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

• Number: Presidential Decree No. 1358
• Sections: 5

Preamble

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

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. —

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.

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 —

Twenty percent thereof for expenses and profits; and

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."

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:

Revise the rates of percentage taxes;

Change the classification of the articles enumerated in Sections 194, 195,

196, 197, 198, 199 and 201; and

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:

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

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

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

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

country.

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.

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;

Harpsicord and accordions;

Firearms and cartridges or other forms of ammunitions;

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;

Washing machines, cloth dryers and combination washing machines and cloth

dryers of all types;

Mechanical lighters;

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;

Toys and plaything of all sorts;

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;

Air-conditioning units;

Electricity and/or battery operated beauty equipments and accessories;

Pianos, electric or electronic musical organ; and

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:

Locally Manufactured —

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;

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.

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.

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.

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.

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.

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.

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.

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.

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:

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

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 2 Repealing Clause.

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

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

Section 194

section 194, 195, 196, 197, 198, 199, and 201:

Articles subject to tax under Title IV of this Code.

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.

Articles subject to tax under Section 203 of this Code.

.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.

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.