LEVYING A SURTAX ON EXTRAORDINARY GAINS REALIZED BY OIL COMPANIES ON PETROLEUM PRODUCTS

• Number: Presidential Decree No. 1709
• Sections: 9

Preamble

WHEREAS, the grant of immediate price increases on the whole

range of refined or blended petroleum products, oil companies derived

extraordinary gains from the sale at higher prices of finished products

processed from crude oil and other base stocks acquired at lower prices;

WHEREAS, a part of such extraordinary gains should be

remitted to the Government for the benefit of a greater member of our people and

the balance of such gains be devoted by the oil companies in projects designed

to improve the capacity and efficiency of their facilities;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution, do hereby

order and decree the following:

Section 1

SEC. 1. Surtax on Extraordinary Gains; Rate of Surtax

— In addition to the income imposed under Title II of the National Internal

Revenue Code, there is hereby imposed a surtax of twenty (20%) per cent on

extraordinary gains realized by oil companies as a result of price and specific

taxes increases authorized for petroleum products, which surtax shall not be an

allowable deduction for income tax purposes.

Section 2

SEC. 2. Computation of Extraordinary Gains — The

extraordinary gain shall be measured by the difference between the approved

wholesale posted prices of refined petroleum products immediately before the

authorized price increases and the new posted prices multiplied by the number of

units of petroleum products existing as of the day of effectivity of the price

increases. Any such profit or gain so determined, shall be deemed realized

during the quarter when the authorized price increases occurred. Extraordinary

gains shall not only refer to the aggregate increases in the value of crude oil,

base stocks and refined petroleum products resulting from the authorized price

increases of petroleum products but shall also include the gains accruing to the

oil companies as a result of the upward revision of the specific tax rates

applicable to said petroleum products.

Section 3 Time Manner and Place of Payment.

SEC. 3. Time Manner and Place of Payment. — The

surtax herein imposed shall be paid within thirty (30) days following the

promulgation of this Decree. Oil companies will be allowed to use the

receivables which they have forthcoming from the Crude equalization. fund as

credits to offset their liabilities for the surtax herein imposed. The rules and

regulations authorized under Section 6 hereof may provide for installment

payments.

A return therefore should be filed at the time of payment with the Revenue

District Office or Collection Agent or duly authorized Municipal Treasurer

having jurisdiction over the principal office and place where the books of

accounts and other date of the oil companies are kept.

Section 4 Penalties.

SEC. 4. Penalties. — failure to pay the tax and to

file the corresponding tax return as hereinabove specified, as well as any other

violations of this Decree, shall be subject to surcharges, interests and

penalties provided under Title II of the National Internal Revenue Code.

Section 5 Program for Investment of Balance of Gains.

SEC. 5. Program for Investment of Balance of Gains.

— The oil companies shall prepare a program for the investment of the

balance of the extraordinary gains in their own projects which will increase the

capacity and improve the efficiency of their refining or bulk storage and

distribution facilities in the country.

Section 6 Rules and Regulations.

SEC. 6. Rules and Regulations. — The Minister of

Finance upon recommendation of the Commissioner of Internal Revenue and in

consultation with the Minister of Energy shall promulgate all rules and

regulations in order to implement the provisions of this Decree.

Section 7 Repealing Clause.

SEC. 7. Repealing Clause. — All acts, decrees,

executive and administrative orders and other issuances which are inconsistent

herewith, are hereby repealed or modified accordingly,

Section 8 Effectivity and Applicability.

SEC. 8. Effectivity and Applicability. — This

Decree shall apply on extraordinary gains realized beginning August 1, 1979.

Done in the City of Manila this 13th day of August, nineteen hundred and

eighty.

(Sgd.) FERDINAND E. MARCOS

President of the

Philippines

By the President:

(Sgd.) JACOBO C. CLAVE

Presidential Executive

Assistant