R.A. 1612

REPUBLIC ACT No. 1612

AN ACT TO AMEND CERTAIN SECTIONS OF TITLE V OF COMMONWEALTH ACT NUMBERED FOUR HUNDRED SIXTY-SIX, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES.

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

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

Section 3. Section one hundred eighty-one of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby repealed.

Section 4. Section one hundred eighty-two of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"(B) On occupation. Taxes on occupation shall be collected as follows, the amount stated being the sum due for the whole year:

"(C) Exceptions. The following shall be exempt from the tax imposed in this section:

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

"Sec. 183. Payment of percentage taxes. (a) In general. It shall be the duty of every person conducting a business on which a percentage tax is imposed under this Title, to make a true and complete return of the amount of his, her or its gross monthly sales, receipts, or earnings, or gross value of output actually removed from the factory or mill warehouse and within ten days after the end of each month, pay the tax due thereon: Provided, That any person retiring from a business subject to the percentage tax shall notify the nearest internal revenue officer thereof, file his return or declaration, and pay the tax due thereon within ten days after closing his business.

Section 6. Section one hundred eighty-four of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"Sec. 184. Percentage tax on sales of jewelry, automobiles, toilet preparations, and others. There shall be levied, assessed, and collected once only on every original sale, barter, exchange, or similar transaction for nominal or valuable considerations intended to transfer ownership of, or title to, the articles herein below enumerated a tax equivalent to fifty per centum of the gross value in money of the articles so sold, bartered, exchanged, or transferred, such tax to be paid by the manufacturer or producer: Provided, That where the articles enumerated hereinbelow are manufactured out of materials subject to tax under this section, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of such manufactured articles:

"Any part or accessory of the above-mentioned articles shall be taxed at the same rate as the finished articles."

Section 7. Section one hundred eighty-five of Commonwealth Act Numbered Four hundred eighty-six, as amended, is hereby further amended to read as follows:

"Sec. 185. Percentage tax on sales of sporting goods, refrigerators, and others. There shall be levied, assessed, and collected once only on every original sale, barter, exchange, or similar transaction intended to transfer ownership of, or title to, the articles herein below enumerated, a tax equivalent to thirty per centum of the gross selling price or gross value in money of the articles so sold, bartered, exchanged or transferred, such tax to be paid by the manufacturer or producer: Provided, That where the articles enumerated herein below are manufactured out of materials subject to tax under this section, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of such manufactured articles:

"Any part or accessory of the abovementioned articles shall be taxed at the same rate as the finished articles."

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

"Sec. 186. Percentage tax on sales of other articles. There shall be levied, assessed and collected once only on every original sale, barter, exchange and similar transaction either for nominal or valuable considerations, intended to transfer ownership of, or title to, the articles not enumerated in sections one hundred and eighty-four and one hundred and eighty-five a tax equivalent to seven per centum of the gross selling price or gross value in money of the articles so sold, bartered, exchanged, or transferred, such tax to be paid by the manufacturer or producer: Provided, That where the articles subject to tax under this section are manufactured out of materials likewise subject to tax under this section and section one hundred and eighty-nine, the total cost of such materials, as duly established, shall be deductible from the gross selling price or gross value in money of such manufactured articles: And provided, further, That with respect to fish and its by-products when sold, bartered, or exchanged by the fisherman or fishing operator whether in their original state or not, a tax equivalent to five per centum only of the selling price or gross value in money shall be levied, assessed, and collected.

"In the case of operators or proprietors of sawmills, who buy logs for the purpose of sawing and/or cutting them into lumber of standard sizes, the tax prescribed in this section shall be computed on thirty-three and one-third per centum of the gross cost of logs purchased during any given quarter intended for manufacture. Operators or proprietors of sawmills entitled to the privilege of paying the tax on thirty-three and one-third per centum of the gross cost of the logs purchased, including freight, insurance, and similar charges incurred up to the delivery to mill site, by them shall keep a complete record of their transactions, especially their purchase of logs together with the corresponding vouchers, such as official and auxiliary invoices, or the commercial invoices of the products from whom they purchased the logs, in cases where the logs purchased constitute merely a portion of the logs covered by an official invoice, in which commercial invoices the assessment numbers of the official invoices covering the logs and the names and addresses of the vendors shall be indicated. They shall also keep a complete record of lumber purchased by them for resale."

