VHINPH - TITLE XVI Tariff Administration

CHAPTER I TARIFF COMMISSION

Section 1600. Chief Officials of the Tariff Commission and Qualifications.

The officials of the Tariff Commission shall consist of a Chairperson and two (2) Commissioners to be appointed by the President of the Philippines.
The Chairperson and the Commissioners shall be natural-born citizens of the Philippines, of good moral character and proven integrity, and who, by experience and academic training possess the necessary qualifications requisite for developing expert knowledge of tariff and trade related matters.
During their terms of office, the Chairperson and the Commissioners shall not engage in the practice of any profession, or intervene directly or indirectly in the management or control of any private enterprise which may, in anyway, be affected by the functions of their office.
They shall not be, directly or indirectly, financially interested in any contract with the government, or any subdivision or instrumentality thereof.

Section 1601. Appointment and Compensation of Officials and Employees. – All employees of the Commission shall be appointed by the Chairperson in accordance with, the Civil Service Law except as the private secretaries to the offices of the Chairperson, Commissioners and Executive Director.

Section 1602. Official Seal. – The Commission is authorized to adopt an official seal.

Section 1603. Functions of the Commission.

Adjudicate cases on the application of trade remedies against imports pursuant to Sections 711, 712 and 713 of this Act;
Study the impact of tariff policies and programs on national competitiveness and consumer welfare in line with the economic objectives of the government;
Administer the Philippine tariff schedules and tariff nomenclatures;
Issue advance rulings on tariff classification of imported goods and render rulings on disputes over tariff classification of goods pursuant to Section 1100 of this Act, except in cases involving goods on which the Commission has provided advance ruling on tariff classification;
Provide the President and Congress with independent analysis, information and technical support on matters related to tariff and nontariff measures affecting Philippine industries and exports for policy guidance;
Analyze the nature and composition, and the classification of goods according to tariff commodity classification and heading number for customs and other related purposes, which information shall be furnished the NEDA, DTI, DA, DOF, DENR, and BSP;
Review the trade agreements for negotiation and trade agreements entered into by the Philippines and make recommendations, if necessary, on the consistency of the terms of the agreements with the national policy objectives;
Conduct public consultations and public hearings pursuant to its functions; and
Deputize or delegate, to appropriate government agency its function of rendering rulings on disputes over tariff classification of goods, until the plantilla positions necessary for undertaking such function have been approved and filled up: Provided, That such delegation of function shall not extend beyond three (3) years from the effectivity of this Act.

Section 1604. Reports of the Commission.

The Commission shall place at the disposal of the President and any Member of the Congress of the Philippines all information at its command.
It shall conduct such investigation and submit reports as may be required by the President and the Congress of the Philippines.
It shall likewise report to the President and Congress on the first Monday of December of each year and hereafter, a statement of methods adopted and a summary of all reports made during the year.

Section 1605. Access to Documents and Assistance to the Commission. – The Commission or its duly authorized representative

Shall have access to any document, paper or record pertinent to the subject matter under investigation, in the possession of any person, firm, co partnership, corporation, or association engaged in the production, importation, or distribution of goods under investigation, and
Shall have power to summon witnesses, take testimony, administer oaths, and to issue subpoena duces tecum requiring the production of books, papers, or documents relating to the matter under investigation.

The Commission may also request the views, recommendations, and assistance of any government office, agency, or instrumentality who shall be expected to cooperate fully with the Commission.

Section 1606. Sworn and Verified Statements.

The Commission may order the taking of sworn statements at any stage of any proceeding or investigation before it.
The sworn statements must be made before a person duly authorized to administer oaths.
The Commission is authorized to require any importer, grower, producer, manufacturer or seller to file with the Commission a statement, under oath, giving the selling prices in the Philippines of goods imported, grown, produced, fabricated or manufacture d by such person.

Section 1607. Implementing Rules and Regulations. – The Commission shall promulgate and adopt such rules and regulations as may be necessary to carry out the provisions of this Act.

