Section 5
SEC. 5. Section 204 of the National Internal Revenue Code is hereby amended to read as follows: "SEC. 204. Compensating tax. — (a) Taxable articles. —There shall be imposed upon the importer of commodities, goods, wares, or merchandise brought into the Philippines, as compensating tax equivalent to the rates prescribed in Sections 194, 195 and 1961 (A) (1) (2) and (3) based on the total value used by the Bureau of Customs in determining tariff and customs duties, including customs duty and all other charges, such tax to be paid before the withdrawal of the said commodities, goods, wares or merchandise from customhouse or the post office. "(b) Articles not subject to the compensating tax. —The provisions of existing laws to the contrary notwithstanding, but without prejudice to Presidential Decree No. 1395, the following are not subject to compensating tax: " (1) Articles subject to tax under Sections 194, 195 and 196 of this Code; "(2) Articles subject to the specific tax under Title IV of this Code and articles to be used by the importer himself in the manufacture or preparation of articles subject to specific tax; "(3) Articles to be used by the importer himself as operator of passenger and/or cargo vessel of more than ten thousand tons, whether coastwise or ocean-going, including engine and spare parts of said vessel; " (4) Personal and household effects belonging to residents of the Philippines returning from abroad and non-resident citizens coming to resettle in the Philippines and accompanying them upon their return or arriving within ninety days before or after their arrival, which are exempt from customs duty under Section 105 of the Tariff and Customs Code; "(5) Proffessional instruments and implements, tools or trade, occupation or employment, wearing apparel, domestic animals, and personal household effects belonging to persons coming to settle for the first time in the Philippines, for their own use and not for barter, sale or exchange, accompanying such persons, or arriving within ninety days before or after their arrival, upon the production of evidence satisfactory to the Commissioner, that such persons are actually coming to settle in the Philippines, that the articles were bought from their former place of abode, that the change of residence is bona fide; Provided, That the vehicle, vessel, aircraft or merchandise of any kind, machinery or other articles for use in manufacture, shall be classified under this subsection; '' (6) Those granted in pursuance of or in compliance with international treaties or commitments, such as the ADB-RP Headquarters Agreement (1966); the 1947 Convention on Privileges and Immunities of the United Nations and its specialized agencies; the United States Agency for International Development RP Agreement; and the RP-US Military Bases Agreement and other similar treaties or commitments; "(7) Machineries, equipment, tools for production, plants to convert mineral ores into saleable form, spare parts, supplies, materials, accessories, explosives, chemicals, and transportation and communication facilities imported by and for the use of new mines and old mines which resume operations, when certified to as such by the Ministry of Natural Resources upon the recommendation of the Director of Mines, for a period ending five (5) years from the first date of actual commercial production of saleable mineral products: Provided, That such articles are not locally available in reasonable quantity, quality and price and are necessary or incidental to the proper operation of the mine; and aircrafts imported by agro-industrial companies to be used by them in their agricultural and industrial operations or activities, spare parts and accessories thereof; and "(8) Those that may be granted by the President upon recommendation of the National Economic Development Authority in the interest of economic development. "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 persons or entities, the purchasers or recipients shall be considered the importers thereof, and shall be liable for the duty and internal revenue tax due on such importation. In any event where the importer becomes liable for advance sales tax, or in any case where an article is imported or brought into the Philippines without payment of either the compensating or advance sales tax or specific tax, as the case may be, the importer thereof shall be liable for the duty and internal revenue tax on such importation. 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.