Policies and Guidelines on Implementation of Government Assistance to Students and Teachers in Private Education Program Effective SY 2016-2017

October 10, 1977 REVENUE REGULATIONS NO. 13-77 SUBJECT : Petroleum Products Regulations TO : All Internal Revenue Officers and Others Concerned SECTION 1. (a) Scope . Pursuant to the authority granted in Section 338, in relation to Section 4, of Commonwealth Act No. 466, otherwise known as the National Internal Revenue Code, as amended, the following regulations prescribing the manner in which the specific tax on petroleum products shall be collected and paid, the procedure to be followed by persons or entities manufacturing, importing or selling such products, the procedure and requirements in the importation of raw materials, the permits to be secured, the records to be kept by them, and the duties to be performed by internal revenue officers, are hereby promulgated to be known as The Petroleum Products Regulations. (b) Products covered by these regulations . The following are the petroleum products covered by these regulations with their corresponding administrative schedules: Products Administrative Schedule Bunker Fuel Oil A 14 Diesel Fuel Oil A 15 Kerosene A 16 Lubricating Oil A 17 Naphtha & other similar products of distillation A 18 Regular gasoline A 18(a) Premium gasoline A 18(b) Aviation gasoline A 18(c) Greases A 21 Waxes A 21(a) Petrolatum A 21(b) Process gas A 22 L P G A 23 L P G for Motive Power A 23(a) Asphalt A 24 Solvents A 25 Thinners A 25(a) Aviation Turbo Jet Fuel A 26 CHAPTER I PAYMENT OF SPECIFIC TAX SECTION 2. Petroleum Products subject to specific tax . The specific tax imposed by the National Internal Revenue Code shall be collected on petroleum products covered by these regulations which have been manufactured or produced in the Philippines for domestic sale or consumption and those which have been imported irrespective of where to be sold or consumed, but not to petroleum products manufactured or produced in the Philippines which shall be removed for exportation in accordance with Section 31 of these regulations. The specific tax shall attach to the petroleum products as soon as they are in existence as such. SECTION 3. Payment of specific tax on petroleum products . (a) On locally-manufactured petroleum products . The specific tax on petroleum products manufactured or produced in the Philippines shall be paid by the manufacturer, producer, owner or person having possession of the same, and such tax shall be paid within fifteen (15) days from date of removal from the place of production. On lubricating oil and greases, the specific tax thereon shall be paid immediately before removal from the manufacturing or blending plant. The specific tax on petroleum products stored at the bonded terminals or warehouses owned and/or operated by the PNOC or its subsidiaries shall be paid immediately before removal from the bonded terminals or warehouses. When the tax has been paid on the petroleum products the same shall not thereafter be stored or permitted to remain in the bonded warehouse. (b) On imported petroleum products . The specific tax on imported products shall be paid by the owner or importer before their release from customs custody, or by the persons who are found in possession of petroleum products which are exempt from specific tax other than those to whom the same are lawfully issued. CHAPTER II REQUIREMENTS BEFORE ENGAGING IN THE MANUFACTURE OR IMPORTATION OF PETROLEUM PRODUCTS SECTION 4. Application . No person or entity shall engage in the business as manufacturer, importer or repacker of petroleum products before his application to engage in said business is approved by the Commissioner of Internal Revenue. The application shall be filed with the Specific Tax Service, Attn: Gasoline & Miscellaneous Tax Division and shall state the name of the applicant, the business name, and the principal office or place of business. The following papers and documents shall accompany the application: 1. Sketch or blueprint of refinery or manufacturing plant, buildings, storage tanks and other physical facilities of the establishment. In case the applicant is an importer, the sketch or blueprint of the storage warehouse; 2. Certification on the calibration of the storage tanks and on the efficiency of the metering devices, whether owned or not by the manufacturer or importer, prepared and approved by the National Institute of Science and Technology or by a licensed engineer acceptable to the Commissioner of Internal Revenue; 3. Certificate of registration with the Bureau of Domestic Trade; 4. Duplicate or certified true copy of the latest income tax return of the applicant; 5. If the applicant is a corporation or partnership, a certified copy of the Articles of Incorporation or Co-Partnership registered and approved by the Securities & Exchange Commission; and 6. Manufacturer's or importer's bond, as the case may be. For purposes of these regulations, a repacker is one who regularly buys petroleum products covered by these regulations in bulk or in original containers and transfers or places them into small containers "as is", for resale, without undergoing any processing, alterations or changes in any manner as provided for in Section 194(x) of the Tax Code. SECTION 5. Prohibition against changes or alterations . No changes, alterations or new constructions shall be made in the establishment as per the plat and plan as originally approved by the Commissioner of Internal Revenue, nor installations of new