(I) Income payment made by top withholding agents, either private corporations or individuals, to their local/resident supplier of goods and local/resident supplier of services other than those covered by other rates of withholding tax. [formerly under letters (M) and (W)] – Income payments made by any of the top withholding agents, including non-resident aliens engaged in trade or business in the Philippines, shall be subjected to the following withholding tax rates:

                     Supplier of goods – One percent (1%)
                     Supplier of services – Two percent (2%)

Provided, however, that, for gross payments to the manufacturers and direct importers, whether by individuals or corporations, of the following goods intended for wholesale, the tax of one-half percent (1/2%) shall be imposed instead:

a) motor vehicles in Completely Built Units (CBUs) or SemiKnockdown (SKD) units, motor vehicle parts and accessories;

b) medicine/pharmaceutical products; and

c) solid or liquid fuels and related products.