 
TAXES, SURCHARGES AND INTEREST WHICH MAY BE ASSESSED 
PURSUANT TO THIS SECTION. 
ANY PERSON LIABLE FOR ANY OF THE ACTS OR OMISSIONS 
PROHIBITED UNDER THIS SECTION SHALL BE CRIMINALLY LIABLE 
AND PENALIZED UNDER SECTION 254 OF THIS CODE. ANY PERSON 
WHO WILLFULLY AIDS OR ABETS IN THE COMMISSION OF ANY SUCH 
ACT OR OMISSION SHALL BE CRIMINALLY LIABLE IN THE SAME 
MANNER AS THE PRINCIPAL. 
IF THE OFFENDER IS NOT A CITIZEN OF THE PHILIPPINES, HE 
SHALL BE DEPORTED IMMEDIATELY AFTER SERVING THE SENTENCE, 
WITHOUT FURTHER PROCEEDINGS FOR DEPORTATION.” 
SEC. 2. Section 142 of the National Internal Revenue Code of 1997, as amended, 
is hereby further amended to read as follows: 
”SEC 142. Wines. - On wines, there shall be collected per liter of volume 
capacity, the following taxes: 
(a) Sparkling wines/champagnes regardless of proof, if the net retail price 
per bottle (excluding the excise tax and the value-added tax) is: 
(1) Five hundred pesos (P500) or less - [One hundred pesos (PlOO)] ONE 
HUNDRED FORTY-FIVE PESOS AND SIXTY CENTAVOS (P145.60); and 
(2) More than Five hundred pesos (P500) - [Three hundred pesos (P3OO)l 
FOUR HUNDRED THIRTY SIX PESOS AND EIGHTY CENTAVOS (P436.80). 
@) Still wines containing fourteen percent (14%) of alcohol by volume or 
less, [Twelve pesos (P12.OO)l SEVENTEEN PESOS AND FORTY-SEVEN 
CENTAVOS (P17.47); and; 


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(c) Still wines containing more than fourteen percent (14%) but not more 
than twenty-five percent (25%) of alcohol by volume, [Twenty-four pesos 
(P24.OO)l THIRTY-FOUR PESOS AND NINETY-FOUR CENTAVOS (P34.94). 
Fortified wines containing more than twenty-five percent (25%) 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 alcohol strength. 
[The rates of tax imposed under this Section shall be increased by twelve 
percent (12%) on January 1,2000.1 
[New brands shall be classified according to their current net retail price.] 
[For the above purpose, 'nl 'Net retail piice' shall mean the price at which 
wine is sold on retail in ten (10) major supermarkets in Metro Manila, excluding 
the amount intended to cover the applicable excise tax and the value added tax 
[as of October 1, 19961. FOR BRANDS WHICH ARE MARKETED OUTSIDE 
METRO MANILA, THE 'NET RETAIL PRICE' SHALL MEAN THE PRICE AT 
WHICH THE WINE IS SOLD IN FIVE (5) MAJOR SUPERMARKETS IN THE 
REGION EXCLUDING THE AMOUNT INTENDED TO COVER THE 
APPLICABLE EXCISE TAX AND THE VALUE-ADDED TAX. 
VARIANTS OF EXISTING BRANDS AND VARIANTS OF NEW 
BRANDS WHICH ARE INTRODUCED IN THE DOMESTIC MARKET 
AFTER THE EFFECTIVITY OF THIS ACT SHALL BE TAXED UNDER THE 
HIGHEST CLASSIFICATION OF ANY VARIANT OF THAT BRAND. 
A 'VARIANT OF A BRAND' SHALL REFER TO A BRAND ON 
WHICH A MODIFIER IS PREFIXED AND/OR SUFFIXED TO THE ROOT 
NAME OF THE BRAND AND/OR A DIFFERENT BRAND WHICH CARRIES 
THE SAME LOGO OR DESIGN OF THE EXISTING BRAND. 
NEW BRANDS SHALL BE CLASSIFIED ACCORDING TO THEIR 
CURRENT SUGGESTED NET RETAIL PRICE. 


