FURTHER AMENDING CERTAIN SECTIONS OF TITLE V OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED.

WHEREAS, there is a need to restructure the sales tax system
to make it more progressive and responsive to the requirements of a developing
economy;

WHEREAS, certain luxury and semi-luxury articles should be
reclassified based on their inherent essentialities consistently with present
economic levels and conditions;

WHEREAS, to minimize the adverse effects of worldwide
inflation, the sales tax rate of basic commodities should be reduced from 7% to
5%;

WHEREAS, local governments are in need of additional revenue
to augment the funds needed in their development projects;

WHEREAS, in the interest of equity and in order to eliminate
the double taxation feature of the present sales tax system as regards raw
materials used in the manufacture of articles, there is need to adopt the tax
credit method in computing the sales tax;

WHEREAS, in order to make the administration of the customs
duty and advance sales tax or compensating tax simple, it is desirable to adopt
a common base of valuation of imported articles for such levies;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Republic of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby decree:

SECTION 1. Certain sections of Title V of the National
Internal Revenue Code as amended, are hereby further amended to read as
follows:

“SEC. 193. Payment of percentage taxes. —

1. In general.—Unless otherwise specifically provided, 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 value of output actually removed from the factory or mill warehouse
   and within twenty days after the end of each quarter pay and 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 twenty days
   after closing his business.

   “For purposes of this section, sales on consignment shall be considered
   actually sold on the day of sale or sixty days after the date consigned,
   whichever is earlier.

   “If the percentage tax on any business is not paid within the time specified
   above, the amount of the tax shall be increased by twenty-five per
   centum the increment to be a part of the tax and the entire unpaid amount
   shall be subject to interest at the rate of fourteen per centum per
   annum.

   “In case of willful neglect to file the return within the period prescribed
   herein, or in case of false or fraudulent return is willfully made there shall
   be added to the tax or to the deficiency tax in case any payment has been made
   on the basis of such return before the discovery of the falsity or fraud, a
   surcharge of fifty per centum of its amount and the entire unpaid
   amount shall be subject to interest at the rate of fourteen per centum per
   annum. The amount so added to any tax shall be collected at the same time
   and in the same manner and as part of the tax unless the tax has been paid
   before the discovery of the falsity or fraud, in which case, the amount so added
   shall be collected in the same manner as the tax.

2. Sales tax on imported articles.—When the articles are imported, the
   percentage taxes established in Sections 194, 195, 196, 197, 198, 199 and 201 of
   this Code shall be paid in advance by the importer, in accordance with the
   regulations promulgated by the Secretary of Finance and prior to the release of
   such articles from customs’ custody, based on the home consumption value or
   price (excluding internal excise taxes) thereof, plus ten (10) percent of such
   home consumption value or price, including postage, commission, customs duty and
   all similar charges, except freight and insurance, plus one hundred per
   centum of such total value in the case of articles enumerated in Sections
   194 and 195; fifty per centum in the case of articles under Section 196
   and 197; and twenty-five per centum in the case of articles under
   Sections 198, 199 and 201. 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 specified tax: Provided, However, That where the
   National Economic and Development Authority certifies to the availability of
   local raw materials of sufficient quantity, comparable quality and price to meet
   the needs of manufacturers subject to specific tax the importation of such raw
   materials shall be subject to the tax herein imposed.

   The home consumption value or price under this section shall be the value or
   price declared in the consular, commercial, trade or sales invoice, certified to
   as correct under penalties of perjury by the Philippine Consul at the port of
   origin if there is any. Where there exists a reasonable doubt as to the value or
   price of the imported article declared in the entry, the correct value of the
   article shall be ascertained from the reports of the revenue attache or
   commercial attache (foreign trade promotion attache), pursuant to Republic Act
   Numbered Fifty-Four Hundred and Sixty six or other Philippine diplomatic
   officers and from such other information that may be available to the Bureau of
   Customs.

   From the data thus gathered, the Commissioner of Customs shall ascertained
   and establish the home consumption values of articles exported to the
   Philippines and shall publish such lists of values from time to time.