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

"Sec. 188. Transactions and persons not subject to percentage tax. In computing the tax imposed in sections one hundred eighty-four, one hundred eighty-five, and one hundred eighty-six, transactions in the following commodities shall be excluded:

"The following shall be exempt from the percentage taxes imposed in sections one hundred eighty-four, one hundred eighty-five, and one hundred eighty-six;

Section 10. Section one hundred eighty-nine of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"Sec. 189. Percentage tax upon proprietors or operators of rope factories, sugar centrals, rice mills, coconut oil mills, corn mills, and desiccated coconut factories. Proprietors or operators of rope factories, sugar centrals, rice mills, coconut oil mills, corn mills and desiccated coconut factories shall pay a tax equivalent to two per centum of the gross value in money of all the rope, sugar, rice, coconut oil, ground or milled corn, and desiccated coconut manufactured or milled by them, including the by-products of the raw materials from which said articles are produced or manufactured, such tax to be based on the actual selling price or market value of these articles at the time they leave the factory or mill warehouse: Provided, however, That this tax shall not apply to coconut oil, copra by-products and desiccated coconuts shall be removed for exportation and are actually exported without returning to the Philippines, whether so exported in their original state, or as an ingredient or part of any manufactured article or product.

"A proprietor or operator of a refined sugar or coconut oil factory shall be subject to the tax imposed by this section but shall be permitted to deduct from the actual selling price or market value of the refined sugar or coconut oil the total cost, as duly established, of the raw sugar or crude oil, as the case may be, upon which the tax under this section has been previously paid.

"Where articles are manufactured out of materials subject to tax under this section, the total cost thereof, as duly established, shall be deductible from the gross selling price or gross value in money of the manufactured articles."

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

"Sec. 190. Compensating tax. All persons residing or doing business in the Philippines, who purchase or receive from without the Philippines any commodities, goods, wares, or merchandise, excepting those subject to specific taxes under Title IV of this Code, shall pay on the total value thereof at the time they are received by such persons, including freight, postage, insurance, commission and all similar charges, a compensating tax equivalent to the percentage taxes imposed under this Title on original transactions effected by merchants, importers, or manufacturers, such tax to be paid before the withdrawal or removal of said commodities, goods, wares, or merchandise from the customhouse or the post office: Provided, however, That merchants, importers, and manufacturers, who are subject to tax under sections one hundred eighty-four, one hundred eighty-five, one hundred eighty-six, or one hundred eighty-nine of this Title, shall not be required to pay the tax herein imposed where such commodities, goods, wares, or merchandise purchased or received by them from without the Philippines are to be sold, resold, bartered, or exchanged or are to be used in the manufacture or preparation of articles for sale, barter, or exchange and are to form part thereof: And provided, further, That the tax imposed in this section shall not apply to articles to be used by the importer himself in the manufacture or preparation of articles subject to specific tax or those for consignment abroad and are to form part thereof. If any article withdrawn from the customhouse or the post office without the payment of the compensating tax is subsequently used by the importer for other purposes, corresponding entry should be made in the books of accounts, if any are kept, or a written notice thereof sent to the Collector of Internal Revenue and payment of the corresponding compensating tax made within ten days from the date of such entry or notice. If the tax is not paid within such period, the amount of the tax shall be increased by twenty-five per centum, the increment to form part of the tax.

"The tax herein imposed shall not be assessed or collected on any single shipment consigned to any single person when the total value thereof does not exceed one hundred pesos. Goods brought in by residents returning from abroad, the value of which does not exceed five hundred pesos, are exempt from this tax.

