PH ALVIN - TITLE VII Import Duty and Tax

CHAPTER 1 BASIS OF VALUATION

Section 700. Sequential Application of Valuation Methods.

Imported goods shall be valued in accordance with the provisions of Section 701 of this Act whenever the conditions prescribed therein are fulfilled.
Where the customs value cannot be determined under the provisions of Section 701 of this Act, it is to be determined by proceeding sequentially through the succeeding sections hereof to the first such section under which the customs value can be determined.
Except as provided in Section 704 of this Act, it is only when the customs value cannot be determined under the provisions of a particular section that the provisions of the next section in the sequence can be used.
If the importer does not request that the order of Sections 704 and 705 of this Act be reversed, the normal order of the sequence is to be followed. If the importer so requests but it is impossible to determine the customs value under Section 705 of this Act, the customs value shall be determined under Section 704.
When the customs value cannot be determined under Sections 701 through 705, it may be determined under Section 706 of this Act.

Section 701. Method One - Transaction Value System. – The transaction value shall be the price actually paid or payable for the goods when sold for export to the Philippines adjusted in accordance with the provisions of this section: Provided, That:

There are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which:

Are imposed or required by law or by Philippine authorities;
Limit the geographical area in which the goods may be resold; or
Do not substantially affect the value of the goods;

The sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued; and
The buyer and the seller are not related, or where the buyer and the seller are related, that the transaction value is acceptable for customs purposes under the provisions hereof. For purposes of this Act, persons shall be deemed related only if:
- They are officers or directors of one another's business;
- They are legally recognized partners in business;
- There exists an employer-employee relationship between them;
- Any person directly or indirectly owns, controls or holds five percent (5%) or more of the outstanding voting stocks or shares of both seller and buyer;
- One of them directly or indirectly controls the other;
- Both of them are directly or indirectly controlled by a third person;
- Together they directly or indirectly control a third person; or
- They are members of the same family, including those related by affinity or consanguinity up to the fourth civil degree.

Persons who are associated in business with one another in that one is the sole agent, sole distributor or sole concessionaire, however described, of the other shall be deemed to be related for the purposes of this Act if they fall within, any of the eight (8) cases cited in the preceding paragraph. In a sale between related persons, the transaction value shall be accepted as basis for customs valuation whenever the importer demonstrates that such value closely approximates one of the following occurring at or about the same time:

The transaction value in sales to unrelated buyers of identical or similar goods for export to the same country of importation;

The customs value of identical or similar goods as determined under the provisions of Section 704 of this Act; or
The customs value of identical or similar goods are determined under the provisions of Section 705 of this Act. In determining the transaction value,

The following shall be added to the price actually paid or payable for the imported goods:

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:
- Commissions and brokerage fees except buying commissions;
- Cost of containers;
- Cost of packing, whether for labor or materials;

Value, apportioned as appropriate, of the following goods and services: materials, components, parts and similar items incorporated in the imported goods; tools; dies; moulds and similar items used in the production of imported goods; materials consumed in the production of the imported goods; and engineering, development, artwork, design work and plans and sketches undertaken elsewhere than in the Philippines and necessary for the production of imported goods, where such goods and services are supplied directly or indirectly by the buyer free of charge or at a reduced cost for use in connection with the production and sale for export of the imported goods; and

Amount of royalties and license fees related to the goods being valued that the buyer must pay either directly or indirectly, as a condition of sale of the goods to the buyer.
Value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller;
Cost of transport of the imported goods from the port of exportation to the port of entry in the Philippines
Loading, unloading and handling charges associated with the transport of the imported goods from, the country of exportation to the port of entry in the Philippines; and
Cost of insurance.

All additions to the price actually paid or payable shall be made only on the basis of objective and quantifiable data.

Section 702. Method Two – Transaction Value of Identical Goods – Where the dutiable value cannot be determined under method one,

The dutiable value shall be the transaction value of identical goods sold for export to the Philippines and exported at or about the same time as the goods being valued.
For purposes of this section, "Identical goods" refer to goods which are the same in all respects, including physical characteristics, quality and reputation. Minor differences in appearances shall not preclude goods otherwise conforming to the definition from being regarded as identical.
If, in applying this section, more than one transaction value of identical goods are found, the lowest value shall be used to determine the customs value.