   When the dutiable value provided for in the preceding paragraphs cannot be
   ascertained for failure of the importer to produce the documents mentioned above
   or where there exists a reasonable doubt as to dutiable value of the imported
   articles declared in the entry, it shall be the domestic wholesale selling price
   of such or similar article in Manila or other principal markets in the
   Philippines on the date the tax becomes payable on the articles in the usual
   wholesale quantities and in the ordinary course of trade, minus —

   1. Twenty percent thereof for expenses and profits; and
   2. Duties and taxes paid thereon.

   “The tax herein imposed shall be collected in all cases where the original
   importer sold, transferred or negotiated the imported articles to third persons
   before release thereof from customs’ custody, regardless of the tax status of
   the original importer and the indorsee or transferee, the same to be paid by the
   transferee and/or indorsee.

   “The provisions of this Code shall not be construed as nullifying whatever
   interpretation the government has given to the word ‘importer’ heretofore.

   “In the case of tax-free articles brought or imported into the Philippines by
   persons, entities or agencies exempt from the tax which subsequently sold,
   transferred, or exchanged in the Philippines to non-exempt private persons or
   entities, the purchasers 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.”

3. Flexibility Clause.—In the interest of the national economy and
   general welfare, and subject to the limitations herein prescribed, the
   President, upon recommendation of the Secretary of Finance and the National
   Economic and Development Authority, is hereby empowered to:
   1. Revise the rates of percentage taxes;
   2. Change the classification of the articles enumerated in Sections 194, 195,
      196, 197, 198, 199 and 201; and
   3. Revise the taxable base levels in Sections 195 and 197.

   The existing rates may be increased by not more than 50% or decreased by not
   more than 10%. The existing price levels may be increased or decreased by not
   more than 50%.

   The above authority may be exercised by the President if any of the following
   conditions exists:

   1. Economic conditions render it necessary to increase revenue, or to re-direct
      expenditure or consumption patterns by increasing or decreasing the rate of
      percentage tax on certain commodities; or
   2. Where, in the light of technological and social changes, it is necessary to
      classify new products or to reclassify articles subject to the sales tax on the
      basis of the changed concepts of essentiality or the degree of manufacturing
      done; or
   3. Whenever by reason of fluctuation of currency and/or inflation, the existing
      taxable base levels are no longer realistic or consistent with current price
      levels, it is necessary to revise the same to conform to existing conditions; or

   4. Where it is necessary to counter adverse action on the part of another
      country.

4. Value-Added Tax.—The provision of this title to the contrary
   notwithstanding, when public interest so requires, the President, upon
   recommendation of the Secretary of Finance, may subject the second sale of any
   article taxable under this title to a value-added tax at the same rates
   hereinafter provided, based on the gross selling price or gross value in any of
   the articles sold, bartered, exchanged or transferred. In case an article has
   been made subject to the value-added tax by the President, the tax credit method
   shall be applied in computing the tax due.

“SEC. 194. Percentage tax on sales of non-essential
articles.—There shall be levied, assessed and collected once only on every
original sale, barter, exchange, or similar transaction for nominal or valuable
consideration intended to transfer ownership of, or title to, the articles
hereinbelow 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:

“(a) All articles commonly or commercially known as jewelry, whether real or
imitation, pearls, precious and semi-precious stones and imitations thereof;
articles made of, or ornamented, mounted or fitted with, precious metals or
imitations thereof or ivory (not including surgical and dental instruments,
silver plated wares, frames or mounting for spectacles or eyeglasses, and dental
gold or gold alloys and other precious metals used in filling, mounting or
fitting of the teeth); opera glasses, and lorgnettes. The term “precious metals”
shall include platinum, gold, silver, and other metals of similar or greater
value. The term “imitation thereof” shall include plating and alloys of such
metals.

“(b) Perfumes, essences, extracts, toilet waters, cosmetics, hair dressings,
hair dyes, hair restoratives, aromatic cachous, toilet powders, except tooth and
mouth washes, dentrifices, tooth paste, talcum and medicated toilet powders,
hair oils and pomades.

“(c) Dice, mahjong sets and playing cards.

“(d) Juke boxes.

“(e) Similar or analogous articles, substances or preparations to those
enumerated above as determined by the Secretary of finance upon the
recommendation of the Commissioner of Internal Revenue based on the inherent
essentiality of the product.

