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MINISTRY OF FINANCE ORDER NO. -

f L

These regulations are hereby issued to implement the provisions of paragraph No. 5 of LOI No. 1416, and Section .'8 of Ministry of Trade and Industry Order No. 19, series

of 1984. I Provision of Law; Ministry of Trade & Industry Regulation a.

"5.

The Ministry of Energy is authorized to permit the sale and delivery of petroleum products to copper mining companies with tax suspension privilege without payment of taxes, duties and imposts on the relevant products, provided such unpaid amount forms part of the unpaid taxes of the particular mining company." (LOI No. 1416).

b,

"Section 8.

Petroleum Products -

All distressed copper mining companies which have been granted the privilege of suspending tax payments are entitled to apply to the Ministry of Energy for exemption from payment of all taxes, duties, imposts and other charges on petroleum .products, who shall authorize to issue a permit exempting payment of all such taxes, duties, etc. under terms and conditions the Ministry of Energy may impose." (MOTI, Ministry Order No. 19, series of 1984).

II Section 1. Scope: These rules shall govern the filing, evaluation and approval of applications by distressed copper mining com-

- 2 panies to suspend payment of taxes, duties and other imposts in connection with their purchases of petroleum products as authorized under the Letter of Instruction and the Ministry of Trade & Industry regulation. Section 2.

Persons/Entitled to Suspension of Payments:

Copper mining companies who are holders of Certificate of Eligibility to Suspend Payment (CESP) issued by the Ministry of Trade & Industry and, a Permit to Purchase petroleum products with suspension from payment of taxes and duties, issued by the Ministry of Energy may avail of the privilege under the LOI. The privilege shall commence and apply to purchases of petroleum products made on, or after, the date indicated in the CESP, provided the corresponding authority has been issued by the Ministry of Energy. The follAwing firms, holders of CESP, may for the present avail of the privilege of suspension of payments: 1. Atlas Consolidated Development & Mining Corporation 2. Marcopper Mining Corporation 3. North Davao Mining Corporation 4. Batong Buhay Gold Mines, Inc. Section 3. Impositions Covered; Purchases with Privilege: All customs duties, fees and other charges due and paid to the Bureau of Customs on imported crude oil processed into refined petroleum products, and, all internal revenue taxes paid or collected by the Bureau of Internal Revenue on the said refined petroleum products, which are

-3sold and delivered to an authorized copper mining company shall be entitled to the privilege of suspension/exemption of payments. The privilege of suspension of payments/exemption shall be limited to direct purchases of petroleum products from oil refining companies to be used actually and exclusively in the mining operations of the copper mining firm. Section 4.

Applications; Ministry of Energy Autho-

rization: The Ministry of Energy shall direct the oil companies to sell petroleum products with tax suspension privileges to selected copper mining companies subject to rules and regulations issued by all agencies concerned in this regard. Section 5.

Procedures for Suspended Payment:

Since refined petroleum products to be purchased locally by copper mining firms from oil companies would be processed from duty-paid imported crude oil, the suspension of payment authorized under the LOI shall operate through a system of refund/tax credit to be issued by the Bureau of Customs or the Bureau of Internal Revenue as the case may be, to the copper mining firm. A copper mining firm desiring to avail of the privilege on its Ministry of Energy-approved purchase of refined petroleum products, may file with the Commissioner of Customs, ATTN.:

The Legal Division or, the Commissioner of

Internal Revenue, ATTN.:

a claim for refund/tax. credit on the proportionate amount of customs duties and/or internal revenue taxes paid on the corresponding quantity of imported crude oil from which the refined petroleum product was produced or, the

specific tax paid on such refined petroleum products. The amount of duties and taxes refundable/tax credited shall be determined, and/or equivalent to the proportionate amount of customs duties and taxes paid on the imported crude oil used in the processing or manufacture of the refined petroleum product sold to the copper mining firm, or, the specific tax paid thereon (based on the 1:1 formula). The claim shall be supported by the following documents: A - Certificate, under oath, of the oil company/ supplier as to the imported duty-paid crude oil used in the manufacture of refined petroleum products, with the following particulars: 1 - Carrying vessel; its date of.arrival and registry number; 2 - Quantity of crude oil imported; 3 - Import Entry No.; 4 - 0. R. No.; 5 - Date of Production and Quantity of Yield of Product Sold. The certificate shall be attested to by the Collector of Customs of the Port of Entry where the imported dutypaid crude oil was entered and processed. B - Certificate of Sale and Delivery by the Company/ Supplier which shall state the following: 1 - Description of Product Sold; 2 - Quantity of Product Sold; 3 - Invoice No.;

4 - Customs duty/Specific Tax paid on product; 5 - Date of delivery; 6.- Statement that sales include customs duties and taxes.

5C - Certificate of Delivery and Receipt by Copper Mining Fimm 1 - Date and Place of Delivery 2 - Invoice No.

3 - Quanity 4 - Value 5 - Statement that products delivered are tax and duty paid D - Copy of CESP and Permit to Purchase by MOE. A claim for refund found to be in order shall be issued the corresponding tax credit in favor of the authorized copper mining firm. The tax credit as evidence of sale of the petroleum products, net of customs duties, taxes, and other imposts or charges shall at the same time represent the amount of duties, taxes, imposts and charges owing to the Government by the copper mining firm, payment of which is suspended. The tax credit issued shall be consecutively numbered, dated and under the seal of the issuing Bureau. Copies shall be kept on file for safekeeping with the accounting office of the issuing Bureau, with additional copies furnished to the Ministry of Energy and the Ministry of Trade & Industry. The original copy of tax credit once fully utilized shall be forwarded by the receiving Cashier to the Accounting Division, for future action. 6.

Repayment of Duties and Taxes:

Upon the lifting of the order of suspension of payment by the President and the approval of the schedule of payment by the Ministry of Trade and industry, the Accounting Divi-

- 6 sion keeping the file of tax credits issued under this Order shall within five (5) days from receipt of the lifting order and schedule, formally notify the debtor/copper mining firm of their accounts and demand the payment of. the same in accordance with the approved schedule of repayments. 7.

Limitations on Use of Tax Credit Issued; Period to File Claims:

Tax credits issued under this Urder are of limited usage and may be applied only in payment of customs duties and internal revenue taxes, fees and other charges due on imported crude oil, by assignment of the tax credit by the copper mining firm-grantee to the oil companies/suppliers of petroleum products. Oil companies shall apply tax credits issued by the Bureau of Customs to payment of duties and other charges due on crude oil imports; tax credits issued by the Bureau of Internal Revenue to payment of taxes on refined petroleum products. All claims for suspension of payments with tax credit issue under this Order shall be filed within thirty 00) days from receipt of complete delivery under a particular purchase order or invoice. 8.

Amendments, Modifications of Existing Regulations:

All existing rules and regulations inconsistent with this Order are hereby modified and/or amended accordingly. 9.

Effectivity:

This Order shall take effect immediately. Manila,

December 21

, 1984.

ALFREDO PIO DE )*A, JR. er Acting Mi