Clarifying Certain Provisions of RR No. 3-2006

April 12, 2006 REVENUE MEMORANDUM CIRCULAR NO. 26-06 SUBJECT : Clarifying Certain Provisions of Revenue Regulations (RR) No. 3-2006, More Particularly on the Printing Requirements of Section 23 thereof TO : All Internal Revenue Officials and Others Concerned This Circular is hereby issued in order to clarify issues on the implementation of the provisions of RR No. 3-2006, more particularly on the provisions of Section 23 with respect to the printing requirements on commercial labels, packaging/secondary containers and master cases of alcohol and tobacco products. Enumerated hereunder are the following clarifications on the issues in the form of Questions (Q) and Answers (A). Q1: Are the printing requirements under the provisions of Section 23 A limited only to the registration of new brands, variants of existing and new brands that were introduced after the effectivity of RR No. 3-2006? A1: No. The new requirements that should be printed on the commercial labels shall not only apply to the brands registered on or after the effectivity of RR No. 3-2006. It shall likewise apply to all brands of tobacco products whether existing/new brands, variants of existing/new brands that were introduced BEFORE the effectivity of RR No. 3-2006. This intention of the provisions of Section 23 A can be gleaned from the transitory provisions of Section 25 (7) of RR No. 3-2006 when it prescribed the submission of the inventory list of unused commercial labels of alcohol and tobacco products intended for sale in the domestic market without the new marking "FOR DOMESTIC SALE ONLY". Q2: In the light of the new minimum size requirements for printing of health warnings on commercial labels and packages of tobacco products under R.A. No. 9211, otherwise known as the Tobacco Regulation Act of 2003, what shall be the effect thereof on the printing requirements on the commercial label and packages of the tobacco products prescribed under the provisions of RR no. 3-2006, more particularly Section 23.A.(1)(a), (b), (c), (d) and (e), as well as the printing requirements on master cases of alcohol and tobacco products prescribed under Section 23.B.(1)(a), (b) and (c) and (2)(a), (b), (c) and (d)? A2: The printing requirements on commercial labels and packages of tobacco products, more specifically cigarette products, prescribed under the aforesaid provisions of RR No. 3-2006 are sufficiently complied with if the minimum printing requirements on the commercial labels and packages provided in Annex "A" hereof are strictly complied with by the concerned taxpayers. aSIETH For purposes of consistency and uniformity, the printing requirements on commercial labels and packages of alcohol products prescribed on the same provisions of RR No. 3-2006 are, likewise, sufficiently complied with if the minimum printing requirements on the commercial labels and packages provided in Annex "B" hereof are strictly complied with by the concerned taxpayers. Moreover, for purposes of guidance in complying the minimum printing requirements provided in Annex "A" and "B" hereof, the diagrams on the commercial labels and packages are provided in Annexes "A-1", for cigarette products, and Annexes "B-1", for alcohol products. Q3: Considering that there are preparations that need to be made on the redesign of the commercial labels, as well as on the reams or cartons of the tobacco products, as a mandatory requirement of R.A. No. 9211, may the implementation of the printing requirements on the commercial labels and reams or cartons under RR No. 3-2006 be deferred? If so, how long may the same be made? A3: Yes, the implementation of the printing requirements under RR No. 3-2006 may be deferred but only up to October 31, 2006. Accordingly, the same shall be strictly enforced on every importation or removal from the place of production, as the case may be, of all brands of tobacco products beginning November 1, 2006. Since the aforesaid provisions on the deferment of printing requirements under RR No. 3-2006 on tobacco products are in lien with the requirements of R.A. No. 9211, the said provisions shall not apply to alcohol products. Q4: What will be the prescribed printing requirements on the master cases of imported alcohol and tobacco products intended for sale in the domestic market and those intended for Duty Free Philippines (DFP)? A4: While the provisions of Section 32.B(2) under RR No. 3-2006 are silent on the prescribed markings on at least one side of the master case of imported alcohol and tobacco products for sale in the domestic market and DFP, the provisions of Section 23.A.(1)(d) and (c), thereof, however, are clear that the phrases "DUTY-FREE AND NOT FOR RESALE", in case of importation by the DFP, and "FOR EXPORT TO THE PHILIPPINES, TAX AND DUTY PAID, in case of importation for sale in the domestic market, should be printed on the secondary containers, including master cases, of the alcohol and tobacco products. For this purpose, the minimum printing requirements on the specific panels of the master cases provided in annexes "A" and "B" shall, likewise, be strictly complied with by the concerned taxpayers. All revenue officials and employees are hereby enjoined to give this Circular as wide a publicity as possible. (SGD.) JOSE MARIO C. BUAG Commissioner of Internal Revenue ANNEX A PRINTING REQUIREMENTS ON CIGARETTES PURSUANT TO SECTION NOS. 23(A) AND 23(B) OF REVENUE REGULATIONS