equipment, apparatuses, metering devices or machineries, redirection of existing pipelines, laying of addition pipe connection, and transferring or putting up of new storage tanks, or any form of changes or alterations shall be made without first securing the necessary permit from the Commissioner of Internal Revenue. In case any changes shall be made, the plat and plan as amended shall be submitted for approval. Likewise no changes in the product content of a particular storage tank/tanks as previously approved, shall be allowed without the prior approval of the Commissioner of Internal Revenue. The provisions of this Section shall apply and embrace bonded terminals as well as repackers of petroleum products. SECTION 6. Manufacturer's and importer's bond . Manufacturers and importers of oil products subject to specific tax shall give bond in an amount equal, as nearly as can be estimated, to twenty per centum of the taxes payable by them during an average year. Such bond shall be conditioned upon the faithful compliance, during the time such business is pursued, with the laws and regulations relating to such business and shall guarantee the satisfaction of all fines and penalties imposed by the Tax Code. No such bond shall be required in an amount exceeding five hundred thousand pesos or received in a sum less than ten thousand pesos. CHAPTER III BONDED TERMINALS SECTION 7. Bonded terminals or warehouses . For purposes of these regulations, a bonded terminal or warehouse consists of storage tanks and all other similar containers, including the premises and all physical facilities used in relation thereto which are owned or leased to and operated by the manufacturer for the purpose of storing untaxed petroleum products, covered by sufficient bond to secure the payment of specific tax due on the products stored therein. SECTION 8. Who may and where to maintain bonded warehouse . The Philippine National Oil Company, referred to hereafter as PNOC, or its subsidiaries, pursuant to the national policy of maintaining adequate strategic fuel reserves may designate such storage terminals or warehouses as it may deem necessary, and maintain them as bonded terminals or warehouses subject to the bonding requirements prescribed under these regulations. All other existing bonded terminals or warehouses owned and/or operated by other oil companies are hereby deemed unbonded effective May 15, 1977, and therefore, they could not be used for the storage of untaxpaid petroleum products. SECTION 9. Application for additional bonded warehouse . Should the PNOC desire to maintain additional bonded terminals or warehouses, an application should first be filed with the Commissioner of Internal Revenue, Attn: Gasoline & Miscellaneous Tax Division, together with the following papers or documents: 1. Sketch or blueprint of the bonded terminal, buildings, storage tanks, pipes layouts and other physical facilities of the terminal. The kind of oil products to be stored at each particular storage tank shall be indicated in the blueprint; 2. Certification on the calibration of the storage tanks and the efficiency of the metering devices, if any, as prepared and approved by the National Institute of Science and Technology or by a licensed engineer satisfactory to the Commissioner of Internal Revenue; and, 3. A bond in an amount satisfactory to the Commissioner of Internal Revenue to secure the payment of the specific tax due on the oil products stored therein. SECTION 10. Storage and in-transit losses . Losses due to whatever cause sustained during storage in bonded terminals are subject to specific tax and, likewise, all losses due to whatever cause sustained during the transfer of bonded petroleum products from the refinery or bonded terminal to another bonded terminal shall be subject to specific tax. The specific tax due on losses in transit and storage losses shall be paid on or before the 15th day following the month of operation. For specific tax purposes, gains in transit shall in no case be allowed to offset losses in transit. CHAPTER IV SUPERVISION AND CONTROL OF REFINERIES, MANUFACTURING PLANTS AND BONDED TERMINALS SECTION 11. Custody . For internal revenue purposes, oil refineries, manufacturing plants and bonded terminals are under the joint custody of the Bureau of Internal Revenue and the oil company concerned. The Commissioner of Internal Revenue may assign such number of field personnel as the need so requires for an effective supervision of the establishment. The oil company concerned shall provide office space and equipment for the use of the internal revenue officers, and should overtime service be required, adequate lodging facilities should likewise be provided for them. An advance schedule for overtime work shall be filed with the Gasoline & Miscellaneous Tax Division or with the Specific Tax Branch three days before the start of the overtime services SECTION 12. Loading and unloading of petroleum products and raw materials . No loading, unloading or pumping of petroleum products or raw materials to and from the storage tanks of refineries, manufacturing plants and/or bonded terminals shall be made without the presence of the internal revenue officers assigned thereat who shall verify and check the quantity and kind of petroleum products or raw materials loaded or unloaded. SECTION 13. Metering devices . When and wherever deemed necessary by the Commissioner of Internal Revenue for the effective control of the operation of the refinery, manufacturing plant or bonded terminal, metering