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'NhW BRAND' SHALL MEAN A BRAND REGISTERED AFTER THE 
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DATE OF EFFECTIVITY OF THIS ACT, AND SHALL INCLUDE 
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PREVIOUSLY REGISTERED BUT INACTIVE BRANDS OF WINE. 
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'SUGGESTED NET RETAIL PRICE' SHALL MEAN THE NET RETAIL 
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PRICE AT WHICH NEW BRANDS OF LOCALLY MANUFACTURED OR 
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IMPORTED WINES ARE INTENDED BY THE MANUFACTURER OR 
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IMPORTER TO BE SOLD ON RETAIL IN MAJOR SUPERMARKETS OR 
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RETAIL OUTLETS IN METRO MANILA FOR THOSE MARKETED 
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NATIONWIDE, AND IN OTHER REGIONS, FOR THOSE WITH REGIONAL 
MARKETS. AT THE END OF THREE (3) MONTHS FROM THE PRODUCT 
LAUNCH, THE BUREAU OF INTERNAL REVENUE SHALL VALIDATE 
THE SUGGESTED NET RETAIL PRICE AGAINST THE NET RETAIL PRICE 
AS DEFINED HEREIN AND FINALLY DETERMINE THE CORRECT TAX 
BRACKET TO WHICH A PARTICULAR BRAND OF WINE SHALL BE 
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CLASSIFIED. 
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THE RATES OF TAX IMPOSED UNDER THIS SECTION SHALL BE 
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INCREASED BY EIGHT PERCENT (8%) EVERY TWO YEARS STARTING 
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ANY 
DOWNWARD 
RECLASSIFICATION 
OF 
PRESENT 
ON JANUARY 1,2007 UNTIL JANUARY 1,2011. 
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CATEGORIES, FOR TAX PURPOSES, OF EXISTING BRANDS OF WINE 
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THEREOF, SHALL BE PROHIBITED. 
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revised by Congress. 
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DULY REGISTERED AT THE TIME OF THE EFFECTIVITY OF THIS ACT 
WHICH WILL REDUCE THE TAX IMPOSED HEREIN, OR THE PAYMENT 
The classification of each brand of wines based on the average net retail 
price as of October 1, 1996, as set forth in Annex 'B', shall remain in force until 
MANUFACTURERS AND IMPORTERS OF WINES SHALL, WITHIN 
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THIRTY (30) DAYS FROM THE EFFECTIVITY OF THIS ACT, AND WITHIN 
THE FIRST FIVE (5) DAYS OF EVERY MONTH THEREAFTER, SUBMIT TO 


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THE COMMISSIONER A SWORN STATEMENT OF THE VOLUME OF 
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SALES FOR EACH PARTICULAR BRAND OF WINES SOLD AT HIS 
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ESTABLISHMENT FOR THE THREE-MONTH PERIOD IMMEDIATELY 
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PRECEDING. 
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ANY MANUFACTURER OR IMPORTER WHO, IN VIOLATION OF 
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THIS SECTION, KNOWINGLY MISDECLARES OR MISREPRESENTS IN 
HIS OR ITS SWORN STATEMENT HEREIN REQUIRED ANY PERTINENT 
DATA OR INFORMATION SHALL, UPON DISCOVERY, BE PENALIZED 
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OF WINES. 
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ANY CORPORATION, ASSOCIATION OR PARTNERSHIP LIABLE 
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FOR ANY OF THE ACTS OR OMISSIONS IN VIOLATION OF THIS 
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SECTION SHALL BE FINED TREBLE THE AMOUNT OF DEFICIENCY 
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TAXES, SURCHARGES AND INTEREST WHICH MAY BE ASSESSED 
BY A SUMMARY CANCELLATION OR WITHDRAWAL OF HIS OR ITS 
PERMIT TO ENGAGE IN BUSINESS AS MANUFACTURER OR IMPORTER 
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PURSUANT TO THIS SECTION. 
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ANY PERSON LIABLE FOR ANY OF THE ACTS OR OMISSIONS 
PROHIBITED UNDER THIS SECTION SHALL BE CRIMINALLY LIABLE 
AND PENALIZED UNDER SECTION 254 OF THIS CODE. ANY PERSON 
WHO WILLFULLY AIDS OR ABETS IN THE COMMISSION OF ANY SUCH 
ACT OR OMISSION SHALL BE CRIMINALLY LIABLE IN THE SAME 
MANNER AS THE PRINCIPAL. 
IF THE OFFENDER IS NOT A CITIZEN OF THE PHILIPPINES, HE 
SHALL BE DEPORTED IMMEDIATELY AFTER SERVING THE SENTENCE, 
WITHOUT FURTHER PROCEEDINGS FOR DEPORTATION.” 
SEC. 3. Section 143 of the National Internal Revenue Code of 1997, as amended, 
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is hereby further amended to read as follows: 
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“SEC. 143. Fermented Liquor. - There shall be levied, assessed and collected 
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an excise tax on beer, lager beer; ale, porter and other fermented liquors except 