Section 703. Method Three -Transaction Value of Similar Goods – Where the dutiable value cannot be determined under the preceding method,

The dutiable value shall be the transaction value of similar goods sold for export to the Philippines and exported at or about the same time as the goods being valued.
For purposes of this section, "Similar goods" refer to goods which, although not alike in all respects, have like characteristics and similar component materials which enable them to perform the same functions and to be commercially interchangeable. The quality of the goods, its reputation and the existence of a trademark shall be among the factors to be considered in determining whether goods are similar.
If, in applying this section, more than one transaction value of identical goods are found, the lowest such value shall be used to determine the customs value.

Section 704. Method Four - Deductive Value – Where the dutiable value cannot be determined under the preceding method,

The dutiable value shall be the deductive value unless otherwise requested by the importer as provided in Section 700 hereof.
The deductive value which shall be based on the unit price at which the imported goods or identical or similar imported goods are sold in the Philippines, in the same condition as when imported, in the greatest aggregate quantity, at or about the time of the importation of the goods being valued, to persons not related to the persons from whom they buy such goods,

Subject to deductions for the following:

Either the commissions usually paid or agreed to be paid or the additions usually made for profit and general expenses in connection with sales in such country of imported goods of the same class or kind;
The usual costs of transport and insurance and associated costs incurred within the Philippines;
Where appropriate, the costs of:
- Transport of the imported goods from the port of exportation to the port of entry in the Philippines;
- Loading, unloading and handling charges associated with the transport of the imported goods from the country of exportation to the port of entry in the Philippines; and
- Insurance; and
- The customs duties and other national taxes payable in the Philippines by reason of the importation or sale of the goods.

If neither the imported goods nor identical nor similar imported goods are sold at or about the time of importation of the goods being valued in the Philippines in the conditions they were imported, the customs value shall, subject to the conditions set forth in the preceding paragraph, be based on the unit price at which the imported goods or identical or similar imported goods sold in the Philippines in the condition they were imported and at the earliest date after the importation of the goods being valued, but before the expiration of ninety (90) days after such importation.
If neither the imported goods nor identical nor similar imported goods are sold in the Philippines in the condition as imported, then, if the importer so requests, the dutiable value shall be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons in the Philippines who are not related to the persons from whom they buy such goods, subject to allowance for the value added by such processing and deductions provided under subsections (1), (2), (3) and (4) hereof.

Section 705. Method Five - Computed Value. – Where the dutiable value cannot be determined under the preceding method,

The dutiable value shall be the computed value of the sum of:

The cost or the value of materials and fabrication or other processing employed in producing the imported goods;
The amount for profit and general expenses equal to that usually reflected in the sale of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to the Philippines;
The freight, insurance fees and other transportation expenses for the importation of the goods;
Any assist, if its value is not included under paragraph (1) hereof; and
The cost of containers and packing, if their values are not included under paragraph (1) hereof.

The Bureau shall not require or compel any person not residing in the Philippines to produce for examination, or to allow access to, any account or other record for the purpose of determining a computed value. However, information supplied by the producer of the goods for the purposes of determining the customs value may be verified in another country with the agreement of the producer and provided that said producer will give sufficient advance notice to the government of the country in question and that the latter does not object to the investigation.

Section 706. Method Six - Fallback Value. – If the dutiable value cannot be determined under the preceding methods described above, it shall be determined by using other reasonable means and on the basis of data available in the Philippines. If the importer so requests, the importer shall be informed in writing of the dutiable value determined under method six and the method used to determine such value.

No dutiable value shall be determined under method six on the basis of:

The selling price in the Philippines of goods produced in the Philippines;
A system that provides for the acceptance for customs purposes of the higher of two (2) alternative values;
The price of goods in the domestic market of the country of exportation;
The cost of production, other than computed values, that have been determined for identical or similar goods in accordance with method five hereof;
The price of goods for export to a country other than the Philippines;
Minimum customs values; or
Arbitrary or fictitious values.

Section 707. Ascertainment of the Accuracy of the Declared Value.