"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 private persons or entities, the purchasers or recipients shall be considered the importers thereof. The tax due on such articles shall constitute a lien on the article itself superior to all other charges or liens, irrespective of the possessor thereof."

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

"Sec. 191. Percentage tax on road, building, irrigation, artesian well, waterworks, and other construction work contractors; proprietors or operators of dockyards, and others. Road, building, irrigation, artesian well, waterworks, and other construction work contractors; filling contractors; demolition and salvage work contractors; arrastre contractors; persons engaged in the installation of gas or electric light, heat, or power; persons selling water, light, heat, or power, except those paying a franchise tax; proprietors or operators of dockyards, mine drilling apparatus, smelting plants, engraving plants, plating establishments, plastic lamination establishments, vulcanizing and recapping establishments; establishments for washing and/or greasing of motor vehicles, battery charging, planning or surfacing and recutting of lumber; sawmills under contract to saw and/or cut logs belonging to others; dry-cleaning or dyeing establishments, steam laundries, laundries using washing machines; photographic studios, telephone or telegraph lines or exchanges, broadcasting or wireless stations; funeral parlors; shops for the construction or repair of bicycles or vehicles of any kind, mechanical devices, instruments, apparatus, or furniture of any kind, shoe repairing by machine or any mechanical contrivance, and tailor shops, beauty parlors, dressmakers, milliners, hatters, keepers of hotels, lodging houses, stevedores, warehousemen; plumbers; smiths; house or sign painters; lithographers, publishers, except those engaged in the publication or printing and publication of any newspaper, magazine, review or bulletin which appears at regular intervals, with fixed prices for subscription and sale, and which is not devoted principally to the publication of advertisements; printers and bookbinders, business agents and other independent contractors, shall pay a tax equivalent to three per centum of their gross receipts.

"Keepers of restaurants, refreshment parlors and other eating places, and caterers, shall pay a tax of three per centum of their gross receipts. Keepers of bars and cafes where wines or liquors are served shall pay a tax of seven per centum of their gross receipts: Provided, however, That two sets of sales or commercial invoices or receipts serially numbered in duplicate shall be separately prepared and issued, one for each sale of food or refreshment served and another for each sale of wine or liquor served, the originals of which shall be issued to the purchaser or customer. Where such establishments are maintained within the premises or compound of a race track or jai-alai or are accessible to patrons of such race tracks or jai-alai by means of a connecting door or passage, the keepers of such establishments shall pay a tax of twenty per centum of their gross receipts. Where the establishment is maintained within the premises of a cabaret or night club, or is accessible to patrons thereof by means of a connecting door or passage, the keeper of the establishment shall pay a tax of ten per centum of the gross receipts."

Section 13. Sections one hundred ninety-three, one hundred ninety-six, and two hundred one of Commonwealth Act Numbered Four hundred sixty-six, as amended, are hereby repealed.

Section 14. The first paragraph and subsection (s) of section one hundred ninety-four of Commonwealth Act Numbered Four hundred sixty-six, as amended, are hereby further amended to read as follows:

"Sec. 194. Words and phrases defined. In applying the provisions of this title, words and phrases shall be taken in the sense and extension indicated below:

"(s) "Real estate broker" includes any person, other than a real estate salesman as hereinafter defined, who for another, and for a compensation or in the expectation or promise of receiving compensation, (1) sells or offers for sale, buys or offers to buy, lists, or solicits for prospective purchasers, or negotiates the purchase, sale or exchange of real estate or interests therein; (2) or negotiates loans on real estate; (3) or leases or offers to lease or negotiates the sale, purchase or exchange of a lease, or rents or places for rent or collects rent from real estate or improvements thereon; (4) or shall be employed by or on behalf of the owner or owners of lots or other parcels of real estate at a stated salary, on commission, or otherwise, to sell such real estate or any parts thereof in lots or parcels. "Real estate salesman" means any natural person regularly employed by a real estate broker to perform in behalf of such broker any or all of the functions of a real estate broker. One act of a character embraced within the above definition shall constitute the person performing or attempting to perform same a real estate broker. But the foregoing definitions do not include a person who shall directly perform any of the acts aforesaid with reference to his own property, where such acts are performed in the regular course of or as an incident to the management of such property; nor shall they apply to persons acting pursuant to a duly executed power of attorney from the owner authorizing final consummation by performance of a contract conveying real estate by sale, mortgage or lease; nor shall they apply to any receiver, trustee or assignee in bankruptcy or insolvency, or to any person acting pursuant to the order of any court; nor to a trustee selling under a deed of trust. "Real estate dealer" includes any person engaged in the business of buying, selling, exchanging, leasing, or renting property as principal and holding himself out as a full or part-time dealer in real estate or as an owner of rental property or properties rented or offered to rent for an aggregate amount of three thousand pesos or more a year: Provided, however, That any person receiving an annual income of four thousand pesos or more from buying, selling, exchanging, leasing, or renting property on his own account as principal or as an owner of real property or properties shall be considered as engaged in business as real estate dealer: And provided, further, That an owner of sugar lands subject to tax under Commonwealth Act Numbered Five hundred and sixty-seven shall not be considered as a real estate dealer under this definition."

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

"Sec. 198. Continuation of business of deceased person. When any individual paying a business tax dies and the same business is continued by the person or persons interested in his estate, no additional payment shall be required for the residue of the term for which the tax was paid: Provided, however, That the person or persons interested in the estate should within thirty days from the death of the decedent submit to the Bureau of Internal Revenue or the regional or provincial revenue office inventories of goods or stocks had at the time of such death.

"The requirement under this section shall also be applicable in the case of transfer of ownership or change of name of the business establishment."

Section 16. Section two hundred of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"Sec. 200. Revocation of privilege. When a person doing business under the provisions of this Title was as a wholesale or retail liquor dealer, retail vino dealer, wholesale or retail fermented liquors dealer, or as a peddler of tobacco or liquor, is abusing his privilege to the injury of the public morals or peace, or when a place where any such business is established has been or is conducted in a disorderly or unlawful manner, or is a nuisance, or is permitted to be used as a resort for disorderly characters, criminals, or women of ill repute, the Collector of Internal Revenue may, after due investigation, and with the approval of the Department Head, revoke such privilege, subject to appeal to the President of the Philippines whose action on the appeal shall be final. Such revocation shall operate to forfeit all sums which may have been paid in respect of said privilege and to prohibit the sale, by the person whose privilege is so revoked, of liquor or tobacco for a term which may be fixed in said order."

Section 17. Section two hundred three of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"Sec. 203. Registration of name or style with provincial revenue agent or provincial treasurer. Every person engaged in any business or occupation on which a privilege tax is imposed by law shall, on or before the commencement of his business or occupation, register with the provincial revenue agent or with the provincial treasurer, in case no provincial revenue agent is assigned to the province, within ten days after securing his privilege tax receipt, his name or style, place of residence, business or occupation, and the place where such business or occupation is carried on. In case of a firm, the names and residence of the various persons constituting the same shall also be registered."

Section 18. Section two hundred four of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"Sec. 204. Persons subject to tax, to issue sales invoices or receipts. All persons subject to an internal revenue tax, shall, for each sale or transfer of merchandise or for services rendered valued at two pesos or more, prepare and issue sales or commercial invoices or receipts serially numbered in duplicate, showing, among other things, their names, or styles, if any, and business addresses: Provided, That in case of sales, receipts or transfers in the amount of fifty pesos or more, the invoices or receipts shall further show the name, or style, if any, and business address of the purchaser, customer or client. The original of each sales invoice or receipts shall be issued to the purchaser, customer, or client who, if engaged in any taxable business, shall keep and preserve the same in his place of business for a period of five years from the date of the invoice or receipt, the duplicate to be kept and preserved by the persons subject to tax, also in his place of business for a like period: Provided, That persons subject to tax, whose gross sales, earnings or receipts during the last preceding year exceed twenty thousand pesos shall, for each sale or transaction, issue an invoice or receipt, irrespective of the value of the article sold or service rendered.