NO. 3-2006 REQUIRED INFORMATION APPLICABLE TO FOR PRINTING TO THE APPLICABLE CONTAINER PACK REAM MASTER CASE 1. Name, address & Assessment Number Locally produced At least on any one (1) panel, At least on any one (1) panel At least on any one (1) panel of the manufacturer cigarettes except top and bottom panels except bottom panel 2. Name and address of the foreign Imported cigarettes At least on any one (1) panel, At least on any one (1) panel At least on any one (1) panel, manufacturer, as well as the name, except top and bottom panels except top and bottom panels address and Assessment Number of the importer 3. Complete name of the brand Locally produced At least on front and back At least on four (4) panels, On all panels, including top and/or imported panels of the label including the front and back and bottom panels cigarettes panels 4. No. of sticks per pack, per Locally produced carton/ream and per master case and/or imported cigarettes 4.1 No. of sticks per pack At least on any one (1) panel, except bottom panel 4.2 No. of sticks per ream At least on any one (1) panel 4.3 No. of sticks per pack, per carton/ream and per master At least on front and back case panels 5. Phrase "FOR DOMESTIC SALE ONLY" Locally produced At least on any one (1) panel, At least on any one (1) panel, At least on any one (1) panel, cigarettes except top and bottom panels except top and bottom panels except top and bottom panels 6. Phrase "FOR EXPORT ONLY" Locally produced At least on any one (1) panel, At least on any one (1) panel, At least on any one (1) panel, cigarettes for export except top and bottom panels except top and bottom panels except top and bottom panels 7. Phrase "DUTY FREE AND NOT FOR Imported cigarettes At least on any one (1) panel, At least on any one (1) panel, At least on any one (1) panel, RESALE" by the Duty Free except top and bottom panels except top and bottom panels except top and bottom panels Philippines, Inc. 8. Phrase "FOR EXPORT TO THE Imported cigarettes At least on any one (1) panel, At least on any one (1) panel, At least on any one (1) panel, PHILIPPINES; TAX AND DUTY PAID" except top and bottom panels except top and bottom panels except top and bottom panels NOTE: PRESCRIBED MANNER OF PRINTING 1. For Information Nos. 1 to 4, the same should be conspicuously printed in easily recognizable and readable manner. 2. For Information Nos. 5 to 8, these should be conspicuously printed in easily recognizable and readable manner with adequate space(s) between other making requirements for easy recognition. ANNEX A-1 Diagram on Commercial Label, Ream/Carton and Master Case of Cigarettes ANNEX B PRINTING REQUIREMENTS PURSUANT TO SECTIONS 23(A) AND 23(B) OF REVENUE REGULATIONS NO. 3-2006 ALCOHOLIC BEVERAGES AND FERMENTED LIQUORS REQUIRED INFORMATION APPLICABLE TO FOR PRINTING TO THE APPLICABLE CONTAINER BOTTLE/CAN/KEG INDIVIDUAL BOX MASTER CASE 1. Name, address & Assessment Locally produced alcoholic For bottle with paper label - either At least on any one At least on any one (1) Number of the Manufacturer beverages and fermented on the front or back label while the (1) panel panel, except the folded liquors Assessment Number for fermented portion intended for liquor may be printed on the bottle opening the case crown NOTE: The beer shall for For bottle with wrap-around plastic fermented liquors label - on any part of the plastic in bottles is not label subject to any printing For bottle with etched or applied requirement ceramic label (ACL) - On any part of the bottle, except the bottom portion while the Assessment Number for fermented liquor may be printed on the bottle crown For polyethylene (PET) bottle without paper label - On any part of the PET bottle, except the bottom portion while the Assessment Number for fermented liquor may be printed on the bottle cap For can - On any part of the can For keg - On the keg cap label 2. Name and address of the foreign Imported alcoholic beverages For bottle with paper label - For the At least on any one At least on any one (1) manufacturer, as well as the name, and fermented liquors name and address of the foreign (1) panel panel, except the folded address and Assessment Number manufacturer and importer, either portion intended for of the importer. on the front or back label while the opening the case Assessment Number of the importer may be printed on the "auxiliary label" issued by the BIR for such NOTE: The beer shell for importation. The Assessment fermented liquors Number for the imported fermented in bottles is not liquor may be printed in a separate subject to any fully adhesive sticker-type label printing requirement For bottle with wrap-around plastic label - For the name and address of the foreign manufacturer and importer, on any part of the plastic label while the Assessment Number of the importer may be printed on the "auxiliary label" issued by the BIR for such importation. The Assessment Number for the Imported fermented liquor may be printed in a separate fully adhesive sticker-type label For can - On any part of the can For keg - On any part of the keg including the keg cap label, except the bottom portion thereof 3. Complete name of the brand Locally produced and/or For bottle with paper label - Either At least on four (4) On all panels, excluding the imported alcoholic beverages on the front or back label panels, including the folded portion intended for and fermented liquors front and back panels opening