Nothing in this section shall be construed as restricting or calling into question the right of the Bureau to ascertain the truth or accuracy of any statement, document or declaration presented for customs valuation purposes.
When a declaration has been presented and when the Bureau has reason to doubt the truth or accuracy of the particulars or of documents produced in support of such declaration, it may ask the importer to provide further explanation, including documents or other evidence, that the declared value represents the total amount actually paid or payable for the imported goods, adjusted in accordance with the provisions of Section 701 of this Act.
If in the course of determining the dutiable value of imported goods, it becomes necessary to delay the final determination of such dutiable value, the importer shall nevertheless be able to secure the release of the imported goods upon posting of a sufficient security in an amount equivalent to the duties and taxes in dispute conditioned on the payment of additional duties and taxes, if any, as may be determined:
Provided, That, prohibited goods shall not be released under any circumstance.
If, after receiving further information, or in the absence of a response, the Bureau still has reasonable doubts on the truth or accuracy of the declared value, it may deem that the customs value of the imported goods cannot be determined under method one, without prejudice to an importer's right to appeal pursuant to Section 1104 of this Act.
Before taking a final decision, the District Collector shall communicate to the importer, in writing if requested, the grounds for doubting the truth or accuracy of the particulars or documents produced and give the importer a reasonable opportunity to respond.
When a final decision is made, the Bureau shall communicate its decision, and the grounds therefor in writing.

Section 708. Exchange Rate. – For the assessment and collection of import duty upon imported goods and for other purposes, the value and prices thereof quoted in foreign currency shall be converted into the currency of the Philippines at the current rate of exchange or value specified or published, from time to time, by the Bangko Sentral ng Pilipinas (BSP).

CHAPTER 2 SPECIAL DUTIES AND TRADE REMEDY MEASURES

Section 709. Government's Right of Compulsory Acquisition.

In order to protect government revenues against undervaluation of goods, the Commissioner may, motu proprio or upon the recommendation of the District Collector, acquire imported goods under question for a price equal to their declared customs value plus any duties already paid on the goods, payment for which shall be made within ten (10) working days from issuance of a warrant signed by the Commissioner for the acquisition of such goods.
An importer who is dissatisfied with a decision of the Commissioner pertaining to this section may, within twenty (20) working days after the date on which notice of the decision is given, appeal to the Secretary of Finance, and thereafter.
If still dissatisfied, to the CTA as provided for in Section 1136 of this Act.
Where no appeal is made by the importer, or upon reaffirmation of the Commissioner's decision during the appeals process, the Bureau or its agents shall sell the acquired goods pursuant to existing laws and regulations.
Nothing in this section limits or affects any other powers of the Bureau with respect to the disposition of the goods or any liability of the importer or any other person with respect to an offense committed in the importation of the goods.

Section 710. Marking of Imported Goods and Containers.

Marking of Goods, – All goods of foreign origin imported into the Philippines or their containers, as provided in subsection (B) hereof shall be conspicuously marked in any official language of the Philippines as legibly, indelibly and permanently as the nature of the goods or container will permit and in such a manner as to indicate to an ultimate purchaser in the Philippines the name of the country of origin of the goods.

Pursuant thereto, the Commissioner shall, with the approval of the Secretary of Finance:

Determine the character of words and phrases or abbreviation thereof which shall be acceptable as indicating the country of origin and prescribe any reasonable method of marking, whether by printing, stenciling, stamping, branding, labeling or by any other reasonable method, and in a conspicuous place on the goods or container where the marking' shall appear;
Require the addition of other words or symbols which may be appropriate to prevent deception or mistake as to the origin of the goods or as to the origin of any other goods with which such imported goods is usually combined subsequent to importation but before delivery to an ultimate purchaser; and
Authorize the exception of any goods from the requirements of marking if:
- Such goods are incapable of being marked;
- Such goods cannot be marked prior to shipment to the Philippines without injury;
- Such goods cannot be marked prior to shipment to the Philippines, except at an expense economically prohibitive of their importation;
- The marking of a container of such goods will reasonably indicate the origin of such goods;
- Such goods are crude substances;
- Such goods are imported for use by the importer and not intended for sale in their imported or any other form;
- Such goods are to be processed in the Philippines by the importer or for the importer's account other than for the purpose of concealing the origin of such goods and in such manner that any mark contemplated by this section would necessarily be obliterated, destroyed, or permanently concealed;
- An ultimate purchaser, by reason of the character of such goods or by reason of the circumstances of their importation, must necessarily know the country of origin of such goods even though they are not marked to indicate their origin;
- Such goods were produced more than twenty (20) years prior to their importation into the Philippines; or
- Such goods cannot be marked after importation except at an expense which is economically prohibitive, and the failure to mark the goods before importation was not due to any purpose of the importer, producer, seller or shipper to avoid compliance with this section.