devices shall be installed by the oil company concerned. SECTION 14. Storage room for gasoline additives . A separate storage room or compartment shall be provided by the refinery for the storage of tetraethyl lead coloring dye and such other additives used in the processing of gasoline and such storage room shall jointly be under the custody and control of the revenue officer assigned thereat and the oil company concerned. The storage room shall be provided with complementary safety locks and one key of which should be furnished the revenue officer and the other in the possession of the oil company. SECTION 15. Distinction between regular, premium and aviation gasoline . The coloring of gasoline shall be as follows: a. Regular straw yellow b. Premium purple red c. Aviation gasoline with octane rate of 100/130 green d. Aviation gasoline with octane rate of 80/87 red The octane rating (RON) for each kind of gasoline shall be at the standard octane rating prescribed by the Oil Industry Commission or the Bureau of Standards. SECTION 16. Special cylinder tanks and devices for Liquefied Petroleum Gas (LPG) for Motive Power . Oil companies engaged in the manufacture, processing and/or selling LPG for motive power shall use special cylinder tanks, connectors and regulators that are acceptable to the Commissioner of Internal Revenue and the same shall be inscribed or painted with markings "FOR MOTIVE POWER ONLY" so as to provide a marked distinction between those cylinders and devices and those used for ordinary LPG for cooking, heating and lighting. SECTION 17. Sealing and Unsealing of outlet valves . All outlet valves to and from storage tanks for finished products should be sealed after the end of the day's operation. The sealing and unsealing shall be done jointly by the revenue officer and representative of the refinery, manufacturing plant or bonded terminal, and for this purpose, the BIR shall supply the required sealing devices. SECTION 18. Delivery through pipelines . Where the petroleum products are delivered through the pipelines, the pumping station shall be under the joint custody and control of the BIR and the owner and/or operator of the pipeline. The pipeline shall be registered and covered with permit from the BIR and shall be provided with a calibrated metering devices. SECTION 19. Used petroleum products . Persons selling or otherwise disposing 1 drum of 200 liters or more of used petroleum products shall notify the Gasoline & Miscellaneous Tax Division or the Specific Tax Branch stating therein the name and address of the consignee and the kind and quantity intended to be sold or disposed of. CHAPTER V REQUIREMENTS IN THE IMPORTATION OF FINISHED PRODUCTS AND RAW MATERIALS FOR THE MANUFACTURE OF ARTICLES SUBJECT TO SPECIFIC TAX SECTION 20. Release of imported finished products . Before release of imported petroleum products from customs custody, the importer shall apply for Authority to Release Imported Goods with the Commissioner of Internal Revenue and shall submit there with copies of consular invoice, commercial invoice, bill of lading and import declaration. SECTION 21. Requirements before issuance of Authority to Release Imported Raw Materials . Persons and entities engaged in the manufacture of petroleum products who import tax-free raw materials for use in the manufacture of petroleum products subject to specific tax shall apply for Authority to Release Imported Goods with the Commissioner of Internal Revenue and shall submit therewith copies of consular invoice, commercial invoice, bill of lading, import declaration, and an affidavit by the importer attesting to the fact that the imported material covered by the afore-mentioned documents shall be used exclusively in the manufacture of petroleum products, and included among those listed by the National Economic Development Authority as tax-exempt raw materials. SECTION 22. Supervision of delivery by internal revenue officers of imported raw materials . Upon withdrawal of the imported raw materials from customs custody, the Commissioner of Internal Revenue shall cause the supervision of the delivery thereof by an internal revenue officer who shall require the importer thereof to submit a certificate, duly signed by his duly authorized representative and attested by the internal revenue officer who supervised the delivery, as to the receipt of the imported raw materials stating therein the nature, kind and quantity of the same, as well as the amount paid, if any, upon withdrawal from the Bureau of Customs and the invoice value of the shipment. This certificate shall be attached to the duplicate record of authority to release imported raw materials kept in the BIR. SECTION 23. Requirements in case of transfer or sale of imported raw materials . No person or entity engaged in the manufacture or processing of petroleum products subject to specific tax, who imported raw material which was declared before their release from the Bureau of Customs to be used exclusively in the manufacture of articles subject to specific tax, shall remove, transfer, sell or loan such imported raw material without prior advice to the Commissioner of Internal Revenue and without prior payment of the advance sales tax as prescribed in Section 183(b) of the National Internal Revenue Code. SECTION 24. Transfer of raw materials and/or semi-processed articles under bond . Upon prior permit by the commissioner of Internal Revenue, raw materials, unfinished and/or intermediate products may be transferred under bond, filed on a case-to-case