CHAPTER 2 FLEXIBLE TARIFF

Section 1608. Flexible Clause.

A. In the interest of the general welfare and national security, and, subject to the limitations prescribed under this Act, the President, upon the recommendation of the NEDA, is hereby empowered to:

- Increase, reduce, or remove existing rates of import duty including any necessary change in classification.
- The existing rates may be increased or decreased to any level, in one or several stages, but in no case shall the increased rate of import duty be higher than a maximum of one hundred percent (100%) ad valorem;
- Establish import quotas or ban imports of any commodity, as may be necessary; and
- Impose an additional duty on all imports not exceeding ten percent (10%) ad valorem whenever necessary:
- Provided, That upon periodic investigations by the Commission and recommendation of the NEDA, the President may cause a gradual reduction of rates of import duty granted in Section 1611 of this Act, including those subsequently granted pursuant to this section.

B. Before any recommendation is submitted to the President by the NEDA pursuant to the provisions of this section, except in the imposition of an additional duty not exceeding ten percent (10%) ad valorem,

The Commission shall conduct an investigation and shall hold public hearings wherein interested parties shall be afforded reasonable opportunity to be present, to produce evidence and to be heard.
The Commission shall also hear the views and recommendations of any government office, agency, or instrumentality.
The Commission shall submit its findings and recommendations to the NEDA within thirty (30) days after the termination of the public hearings.

C. The power of the President to increase or decrease rates of import duty within the limits fixed in subsection (a) hereof shall include the authority to modify the form of duty.

In modifying the form of duty, the corresponding ad valorem or specific equivalents of the duly with respect to imports from the principal competing foreign country for the most recent representative period shall be used as basis.
Any order issued by the President pursuant to the provisions of this section shall take effect thirty (30) days after promulgation, except in the imposition of additional duty not exceeding ten percent (10%) ad valorem which shall take effect at the discretion of the President.

D. The power delegated to the President as provided for in this section shall be exercised only when Congress is not in session.

E. The power herein delegated may be withdrawn or terminated by Congress through a joint resolution. The NEDA shall promulgate rules and regulations necessary to carry out the provisions of this section.

Section 1609. Promotion of Foreign Trade.

A. For the purpose of expanding foreign markets for Philippine products as a means of assisting in the economic development of the country, in overcoming domestic unemployment, in increasing the purchasing power of the Philippine peso, and in establishing and maintaining better relations between the Philippines and other countries,the President, shall, from time to time:

- Enter into trade agreements with foreign governments or instrumentalities thereof; and
- Modify import duties, including any necessary change in classification and other import restrictions as are required or appropriate to carry out and promote foreign trade with other countries:
- Provided, That in modifying import duties or fixing import quota, the requirements prescribed in subsection (a) of Section 1608 of this Act shall be observed:
- Provided, however, That any modification in import duties and the fixing of import quotas pursuant to the various trade agreements the Philippines has entered into, shall not be subject to the limitations of aforesaid subsection (a) of Section 1608.

B. The duties and other import restrictions as modified in subsection (a) of this section,

Shall apply to goods which are the growth, produce, or manufacture of the specific country, whether imported directly or indirectly, with which the Philippines has entered into a trade agreement:
Provided, That the President may suspend the application of any concession to goods which are the growth, produce, or manufactured product of the specific country because of acts or policies which tend to defeat the purposes set in this section, including the operations of international cartels; and the duties and other import restrictions as negotiated shall be in force and effect from and after such time as specified in the order, without prejudice to the Philippine commitments in any ratified international agreement or treaty.

C. Nothing in this section shall be construed to give any authority to cancel or reduce in any manner the indebtedness of any foreign country to the Philippines or any claim of the Philippines against any foreign country.

D. Before any trade agreement is concluded with any foreign government or instrumentality thereof, reasonable public notice of the intention to negotiate an agreement with such government or instrumentality shall be given in order that interested persons may have an opportunity to present their views to the Commission.

