RMO No. 59-2022 — Prescribes the guidelines and procedures in the conduct of fuel testing mandated under Section 148-A of the NIRC of 1997, as amended by RA No. 10963 (TRAIN Law), and the DOF Joint Circular No. 001.2021 implementing the guidelines on field testing for the Fuel Marking Program, enforcement operations, forfeiture and prosecution of cases on offenses related to fuel marking Digest |

BUREAU OF INTERNAL REVENUE Republic of the Philippines Department of Finance Quezon City il:65 A.m DEC 2'7 202:

November 16, 2022

REVENUE MEMORANDUM 0RDER N0. 5- 2023

SUBJECT: Implementing the Guidelines on Field Testing for the Fuel Marking Program, Enforcement Operations, Forfeiture and Prosecution of Cases on Offenses Related to Fuel Marking Section 148-A of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (RA) No. 10963, otherwise known as the Tax Finance (DOF) Joint Circular No. 001.2021 dated 1 February 202I Guidelines and Procedures in the Conduct of Fuel Testing Mandated under Reform Acceleration and Inclusion (TRAiN) Law, and the Department of

TO All Internal Revenue Officials & Employees and Others Concerned

I. OBJECTIVES

This Order is hereby issued to:

1. Prescribe guidelines and procedures to be observed in the conduct of: (a) random to fuel marking. enforcement operations, forfeiture and prosecution of cases on all offenses relating outlets, and in such other properties or equipment, including mechanisms of transportation, of persons or establishments engaged in the sale, delivery, trading. transportation, distribution, or importation of fuel for domestic market; and (b) field and confirmatory testing on gasoline, diesel and kerosene found in warehouses, storage facilities, depots, storage tanks, tank trucks, gas stations and other retail

2. Provide for immediate imposition of penalties and sanctions for offenses committed in order to deter further commission thereof.

3. Maximize the degree of voluntary tax compliance, thereby increasing revenue collection.

HI. LEGAL BASIS

DOF Joint Circular No. 001.2021 dated 1 February 2021. provisions of Sections 6(C), 15, 130, 131, 148, 148-A, 171, and 172 of the National Internal Revenue Code (NIRC) of 1997, as amended; Sections 224, 225, 263, 265-A, and 279 of the same Code; Section 6 of Revenue Regulations (RR) No. 13-21 dated 23 June 2021; and the The conduct of said random field and confirmatory testing shall be based on the

BUREAUOF INTERNAL REVENUE RECORDS MGT DIVISION

HHI. DEFINITION OF TERMS NECEED Ly05AMMN DEC 27 2022

For purposes of this Order;the entire definition of terms found in Section 2 of the DOF Joint Circular No. 001.2021 dated 1 February 2021 is hereby adopted.

IV. POLICIES

A. For purposes of this Order, a BIR FIELD INSPECTION UNIT shall be constituted and composed of the following officers who shall be responsible in the conduct of the

undertaking:

Over-all Head: Deputy Commissioner of Interna! Revenue (DCIR)

Operations Group

Team I: Large Taxpayers

Head: Co-Head: Asst. Head: ACIR, Large Taxpayers Service (LTS) ACIR, Enforcement & Advocacy Services (EAS) Head Revenue Executive Assistant (HREA), LTS-Excise

Members: Co-Asst. Head: Chief, National Investigation Division (NID) and HREA,EAS

Chief, Excise LT Field Operations Division (ELTFOD) and Representatives

Excise LT Audit Division II Excise Tax Areas (EXTA) Representatives [Optional] Representatives Representatives [Optional]

Team II: Non-Large Taxpayers

Head: Asst. Head: Members: Concerned Assistant Regional Director Chief, Regional Investigation Division (RID) and Concerned Regional Director

Representatives from Legal Division Representatives from Revenue District Office (RDO) Representatives

Excise Tax Areas (EXTA) Representatives [Optional] [Optional]

offices to provide assistance and relevant information relative to the enforcement Further, the BIR Field Inspection Unit may request other revenue personnel from other

operation.

B. All random field and confirmatory testing activities of the BIR Field Inspection Unit

shall be covered by duly issued Mission Orders (MOs) and shall be conducted together with the authorized officers from the Bureau of Customs (BOC) in accordance with the provisions of the DOF Joint Circular No. 001.2021 dated 1 February 2021.

The MO of the BIR Field Inspection Unit shall be signed by the DCIR-Operations Group, ACIR, LTS, or the concerned Regional Director.

In case the subject of the random field and confirmatory testing activity is a registered excise large taxpayer under the LTS, the said activity shall be performed by Team I

Revenue District Office having jurisdiction over the said taxpayer) shall conduct the identified owner/possessor of excisable articles or machinery, etc. falls under the jurisdiction of the Revenue Region (RR), Team II (RID, EXTA and/or concerned (ELTFOD, NID, Excise LT Audit Division II or EXTA). On the other hand, if the activity.

The MOs shall be issued in triplicate/quadruplicate copies, and to be distributed as follows:

3rd Copy - 4th Copy - Original -- 2nd Copy -- Issuing Office's file copy Investigating Office's / Division's file copy Taxpayer's copy Revenue Officer/s (ROs) directed to conduct the surveillance, and to be attached to the report on surveillance after termination of the activity.

