Sec. 142. Cigars and cigarettes. -- x x x.
(c) Cigarettes packed by machine. -- There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below:
(1) 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;
(2) 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 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 One peso (P1.00) per pack.x x x x
The specific tax from any brand of cigarettes within the next three (3) years of effectivity of this Act shall not be lower than the tax [which] is due from each brand on October 1, 1996: Provided, however, That in cases where the specific tax rates imposed in paragraphs (1), (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 1997 and one hundred percent (100%) of the increase shall be effective in 1998.x x x x
The rates of specific tax on cigars and cigarettes under paragraphs (1), (2), (3) and (4) hereof, shall be increased by twelve percent (12%) on January 1, 2000. [emphases ours]
Section 1. New Rates of Specific Tax. The specific tax rates imposed under the following sections are hereby increased by twelve percent (12%) and the new rates to be levied, assessed, and collected are as follows:
Section Description of Articles Present Specific Tax Rates (Prior to January 1, 2000) New Specific Tax Rates (Effective January 1, 2000) 145 CIGARS and CIGARETTES B) Cigarettes Packed by Machine (1) Net Retail Price (excluding VAT & Excise) exceeds P10.00 per pack P12.00/pack P13.44/pack (2) Net Retail Price (excluding VAT & Excise) is P6.51 up to P10.00 per pack P8.00/pack P8.96/pack (3) Net Retail Price (excluding VAT & Excise) is P5.00 to P6.50 per pack P5.00/pack P5.60/pack (4) Net Retail Price (excluding VAT & Excise) is below P5.00 per pack P1.00/pack P1.12/pack
Provided, however, that the new specific tax rate for any existing brand of cigars [and] cigarettes packed by machine, distilled spirits, wines and fermented liquors shall not be lower than the excise tax that is actually being paid prior to January 1, 2000. [emphasis ours]
Section 145 states that during the transition period, i.e., within the next three (3) years from the effectivity of the Tax Code, the excise tax from any brand of cigarettes shall not be lower than the tax due from each brand on 1 October 1996. This qualification, however, is conspicuously absent as regards the 12% increase which is to be applied on cigars and cigarettes packed by machine, among others, effective on 1 January 2000. Clearly and unmistakably, Section 145 mandates a new rate of excise tax for cigarettes packed by machine due to the 12% increase effective on 1 January 2000 without regard to whether the revenue collection starting from this period may turn out to be lower than that collected prior to this date.
By adding the qualification that the tax due after the 12% increase becomes effective shall not be lower than the tax actually paid prior to 1 January 2000, Revenue Regulation No. 17-99 effectively imposes a tax which is the higher amount between the ad valorem tax being paid at the end of the three (3)-year transition period and the specific tax under paragraph C, sub-paragraph (1)-(4), as increased by 12% - a situation not supported by the plain wording of Section 145 of the Tax Code.16
Brand22 Net Retail Price per pack (A)
Ad Valorem Tax Due prior to Jan 1997 (B)
Specific Tax under Section 145(C)(4)(C)
Specific Tax Due Jan 1997 to Dec 1999 (D)
New Specific Tax imposing 12% increase by Jan 2000(E)
New Specific Tax Due by Jan 2000 per RR 17-99
Camel KS 4.71 5.50 1.00/pack 5.50 1.12/pack 5.50 Champion M 100 4.56 3.30 1.00/pack 3.30 1.12/pack 3.30 Union American Blend 4.64 1.09 1.00/pack 1.09 1.12/pack 1.12
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 the new specific tax rate for any existing brand of cigars [and] cigarettes packed by machine, distilled spirits, wines and fermented liquors shall not be lower than the excise tax that is actually being paid prior to January 1, 2000.
This bill serves as a catch-up measure as government attempts to collect additional revenues due it since 2001. Modifications are necessary indeed to capture the loss proceeds and prevent further erosion in revenue base. x x x. As it is, it plugs a major loophole in the ambiguity of the law as evidenced by recent disputes resulting in the government being ordered by the courts to refund taxpayers. This bill clarifies that the excise tax due on the products shall not be lower than the tax due as of the date immediately prior to the effectivity of the act or the excise tax due as of December 31, 1999.26
Endnotes:
* Designated as Acting Chairperson in lieu of Associate Justice Antonio T. Carpio, per Special Order No. 1083 dated September 13, 2011.
** Designated as Additional Member of the Second Division in lieu of Associate Justice Antonio T. Carpio, per Special Order No. 1084 dated September 13, 2011.
*** Designated as Additional Member of the Second Division in lieu of Associate Justice Bienvenido L. Reyes, per Special Order No. 1107 dated September 27, 2011.
1 Penned by CTA Justice Juanito C. Castañeda, Jr., and concurred in by CTA Justices Lovell R. Bautista, Erlina P. Uy, Caesar A. Casanova, and Olga Palanca-Enriquez; rollo, pp. 41-54. CTA Presiding Justice Ernesto D. Acosta dissented from the majority; id. at 55-63.
2 Id. at 64-66. CTA Justice Ernesto D. Acosta reiterated his dissent from the majority opinion; id. at 67-70.
3 An Act Amending Sections 138, 139, 140 and 142 of the National Internal Revenue Code, as amended, and For Other Purposes.