Marking of Containers. – Whenever goods are exempt under paragraph (3) of subsection (A) of this section from the requirements of marking, the immediate container, if any, of such goods, or such other container or containers of such goods, shall be marked in such manner as to indicate to an ultimate purchaser in the Philippines the name of the country of origin of such goods in any official language of the Philippines, subject to all provisions of this section, including the same exceptions as are applicable to goods under paragraph (3) of subsection (A).

Fine for Failure to Mark. – If, at the time of importation any good or its container, as provided in subsection (B) hereof, is not marked in accordance with the requirements of this section, there shall be levied, collected, and paid upon such good a marking duty of five percent (5%) of dutiable value, which shall be deemed to have accrued at the time of importation,
Release Withheld Until Marked. – No imported goods held in customs custody for inspection, examination, or assessment shall be released until such goods or their containers shall have been marked in accordance with the requirements of this section and until the amount of duty estimated to be payable under subsection (C) of this section shall have been deposited.
The failure or refusal of the owner or importer to mark the goods as herein required within a period of thirty (30) days after due notice shall constitute as an act of abandonment of said goods and their disposition shall be governed by the provisions of this Act relative to abandonment of imported goods.

Section 711. Dumping Duty. – The provisions of Republic Act No. 8752, otherwise known as the "Anti-Dumping Act of 1999", are hereby adopted.

Anti Dumping Investigation?

Prima Facie Determination

DTI-BIS or DA, upon acceptance of the properly documented protest/application, has 5 working days to decide.

Preliminary Determination

DTI or DA has 30 working days from receipt of the answer to the questionnaire.

Final Determination

The Commission has 120 days from receipt of the advice from either Secretary of DTI or DA to complete its investigation

Department Order

Within 10 days from receipt of the affirmative final determination by the Commission, Secretary of DTI or DA issue a Department Order.

What is meant by disclosure of essential facts

The parties are given 5 days from the date of receipt of the essential facts to defend their interests in writing.

Provisional measure - takes the form of a provisional duty or, preferably, a security by cash deposit or bond equal to the estimated difference between the normal value and the export price of the protested article, the former being higher than the latter. It is applied only after the DTI-BIS or DA has made a preliminary affirmative determination no sooner than 60 days from the initiation of the case.
Definitive duty - final anti-dumping duty imposed, in addition to the regular duty and other charges, on a protested product imported from a specific country following an affirmative final determination.

Duration:

Provisional measure - 4 months, extendable to 6 months upon request by the exporter.
Definitive anti-dumping duty - 5 years from the date of imposition.
Price undertaking - effective period of 5 years unless the foreign exporter proves to the satisfaction of the authorities
Judicial Review - Any interested party may file a petition for review with the CTA within 30 days from receipt of Notice of the final ruling

Section 712. Safeguard Duty. – The provisions of Republic Act No. 8800, otherwise known as the "Safeguard Measures Act", are hereby adopted.

General safeguard Investigation?

Prima Facie Determination

DTI-BIS or DA, has 5 calendar days to decide whether a prima facie case exists to merit the initiation of a preliminary investigation.

Preliminary Determination

DTI or DA has 30 calendar days from receipt of the response to questionnaire

Final Determination. The Commission has 120 calendar days (or 60 days if the Secretary certifies the case as urgent) from receipt of the endorsement from the Secretary.

Decision.

The Secretary has 15 calendar days from receipt of the Commission’s report to make a decision.

Duration:

Provisional measure

Not exceed 200 calendar days from the date of imposition.

Definitive safeguard measure

The maximum initial period for the application of a safeguard measure is four (4) years,

The initial period may be extended up to a maximum of 8 years, or 10 years for developing countries.

Limitations in the application of general safeguard measures

When quantitative import restrictions are used, such measures shall not reduce the quantity of imports below the average imports for the three (3) preceding representative years,

Section 713. Countervailing Duty. – The provisions of Republic Act No. 8751, otherwise known as "An Act Strengthening the Mechanisms for the Imposition of Countervailing Duties on Imported Subsidized Products, Commodities or Articles of Commerce in Order to Protect Domestic Industries from Unfair Trade Competition, Amending for the Purpose Section 302, Part 2, Title II, Book I of Presidential Decree No. 1464", otherwise known as the "Tariff and Customs Code of the Philippines, as Amended", are hereby adopted.