basis, by the manufacturer or owner to another processing plant for initial processing or further processing into finished products. The bond shall answer for any internal revenue tax arising out of losses, or in such event that the processed or finished articles are not returned to the original transferor in a reasonable time after it is processed or finished. CHAPTER VI STOCKTAKING SECTION 25. Stocktaking or physical inventory . After every six (6) months, reckoned from the date of the last stocktaking, the BIR shall conduct a general or total physical inventory by actual weight, count, volume, and/or measurement of the entire stock of raw materials (including in-process or intermediate materials, articles or products) and finished products then existing and on hand in the presence of the representative of the oil company concerned who shall jointly attest to the fact of witnessing and verifying the results thereof by affixing their signatures on an attestation clause in the inventory certificate. Any overage or shortage found upon reconciliation of the results with the official register book balances as of the stocktaking date and hour should be debited or credited, as the case may be, in the proper official register book and signed by the internal revenue officer with the corresponding report and recommendation to the Commissioner of Internal Revenue. The foregoing routine schedule of stocktaking notwithstanding, the Commissioner of Internal Revenue may at any time cause a general or total stocktaking to be undertaken. Moreover, a limited or partial physical inventory (stocktaking of certain products or raw materials only) may be caused to be undertaken at any time it is deemed necessary. The manufacturer shall extend all the necessary assistance to the revenue officers to facilitate the stocktaking. SECTION 26. Investigation/Examination . Every manufacturer operator of bonded terminals or importer of petroleum products shall be subject to an investigation or examination of his official register books, books of accounts, and related accounting records, for specific tax purposes not oftener than once a year, except in cases of prima facie evidence of fraud or on other serious grounds. SECTION 27. Fuel consumption . Fuel oils and other petroleum products consumed or used by the refinery shall be subject to the payment of the corresponding specific taxes and payment thereon shall be effected on or before the 15th day following the month of operation. CHAPTER VII REPROCESSING AND DOWNGRADING OF CONTAMINATED PETROLEUM PRODUCTS SECTION 28. Prior authority required before reprocessing . No petroleum products which are contaminated or below specification shall be reprocessed without prior written permit from the Commissioner of Internal Revenue or his duly authorized representative. The request for a permit shall contain the following, namely: 1. Kind of product, quantity and carrier of the contaminated product or "off-spec" product; 2. Quantity of original shipment and xerox copy of the Withdrawal Certificate covering the original shipment; and 3. Other information the applicant may wish to state in the request. The word "reprocessing" as used in these regulations shall be synonymous to "manufacturing" as contemplated under Section 194(x) of the National Internal Revenue Code. "Off-spec" product shall mean product below or outside the standard specification. SECTION 29. Unloading of petroleum products for reprocessing . The unloading of petroleum products for reprocessing in the refinery or place of production shall be supervised by internal revenue officers, who will submit to the Gasoline & Miscellaneous Tax Division a certificate duly confirmed as correct by the authorized representative of the refinery stating, among others, the quantity, kind of product, date of unloading, name and voyage number of carrying vessel, and bill of lading. The total quantity of returned products for reprocessing received in the refinery must be entered in the official register books as "Raw Material Received" in the column provided for. The specific tax for the removal of reprocessed products must be paid in the same manner as regularly removed finished products. SECTION 30. Downgrading of petroleum products . Downgrading of petroleum products shall mean a reclassification of contaminated or "off-spec" product to a product subject to a lower rate of specific tax without undergoing any reprocessing or blending. The tax, however, shall be understood to remain the same as the tax due at the time of original removal from the refinery or place of production, and such downgrading of petroleum products shall not give rise to any claim for tax refund or credit on account of the reclassification thereof to a lower rate of specific tax on the downgraded product. CHAPTER VIII EXEMPTION FROM SPECIFIC TAX PAYMENTS SECTION 31. Exemption from payment of specific tax on exportation . No specific tax shall be collected on locally produced or manufactured petroleum products which shall be removed for exportation and are actually exported without returning to the Philippines. (a) Permit of Export Shipment . Immediately before removal, exporters of petroleum products shall apply in writing for a written permit from the Commissioner of Internal Revenue, stating the kind, quantity, country of destination, the name of the vessel, consignee and the place of loading. The discovery of any such product in transit in regard to which no permit has been issued shall be deemed prima facie evidence of illegal removal