Rules and Regulations Implementing Section 148-A, Subsection (H), Chapter V of the National Internal Revenue Code, as Amended, on the Use of Fuel Marking Program Funds

October 2, 2018

DOF-DBM-COA JOINT CIRCULAR NO. 001-18

RULES AND REGULATIONS IMPLEMENTING SECTION 148-A, SUBSECTION (H), CHAPTER V OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, ON THE USE OF FUEL MARKING PROGRAM FUNDS

SECTION 1.0 Purpose.—

These Rules are promulgated to prescribe the procedures and guidelines for the collection and disbursement of the Fuel Marking Fees collected in connection with the implementation of the Fuel Marking Program (FMP) under Section 148-A of the National Internal Revenue Code (NIRC), as amended. ASEcHI

SECTION 2.0 Legal Basis.—

In compliance with Section 148-A, subsection (h) thereof, the Fuel Marking Trust Account is herein established for the FMP with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) as Implementing Agencies. The Fuel Marking Fees collected for the implementation of the FMP shall be recorded as trust receipt of the Implementing Agencies.

SECTION 3.0 Definition of Terms.—

For the purpose of these Rules, the following terms shall be construed to mean as follows:

3.1 Advice to Debit Account (ADA) — refers to the authorization issued by the National Government Agency (NGA) or Operating Unit appearing in the lower portion of the List of Due and Demandable Accounts Payable (LDDAP) form. It serves as instructions to the Modified Disbursement Scheme-Government Servicing Banks (MDS-GBSs) to debit the specified amount from its available Notice of Cash Allocation balance under the regular MDS sub-account for payment of creditors/payees through the Modified Direct Payment System (MDPS). cTDaEH

3.2 Certificate of Deposit of Trust Receipt — refers to the certification issued by the Bureau of the Treasury (BTr) attesting to the availability of funds deposited under the Fuel Marking Trust Account sufficient to cover the amount due for payment to the Fuel Marking Provider.

3.3 Fuel Marking Fees — refers to the amount paid by the refiner, manufacturer or importer of petroleum products for the Marking Services. The same shall be computed based on the agreed contract price multiplied by the actual liter of fuel marked by the Fuel Marking Provider.

3.4 Fuel Marking Provider — refers to the firm engaged by the Department of Budget and Management-Procurement Service (DBM-PS), in line with Republic Act No. 9184 and its 2016 Revised Implementing Rules and Regulations, to provide an end-to-end fuel marking solution to the Philippine Government. ITAaHc

3.5 Fuel Marking Trust Account — refers to the trust liability account established for the purpose of implementing the FMP and maintained by the BTr pursuant to Section 148-A, subsection (h) of the NIRC, as amended.

3.6 Implementing Agencies (IAs) — refers to the BOC and the BIR, mandated under Section 148-A, subsection (f),to supervise and direct the Fuel Marking Provider in the administration and implementation of the FMP.

3.7 Marking Services — refers in general to the end-to-end solution provided by the Fuel Marking Provider to the Philippine Government. These shall include, but are not limited to, providing the fuel markers, administering and injecting the fuel markers, conducting field testing and confirmatory laboratory testing, and all other necessary services and goods in relation to FMP as contracted.

3.8 Modified Disbursement Scheme (MDS) — refers to a procedure whereby disbursements by NGAs chargeable against the account of the Treasurer of the Philippines are effected through GSBs.

3.9 Notice of Cash Allocation (NCA) — refers to the cash authority issued by the DBM to cover the cash requirements of the IAs.

SECTION 4.0 General Guidelines.—

4.1 The IAs, concurrent with collecting the taxes and duties due on the imported or refined fuel, shall collect the Fuel Marking Fees from the refiner, manufacturer and importer of petroleum products for the Marking Services rendered by the Fuel Marking Provider. Such fees shall be characterized as non-revenue collection and recorded as trust receipts of the IAs. cSaATC

4.2 All Fuel Marking Fees collected by the IAs for the implementation of the FMP shall be deposited and credited to the Fuel Marking Trust Account to be maintained by the BTr.