Any percentage, specific or mining tax paid under this title, title IV or
title VII, respectively, on domestically manufactured, processed or produced, or
imported raw materials, part, accessory or other article forming part of the
finished product shall be credited against the sales tax due on the finished
product: Provided, however, That in case the total tax paid on the raw
material, part, accessory or other article exceeds the amount of the sales tax
due on the finished product, the excess shall be credited against the sales tax
liabilities of the manufacturer for the succeeding taxable quarter: And,
provided, furthermore, That the amount of the tax on the raw material,
part, accessory, or other article shall be indicated as a separate item in the
sales invoice.

Whenever the finished product subject to sales tax is manufactured or
produced out of any raw material, part, accessory of other article which is
exempt from tax, the tax otherwise due on the latter shall be deemed to have
been paid for purposes of the next preceding paragraph.

Any materials part or accessory of the above-mentioned articles shall be
taxed under this section.

“SEC. 196. Percentage tax on sales of semi-essential
articles.—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 hereinbelow enumerated, a tax equivalent
to twenty-five 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.

1. Luggage, trunks, valises, travelling bags, suitcases, satchels, overnight
   bags, hat boxes for use of travelers, beach bags, bathing suit bags, brief cases
   made of leather or imitation leather, and salesman’s sample and display cases;
   handbags, card, pass and key cases; toilet cases and other cases, bags and kits
   (without regard to size, shape, construction, or material from which made) for
   use in carrying toilet articles or articles of wearing apparel;
2. Harpsicord and accordions;
3. Firearms and cartridges or other forms of ammunitions;
4. Electric, gas or oil water heaters; electric gas or oil appliances, other
   than stoves and ranges, of the typo used for cooking, warming, or keeping warn
   food or beverage for consumption on the premises; electric mixers, whippers, and
   juicers; and household type electric vacuum cleaners or polishers;
5. Washing machines, cloth dryers and combination washing machines and cloth
   dryers of all types;
6. Mechanical lighters;
7. Textiles wholly or in chief value of silk, wool, linen; nylon or other
   synthetic and/or chemical fabrics except those primarily intended for clothing;
   wool and silk hats; and furs and manufacturers, thereof;
8. Toys and plaything of all sorts;
9. Beverage coolers, ice cream cabinets, water coolers, food and beverage
   storage cabinets, ice-making machines, and mild cooler cabinets, each having, or
   being primarily designated for use with a mechanical refrigerating unit operated
   by electricity, gas, kerosene or other means;
10. Air-conditioning units;
11. Electricity and/or battery operated beauty equipments and accessories;
12. Pianos, electric or electronic musical organ; and
13. Similar or analogous article to those enumerated above, as determined by the
    Secretary of Finance upon recommendation of the Commissioner of Internal Revenue
    based on the inherent essentiality of the product.

Any percentage, specific, or mining tax paid under this title, title IV or
title VII, respectively, on domestically manufactured, processed or produced, or
imported raw materials, part, accessory or other article forming part of the
finished product shall be credited against the sales tax due on the finished
product: Provided, however, That in case the total tax paid on the raw
material, part accessory or other article exceeds the amount of the sales tax
due on the finished product, the excess shall be credited against the sales tax
liabilities of the manufacturer if or the succeeding, taxable quarter: And,
provided, further, That the amount of the tax on the raw material,
part, accessory, or other article shall be indicated as a separate item in the
sales invoice.

Whenever the finished product subject to sales tax is manufactured or
produced out of any raw material, part, accessory or other article which is
exempt from tax, the tax otherwise due on the latter shall be deemed to have
been paid for purposes of the next preceding paragraph.

Any material, part or accessory of the above-mentioned articles shall be
taxed under this section.