of the same and the specific tax shall be due immediately upon demand. (b) Delivery direct to vessel or means of transportation . Petroleum products for export shall be loaded direct from the place of production to the vessel or means of transportation under the supervision of internal revenue officer. (c) Proof of exportation . Exporters of petroleum products are required to submit proof of exportation to the Commissioner of Internal Revenue within thirty (30) days from date of removal from the place of production and were actually removed, which shall consist of a certificate in the following form: __________, Philippines __________, 19___ I hereby certify that this shipment was removed on _______ for exportation to ________ on board ________ which left on _________. _________________ ________________ (Supervising Internal Signature of Exporter Revenue Officer) (d) Exporter's bond . When deemed necessary, an exporter shall be required to give a bond prior to removal of petroleum products for export, conditioned upon the exportation of the same in good faith, in an amount satisfactory to the Commissioner of Internal Revenue, but not less than P10,000.00. SECTION 32. Delivery to tax-exempt agencies . Manufacturers of petroleum products are hereby allowed to sell to tax-exempt agencies without the prepayment of specific tax. SECTION 33. Requirements in the sale of petroleum products to tax-exempt entities . No petroleum products shall be removed from the refinery or place of production for sale to tax-exempt agencies without prior written approval from the Commissioner of Internal Revenue. The supplier of oil company shall apply for an approval transmitting an authenticated copy of the purchase order, indicating the quantity and kind of petroleum products to be purchased, and the place or location of the point of delivery of the petroleum products. SECTION 34. Tax credits/refunds for tax exempt agencies . In cases where tax-exempt agencies purchased petroleum products in which specific tax due thereon was included or where specific tax had been erroneously or illegally collected, the same may file a claim for tax refund or tax credit with the Commissioner of Internal Revenue, submitting the following: a) Original copy of the certificate of tax-exemption; b) Copies of sales invoices; c) Photostatic copies of official receipts evidencing payment of specific tax. The claim for refund or tax credit should be filed within two (2) years from date of payment of the tax. SECTION 35. Replenishment of taxpaid stocks . The Commissioner of Internal Revenue, may, in case of purchases made by tax-exempt agencies, allow their supplier of petroleum products to draw from their tax-paid stocks, and, the quantity of tax-paid products sold may be replenished with a similar kind and quantity of bonded stocks of the supplier. The replenishment herein allowed shall be granted only upon prior permit or authority of the Commissioner of Internal Revenue. The afore-mentioned requirements for tax credit/refund shall be complied with by the claimant. CHAPTER IX WITHDRAWAL CERTIFICATES SECTION 36. Preparation of Withdrawal Certificates . The manufacturer of petroleum products shall prepare an official withdrawal certificate for every removal of products from the refinery, irrespective of destination, and shall indicate therein his schedule, paragraph and assessment number, the name and address of the consignee, the date of removal, quantity and description of the product removed. Any revenue officer assigned in the refinery shall certify as to the correctness of the entries therein. The Withdrawal Certificates shall be issued in consecutive numbers and the corresponding entries in the official register book shall be made on the date of issuance thereof. In case of removals from the refineries or place of production, the Withdrawal Certificates shall indicate the due date of payment. SECTION 37. Alteration of prepared withdrawal certificates . In case a change on the prepared withdrawal certificate is necessary, the consignor shall issue a new withdrawal certificate in lieu thereof and the cancelled withdrawal certificate shall be properly authenticated by the internal revenue officer assigned thereat who shall render a report on the matter and to form part of the monthly report. SECTION 38. Withdrawal certificate to accompany shipment . The withdrawal certificate shall at all times accompany the petroleum products which it covers and shall be attached to the bill of lading if the products are shipped through a conveyance not owned or operated by the consignor/manufacturer. SECTION 39. Prima facie evidence of illegal removal . Whenever petroleum products are found unaccompanied by an official withdrawal certificate as required by these regulations, the fact that it is so unaccompanied shall constitute a prima facie evidence that it is illegally removed. SECTION 40. Delivery of loaned or borrowed bonded petroleum products . No loan and borrowing of bonded petroleum products shall be allowed except on emergency cases and upon prior approval by the Commissioner of Internal Revenue on a case-to-case basis. CHAPTER X BOOKS AND RECORDS SECTION 41. Records to be kept by importers . Every person or entity engaged in the importation of petroleum products shall keep an official register book wherein shall be entered the following; (a) On the debit side Date of arrival of the importations, subsidiary document reference (e.g. Customs Formal Entry), kind of product, quantity actually received, amount of specific