C. All requests from the Bureau of Customs for the conduct of a random field and confirmatory testing activity pursuant to the provisions of the DOF Joint Circular No. 001.2021 dated 1 February 2021 shall be processed and acted upon by the BIR Field Inspection Unit within five (5) days from receipt of such request.

D. All legal issues shall be referred to the Law & Legislative Division under the Legal Service at the National Office or to the Legal Division of the concerned Revenue Region, whichever is applicable. The resolution of the legal issues shall be prepared and issued within fifteen (15) working days from the date of receipt of such referral.

E. The BIR Field Inspection Unit Team shall be assisted by a Secretariat which shall be Group (ODCIR-OG) and shall have the following duties and responsibilities have the following functions and responsibilities: composed of personnel from the Office of the Deputy Commissioner -- Operations

1. Receive, process and act on all kinds of communications and requests from other 2 Ensure that meetings are coordinated and communicated to all members of the Unit (LGUs), etc., relating to the Fuel Marking Program; National Police (PNP), Department of Energy (DOE), Local Government Units government agencies, i.e., BOC, National Bureau of Investigation (NBI), Philippine

3. that activities and tasks are met within the schedule; 4 Document the issues/concerns as well as the resolution/s thereof: and other concerned revenue officials/officers;

S. Keep the BIR's Fuel Marking Program's documentation and provide the members

6. Prepare notices and minutes of the meeting, consolidated work plan, and status with necessary materials;

Perform such other functions as are necessary, incidental or as may be directed by the Over-All Head of the BIR Field Inspection Unit to properly carry out the purposes of this RMO. report; and

F. The Head of the applicable BIR Field Inspection Unit Team shall coordinate with other government agencies and/or private individuals/entities who will be giving information relative to the activities covered by this Order. BUREAUOF INTERNALREVENUE RECORDS MGT DIVISION

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G. In all random field and confirmatory testing activities to be conducted by the BIR Head

Field Inspection Unit Team, the Excise Large Taxpayer Field Operations Division (ELTFOD), LTS shall assist in the computation of the: (1) deficiency Excise Tax and Value Added Tax (VAT) due on fuel found to be either unmarked, adulterated or diluted: and (2) the corresponding penalties due pursuant to Section 265-A of NIRC of 1997, as amended.

V. GUIDELINES AND PROCEDURES

In addition to the procedures prescribed under the provisions of the DOF Joint Circular No. 001.2021 dated 1 February 2021, the following procedures shall likewise be observed:

1. Preliminary Procedures

Acquiring preliminary information on the person or establishment which shall be the subject of random field and confirmatory testing activities is necessary for an effective implementation thereof. Thus, before the actual random field and confirmatory testing, the concerned BIR Field Inspection Unit Team must:

1.1.Acquaint themselves with the business organization and economic activity of the

subject of the random field and confirmatory testing (SUBJECT), the location of the

and such other relevant information as may be available and / or necessary. This stores, outlets, production plants/factories/warehouses, storage facilities, depots.

must be done with utmost secrecy to prevent leakage of information to the SUBJECT.

1.2. Prepare the necessary recommendation for the issuance of a MO for approval and

Director. signature of the DCIR, Operations Group, ACIR, LTS, or concerned Regional

1.3. Brief the implementing officers on the acts to be performed in compliance with the

MOs. The briefing shall be done at least thirty (30) minutes before the actual random field and confirmatory testing. To preserve the confidentiality of the random field and confirmatory testing operation, the identity of the target SUBJECT should be revealed to the implementing officers only upon arrival at the site of operations.

1.4.Coordinate with the following:

a Fuel Marking Service Provider (as defined and referred to in Section 2.2.10. of

b.Fuel Testing Facility (as defined and referred to in Section 2.2.12. of the DOF the DOF Joint Circular No. 001.2021 dated 1 February 2021);

The authorized officials/officers of the BOC who forms part of the Field Joint Circular No. 001.2021 dated 1 February 2021);

Inspection Unit defined under Section 2.2.9 of the DOF Joint Circular No. 001.2021 dated 1 February 2021; and d. Other Government Agencies, such as but not limited to NBI, PNP, the

concerned LGU, DOE, etc.

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2. Conduct of Random Field and Confirmatory Testing Activity

2.1. The BIR Field Inspection Unit Team, pursuant to a validly issued MO signed by the

concerned authorized revenue official, together with the authorized personnel of the

conduct the Field Testing and the Confirmatory Test on gasoline, diesel and BOC and the authorized representative of the Fuel Marking Service Provider, shall

kerosene found in the SUBJECT's warehouses, storage facilities, depots, storage tanks, tank trucks, vessels, barges, gas stations and other retail outlets, and in such

accordance with the procedures prescribed under Sections 5 and 6 of the DOF Joint other properties or equipment, including mechanisms of transportation strictly in

Circular No. 001.2021 dated 1 February 2021, respectively.

