History of the Philippine Tariff System THE ORIGIN OF TARIFFS The word “tariff” originated from the old

Spanish coast town of Tarifa, which received its name in the Arab who are said to named it after “Tariff
Iban Malik”. This historic little town has existed far more than 12 centuries. In the days when commerce
began to expand from the Mediterranean, a gang of racketeers made Tarifa their headquarters, help up
all merchant ships at this point and levied tribute according to a fixed rate on all merchandise passing in
and out of the Straits of Gibraltar. The mariners called this tribute a “tariff”, and the word beacme
current in England whose vessels founded majority in the merchant trade. The word was adopted into
Spanish tarifa which means price list or rate book; in Portugese tarifa which means schedule; in French
tarifa which means rate; and in Italian tarifa which means price list. TARIFF DISTINGUISHED FROM
CUSTOMS Tariff – a term found in many languages, denotes the list of schedules of commodities with
the particular duties or charges upon each. Customs – an English term which originally denoted “all
customary tolls” or dues paid by merchants upon commodities on their way to and from the market, not
necessarily differentiated by the class of goods for the benefit of the King, Lord, local government
authority. Modern Customs Tariff – a systematic arrangement of customs duties levied on goods when
they cross the border of a political unit. They are an official list of schedule setting forth the several
customs duties to be imposed on imports, exports on goods in transit. ORIGIN OF CUSTOMS The
practice of collecting revenue from customs on importation by means of tariff is shrouded with
antiquity. Customs duties are mentioned in the Old Testament, but this method of collecting revenue
may have been the fashion long before its first authentic record. During the many disputes between the
English Kings and the House of Commons over the levying and imposition of taxes the kings claomed
that proceeds from “ancient customs” was theirs and parliaments had no jurisdiction over it. Thus, the
term “customs” came into official use at an early date in England, and has ever since been applied to
imports or taxes on imports. During the feudal ages, favored barons were granted the privelege to levy
takes by the king. Those importing foreign mechandise or selling a certain domestic commodity were
taxed for the privelede by favored lord or baron. One baron would have the exclusive right to levey
tribute on sellers of salt while another baron would have the priveledge to some other commodity.
Thus, taxes were collected from domestic merchants and importers somewhat as they are today. The
Kings, in turn, levied upon these same feudal lords, sometimes referred to as robber barons, through the
so-called “divine rights of kingds” which included the physical ability: 1. To raise revenue by levying on
the feudal lords; 2. To enforce their decrees on the greater number; and 3. To raise armed forces to
sustain their orders, by punishing recalictrants and to make conquest on other nobles and kings and
bring them into the orbits of influence. PURPOSES OF TARIFF 1. Revenue Tariff Tariff whose rate of
duty is relatively low so that goods may be readily imported and duties easily collected. 2. Protective
Tariff Tariff whose rates are relatively high to keep certain imports out of the domestic market or to
raise domestic price on certain imports so that they may be manufactured profitability at home. 3.
Baragaining Tariff Tariff whose schedules include rates designed primarily for barganing purposes or
which contain some general provision for the imposition of higher duties upon products of countries
vision for the imposition of higher duties upon products of countries vision for the imposition of higher
duties. TARIFF AS IT HAS AFFECTED THE HISTORY OF THE PHILIPPINES DURING THE PRE-SPANISH
PERIOD Long before the history of the Philippines by Magellan, the ancient Filipinos were already
trading with China, Japan, Siam (Thailand), Cambodia, India, Burma, Sumatra, Java and other
neighboring islands. An interestingbSpanish document of 1586 narrated that they are “keen traders and
have traded with China for many years and before the advent of the Spaniards they saild to Mulloco,
Malacca, Hazian, Parani, Burnie and other kingdoms.” The customary way of trading with other people
was by barter in which the Filipinos offered their home products in exchange for the products of other
countries. Sometimes, a price was fixed for commodities “which was paid in gold, as agreed upon or in
metal bells (gongs) brought from China.” The Chinese writers Chao Ju Kua and Wang Tay-Uan observed
that the ancient Filipinos were honest in the commercial dealings. History records show that even
before the arrival of Magellan in the Philippines, Chinese, Japanese and other foreign traders who
brought silks, woolens, bells, porcelains, perfume, iron, tin, colored cotton cloth and other small wares
to the country paid tariff duties on them. DURING THE SPANISH PERIOD As soon as the islands were
acquired by Sapin, the ancient almojarifazgo (a three percent ad valorem) imposed on both imports and
exzports was amplified to the Philippine customshouse was established in Manila by Governorn Guido R.
de lavizares in 1573. However, according to the report of the Viceroy of Mexico to the Spanish King of
1573, the governor-genral did not enforced the almojarifazgo at once. It took Gonzalo Ronquillo de
Penalosa, the fourth Spanish governor-general to impose almojarifazgo in 1582. It was not until more
than 2 and a half centuries that other ports of the archipelago were opened for foreign commerce.
Zamboanga was opened in 1833; Cebu in 1842; Iloilo and Sulu in 1855; and Legazpi and Tacloban in