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tuba, basi, tupuy and similar [domestic] fermented liquors in accordance with the 
following schedule: 
(a) If the net retail price (excluding the excise tax and value-added tax) per 
liter of volume capacity is less than Fourteen pesos and fifty centavos (P14.50), 
the tax shall be [Six pesos and fifteen centavos (P6.15)l EIGHT PESOS AND 
TWENTY-SEVEN CENTAVOS (P8.27) per liter; 
(b) If the net retail price (excluding the excise tax and the value-added 
tax) per liter of volume capacity is Fourteen pesos and fifty centavos (P14.50) up 
to Twenty-two pesos (P22.00), the tax shall be [Nine pesos and fifteen centavos 
(P9.15)l TWELVE PESOS AND THIRTY CENTAVOS (P12.30) per liter; 
(c) If the net retail price (excluding the excise tax and the value-added tax) 
per liter of volume capacity is more than Twenty-two pesos (P22.00), the tax shall 
be [Twelve pesos and fifteen centavos (P12.15)l SIXTEEN PESOS AND 
THIRTY-THREE CENTAVOS (P16.33) per liter. 
Variants of existing brands AND VARIANTS OF NEW BRANDS which 
are introduced in the domestic market after the effectivity of [Republic Act 
No.82401 THIS ACT shall be taxed under the highest classification of any variant 
of that brand. 
A 'VARIANT OF A BRAND' SHAFL REFER TO A BRAND ON 
NAME OF THE BRAND AND/OR A DIFFERENT BRAND WHICH CARRIES 
THE SAME LOGO OR DESIGN OF THE EXISTING BRAND. 
Fermented liquor which are brewed and sold at micro-breweries or small 
establishments such as pubs and restaurants shall be subject to the rate in 
paragraph (c) hereof. 
[The excise tax from any brand of fermented liquor within the next three 
(3) years from the effectivity of R.A. No. 8240 shall not be lower than the tax 
which was due from each brand on October 1,1996.1 


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[The rates of excise tax on fermented liquor under paragraphs (a), 
(c) hereof shall be increased by twelve percent (12%) on January 1,2000J. 
New brands shall be classified according to their current SUGGESTED 
net retail price. 
'NEW BRAND' SHALL MEAN A BRAND REGISTERED AFTER THE 
DATE OF EFFECTIVITY OF THIS ACT, AND SHALL INCLUDE 
PREVIOUSLY REGISTERED BUT INACTIVE BRANDS OF FERMENTED 
LIQUOR. 
'SUGGESTED NET RETAIL PRICE' SHALL MEAN THE NET RETAIL 
PRICE AT WHICH NEW BRAN& OF LOCALLY MANUFACTURkD OR 
IMPORTED 
FERMENTED 
LIQUOR 
ARE 
INTENDED 
BY 
THE 
MANUFACTURER OR IMPORTER TO BE SOLD ON RETAIL IN MAJOR 
SUPERMARKETS OR RETAIL OUTLETS IN METRO MANILA FOR THOSE 
MARKETED NATIONWIDE, AND IN OTHER REGIONS, FOR THOSE 
WITH REGIONAL MARKETS. AT THE EN? OF THREE (3) MONTHS 
FROM THE PRODUCT LAUNCH, THE BUI$EAU OF INTERNAL REVENUE 
SHALL VALIDATE THE SUGGESTED NET RETAIL PRICE AGAINST THE 
NET RETAIL PRICE AS DEFINED HEREIN AND FINALLY DETERMINE 6
THE CORRECT TAX BRACKET TO WHICH A PARTICULAR BRAND 
[For the above purpose, nl 'Net retail price' shall mean the price at which 
the fermented liquor is sold on retail in twenty (20) major supermarkets in Metro T 
FERMENTED LIQUOR SHALL BE CLASSIFIED. 
Manila (for brands of fermented liquor marketed nationally), excluding the 
amount intended to cover the applicable excise tax and the value-added tax. For 
brands which are marketed outside Metro Manila, the 'net retail price' shall 
mean the price at which the fermented liquor is sold in five (5) major 
supermarkets in the region excluding the amount intended to cover the 
applicable excise tax and the value-added tax. 