taxes paid, number and date of the covering official receipt payment. (b) On the credit side Date of removal, consignee and address, kind of product removed, quantity, and remarks. (c) Resum At the end of the month, the importer shall prepare a resumwhich shall show the totals of the beginning balance, the importations for the month, the sales for the month, and finally the ending balance. These records should be submitted to the Chief, Gasoline & Miscellaneous Tax Division on or before the 8th day of the succeeding month. cd The importer shall certify that the entries on the page of the transcript sheets contain a true and correct account of all petroleum products imported during the month, for the debit side, and the petroleum products removed, sold or disposed of, in the case of the credit side. The books of account shall be subject to periodic verification. SECTION 42. Records to be kept by manufacturers . Every person or entity engaged in the manufacture of production of petroleum products subject to specific tax shall keep official register books as the nature of his operations may require. The official register books shall basically consist of the following: (a) Raw Materials Account (b) In-Process Account (c) Production Account (d) Removals Account (e) Resum or Monthly Summary of Operations (f) Bonded Terminal Account The daily tank dipping/sounding or meter reading shall be conducted and attested jointly by the revenue officer assigned at the establishment and the duly authorized representative of the company, the record to become a subsidiary control book subject to inspection at any time by duly authorized representative of the Chief, Gasoline & Miscellaneous Tax Division. The said control book must show the daily balance of every finished product, whether in the storage tanks or in the warehouses, computed at the end of the day's operation. A daily summary of all removals of petroleum products shall be prepared and submitted weekly to the Gasoline & Miscellaneous Tax Division. The Official Register Books, subsidiary document references, auxiliary records (including calibration tables), and other adjustment memoranda used by the manufacturer must be kept within its premises and may be opened for inspection by duly authorized internal revenue officers at any time. Installation of official register book . There shall be entered in the fly leaf of the initial official register book, at the time of delivery to each manufacturer, the date of delivery of the books, the name, assessment number, tax account number, and paragraph schedule of the establishment; the beginning inventory, and a certificate signed by the internal revenue officer delivering the same and attested to by the owner or manager that all the pertinent provisions of the law and regulations governing the operations of his manufactory, the use of said register books, and the manner of handling the petroleum products in the manufactory have been fully explained to such manager or owner and that he fully understands the same and knows the penalties and punishments imposed for the disregard thereof. One copy of this certification shall be forwarded to the Chief, Gasoline & Miscellaneous Tax Division, one shall be forwarded to the Chief, Specific Tax Branch of the region where the refinery is situated, and one shall remain permanently in the official register book. SECTION 43. Entries to be made in the official register book . (1) Raw Material Account (a) D ebit side The debit side of the "Raw Material Account" will show the name and address of the exporter or consignor, the commercial invoice number of Customs Formal Entry, the kind of raw material, the quantity in metric measurement as actually received in the port of entry. (b) Credit side On the credit side shall be entered the date and requisition reference, the kind or class, and the quantity of the raw material so issued or used in manufacturing in the same metric measurements. Any sale, transfer, or removal of the raw material other than issues or used in manufacturing, shall be separately recorded in the credit column citing the letter of the Commissioner of Internal Revenue as authority thereof. (2) In-Process Account (a) Debit side All raw material issues, inter-product receipts, and contaminated petroleum products returned to the refinery for reprocessing shall be entered as debits of the In-Process Account. (b) Credit side The date and quantity at air of semi-processed products, straight-run finished products, and blending component fractions (this is a blending of two petroleum products of varying tax rates) shall be reflected in the right hand column of the In-Process Account as the results of production. Refinery losses, inter-product issues, and product re-runs shall also be reflected as credits. (3) Production and Removals Account For every taxable product of the same specific tax rate shall be one Production and Removal Account. (a) Debit side The beginning monthly inventory of the particular petroleum product taken by actual stocktaking or tank dipping/sounding shall be the initial entry on the production column. Subsequent entries shall be the daily yield in volume liters at air or kilogram, as the case may be, of the particular petroleum product produced as actually pumped in or received in each finished product storage tank. (b) Credit side On the credit side of the said account, per product, there shall be entered the date, class (e.g. bonded, taxpaid, etc.) and quantity of the particular product being removed, including the amount