4 SEC. 3. Rates and Bases of Tax. - There shall be levied, assessed and collected on cigars and cigarettes excise tax as follows:
(c) Cigarettes Packed by Machine:
(1) Per pack - P12.00 if the net retail price per pack (exclusive of VAT and excise tax) is over P10.00;
(2) Per pack - P8.00 if the net retail price per pack (exclusive of VAT and excise tax) is over P6.50 but not over P10.00;
(3) Per pack - P5.00 if the net retail price per pack (exclusive of VAT and excise tax) is P5.00 but not over P6.50;
(4) Per pack - P1.00 if the net retail price per pack (exclusive of VAT and excise tax) is below P5.00.
The specific tax from any brand of cigarettes within the next three (3) years of effectivity of this Act shall not be lower than the tax which is due from each brand on October 1, 1996: Provided, however, That in cases where the specific tax rates imposed in paragraph (C), sub-paragraphs (1), (2), (3) and (4) herein above, 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: (a) fifty percent (50%) of the increase shall be effective in 1997; and (b) one hundred percent (100%) of the increase shall be effective in 1998.
(d) Beginning January 1, 2000, the rates of specific tax on cigars and cigarettes under paragraphs (A) and (C), sub-paragraphs (1), (2), (3) and (4) hereof, shall be increased by twelve percent (12%).
5 Rollo, p. 45.
6 Ibid.
7 Id. at 46-47.
8 The CIR's motion for reconsideration of the CTA First Division's decision dated May 26, 2006 was denied in a resolution dated November 15, 2006; id. at 46-47.
9 Supra note 1.
10 Supra note 2.
11 Rollo, p. 209.
12 Ibid.
13 The CIR referred to the exchange between Senator Juan Ponce Enrile and Senators Neptali Gonzales and Franklin Drilon; Records of the Senate, No. 33, Volume II, October 16, 1996.
14 The 2008 Fortune Tobacco case involved refund of excise taxes amounting to P680,387,025.00 for the period of January 2000 to December 2001; and P355,385,920 for the period of January to December 2002.
15 G.R. Nos. 167274-75, July 21, 2008, 559 SCRA 160.
16 Id. at 177.
17 Under this doctrine, Courts are "to stand by precedent and not to disturb settled point." Once the Court has "laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle, and apply it to all future cases, where facts are substantially the same; regardless of whether the parties or property are the same"; In the Matter of the Charges of Plagiarism, etc., Against Associate Justice Mariano C. del Castillo, A.M. No. 10-7-17-SC, February 8, 2011. Also, in Ting v. Velez-Ting, G.R. No. 166562, March 31, 2009, 582 SCRA 694, 704-705, we said that "based on the principle that once a question of law has been examined and decided, it should be deemed settled and closed to further argument. Basically, it is a bar to any attempt to relitigate the same issues, necessary for two simple reasons: economy and stability. In our jurisdiction, the principle is entrenched in Article 8 of the Civil Code."
18 Senator Enrile's sponsorship speech, in fact, identifies three objectives for the enactment of RA 8240: (1) to evolve a tax structure which will promote fair competition among the players in the industries concerned and generate buoyant and stable revenue for government; (2) to ensure that the tax burden is equitably distributed; and (3) to simplify the tax administration and compliance with the tax laws. Transcript of Senate Deliberations on House Bill No. 7198 dated October 15, 1996.
19 Senate deliberations dated October 16, 1996.
20 CONSTITUTION, Article VI, Section 28(1).
21 British American Tobacco v. Camacho, G.R. No. 163583, April 15, 2009, 585 SCRA 36.
22 Camel and Champion are Fortune Tobacco brands; and Union American Blend is a brand of Sterling Tobacco Corporation. See Annex "D" of the 1997 Tax Code.
23 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 are 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 (P4.00);
(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:
(1) Less than Two hundred and fifty pesos (P250) - Seventy-five pesos (P75), per proof liter;
(2) Two hundred and fifty pesos (P250) up to Six hundred and Seventy-Five pesos (P675) - One hundred and fifty pesos (P150), per proof liter; and
(3) More than Six hundred and seventy-five pesos (P675) - Three hundred pesos (P300), per proof liter.
(c) Medicinal preparations, flavoring extracts, and all other preparations, except toilet preparations, of which, excluding water, distilled spirits for 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 thereof, from whatever source, by whatever process produced, and shall include whisky, brandy, rum, gin and vodka, and other similar products or mixtures.
"Proof spirits" 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.
New brands shall be classified according to their current net retail price.
For the above purpose, "net retail price" shall mean the price at which the distilled spirit 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, 1996.
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.
24 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 (P100); and
(2) More than Five hundred pesos (P500) - Three hundred pesos (P300).
(b) Still wines containing fourteen percent (14%) of alcohol by volume or less, Twelve pesos (P12.00); and
(c) Still wines containing more than fourteen percent (14%) but not more than twenty-five percent (25%) of alcohol by volume, Twenty-four pesos (P24.00).
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 alcoholic strength.
The rates of tax imposed under this Section shall be increased by twelve percent (12%) on January 1, 2000.
New brands shall be classified according to their current net retail price.
For the above purpose, "net retail price" 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, 1996.
The classification of each brand of wines based on its average net retail price as of October 1, 1996, as set forth in Annex "B," shall remain in force until revised by Congress.
25 SEC. 145. Cigars and Cigarettes. - (A) Cigars. - There shall be levied, assessed and collected on cigars a tax of One peso (P1.00) per cigar[.]
26 House Deliberations on RA 9334 (House Bill No. 3174), October 27, 2004, p. 19.