1874. All foreign commerce was required to be carried in government vessels except those with China,
Japan and other oriental countries. Not until 1834, the Philippine trade was opened to the world and
ships other than those os Spain was permitted to share in Philippine commerce. The customshouse
became a distinct department if 1779 and was made an independent branch of the Treasury in 1805.
While duties in theory and ad valorem, they were in reality specific by the fixing of arbitrary values. Prior
to 1734, these values were assessed by a board composed of a royal officer and two merchants with a
royal fiscal as intervenor. In 1734, a permanent board of valuation called as “Junta de Valoraciones” was
established. This was abolished in 1782, followed by the tariff board in 1828 called as “Junta de
Arancelus”. Trade during the interim was in the hands of Compania Real de Filipinas. The traiff board
created in 1828 was introduced to prepare a new tariff bases on the following purposes, Junta de
Arancelus as follows: 1. To increase revenue; 2. To protect agriculture and arts of the islands; and 3.
To expand foreign commerce. On January 1, 1832, a new tariff which was drafted by the Tariff Board
created in 1828 was adopted. Like its predecessor, it provided from rge arbitrary valuation. This tariff
was in effect until April 1891. Under this tariff, there were 100 classes of articles which fixed values with
few exceptions. Fifteen export articles were enumerated, although all exports were subject to duty,
except gold, silver and tobacco, which were exported to Spain. On importations, four rates were
established according to origin namely: 1. First and lowest rate, Spanish goods in Spanish ships; 2.
Spanish goods in foreign ships; 3. Foreign goods in Spanish ships; 4. Foreign goods in foreign ships.
On April 1, 1891, the new traiff which was promulgated on March 3, 1891 took effect. This tariff as made
all duties specific reduced the free list but exemoted Spanish merchandise from duty. This law of 1981
remained in force up to the beginning of the American occupation and was continued in force and
effected by the US Military Government until November 15, 1901. DURING THE AMERICAN
OCCUPATION The early Philippine tariff, although Manila was occupied by the United States forces in
August 13, 1898, one month earlier on July 12, 1898, President William Mckinley had already issued and
executive order providing for a tariff duties and taxes to be imposed as military contributions and to
take effect and be in force in the ports and places of the Philippines so occupied by the American forces.
However, when the Manila customshouse was actually re-opened for business on August 21, 1898, it
was deemed advisable by General Wasley Merritts to continue temporarily the Spanish tariff then found
in force modifying the same by eliminating the extensive preference accorded to Spanish goods. The
action taken by General Meritts was notified by the United States Secretary of War on October 13, 1893
providing that the effectivity until November 10, 1898 and in the interim period the Spanish tariff shall
be enforced. It should be recalled that at the time the United States gained possession of the
Philippines, the Dingley Tariff Law was in force in the former country. No tariff preference were
accorded by the United States to Philippine products nor were accorded by the American Government in
the Philippines to United States products. The full rates of the Dingley Tariff Law, therefore, applid on
Philippine products imported into the United States and the full rates of the Spanish Tariff and
subsequently the modified American tariff prepared for the Philippines were applied on United States
goods imported into the Philippines. The Spanish tariff and the modified tariff were enforced from the
occupation of the Philippines in 1989 upto November 15, 1901 were deemed to be only temporary
meausures pending the enactment of a general revision of the Philippine tariff. On September 17, 1901,
the Philippine Commission passed Act No. 230 which initiated a general revision of the tariff. The Act
was made to take effect on November 15, 1901. THE FOURTEEN DIAMOND RING CASES AND ITS
AFTERMATH The imposition of duties on Philippine products entering the United States and on United
States products entering the Phillippines had so far remained unquestioned. However, in the later part
of 1901 and a short time after the enactment of Act 230 of the Philippine Commission, the Supreme
Court of the United States made a far reaching decision in the famous 14 Diamond Ring Cases. Briefly,
the case was brought up when Emil J. Pepke, United States citizen in the service of the American Armed
Forces, brought with him which he acquired in the Philippines, 14 diamond rings. They were seized by
the United States customs authorities as having been brought in illegally, into the United States, which
ruled that the Philippine is not a foreign country within the meaning of the Dingley Tariff Law. As a
consequence thereof, Philippine goods may be imported into the United States and the United States
goods into the Philippines duty free. This ruling nullified the applicability of Act 230 of the Philippine
Commission on the Philippine imports of United States goods and of the Dingley Law on Philippine
products imported into the United States. One of the provisions of the Treaty of Paris on April 10, 1899
betweeen the United States and Spain was the following: “The United States will, for a term of 10 years
from the date of exchange of the ratification of the present treaty, admit Spanish ships and merchandise
to the ports of the Philippine Islands on the same term as ships and merchandise of the United States.”
PHILIPPINE OPPOSITION TO FREE TRADE Messengers Benito Legarda and Paolo Ocampo expressed their