“SEC. 197. Percentage tax on sales of certain
semi-essential articles.—There shall be levies, assessed, and collected
once only on every original sale, barter, exchange, or similar transaction for
nominal or valuable consideration intended to transfer ownership of, or title
to, the articles hereinbelow enumerated, a percentage tax to be paid by the
manufacturer or producer determined in accordance with the following
schedules:

1. Locally Manufactured —
   1. Fountain pens and ball pens: —

      If the gross selling price does not exceed P25, the tax shall be 10% of such
      selling price; if it exceeds P25 but does not exceed P35, the tax shall be P2.50
      plus 15% of the excess over P25;

      If it exceeds P35 but does not exceed P45 the tax shall be P4 plus 20% of the
      excess over P35;

      If it exceeds P45, the tax shall be P6 plus 25% of the excess over P45;

   2. Chairs, sofas, beds, desk, show cases book cases, lockers, cabinets
      except filing cabinets, medical and dental chairs: —

      If the gross selling price does not exceed P200 the tax shall be 10% of such
      selling price; if it exceeds P200 but does not exceed P300, the tax shall be P20
      plus 15% of the excess over P200;

      If it exceeds P300 but does not exceed P400, the tax shall be P55 plus 20% of
      the excess over P300;

      If it exceeds P400, the tax shall be P55 plus 25% of the excess over
      P400.

   3. Watches, clocks, cases and movements therefore: —

      If the gross selling price does not exceed P200, the tax shall be 10% of such
      selling price; if it exceeds P200 but does not exceed P300, the tax shall be P20
      plus 15% of the excess over P200;

      If it exceeds P300 but does not exceed P400, the tax shall be P35 plus 20% of
      the excess over P300;

      If it exceeds P400, the tax shall be P55 plus 25% of the excess over
      P400.

   4. Electric fans and exhaust fans. —

      If the gross selling price does not exceed P200, the tax shall be 10% of such
      selling price; if it exceeds P200 but does not exceed P300, the tax shall be P20
      plus 15% of the excess over P200;

      If it exceeds P300 but does not exceed P400, the tax shall be P35 plus 20% of
      the excess over P300;

      If it exceeds P400, the tax shall be P55 plus 25% of the excess over
      P400.

   5. Electric, gas and oil stoves and ranges: —

      If the gross selling price does not exceed P500, the tax shall be 10% of such
      selling price; if it exceeds P500 but does not exceed P750, the tax shall be P50
      plus 15% of the excess over P500;

      If it exceeds P750 but does not exceed P1,000, the tax shall be P87.50 plus
      20% of the excess over P750;

      If it exceeds P1,000, the tax shall be P137.50 plus 25% of the exceeds over
      P1,000.

   6. On phonographs or gramophones; combination radio phonograph sets; tape
      recorders, video tape recorders, tape decks, car stereos, casette-radio; and
      similar articles for reproducing and/or recording music, sound and image: —

      If the gross selling price does not exceed P500, the tax shall be 10% of such
      selling price; if it exceeds P500 but does not exceed P750, the tax shall be P50
      plus 15% of the excess over P500;

      If it exceeds P750 but does not exceed P1,000, the tax shall be P87.50 plus
      20% of the excess over P750;

      If it exceeds P1,000, the tax shall be P137.50 plus 25% of the exceeds over
      P1,000.

   7. On television sets, combination radio and television sets; and
      combination radio-phonograph-television sets: —

      If the gross selling price does not exceed P1,300, the tax shall be 10% of
      such selling price; if it exceeds P1,300 but does not exceed P1,600, the tax
      shall be P130 plus 15% of the excess over P1,300;

      If it exceeds P1,600 but does not exceed P1,900, the tax shall be P175 plus
      20% of the excess over P1,600;

      If it exceeds P1,900, the tax shall be P235 plus 25% of the exceeds over
      P1,900.

   8. On household type refrigerators and freezers: —

      If the gross selling price does not exceed P1,900, the tax shall be 10% of
      such selling price; if it exceeds P1,900 but does not exceed P2,300, the tax
      shall be P190 plus 15% of the excess over P1,900;

      If it exceeds P2,300 but does not exceed P2,700, the tax shall be P250 plus
      20% of the excess over P2,300;

      If it exceeds P2,700, the tax shall be P330 plus 25% of the exceeds over
      P2,700.

   9. Similar or analogous articles: —

      Similar or analogous articles to those mentioned above, as determined by the
      Secretary of Finance upon the recommendation of the Commissioner of Internal
      Revenue based on the inherent essentiality of the product, shall be subject to
      their respective classifications and rates as indicated above.

2. Imported Articles: —

   When the articles above-mentioned are imported the tax shall be twenty-five
   (25%) per centum of landed cost plus mark-up.

