C.A. No. 503

An Act to Amend Certain Sections of the National Internal Revenue Code

Commonwealth Act No. 503

Be it enacted by the National Assembly of the Philippines:

Section 1. Section one hundred eighty-seven of Commonwealth net Numbered Four hundred and sixty-six is amended to read as follows;

Sec. 187. Percentage tax on consignments abroad.— Every merchant or producer not herein specifically exempted, shall pay a tax of one and one-half per centum of the gross value money of the commodities, goods, wares, and merchandise consigned abroad by him, such tax to be based on the actual selling price or value of the things in question at the time they are consigned abroad, whether consisting of raw materials or of manufactured or partially manufactured products or whether of domestic or foreign origin: Provided, That the tax prescribed in this section shall not be imposed on (a) articles upon which the tax prescribed in sections 184, 185, 186, and 189 has previously been paid; (b) articles imported into the Philippines and re-exported from the same in their original condition by the importer; and (c) minerals and mineral products when consigned abroad by the lessee, concessionaire, or owner of the mineral land from which removed. The tax upon things consigned abroad shall be re Junded upon satisfactory proof of the return thereof to the Philippines unsold, subject to the limitation established in section 309 of this Code.”

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

Sec. 188. Transactions and persons not subject to percentage tax.— In computing the tax imposed in sections 184, 185, and 186, transactions in the following commodities shall be excluded:

“(a) Things subject to tax under Title IV of this Code.

“(b) Agricultural products and the ordinary salt when sold, bartered, or exchanged in this country by the producer or owner of the land where produced, whether in their original state or not: Provided, That in the case of hemp, whether stripped or unstripped, sugar cane, unhusked rice or palay, coconut, corn, and copra, no tax shall be collected, except when they are consigned abroad, in which case the tax prescribed in section 187 shall be due and payable, irrespective of whether the consignor is the producer thereof or not, or whether or not he is a merchant.

“(c) Minerals and mineral products when sold, bartered, or exchanged in this country by the lessee, concessionaire, or owner of the mineral land from which removed.

“(d) Articles subject to tax under section 189 of this Code.

“The following persons shall be exempt from the percentage taxes imposed in sections 134, 185, and 186:

“(a) Persons whose gross quarterly sales or receipts do not exceed five hundred pesos.

“(b) All persons engaged in the sale of food products, cooked foods, or refreshments at retail in public market places whose gross annual sales do not exceed twenty thousand pesos and ail persons engaged in public market places exclusively in the sale at retail of domestic meat, fruits, vegetables, game, poultry, fish, and other domestic food products,

“(c) Peddlers and sellers at fixed stands and other similar selling places engaged exclusively in the sale at retail of domestic meat, fruits, vegetables, game, poultry, fish, and similar domestic food products, whose total stock in trade in any one day does not reach a retail value of fifty pesos.

“(d) Producers of commodities of all classes working in their own homes, consisting of parents and children living as one family, when the value of each day’s production by each person capable of working is not in excess of five pesos.”

Section 3. Section one hundred eighty-nine of Commonwealth Act Numbered Four hundred and sixty-six is amended to read as follows:

Sec. 189. Percentage tax upon proprietors or operation 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 one and one-half 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 the 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 in the case of a proprietor or operator of a rice or corn mill, the tax herein imposed shall not be collected in respect of rice or corn milled which does not exceed thirty cavanes a year for every single owner.

In case the raw materials are 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 Collector of Internal Revenue.

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

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

Section 4. Section one hundred ninety of Commonwealth Act Numbered Four hundred and sixty-six is 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 tax inclosed under this Title on original transactions effected by merchants, importers, or manufacturers, such tax to be paid upon 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 184, 185, 186, 187, and 189 of this Title shall not be required to pay the tax herein imposed where such commodities, goods, wares,or merchandise purchased be sold, resold, bartered, or exchanged or where the same are to be used in the manufacture or preparation of articles or received by them from without the Philippines are to be for sale, barter, or exchange and are to form part thereof when the total value of such shipment does not exceed fifty on any single person.

The tax herein imposed shall not be assessed or collected pesos. Goods brought by residents returning from abroad, the value of which does not exceed fifty pesos, are exempt from this tax.”

Section 5. As used in sections 184, 185, and 186 of Commonwealth Act Numbered Four hundred sixty-six, the phrase “original sale, barter, or exchange” shall be construed to mean the first sale, barter, or exchange of articles by every manufacturer, producer, or importer: Provided, However, That where the taxes prescribed in said sections have not been collected on articles, the original sales of which are subject to tax, in the possession of any merchant, the first sale, barter, or exchange of said articles on or after the approval of this Act shall be considered as an original sale, barter, or exchange and shall be subject to tax at the rates prescribed in said sections 184, 185, and 186.

Section 6. This Act shall take effect on October first, nineteen hundred and thirty-nine, except sections one and four which shall be effective only when the same shall have been approved by the president of the United States, as provided in section two, subsection (a), paragraph nine of the Act of Congress of March twenty-four, nineteen hundred and thirty-four, entitled, “An Act to provide for the complete independence of the Philippine Islands, to provide for the adoption of a constitution and a form of Government for the Philippine Islands, and for other purposes,” and such approval shall have been made known by proclamation of the President of the Philippines.