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The classification of each brand of fermented liquor based on its average 
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net retail price as of October 1, 1996, as set forth in Annex 'C', shall remain in 
force until revised by Congress. 
[A 'variant of a brand' shall refer to a brand on which a modifier is 
prefixed and/or suffixed to the root name of the brand and/or a different brand 
which carries the same logo or design of the existing brand.] 
THE RATES OF TAX IMPOSED UNDER THIS SECTION SHALL BE 
INCREASED BY EIGHT PERCENT (8%) EVERY TWO YEARS STARTING 
ON JANUARY 1,2007 UNTIL JANUARY 1,2011. 
ANY 
DOWNWARD 
RECLASSIFICATION 
OF 
PRESENT 
CATEGORIES, FOR TAX PURPOSES, OF EXISTING BRANDS OF 
FERMENTED LIQUOR DULY REGISTERED AT THE TIME OF THE 
EFFECTIVITY OF THIS ACT WHICH WILL REDUCE THE TAX IMPOSED 
HEREIN, OR THE PAYMENT THEREOF, SHALL BE PROHIBITED. 
Every brewer or importer of fermented liquor shall, within thirty (30) days 
from the effectivity of [RA NO. 82401 THIS ACT, and within the first five (5) 
days of every month thereafter, submit to the Commissioner a sworn statement 
of the volume of sales for each particular brand of fermented liquor sold at his 
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establishment for the three-month period immediately preceding. 
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Any brewer or importer who, in violation of this Section, knowin 
misdeclares or misrepresents in his or its sworn statement herein required any 
pertinent data or information shall be penalized by a summary cancellation or 
withdrawal of his or its permit to engage in business as brewer or importer of 
fermented liquor. 
Any corporation, association or partnership liable for any of the acts or 
omissions in violation of this Section shall be fined treble the amount of 
deficiency taxes, surcharge and interest which may be assessed pursuant to this 
Section. 


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If the offender is not a citizen of the Philippines, he shall be deported 
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immediately after serving the sentence, without further proceedings for 
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deportation." 
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of tobacco: 
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sweepings of tobacco. 
Any person liable for any of the acts or omissions prohibited under this 
Section shall be criminally liable and penalized under Section 254 of this Code. 
Any person who willfully aids or abets in the commission of any such act 
or omission shall be criminally liable in the same manner as the principal. 
SEC. 4. Section 144 of the National Internal Revenue Code of 1997, as amended, 
is hereby further amended to read as follows: 
"SEC. 144. Tobacco Products. - There shall be collected a tax of [seventy-five 
centavos (PO.75)] ONE PESO (P1.00) on each kilogram of the following products 
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(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 
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Fine-cut shorts and refuse, scraps, clippings, cuttings, stems an 3
sweepings of tobacco resulting from the handling of stripping of whole leaf 
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tobacco may be transferred, disposed of, or otherwise sold, without any 3
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CENTAVOS (P0.79). 
prepayment of the excise tax herein provided for under such conditions as may 
be prescribed in the rules and regulations promulgated by the Secretary 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. 
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On tobacco specially prepared for chewing so as to be unsuitable for use 
in any other manner, on each kilogram, [Sixty centavos (PO.6O)l SEVENTY-NINE 


