Sec. 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. 

Sec. 701, Transaction Value System – Method One. – 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 tins section: Provided, That:

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

  • (i) Are imposed or required by law or by Philippine authorities;

  • (ii) Limit the geographical area in which the goods may be resold; or 

  • (iii) Do not substantially affect the value of the goods; 

• (b) 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 

• (c) 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: 

• • (i) They are officers or directors of one another's business; 

  • (ii) They are legally recognized partners in business; 

  • (iii) There exists an employer-employee relationship between them; 

  • (iv) 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; 

  • (v) One of them directly or indirectly controls the other; 

  • (vi) Both of them are directly or indirectly controlled by a third person; 

  • (vii) Together they directly or indirectly control a third person; or 

  • (viii) 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: 

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

    • (b) The customs value of identical or similar goods as determined under the provisions of Section 704 of this Act; or 

    • (c) 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:

      •  (1) 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: 

• • • • • (a) Commissions and brokerage fees except buying commissions; 

        • (b) Cost of containers; 

        • (c) Cost of packing, whether for labor or materials;

        • (d) 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 

        • (e) 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. 

      • (2) 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; 

      • (3) Cost of transport of the imported goods from the port of exportation to the port of entry in the Philippines; 

      • (4) 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 

      • (5) Cost of insurance. All additions to the price actually paid or payable shall be made only on the basis of objective and quantifiable data. 

Sec. 702. Transaction Value of Identical Goods – Method Two. – 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. Sec. 

703. Transaction Value of Similar Goods - Method Three. – 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. 

Sec. 704. Deductive Value – Method Four. – 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:

• (1) 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; 

• (2) The usual costs of transport and insurance and associated costs incurred within the Philippines; 

• (3) Where appropriate, the costs of: 

  • (i) transport of the imported goods from the port of exportation to the port of entry in the Philippines; 

  • (ii) 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 

  • (iii) insurance; and  

• (4) 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 import ed, 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. 

Sec. 705. Computed Value – Method Five. – Where the dutiable value cannot be determined under the preceding method, the dutiable value shall be the computed value of the sum of:

• (1) The cost or the value of materials and fabrication or other processing employed in producing the imported goods; 

• (2) 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; 

• (3) The freight, insurance fees and other transportation expenses for the importation of the goods; 

• (4) Any assist, if its value is not included under paragraph (1) hereof; and 

• (5) 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. 

Sec. 706. Fallback Value–Method Six. – 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: 

• (1) The selling price in the Philippines of goods produced in the Philippines; 

• (2) A system that provides for the acceptance for customs purposes of the higher of two (2) alternative values; 

• (3) The price of goods in the domestic market of the country of exportation; 

• (4) The cost of production, other than computed values, that have been determined for identical or similar goods in accordance with method five hereof;

• (5) The price of goods for export to a country other than the Philippines; 

• (6) Minimum customs values; or 

• (7) Arbitrary or fictitious values. 

Sec. 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. Sec. 

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).