   Any percentage, specified or mining tax paid under this title, title IV or
   title VII, respectively, on domestically manufactured, processed or produced, or
   imported raw materials, part, accessory or other article forming part of the
   finished product shall be credited against the sales tax due on the finished
   product: Provided, however, That in case the total tax paid on the raw
   material, part, accessory or other article exceeds the amount of the sales tax
   due on the finished product, the excess shall be credited against the sales tax
   liabilities of the manufacturer for the succeeding taxable quarter: And,
   provided, further, That the amount of the tax on the raw material,
   part, accessory, or other article shall be indicated as a separate item in the
   sales invoice.

   When the finished product subject to sales tax is manufactured or produced
   out of any raw materials, part, accessory or other article which is exempt from
   tax, the tax otherwise due on the latter shall be deemed to have been paid for
   purposes of the next preceding paragraph.

   Any material, part, or accessory of the above-mentioned articles shall be
   taxed under this section.

“SEC. 198. Percentage tax on sales of agricultural
products.—There shall be levied, assessed and collected once only on every
original sale, barter, exchange and similar transaction either for nominal or
valuable consideration, intended to transfer ownership of, or title to, the
articles enumerated hereinbelow, a tax equivalent to one (1%) 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 producers:

1. Agricultural food products including ordinary salt and all kinds of fish and
   its by-products, whether in their state or not, except those subject to tax
   under Section 201 and 203; and
2. Agricultural non-food products, whether in their original state or not when
   sold, bartered, or exchanged by the producer or owner of the land where produced
   except those subject to tax under Section 203.

When the articles mentioned in (a) and (b) above are imported, the tax shall
be ten (10%) per centum of the landed cost plus mark-up.

The phrase “whether in their original state or not” means the transformation
of said products by the application of simple processes to preserve or otherwise
prepare said products for the market such as freezing, drying, salting, smoking
or stripping.

“SEC. 199. 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 consideration, intended to transfer ownership of, or title to, the
articles not covered in Section 194, 195, 196, 197, 198, and 201, a tax
equivalent to ten (10%) 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 any percentage,
specific or mining tax paid under this title, title IV or title VII,
respectively, on domestically manufactured, processed or produced, or imported
raw materials, part, accessory or other article forming part of the finished
product shall be credited against the sales tax due on the finished product:
Provided, however, That in case the total tax paid on the raw material,
part, accessory or other article exceeds the amount of the sales tax due on the
finished product, the excess shall be credited against the sales tax liabilities
of the manufacturer for the succeeding taxable quarter: And, provided,
further, That the amount of the tax on the raw material, part, accessory,
or other article shall be indicated as a separate item in the sales invoice.

Whenever the finished product subject to sales tax is manufactured or
produced out of any raw material, part, accessory or other article which is
exempt from tax, the tax otherwise due on the latter shall be deemed to have
been paid for purposes of the next preceding paragraph.

Any part or accessory of the above-mentioned articles shall be taxed under
this section.

“SEC. 200—Tax on tax-exempt products deemed
paid.—Whenever a tax-exempt product is used in the manufacture or
production of any article, the sales, specific or mining taxes otherwise due on
such tax-exempt product shall be credited against the sales tax due on the
manufactured article.

“SEC. 201. Percentage tax on sales of essential
articles.—There shall be levied, assessed and collected once only on every
original sale, barter, exchange and similar transaction either for nominal or
valuable consideration, intended to transfer ownership of, or title to, the
articles enumerated hereinbelow, a tax equivalent to five (5%) 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.

“(a) Locally processed meat, milk, fish and other sea foods;

“(b) Wheat flour;

“(c) Locally manufactured medicine;

“(d) Locally manufactured laundry soap and detergent;

“(e) Locally manufactured writing pads, notebooks and ordinary load
pencils;

“(f) Poultry, swine and cattle feeds; and

“(g) Cement.

Provided, that any percentage, specific or mining tax paid under
this title, title IV or title VII, respectively, on domestically manufactured,
processed or produced, or imported raw materials, part, accessory or other
article forming part of the finished product shall be credited against the sales
tax due on the finished product: Provided, however, That in case the
total tax paid on the raw material, part, accessory or other article exceeds the
amount of the sales tax due on the finished product, the excess shall be
credited against the sales tax liabilities of the manufacturer for the
succeeding taxable quarter: And, provided, further, That the amount of
the tax on the raw material, part, accessory or other article shall be indicated
as a separate item in the sales invoice.