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.THE RATES OF TAX IMPOSED UNDER THIS SECTION SHALL BE 
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INCREASED BY SIX PERCENT (6%) EVERY TWO YEARS STARTING ON 
JANUARY 1,2007 UNTIL JANUARY 1,2011. 
MANUFACTURERS AND IMPORTERS OF TOBACCO PRODUCTS 
SHALL, WITHIN THIRTY (30) DAYS FROM THE EFFECTIVITY OF THIS 
ACT, AND WITHIN THE FIRST FIVE (5) DAYS OF EVERY MONTH 
THEREAFTER, 
SUBMIT 
TO 
THE 
COMMISSIONER 
A 
SWORN 
STATEMENT OF THE VOLUME OF SALES FOR EACH PARTICULAR 
BRAND OF TOBACCO PRODUCTS SOLD AT HIS ESTABLISHMENT FOR 
THE THREE-MONTH PERIOD IMMEDIATELY PRECEDING. 
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ANY MANUFACTURER OR IMPORTER WHO, IN VIOLATION OF 
THIS SECTION, KNOWINGLY MISDECLARES OR MISREPRESENTS IN 
HIS OR ITS SWORN STATEMENT HEREIN REQUIRED ANY PERTINENT 
DATA OR INFORMATION SHALL, UPON DISCOVERY, BE PENALIZED 
BY A SUMMARY CANCELLATION OR WITHDRAWAL OF HIS OR ITS 
PERMIT TO ENGAGE IN BUSINESS AS MANUFACTURER OR IMPORTER 
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OF CIGARS OR CIGARETTES. 
ANY CORPORATION, ASSOCIATION OR PARTNERSHIP LIABLE 
FOR ANY OF THE ACTS OR OMISSIONS IN VIOLATION OF THIS 
SECTION SHALL BE FINED TREBLE THE AMOUNT OF DEFICIENCY 
TAXES, SURCHARGES AND INTEREST WHICH MAY BE ASSESSED 4
PURSUANT TO THIS SECTION. 
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ANY PERSON LIABLE FOR ANY OF THE ACTS OR OMISSIONS 
PROHIBITED UNDER THIS SECTION SHALL BE CRIMINALLY LIABLE 
AND PENALIZED UNDER SECTION 254 OF THIS CODE. ANY PERSON 
WHO WILLFULLY AIDS OR ABETS IN THE COMMISSION OF ANY SUCH 
ACT OR OMISSION SHALL BE CRIMINALLY LIABLE IN THE SAME 
MANNER AS THE PRINCIPAL. 


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IF THE OFFENDER IS NOT A CITIZEN OF THE PHILIPPINES, HE 
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SHALL BE DEPORTED IMMEDIATELY AFTER SERVING THE SENTENCE, 
WITHOUT FURTHER PROCEEDINGS FOR DEPORTATION.” 
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SEC. 5. Section 145 of the National Internal Revenue Code, as amended, is hereby 
further amended to read as follows: 
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“SEC. 145. Cigars and Cigarettes. - 
(A) Cigars. - There shall be levied, assessed and collected on cigars aN AD 
VALOREM tax [of One peso (P1.00) per cigar.] BASED ON THE NET RETAIL 
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PRICE PER CIGAR (EXCLUDING THE EXCISE TAX AND THE VALUE- 
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ADDED TAX) IN ACCORDANCE WITH THE FOLLOWING SCHEDULE: 
(1) 
IF THE NET RETAIL PRICE PER CIGAR IS FIVE HUNDRED 
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PESOS (P500.00) OR LESS, TWENTY PERCENT (20%); AND 
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(2) 
IF THE NET RETAIL PRICE PER CIGAR (EXCLUDING THE 
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EXCISE TAX AND THE VALUE-ADDED TAX) IS MORE THAN FIVE 
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HUNDRED PESOS (P500.00), ONE HUNDRED PESOS (P100.00) PLUS 
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HUNDRED PESOS (P500.00). 
THIRTY PERCENT (30%) OF THE NET RETAIL PRICE IN EXCESS OF FIVE 
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(B) Cigarettes Packed by Hand. - There shall be levied, assessed and collected 
on cigarettes packed by hand a tax AT THE RATES PRESCRIBED BELOW [of 
Forty centavos (P0.40) per pack.]: 
EFFECTIVE ON JANUARY 1,2005, EIGHTTY-FIVE CENTAVOS (P0.85 
PER PACK; 
EFFECTIVE ON JANUARY 1, 2007, ONE PESO AND FOUR 
CENTAVOS (P1.04) PER PACK; 
EFFECTIVE ON JANUARY 1,2009, ONE PESO AND TWENTY-FOUR 
CENTAVOS (P1.24) PER PACK; AND 
EFFECTIVE ON JANUARY 1, 2011, ONE PESO AND FORTY-FOUR 
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CENTAVOS (P1.44) PER PACK. 


