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: cdasia

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)

GreasesA — 21

Waxes A — 21(a)

Petrolatum A — 21(b)

Process gas A — 22

LPG 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

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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: cdtai

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

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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.

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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.

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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,

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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

6
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;

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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) Resumé — At the end of the month, the importer shall prepare a resumé which shall show the
totals of the beginning balance, the importations for the month, the sales for the month, and finally the

8
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) Resumé 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) Debit 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

9
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.

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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 Resumé 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

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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

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