of the specific tax paid, the withdrawal certificate number, and the name and address of the consignee. The manner of removal, whether as a sale (taxpaid or tax free), or as a transfer under bond, shall be stated on the right hand corner of the official register book. SECTION 44. Separate books of accounts for tax-exempt entities . All tax-exempt entities except consulate and embassies, international organizations and government agencies shall keep separate books of accounts to record the quantities of tax-free petroleum products purchased and received by them and the removals of such products for their use and consumption. The books of accounts shall be at all times subject to inspection by duly authorized internal revenue officers. A monthly report of receipts and consumption shall be submitted by the tax-exempt entity to the Gasoline & Miscellaneous Tax Division on or before the 8th day following the month of operation. SECTION 45. Separate books of accounts for pipelines . The owner or operator of pipelines through which petroleum products are conveyed shall keep a separate books of accounts to record the quantity removed through their facilities and a monthly report thereon shall be submitted on or before the 8th day following the month of operation to the Gasoline & Miscellaneous Tax Division. SECTION 46. Separate books of accounts on gasoline additives . The refineries shall keep a separate books of accounts for gasoline additives to record the receipts and issues of said raw materials and a monthly report shall be submitted to the Gasoline & Miscellaneous Tax Division on or before the 8th day of the following month. SECTION 47. Records to be kept by PNOC for bonded terminals . PNOC shall keep for each bonded terminal an official register book wherein shall be entered the following: (a) Debit side This shall be an account of all the petroleum products received by the terminal. It shall reflect the date, the vessel and voyage number, subsidiary document references, the withdrawal certificate number, the quantity as stated in the withdrawal certificate and the quantity as actually received. Storage gains and other adjustments shall also form part of the debit figures. (b) Credit side The credit side shall contain all the removals of petroleum products handled by the bonded terminal. It shall account for the quantity of petroleum products actually removed, losses in storage, and other adjustments which must be supported by either a subsidiary document reference or a withdrawal certificate. The Bonded Terminal Account shall contain as many sheets as there are taxable products of the same specific tax rate. And the specific tax payments applicable to each product withdrawn, including the balances, shall be reconciled monthly in the same product sheet. The installation of the official register book of PNOC bonded terminal shall be accomplished in the same manner prescribed for manufacturers of articles subject to specific tax. SECTION 48. The Resum Account Report of Monthly Operations . Every manufacturer and/or operator of PNOC bonded terminal shall make and prepare in three (3) sets a true and exact transcript of all entries made on both the debit and credit sides of his official register book during the preceding month, including all entries made by the internal revenue officer, and shall strike a balance in said books and on said transcript sheets showing the balance of the stocks on hand, if any. Said balance of stock shall be carried over as the first entry for the next month of the official register books. The original or first set should be transmitted and received by the Chief, Gasoline & Miscellaneous Tax Division not later than the 8th day of the succeeding month. The second set should be submitted in the region where the manufactory is situated, and the third set to serve as the manufacturer's or operator's file. Each manufacturer or operator of a bonded terminal, or his duly authorized representative, shall at the foot of each page of his official register books and transcript sheets, certify that the entries therein are true and correct and are exact copies of the entries contained in the original records and subsidiary papers. With the attestation of the manager or his representative therein, the revenue officer assigned in the establishment shall submit, together with the monthly transcript sheets, a summary of operations of each and every finished petroleum products in his jurisdiction. Likewise, a comparative statement of specific tax collections during the months analyzed with that of the same month of the last fiscal years, shall be submitted with his remarks and recommendations annotated therein. CHAPTER XI SURCHARGE AND PENAL PROVISIONS SECTION 49. Surcharge on late payment . If the specific tax on petroleum products, except lubricating oil and grease, is not paid within fifteen days from date of removal from place of production, the amount of tax shall be increased by twenty-five per centum the increment to be a part of the tax and the entire amount shall be subject to interest at the rate of fourteen per cent per annum. SECTION 50. Unlawful possession or removal of petroleum products subject to specific tax . Any person who is found in the possession of petroleum products subject to specific tax, the tax on which has not been paid in accordance with law, or any person who is found in possession of such products which are exempt from specific tax other than those to whom the same is lawfully issued shall be punished by a fine of not less than ten