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DULY REGISTERED OR EXISTING BRANDS OF CIGARETTES OR 
NEW BRANDS THEREOF PACKED BY HAND SHALL ONLY BE PACKED 
IN THIRTIES. 
(C) Cigarettes Packed by Machine. - There shall be levied, assessed and 
collected on cigarettes packed by machine a tax at the rates prescribed below: 
[(l) If the net retail price (excluding the excise tax and the value-added 
tax) is above Ten pesos (P10.00) per pack, the tax shall be Twelve pesos (P12.00) 
per pack;] 
[(Z) If the net retail price (excluding the excise tax and the value-added 
tax) exceeds Six pesos and fifty centavos (P6.50) but dBes not exceed Ten pesos 
(P10.00) per pack, the tax shall be Eight pesos (P8.00) per pack;] 
[(3) If the net retail price (excluding the excise tax and the value-added 
tax) is Five pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) 
per pack, the tax shall be Five pesos (P5.00) per pack;] 
[(4) If the net retail price (excluding the excise tax and the value-added tax) 
is below Five pesos (P5.00) per pack, the tax shall be:] 
(1) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE TAX AND 
THE VALUE-ADDED TAX) IS BELOW FIVE PESOS (P5.00) PER PACK, THE 
EFFECTIVE ON JANUARY 1, 2005, ONE PESO AND SIXTY-FIVE 
EFFECTIVE ON JANUARY 1, 2007, ONE PESO AND EIGHTY-SEVEN +
TAX SHALL BE: 
CENTAVOS (P1.65) PER PACK; 
CENTAVOS (P1.87) PER PACK; 
EFFECTIVE ON JANUARY 1, 2009, TWO PESOS AND TEN 
CENTAVOS (P2.10) PER PACK; AND 
EFFECTIVE ON JANUARY 1,2011, TWO PESOS AND THIRTY-FOUR 
CENTAVOS (P2.34) PER PACK. 
(2) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE TAX AND 
THE VALUE-ADDED TAX) IS FIVE PESOS (P5.00) BUT DOES NOT EXCEED 


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SIX PESOS AND FIFTY CENTAVOS (P6.50) PER PACK, THE TAX SHALL 
BE: 
EFFECTIVE ON JANUARY 1, 2005, SIX PESOS AND SIXTY-SEVEN 
CENTAVOS (P6.67) PER PACK; 
EFFECTIVE ON JANUARY 1, 2007, SEVEN PESOS AND SEVEN 
CENTAVOS (P7.07) PER PACK; 
EFFECTIVE ON JANUARY 1, 2009, SEVEN PESOS AND FORTY- 
EIGHT CENTAVOS (P7.48) PER PACK; AND 
EFFECTIVE ON JANUARY 1,2011, SEVEN PESOS AND NINETY-ONE 
CENTAVOS (P7.91) PER PACK. 
(3) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE TAX AND 
THE VALUE-ADDED TAX) EXCEEDS SIX PESOS AND FIFTY CENTAVOS 
(P6.50) BUT DOES NOT EXCEED TEN PESOS (P10.00) PER PACK, THE TAX 
SHALL BE: 
EFFECTIVE ON JANUARY 1, 2005, TEN PESOS AND FORTY-FOUR 
CENTAVOS (P10.44) PER PACK; 
EFFECTIVE ON JANUARY 1,2007, TEN PESOS AND NINETY-EIGHT 
CENTAVOS (P10.98) PER PACK; 
EFFECTIVE ON JANUARY 1,2009, ELEVEN PESOS AND FIFTY-FOUR 
EFFECTIVE ON JANUARY 1, 2011, TWELVE PESOS AND TWELVE 4
CENTAVOS (P11.54) PER PACK; AND 
CENTAVOS (P12.12) PER PACK. 
(4) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE TAX AND 
THE VALUE-ADDED TAX) IS ABOVE TEN PESOS (P10.00) PER PACK, THE 
TAX SHALL BE: 
EFFECTIVE ON JANUARY 1,2005, SEVENTEEN PESOS AND FORTY- 
SEVEN CENTAVOS (P17.47) PER PACK; 
EFFECTIVE ON JANUARY 1, 2007, EIGHTEEN PESOS AND FIFTY- 
TWO CENTAVOS (P18.52) PER PACK; 