The Commission shall seek information and advice from the DTI, DA, DOF, DENR, DFA and BSP, and from such other sources as it may deem appropriate.

E. In advising the President, on a trade agreement entered into by the Philippines, the following shall be observed

- The Commission shall determine whether or not the domestic industry has suffered or is being threatened with injury and whether or not the wholesale prices at which the domestic products are sold are reasonable, taking into account the cost of raw materials, labor, overhead, a fair return on investment, and the overall efficiency of the industry.
- The NEDA shall evaluate the report of the Commission and submit recommendations to the President.
- Upon receipt of the report of the findings and recommendations of the NEDA, the President may prescribe adjustments in the rates of import duties, withdraw, modify or suspend, in whole or in part, any concession under any trade agreement, establish import quota, or institute such other import restrictions, as the NEDA recommends to be necessary in order to fully protect domestic industry and the consumers, subject to the condition that the wholesale prices of the domestic products shall be reduced to, or maintained at, the level recommended by the NEDA unless, for good cause shown, an increase thereof, as recommended by the NEDA is authorized by the President.
- Should increases be made without such authority, the NEDA shall immediately notify the President who shall allow the importation of competing-products in such quantities as to protect the public from the unauthorized increase in wholesale prices.

F. This section shall not prevent the effectivity of any executive agreement or any future preferential trade agreement with any foreign country.

G. The NEDA and the Commission shall promulgate such reasonable procedures, rules and regulations as they may deem necessary to execute their respective functions under this section.

CHAPTER 3 TARIFF NOMENCLATURE AND RATE OF DUTY

Section 1610. General Rules for the Interpretation (GRI).

The titles of sections, chapters and subchapters are provided for easy reference only. For legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the following provisions

- Any reference in a heading to the goods shall be taken to include a reference to the same in their incomplete or unfinishedform or state: Provided, That the incomplete or unfinished goods have the essential character, as presented, of the complete or finished goods. It shall also be taken to include a reference to the same, in their complete or finished form or state (or falling- to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.
- Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.

When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two (2) or more headings, classification shall be effected as follows:

- The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two (2) or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
- Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of their essential character, insofar as this criterion is applicable.
- When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration;

Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.

In addition to the foregoing provisions, the following Rules shall apply with respect to the goods referred to therein:
- Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain specific goods or set of goods, suitable for long-term use and presented with the goods for which they are intended, shall be classified with such goods when of a kind normally sold therewith. The Rule does not, however, apply to containers which give the whole its essential character; and
- Subject to the provisions of Rule 5(a), packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use.

For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of the Rule, the relative section and Chapter Notes also apply, unless the context otherwise requires.

Section 1611. Tariff Nomenclature and Rates of Import Duty.

The provisions of Section 104 on Rates of Import Duty of Presidential Decree No. 1464, otherwise known as the Tariff and Customs Code of the Philippines of 1978, as amended, specifically providing for the tariff sections, chapters, headings and subheadings and the rates of import duty, shall still apply and shall supplement this Act.
There shall be levied, collected and paid upon all imported goods the rates of duty indicated thereon except as otherwise specifically provided for in this Act:
Provided, That the maximum rate shall not exceed one hundred percent (100%) ad valorem. The rates of duty provided or subsequently fixed pursuant to Sections 1608 and 1609 of this Act shall be subject to periodic investigation by the Tariff Commission and may be revised by the President, upon the recommendation of the NEDA. It shall also apply to all products, whether imported directly or indirectly, of all foreign countries, which do not discriminate against Philippine export products. An additional one hundred percent (100%) across-the-board duty shall be levied on the products of any foreign country which discriminates against Philippine export products.

Section 1612. Tariff Nomenclature and Rates of Export Duty. – The provisions of Section 514 on Export Products Subject to Duty and Rates of Presidential Decree No. 1464, otherwise known as the Tariff and Customs Code of 1978, as amended, specifically providing for the export products subject to duty and rates, shall still apply and shall supplement this Act.

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