Section 1Sec./Art. 1

Section 138 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:

"Section 138. Distilled Spirits. On distilled spirits, there shall be collected, subject to the provisions of Section 130 of this Code, specific 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): Provided, That if produced in a pot still or other similar primary distilling apparatus by a distiller producing not more than 100 liters a day, containing not more than fifty percent (50%) of alcohol by volume, per proof liter, Four pesos (P4);

"(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 form 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 1/2 of its volume of alcohol of a specific gravity of seven thousand nine hundred and thirtynine ten thousandths (0.7939) at fifteen degrees centigrade. 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 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."