TARIFF & CUSTOMS LAWS

1. Meaning and Scope of Tariff and Custom Laws

2. Governing Laws (Present)
a. The 1978 Tariff and Customs Code under P.D No. 1464
i. This presidential Decree consolidated all tariff and customs laws into a single
code.
b. The 1982 Tariff and Customs Code under E.O No. 688
i. This code is based on the customs cooperative council nomenclature; and on
the harmonized description and coding system.
c. The 1995 Philippine Agreements with other nations resulting in
tariffication of several products.
i. In 1995, Philippines became a party to the Uruguay round of multinational
trade negotiations, and joined the World Trade Organization. Under the
Uruguay Round, developed states reduced tariffs by 33% on the average. For
their part, developing states like the Philippines promised not to raise tariffs
beyond a certain ceiling rate. They also removed quantitative import
restrictions and converted them to tariff equivalents. This move has resulted
in the tariffication of agricultural products.
d. The 1987 Constitution of the Philippines
i. Article VI, Section 24
1. Tariff Bills shall originate exclusively in the House of Representatives,
but the Senate may propose or concur with amendments.
ii. Article VI, Section 27 (2)
1. The President shall the power to Veto any particular item or items in
Tariff Bills.
3. Agency tasked with enforcement of Tariff & Custom Laws
a. The Tariff Commission
i. Composed of a Chairman and Two Commissioners who are all appointed by
the President.
b. Bureau of Customs
i. Composed of a Commissioner and Two deputy Commissioner who are all
appointed by the President.
4. What may be the subject of custom duties
5. Concept & Relevance of Importation
6. Classification of Goods for Importation purposes
7. Kinds of Customs Duties
8. Valuation of Goods
a. Home Consumption Value (HCV)
i. This should properly be called the F.O.B plus 10%.
ii. It is one that includes internal excise taxes because when the manufacturer
sells for home consumption he does not normally absorb, but passes on the
ultimate consumer, the tax.
1. It is the so called Home Consumption Value plus 10% thereof on the
date of the exportation to the Philippines or nearest to such date. (a
misnomer)
b. Transaction Value
i. The transaction value, as the basis of dutiable value, shall be the same price
actually paid or payable for the goods when sold for export to the Philippines
as adjusted by adding the following to the extent that they are incurred by
the buyer but are not included in the price actually paid or payable for the
imported goods, such as: commission or brokerage fees, value of materials,
royalties, license fees, cost of transport, cost of insurance.

c. Fair Market Value plus Insurance and Freight

9. Flexible Tariff (Section 401 of the Tariff Code)
a. Section 401 of the Tariff Code is called the Flexible Tariff Clause because it makes
the customs tariff responsive or readily adjustable to changing economic
considerations.
i. The Flexible Tariff Clause under the Constitution and Tariff and Customs Code
maybe exercised by:
1. The Congress of the Philippines
a. The Congress may authorize the President to fix within the
specified limits:
i. Tariff Rates, Import and Export Quotas, Tonnage and
Wharfage Dues.
ii. Other Duties or Imposts within the Framework of the
National Development Program of the Philippines.
2. The President of the Philippines
a. In the interest of national economy, general welfare and national
security, the President, upon recommendation of the NEDA is
empowered:
i. To increase, reduce or remove existing protective rates or
import duty, provided that the increase should not be
higher 100% ad valorem.
ii. To establish import quotas or to ban imports to any
commodity.
iii. To impose additional duty on all imports not exceeding
10% ad valorem.
iv. To modify the forms of duty, whether ad valorem or
specific.
1. Any order issued by the President pursuant to the
flexible tariff clause shall take effect 30 days after
promulgation.
a. But for the imposition of additional duty not
exceeding 10% ad valorem, its effectivity is
at the discretion of the President.
10.Seizure and Forfeiture
a.