2.2. The BIR Field Inspection Unit Team shall serve to the SUBJECT a letter directing the latter to present the following documents within five (5) days from receipt of

such letter:

A Registration of Branch/Warehouse/Facility (Sec. 236 of NIRC of 1997, as

amended); b. Permit to Operate as manufacturer/importer/dealer of petroleum products or

d Official Register Books (ORB) for each production plant, warehouse/storage Authenticated copy of Lease of Contract/Agreement; amended; Revenue Regulations No. 13-77 dated 10 October 1997; and Revenue Memorandum Order No. 38-03 dated 24 October 2003); maintain a warehouse for excise tax purposes (Sec. 154 of NIRC of 1997, as

e. BIR Forms such as Official Delivery Notice (GUIA) / Excise Taxpayer facility/depot;

f Inventory books per warehouse, storage facility, depots, storage tank, and/or Documents (i.e., Bill of Lading, Packing List, Commercial Invoice, Import Entry and Internal Revenue Declaration (IEIRD), Proof of Payments, Authority to Release Imported Goods (ATRIG) or other proof of source :of goods/ inventory kept in subject warehouses); Removal Declaration (ETRD) / Withdrawal Certificate (WC), Importation

g. Other documents that may be determined necessary. tank truck; and

3. Evaluation of the Results of the Random Field and Confirmatory Testing Activity

3.1. The BiR Field Inspection Unit Team shall submit the results of the random field and confirmatory testing activities, together with the complete set of supporting documents, to the DCIR- Operations Group for evaluation and appropriate action.

A Memorandum Report shall be prepared containing the following: a Facts of the case; b Procedures undertaken: C Documentary requirements: d Violations of the provisions of the NIRC of 1997, as amended, and its Results of the inventory taking, field testing and confirmatory test;

implementing rules and regulations and computation of internal revenue tax liabilities on excise tax, vat on excise tax, and penalties; and BUREAUOF INTARNAL REVENUE RECORDS MGT.DIVISION

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f. Recommendation for the necessary enforcement action, if the result of random field and confirmatory testing activity conducted warrants the same.

3.2. The enforcement actions may consist of any or all of the following:

a. Inventory stock-taking (requires MO)

Inventory taking of all articles subject to excise tax including raw materials. ingredients, machinery, equipment, apparatus, mechanical contrivances, and removable fixture of any sort used for the unlawful production, sale, distribution

found inside the SUBJECT's outlets, stores, production plant/factory. and in such other properties or equipment, including mechanisms of and storing of petroleum products found to be unmarked, adulterated or diluted warehouses, storage tanks, gas stations, other retail outlets, facilities or branches

amended, and its implementing rules and regulations; transportation used for the sale, delivery, trading, transportation, distribution, or importation of such fuel products for domestic market and perform other acts necessary to ensure compliance with the provisions of the NIRC of 1997, as

b. Apprehension/seizure of articles, machinery, apparatus, etc. (requires MO)

The concerned ROs are authorized to make apprehension/seizure of all articles subject to excise tax including raw materials, ingredients, machinery equipment, apparatus, mechanical contrivances, and removable fixture of any sort and other properties or equipment, including mechanisms of transportation

of committing an offense in violation of any provision of NIRC of 1997, as considered as subject of an offense or used or intended to be used as the means

amended. and its implementing rules or regulations, and the issuance of Apprehension Slip in accordance with Section 172 of the NIRC of 1997, as

001.2021 dated 1 February 2021; amended, and the provisions of Section 7 of the DOF Joint Circular No.

C Forfeiture and destruction of seized articles, machinery, apparatus, etc. in

accordance with the provisions of Section 225 of the NIRC of 1997, as amended;

d. Issuance and service of an Assessment to the SUBJECT (i.e., Preliminary a validly issued Letter of Authority (LOA) as required under Section 13 of the NIRC of 1997, as amended, and its implementing rules or regulations; 222, 223 and 228 of the NIRC of 1997, as amended, and Revenue Regulations (RR) No. 12-99, as amended by RR Nos. 18-13, 7-18 and 22-2020 pursuant to Assessment Notice (PAN), and Formal Letter of Demand (FLD) & Final Assessment Notice (FAN)) in accordance with the provisions of Sections 203,

(RATE) Program pursuant to Sections 254, 263 and 265-A of the NIRC of 1997, Filing of civil case and/or criminal case under the Run After Tax Evaders

as amended; and

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f Closure of business establishment pursuant to Section 115 (b) in relation to

Section 236 of the NIRC of 1997, as amended.

VI.REPORTORIAL REQUIREMENTS

1. The concerned BIR Field Testing Unit Team shall prepare an Accomplishment/Status Report on the Surveillance and/or Enforcement Activity that was conducted within ten (10) days after the close of each month, and shall submit the same to the DCIR. Operations Group.

2. The DCIR-Operations Group shall then submit a consolidated Accomplishment /Status Report within twenty (20) days from the close of each quarter to the Commissioner of Internal Revenue.

VIL.REPEALING CLAUSE

accordingly. All revenue issuances inconsistent herewith are hereby repealed or modified

VIIL.EFFECTIVITY

This Order shall take effect immediately

Comptssioner of Internal Revenue ROME6D. LUMAGUI, JR. 000819

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