"The Collector of Internal Revenue may, in meritorious cases, exempt any person subject to an internal revenue tax, from compliance with the provisions of this section."

Section 19. Section two hundred eight of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"Sec. 208. Unlawful pursuit of business or occupation. Any person who distills, rectifies, repacks, compounds, or manufactures any article subject to a specific tax, without having paid the privilege tax therefor as required by law, or who aids or abets in the conduct of illicit distilling, rectifying, repacking, compounding, or illicit manufacture of any article subject to a specific tax shall, in addition to being liable for the payment of such tax, be punished by a fine in a sum not less than two thousand pesos nor more than ten thousand pesos and by imprisonment for a term of not less than six months nor more than six years; and all articles distilled, rectified, repacked, compounded or manufactured, and all personal property found at the distillery, repacking, rectifying, compounding, or manufacturing establishment or in any building, room, yard, or enclosure connected therewith and used with or constituting a part of the premises on which the distilling, repacking, rectifying, compounding, or manufacturing of said article is carried on, and all the right, title, and interest of such person in the lot or tract of land in which such distillery, repacking, rectifying, compounding, or manufacturing establishment is situated, and all the right, title and interest therein of every person who knowingly or with negligence has suffered or permitted the business of a distiller, repacker, rectifier, compounder or manufacturer of any article subject to a specific tax to be there carried on or has connived at the same, shall be forfeited.

"In case of reincidence, the offender under the first paragraph hereof shall be punished by a fine of not less than two thousand pesos nor more than fifteen thousand pesos or by imprisonment of not less than two years nor more than twelve years or both.

"Any person who carries on any other business, or pursues any calling for which a fixed privilege tax is imposed without paying such tax as required by law or who aids or abets in the conduct of such business, shall, in addition to being liable to the payment of such tax, be punished by a fine in a sum of not exceeding one thousand pesos or by imprisonment for a term not exceeding six months or both."

Section 20. Section two hundred nine of Commonwealth Act Numbered Four hundred sixty-six, as amended, is hereby further amended to read as follows:

"Sec. 209. Failure to make return of receipts, sales receipts, or gross value of output removed, or pay the tax due thereon. Any person who, being required under this Title to make a return of the amount of his receipts, sales, business, or gross value of output actually removed, or pay the tax due thereon, shall fail or neglect to make such return or pay such tax within the time required, shall be punished by a fine not exceeding five thousand pesos and by imprisonment for a term not exceeding one year.

"Any such person who shall make a false or fraudulent return shall, besides being liable to the surcharge prescribed in section one hundred eighty-three of this Title, be punished by a fine of not less than two thousand pesos nor more than ten thousand pesos and by imprisonment of not less than six months but not more than six years."

Section 21. This Act shall take effect upon its approval.

Approved, August 24, 1956, except Section 10.

"Sec. 178. Payment of privilege taxes. A privilege tax must be paid before any business or occupation hereinafter specified can be lawfully begun or pursued. The tax on business is payable for every separate or distinct establishment or place where business subject to the tax is conducted; and one line of business or occupation does not become exempt by being conducted with some other business or occupation for which such tax has been paid.

"The tax on a business must be paid by the person, firm, or company conducting the same; the occupation tax, by each individual engaged in a calling subject thereto."

"Sec. 180. Time for payment of fixed taxes. All fixed taxes shall be due and payable on or before the twentieth of January of each year. But any reason first beginning a business or occupation must pay the tax before engaging therein."