opposition to free trade. Commissioner Legarda stated that the proposal to establish free trade between
the Philippines and the United States will tend to divert Philippine sugar and tobacco products from
their natural markeys in China and Japan to one several thousands mile away, and that the duty-free
entry of the American products into the Philippines would result in a big deficit in the revenue of the
Philippine treasury. Resident Commissioner Paolo Ocampo indicated that passage of the trade
measured not only reduced government revenue but also make it difficult for the Philippines to
maintain an independent existence later on. ESTABLISHMENT OF FREE TRADE The opposition of both
the Philippines and the segments of the American people against free trade was nevertheless
overridden by its proponents. The “Payne-Aldrich Tariff Act” was approved on August 5, 1909, to take
effect the following day. Philippine manufactured products were allowed duty-free entry into the United
States articles except rice. No limitation as to quantity or the foreigh material content were imposed
with respect to the United States products imported into the Philippines. Free Trade was thus
established between the Philippines and the United States. The duty-free trade was also subject to the
conditions that np draw back of customs duties has been allowed, and the shipment of the goods must
be direct. THE UNDERWOOD TARIFF LAW The United States Congress passed what is now known as the
“Underwood Tariff Law” which went into effect the following day. This Act of the United States Congress
constituted the final step in the establishment of free trade between the Philippines and the United
States. This Act maintained the provisions under the Tariff Act of 1909 with respect to the Foreign
material content of Philippine products exported to the United States, the non-granting of drawback of
customs duties and direct shipment as conditions of duty-free trade. The Act further repealed Section 13
of the Philippine Tariff Act thereby abolishing exportb duties on Philippine exports. Rice which was
dutiable under the Philippine Tariff Act of 1909 was made duty-free either way under the Tariff Act of
1913. THE JONES LAW On August 29, 1916, the United States made manifest its desire to grant
independence to the Philippines as soon as a stable government could be established in the country. It
thus provided for a more autonomous government for the Philippines. The Jones Law authorizes the
Philippines to enact tariff law for the Philippines subject to the condition that the same shall not become
a law until approved by the President of the United States. It further provided that the relations of the
Philippines and the United States shall exclusively be governed by the laws of the United States
Congress. The United States Tariff Act of 1922 known as the Fordney-McCumber Tariff Law and the
United States Tariff Act of 1930 known as the Hawley-Smooth Tariff Law re-enacted the free trade
relationship between the Philippines and the United States. COMMONWEALTH PERIOD The passage of
the “Tydings-McDuffie Law” on March 24, 1934 made more concrete and definite the commitment of
the United States with respect to the grant of Philippine independence. At the same time, the Act
provided for the trade relations to govern the Philippines for a term of 10-year transition period prior to
independence. It specified all acts of the Philippine legislature with respect to imports and exports shall
not become a law until approved by the President of the United States. It also specified the nature of
trade relations between the Philippines and the United States. The Tydings-McDuffie Act destroyed the
reciprocal nature of free trade relations. The saving clause in the Act (Section 13) provided for the
holding of a conference at least one year prior to the grant of the Philippine independence to formulate
recommendations regarding the future trade relations between the two countries. The transition period
was broken by the outbreak of the World War II. AMERICAN AID AND THE 1946 TRADE AGREEMENT
WITH THE UNITED STATES The United States Congress came to the aid of the Philippine by approving
the Philippine Rehabilitation Act of 1946, otherwise known as the War Damage Act. The Act would bring
millions of the United States dollards for the rehabilitation and construction of the country subject,
however, to the condition that no war damage payments in excess of $500 could be made until an
Executive Agreement providing for the trade relations between the two countries. To implement the
condition of the War Damage Act, the US Congree approved the Philippine Trade Act of 1946 commonly
known as the Bell Trade Act. The Act contained specific provisions on the terms which could govern the
trade and other relationships between the Philippines and the US from July 4, 1946, the date of the
inauguration of the Philippine Republic, to July 3, 1974. In general, it provided an eight years of duty-
free trade relation between the two countries. THE LAUREL-LANGLEY AGREEMENT In order to correct
the inequalities of the 1946 Trade Agreement and to negotiate with the United States a trade
agreement which would be more in harmony with the national interest of the Philippines, a Philippine
Economic Mission headed by Senator Jose P. Laurel with several senators and congressmen and men in
the executive branch of the government, was sent to the US in September 1954. The mission carried on
negotiations with its US counterparts and in December of the same year, they reach an agreement, now
known as the Laurel-Langley Agreement, providing for the terms for the revision of the 1946 Trade
Agreement. The Laurel-Langley Agreement contains also other provisions which will directly help the
Philippine protect its domestic industries and develop its economy in general.