4.3 No portion of the Fuel Marking Trust Account shall be withdrawn by the IAs for purposes of depositing the same in other authorized government depository banks.

SECTION 5.0 Obligations of the IAs and the Fuel Marking Provider.—

5.1 The Fuel Marking Provider shall be responsible for providing to the IAs accurate and timely reports on the actual Marking Services rendered and delivered. They shall submit the monthly request for payment to the IAs accompanied by sufficient documentation to support the Marking Services rendered and delivered for the period. CHTAIc

5.2 It shall be the responsibility of the IAs to monitor the Fuel Marking Provider and ensure that the obligations and deliverables related to the Marking Services claimed for payment are verified as completed. The Fuel Marking Fees for payment must proportionately correspond to the taxes and duties collected by the IAs and the reported quantity of fuel imported and/or refined for the period covered.

5.3 The IAs shall submit its monthly reports of the Fuel Marking Fees collected, along with a reconciliation report on the duties and taxes collected for the period, to the Department of Finance (DOF). This requirement is distinct and separate from the reportorial requirement for trust receipts under Section 6 of the General Provisions of the 2017 General Appropriations Act (GAA).

SECTION 6.0 Disbursement and Payment.—

6.1 Payment to the Fuel Marking Provider shall only be disbursed from the Fuel Marking Trust Account upon full utilization or the approved budget under the 2017 GAA for the FMP as administered by DBM-PS or upon lapse and reversion to the National Treasury of any unutilized portion thereof at the end of its validity period, whichever should occur first.

6.2 Disbursement from the Fuel Marking Trust Account shall only be made for Marking Services submitted for payment by the Fuel Marking Provider and validated as correct by the IAs. The signing and countersigning officials of the IAs shall be jointly and severally liable for any payment in excess of the actual amount due to the Fuel Marking Provider. cHDAIS

6.3 In no case shall the disbursements from the Fuel Marking Trust Account be utilized for any other purpose than that provided above. Allowances, overtime pay, incentive pay or other form of additional compensation for the employees or the contractual personnel of the IAs and operating expenditures of the said IAs shall not be paid out of the Fuel Marking Trust Account.

6.4 Upon receipt of and validation of the request for payment for Marking Services rendered by the Fuel Marking Provider, the IA shall submit to BTr the request for the Issuance of Certificate of Deposit of Trust Receipt.

6.5 The IA shall, upon receipt of the Certificate of Deposit of Trust Receipt, request DBM for the issuance of the NCA in the amount equivalent to the amount due to the Fuel Marking Provider for the period.

6.6 The payment/disbursement to the Fuel Marking Provider shall be through MDS check or through Direct Payment Scheme via bank debit system through issuance of an ADA. In no case shall the payment be made through cash or commercial check. EATCcI

6.7 The IAs, with the BTr, shall maintain complete subsidiary accounting records for receipts, deposits and disbursements pertaining to the Fuel Marking Trust Account. The DOF shall coordinate with the DBM on the creation of funding source in the Unified Accounts Code Structure for the Fuel Marking Trust Account.

SECTION 7.0 Saving Clause.—

7.1 Issues and other matters not covered by this Circular, including concerns which may arise in the implementation of this Circular, shall be submitted to the Permanent Committee for joint resolution.

7.2 The Government Auditing Code of the Philippines, the Government Accounting Manual for National Government Agencies, Commission on Audit Circulars, and other applicable laws and implementing rules and regulations on budget, accounting and audit of government funds, not inconsistent with this Circular, applies suppletory to this Joint Circular.

SECTION 8.0 Effectivity.—

These Rules shall take effect fifteen (15) days after publication in the Official Gazette or a newspaper of general circulation. ISHCcT

(SGD.) CARLOS G. DOMINGUEZSecretary of Finance

(SGD.) BENJAMIN E. DIOKNOSecretary of Budget and Management

(SGD.) MICHAEL G. AGUINALDOChairperson, Commission on Audit