Whenever the finished product subject to sales tax is manufactured or
produced out of any raw material, part, accessory or other article which is
exempt from tax, the tax otherwise due on the latter shall be deemed to have
been paid for purposes of the next preceding paragraph.

Any part, or accessory of the above articles shall be taxed under this
section.

For purposes of this section, processed meat, milk, fish and other sea foods
include such food products, which have undergone the process of curing, canning,
bottling or similar processes, but excludes such food products which have
undergone only simple preserving processes of freezing, refrigerating, drying,
salting or smoking.

“SEC. 202. Articles not subject to percentage tax on
sales.—The following shall be exempt from the percentage taxes imposed in
section 194, 195, 196, 197, 198, 199, and 201:

1. Articles subject to tax under Title IV of this Code.
2. Minerals and mineral products, whether in their original state or not when
   sold, bartered, or exchanged by the lessee, concessionaire or owner of the
   mineral land from which removed.
3. Articles subject to tax under Section 203 of this Code.
4. .22 caliber firearms and cartridges as well as other forms of ammunitions
   sold or delivered directly to the Armed Forces of the Philippines or any
   government instrumentality or any engaged in maintaining peace and order for
   their use or issue.
5. Articles shipped or exported by the manufacturer or producer, irrespective
   of any shipping arrangement that may be agreed upon which may influence or
   determine the transfer of ownership of the articles so exported.

Any percentage tax paid under this title, title IV or title V, respectively,
on domestically manufactured or in imported raw materials used in the
manufacture of finished products exported shall be allowed to be credited
against other tax liabilities of the manufacturer-exporter: Provided,
however, That the amount of the tax on the raw material, part, accessory,
or other article shall be indicated as a separate item in the sales invoice.

Sales to foreign tourists paid for in acceptable foreign currency directly
made by manufacturers or producers shall be considered export sales if the
articles purchased are actually brought out of the Philippines by the buyers
upon their departure.

“SEC. 203. Percentage tax upon proprietors or operators
of rope factories, sugar central and mills, coconut oil mills, cassava mills,
and dessicated coconut factories.—Proprietors or operators of rope
factories, sugar centrals and mills, coconut oil mills, cassava mills and
dessicated coconut factories shall pay a tax equivalent to two (2%) per centum
of the gross value in money of all the rope, sugar, coconut oil, cassava flour
or starch, dessicated coconut, manufactured, processed or milled by them,
including the by-product of the raw materials from which said articles are
produced, processed, 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
rope, coconut oil, and the by-product of copra from which it is produced or
manufactured, and dessicated coconuts, if such rope, coconut oil, copra
by-products and dessicated coconuts shall be removed for exportation and are
actually exported without returning to the Philippines, whether so exported in
their original state, or an ingredient or part of any manufactured article or
product.

In case the raw materials are processed, manufactured or milled in pursuance
of a contract where the factory, central, or mill receives a share of the
finished products, the tax on the share pertaining to the planter or owner of
the raw materials shall be charged to the planter or owner and withheld by the
proprietor or operator of the factory, central, or mill and paid by him to the
Commissioner.

A proprietor or operator of a refined sugar factory shall be subject to the
tax imposed by this section but any percentage tax paid under this section on
the raw sugar shall be credited against the tax due on the refined sugar.

Where articles are manufactured out of materials subject to tax under this
section, the percentage tax paid herein shall be credited against the sales tax
due on the finished product.

SECTION 2. Repealing Clause.—Any provision of
existing general and special laws inconsistent with the provisions of this
Decree are hereby modified, amended or repealed accordingly.

SECTION 3. Effectivity. This Decree shall take
effect upon approval: Provided, That the provisions hereof relating to
the computation and payment of the quarterly percentage tax on sales shall take
effect beginning July 1, 1978.

DONE in the City of Manila, this 21st day of April, in the year of Our Lord,
nineteen hundred and seventy-eight.

			(Sgd.) FERDINAND E. MARCOS President of the Philippines
	By the President:
	(Sgd.) JACOBO C. CLAVE
		Presidential Executive Assistant