times the amount of the specific tax due on the product found but not less than P5,000.00 and by imprisonment of from 4 months and 1 day to 4 years and 2 months. Any manufacturer, owner or person in charge of any petroleum products subject to specific tax who removes or allows or procures the unlawful removal of any production from the place of manufacture or bonded warehouses, upon which product the specific tax has not been paid in the time and manner required, and any person who knowingly aids or abets in the removal of such articles as aforesaid; or conceals the same after illegal removal, shall for the first offense be punished by an imprisonment of not less than 6 months and 1 day nor more than 6 years. Every manufacturer so offending shall, before continuing or resuming business, execute a bond double the amount of his original bond and containing the same conditions. The mere unexplained possession of petroleum products subject to specific tax, the tax on which has not been paid in accordance with law, shall be punished under this Section. In applying the above scale of penalties, if the offender is an alien, he shall be deported after serving the sentence without further proceeding for deportation. If the offender is a government official or employee, the penalty shall be the maximum as hereinabove prescribed and, the offender shall suffer an additional penalty of perpetual disqualification for public office, to vote and to participate in any election. SECTION 51. Violation of the provisions of these regulations . A person violating any provision of these regulations for which delinquency no specific penalty is provided by law, shall be punished by a fine of not more than P300.00 or by imprisonment for not more than 6 months, or both. SECTION 52. Forfeiture of petroleum products illegally stored or removed . All petroleum products subject to specific tax which are stored or allowed to remain in a bonded warehouse or place of manufacture after the tax thereon has been paid shall be forfeited and all petroleum products unlawfully removed from any such place or from customs custody, or brought or received in this country not through the Bureau of Customs without the payment of the required tax shall likewise be forfeited. SECTION 53. Date of effectivity . These Regulations shall take effect upon approval hereof. aisa dc CESAR VIRATA Secretary of Finance Recommended by: EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8 ANNEX A November 16, 1977 MEMORANDUM to The Chief Records Division Enclosed herewith is Revenue Regulations No. 13-77, otherwise known as Petroleum Products Regulations. It will be noted that while there were observations in the 1st Indorsement of the Secretary of Finance, he nevertheless signed it. The observation referred to is contained in Section 50 of page 22. The corrected version which is in accordance with the objection of the Secretary of Finance is the one containing a fine of P5,000.00 and not P10,000. Page 22 containing the recommendation of P10,000.00 is nevertheless made part of the docket but should not be made part in the publication. The publication should contain the page where the fine is P5,000.00. cdt LAURO D. ABRAHAN Assistant Commissioner TAN-A1658-L1117-A-7 ANNEX B 1st Indorsement October 27, 1977 Respectfully returned to the Commissioner of Internal Revenue, Quezon City, the within proposed Revenue Regulation on Petroleum Products, with the following observations: 1. The manufacturer's and importer's bond required under Section 6 of the proposed regulation may not be necessary if the only purpose thereof is to assure faithful compliance with the rules and regulations relating to such business and to guarantee the satisfaction of all fines and penalties imposed by the tax code considering that there are enough precautionary measures to safeguard the interest of the Government respecting the collection of the corresponding taxes due. 2. The penal provision provided under Sec. 50 of the regulation seems not in accordance with the provision of Section 174 of the National Internal Revenue Code, as amended. It is noted that the former imposes a heavier penalty than that prescribed under the Tax Code. Except the foregoing observations, this Department finds the proposed regulations in order. CESAR VIRATA Secretary ANNEX C October 10, 1977 MEMORANDUM FOR: The Secretary of Finance SUBJECT : Proposed Petroleum Products Regulations Respectfully submitted for your approval and signature is the draft of our proposed Petroleum Products Regulations governing the business of persons or entities engaged in manufacturing, importing or selling petroleum products and raw materials used in the manufacturing or processing such products, and prescribing the manner of collection of specific tax due on those petroleum products. These represent the first set of regulations ever promulgated on petroleum products and embody all previous instructions and procedure prescribed by existing revenue laws and latest presidential decrees to date. Among the decrees embodied in the regulations are PD 1119, allowing deferment of specific tax on petroleum products, except lubricating oil and grease, effective May 15, 1977, and PD 1122 increasing the rate of specific tax on certain petroleum products effective April 21, 1977. In the formulation of enclosed regulations, representatives of oil companies met with officials of this Bureau during a series of conference on the matter . cdta EFREN I. PLANA Acting Commissioner of Internal Revenue TAN: P4519-F2828-A-8