COUNTERVAILING INVESTIGATION?

Prima Facie Determination

DTI-BIS or DA has ten (10) days from receipt of the properly documented petition to examine the accuracy and adequacy of the petition.

Preliminary Determination

DTI or DA initiates the investigation and makes a preliminary determination on whether or not a provisional measure may be imposed within 20 days from receipt of the answers of the questionnaire.

Final Determination.

The Commission has 120 days from receipt of the advice from either Secretary of DTI or DA to complete its investigation.

Issuance of Department Order.

Within 10 days from receipt of the affirmative final determination by the Tariff Commission, the Secretary of DTI or DA issues a Department Order for the imposition of a definitive countervailing duty,

What is meant by disclosure of essential facts?

The parties are given 5 days from the date of receipt of the essential facts to defend their interests in writing.

Provisional measure

DTI-BIS or DA has made a preliminary determination, no sooner than 60 days from the initiation of the case.

Duration:

Provisional measure - four (4) months.
Definitive countervailing duty - five (5) years from the date of imposition.
Price undertaking - period of five (5) years unless the foreign exporter proves to the satisfaction of the authorities
Sunset review - before the sunset date, i.e., the 5th year, to determine whether the expiry of the duration.
Interim review - one (1) year should have elapsed since the imposition of the countervailing duty before an interim review .
Judicial Review - Any interested party may file a petition for review with the Court of Tax Appeals within thirty (30) days from receipt of notice of the final ruling

Section 714. Discrimination by Foreign Countries. – Without prejudice to the Philippine commitment in any ratified international agreements or treaty,

the following recourse shall be applicable in case of discrimination by foreign countries

When the President finds that the public interest will be served thereby, the President shall, by proclamation, specify and declare new or additional duties in an amount not exceeding one hundred percent (100%) ad valorem upon goods wholly or in part the growth or product of, or imported in a vessel of any foreign country whenever the President shall find as a fact that such country:
- Imposes, directly or indirectly, upon the disposition or transportation in transit or through re exportation from such country of any goods wholly or in part the growth or product of the Philippines, any unreasonable charge, exaction, regulation or limitation which is not equally enforced upon the like goods of every foreign country; or
- Discriminates in fact against the commerce of the Philippines, directly or indirectly, by law or administrative regulation or practice, by or in respect to any customs, tonnage, or port duty, fee, charge, exaction, classification, regulation, condition, restriction or prohibition, in such manner as to place the commerce of the Philippines at a disadvantage compared with the commerce of any foreign country.

If at any time the President shall find it to be a fact that any foreign country has not only discriminated against the commerce of the Philippines, as aforesaid, but has, after the issuance of a proclamation as authorized in subsection (a) of this section, maintained or increased its said discrimination against the commerce of the Philippines, the President is hereby authorized, if deemed consistent with the interests of the Philippines and of public interest, to issue a further proclamation directing that such product of said country or such goods imported in their vessels be excluded from importation into the Philippines.
Any proclamation issued by the President under this section shall, if the President deems it consistent with the interest of the Philippines, extend to the whole of any foreign country or may be confined to any subdivision or subdivisions thereof: Provided, That the President may, whenever the public interest requires, suspend, revoke, supplement or amend any such proclamation.
All goods imported contrary to the provisions of this section shall be forfeited to the government of the Philippines and shall be liable to be seized, prosecuted and condemned in like manner and under the same regulations, restrictions, and provisions as may from time to time be established for the recovery, collection, distribution, and remission or forfeiture to the government by the tariff and customs laws. Whenever the provision of this section shall be applicable to importations into the Philippines of goods wholly or in part the growth or product of any foreign country, it shall be applicable thereto, whet her such goods are imported directly or indirectly.
It shall be the duty of the Commission to ascertain and at all times be informed whether any of the discriminations against the commerce of the Philippines enumerated in subsections (a) and (b) of this section are practiced by any country; and if and when such discriminatory acts are disclosed, it shall be the duty of the Commission to bring the matter to the attention of the President, and to recommend measures to address such discriminatory acts.
The Secretary of Finance shall make such rules and regulations as are necessary for the execution of a proclamation that the President may issue in accordance with the provisions of this section.

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