the case For bottle with wrap-around plastic label - On any part of the plastic NOTE: The beer shell for label fermented liquors in bottles is not For bottle with etched or applied subject to any ceramic label (ACL), and printing polyethylene (PET) bottle without requirement. paper label - On any part of the said bottles except the bottom portions thereof For can - On any part of the can except the top and bottom portions For keg - On any part of the keg including the keg cap label, except the bottom portion thereof 4. No. of bottles, content in gauge liter and proof liter and/or alcohol content per bottle/can/box and per master case 4.1 Content in gauge liter and Locally produced and/or For bottle with paper label - Either proof liter and/or alcohol imported alcoholic beverages on the front or back label content per bottle/can/keg and fermented liquors For bottle with wrap-around plastic label - Any part of the plastic label For bottle with etched or applied ceramic label (ACL), and polyethylene (PET) bottle without paper label - On any part of the said bottles except the bottom portions thereof For can - On any part of the can except the top and bottom portions thereof For keg - On any part of the keg including the keg cap label, except the bottom portion thereof 4.2 No. of bottles, content in At least on any one gauge liter and proof liter (1) panel, except and/or alcohol content bottom panel per box 4.3 No. of bottles, content in At least on front and back gauge liter and proof liter panels of the case and/or alcohol content per bottle/can/box and per NOTE: The beer shell for master case fermented liquors in bottles is not NOTE: The required information subject to any proof liter and/or alcohol printing content is not applicable requirement for fermented liquor. 5. Phrase "FOR DOMESTIC SALE Locally produced alcoholic For bottle with paper label - Either At least on any one At least on any one (1) ONLY products and fermented on the front or back label. For (1) panel, except top panel, except bottom panel liquors for domestic market fermented liquor, on the crown of and bottom panels the bottle For bottle with wrap-around plastic label - Any part of the plastic label For bottle with etched or applied ceramic label (ACL), and polyethylene (PET) bottle without paper label - On any part of the bottle except the bottom portion thereof. For fermented liquor, it may be printed on the crown of the bottle For can - On any part thereof For keg - On any part of the keg including the keg cap label, except the bottom portion thereof 6. Phrase "FOR EXPORT ONLY" Locally produced alcoholic For bottle with paper label - Either At least on any one At least on any one (1) products and fermented on the front or back label; or on the (1) panel, except top panel, except bottom panel NOTE: In view thereof, the liquors for export crown of the bottle and bottom panels phrases "Imported from the Philippines" or imported, Product of the Philippines may be accepted. For bottle with wrap-around plastic label - On any part of the plastic label or on the crown of the bottle For bottle with etched or applied ceramic label (ACL), and polyethylene (PET) bottle without paper label - On any part of the said bottles except the bottom portions thereof or on the cap or crown of the bottle For can - On any part thereof For keg - On any part of the keg including the keg cap label, except the bottom portion thereof 7. Phrase "DUTY FREE AND NOT Imported Alcoholic beverages For bottle with paper label - Either At least on any one At least on any one (1) FOR RESALE" and fermented liquors by the on the front or back label (1) panel, except top panel, except the bottom Duty Free Philippines, Inc. and bottom panels panel For bottle with wrap-around plastic label - On any part of the plastic label For bottle with etched or applied ceramic label (ACL), polyethylene (PET) bottle without paper label - On any part of the bottle, except the bottom portion thereof For can - On any part of the can For keg - On any part of the keg including the keg cap label, except the bottom portion thereof 8. Phrase "FOR EXPORT TO THE Imported alcoholic beverages For bottle with paper label - Either on At least on any one At least on any one (1) PHILIPPINES; TAX AND DUTY and fermented liquor for the front or back label (1) panel, except panel, except top and PAID" domestic market top and bottom bottom panels NOTE: This phrase may be For bottle with wrap-around plastic panels rephrased as "imported label - On any part of the plastic label by (name of the importer); Tax and duty paid" For bottle with etched or applied ceramic label (ACL), polyethylene (PET) bottle without paper label - On any part of the bottle, except the bottom portions thereof For can - On any part of the can, except the top and bottom portions thereof For keg - On any part of the keg including the keg cap label, except the bottom portion thereof NOTE: PRESCRIBED MANNER OF PRINTING 1. For Information Nos. 1 to 4, the same should be conspicuously printed in easily recognizable and readable manner and the same must be imprinted permanently. 2. For Information Nos. 5 to 8, these should be conspicuously printed in easily recognizable and readable manner with adequate space(s) between other marking requirements for easy recognition and the same must be imprinted permanently. 3. For information printed through the use of an injector, the same must be imprinted permanently. ANNEX B-1