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EFFECTIVE ON JANUARY 1, 2009, NINETEEN PESOS AND SIXTY- 
THREE CENTAVOS (P19.63) PER PACK; AND 
EFFECTIVE ON JANUARY 1, 2011, TWENTY PESOS AND EIGHTY- 
ONE CENTAVOS (P20.81) PER PACK. 
Variants of existing brands AND VARIANTS OF NEW BRANDS of 
cigarettes which are introduced in the domestic market after the effectivity of 
[RA No. 82401 THIS ACT shall be taxed under the highest classification of any 
variant of that brand. 
A 'VARIANT OF A BRAND SHALL REFER TO A BRAND ON 
WHICH A MODIFIER IS PREFIXED AND/OR SUFFIXED TO THE ROOT 
NAME OF THE BRAND AND/OR A DIFFERENT BRAND WHICH CARRIES 
THE SAME LOGO OR DESIGN OF THE EXISTING BRAND. 
[The excise tax from any brand of cigarettes within the next three (3) years 
from the effectivity of R.A. No. 8240 shall not be lower than the tax, which is due 
from each brand on October 1, 1996: Provided, however, That in cases where the 
excise tax rates imposed in paragraphs (l), (2), (3) and (4) hereinabove will result 
in an increase in excise tax of more than seventy percent (70%), for a brand of 
cigarette, the increase shall take effect in two tranches: fifty percent (50%) of the 
increase shall be effective in 1977 and one hundred percent (100%) of the increase 
Duly registered or existing brands of cigarettes or new brands thereof 
shall be effective in 19981. 
packed by machine shall only be packed in twenties. 
[The rates of excise tax on cigars and cigarettes under paragraphs (l), (2), 
(3) and (4) hereof, shall be increased by twelve percent (12%) on January 1,2000.1 
ANY 
DOWNWARD 
RECLASSIFICATION 
OF 
PRESENT 
CATEGORIES, FOR TAX PURPOSES, OF EXISTING BRANDS OF CIGARS 
AND CIGARETTES DULY REGISTERED AT THE TIME OF THE 
EFFECTIVITY OF THIS ACT WHICH WILL REDUCE THE TAX IMPOSED 
HEREIN, OR THE PAYMENT THEREOF, SHALL BE PROHIBITED. 


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New brands shall be classified according to their current SUGGESTED 
net retail price. 
'NEW BRAND' SHALL MEAN A BRAND REGISTERED AFTER THE 
DATE OF EFFECTIVITY OF THIS ACT, AND SHALL INCLUDE 
PREVIOUSLY REGISTERED BUT INACTIVE BRANDS OF CIGARETTES. 
'SUGGESTED NET RETAIL PRICE' SHALL MEAN THE NET RETAIL 
PRICE AT WHICH NEW BRANDS OF LOCALLY MANUFACTURED OR 
IMPORTED CIGARETTES ARE INTENDED BY THE MANUFACTURER OR 
IMPORTER TO BE SOLD ON RETAIL IN MAJOR SUPERMARKETS OR 
RETAIL OUTLETS IN METRO MANILA FOR THOSE MARKETED 
NATIONWIDE, AND IN OTHER REGIONS, FOR THOSE WITH REGIONAL 
MARKETS. AT THE END OF THREE (3) MONTHS FROM THE PRODUCT 
LAUNCH, THE BUREAU OF INTERNAL REVENUE SHALL VALIDATE 
THE SUGGESTED NET RETAIL PRICE AGAINST THE NET RETAIL PRICE 
AS DEFINED HEREIN AND FINALLY DETERMINE THE CORRECT TAX 
BRACKET TO WHICH A PARTICULAR BRAND OF CIGARETTE SHALL BE 
CLASSIFIED. 
[For the above purpose, 'n] 'Net retail price' shall mean the price at which 
the cigarette is sold on retail in twenty (20) major supermarkets in Metro Manila 
(for brands of cigarettes marketed nationally), excluding the amount intended to 
cover the applicable excise tax and the value-added tax. For brands which are 
marketed only outside Metro Manila, the 'net retail price' shall mean the price at 
which the cigarette is sold in five (5) major supermarkets in the region excluding $
the amount intended to cover the applicable excise tax and the value-added tax. 
The classification of each brand of cigarettes based on its average net retail 
price as of October 1, 1996, as set forth in Annex 'D', shall remain in force until 
revised by Congress. 


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[’Variant of a brand’ shall refer to a brand on which a modifier is prefixed 
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and/or suffixed to the root name of the brand and/or a different brand which 
carries the same logo or design of the existing brand.] 
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preceding. 
Manufacturers and importers of cigars and cigarettes shall, within thirty 
(30) days from the effectivity of [R.A. No. 82401 THIS ACT and within the first 
five (5) days of every month thereafter submit to the Commissioner a sworn 
statement of the volume of sales for each particular brand of cigars and/or 
cigarettes sold at his establishment for the three-month period immediately 
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Any manufacturer or importer who, in violation of this Section, 
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knowingly misdeclares or misrepresents in his or its sworn statement herein 
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required any pertinent data or information shall, upon discovery, be penalized 
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by a summary cancellation or withdrawal of his or its permit to engage in 
business as manufacturer or importer of cigars or cigarettes. 
Any corporation, association or partnership liable for any of the acts or 
omissions in violation of this Section shall be fined treble the AGGREGATE 
amount of deficiency taxes, surcharges and interest which may be assessed 
pursuant to this Section. 
Any person liable for any of the acts or omissions prohibited under this 
Section shall be criminally liable and penalized under Section 254 of this Code. 
Any person who willfully aids or abets in the commission of any such act or 
omission shall be criminally liable in the same manner as the principal. 
If the offender is not a citizen of the Philippines, he shall be deported 
immediately after serving the sentence without further proceedings for 
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deportation.” 
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SEC. 6. Section 288 of the National Internal Revenue Code of 1997, as amended, is 
hereby further amended to read as follows: 
”SEC. 288. Disposition of Incremental Revenues. - 
“(A) lncrernental Revenuesfrom Republic Act No. 7660. - 


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"(C) INCREMENTAL RElrENUES FROM THE EXCISE TAX ON 
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ALCOHOL AND TOBACCO PRODUCTS. - TEN PERCENT (10%) OF THE 
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INCREMENTAL REVENUE GENERATED BY THE GOVERNMENT FROM 
THE EXCISE TAX ON ALCOHOL AND TOBACCO PRODUCTS STARTING 
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JANUARY 2005 SHALL BE EARMARKED FOR THE NATIONAL HEALTH 
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INSURACE PROGRAM TO MEET AND SUSTAIN ITS GOAL OF 
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UNIVERSAL COVERAGE, AND TWO AND A HALF PERCENT (2%%) 
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SHALL BE EARMARKED FOR THE PUBLIC INFORMATION PROGRAMS 
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ON THE ILL EFFECTS OF SMOKING OF THE DEPARTMENT OF 
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HEALTH." 
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otherwise modified accordingly. 
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SEC. 7. Implementing Rules and Regulations. - The Secretary of Finance shall, upon 
the recommendation of the Commissioner of Internal Revenue, promulgate the 
necessary rules and regulations for the effective implementation of this Act. 
SEC. 8. Separability Clause. - If any of the provisions of this Act is declared,invalid 
by competent court, the remainder of this Act or any provision not affected by such 
declaration of invalidity shall remain in force and effect. 
SEC. 9. Repealing Clause. - All laws, decrees, ordinances, rules and regulations, 
executive or administrative orders, and such other presidential issuances as are 
inconsistent with any of the provisions of this Act are hereby repealed, amended or 
SEC. 10. Effectivity. -This Act shall take effect on January 1,2005. 
Approved,