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Fundamentals of Customs and Tariff Management (Jahn Wilson C. Castillo)

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Fundamentals of Customs and Tariff Management (Jahn Wilson C. Castillo)

Prelim Coverage

The Tariff Commission

The Tariff Commission

THE HISTORY OF TARIFF COMMISSION

TIME

EVENTS

1953

Thru RA 911, the Tariff Commission was created on June 20, 1953 under the Office of the President. This
Act provided for a collegial body consisting of a Chairman and two Commissioners.

1956

The Tariff Commission was transformed into a division of the then Department of Finance.
1957

Congress enacted RA 1937 or the Tariff and Customs Code of the Philippines restoring the Tariff
Commission as an independent body under the supervision of the Office of the President and headed by
a Commissioner and Assistant Commissioner.

1973

Tariff Commission was converted into a collegial body consisting a Chairman and two Member
Commissioners thru PD No. 1 known as the Integrated Reorganizational Plan and placed under the
administrative supervision of NEDA.

1999

In August 1999, EO 143 was issued (Instituting Effective Operational Mechanisms and Strategies in the
Tariff Commission)

2008

Approval of the Rationalization Plan under EO No. 366 – Effecting the Latest Pattern of the Tariff
Commission.

The Tariff Commission is a government agency under the Republic of the Philippines.

TC performs both governmental and quasi-judicial functions. Under the CMTA, which updated and
expanded TC’s prescribed mandate under Presidential Decree No. 1464 (s. 1978), also known as the
Tariff and Customs Code of the Philippines, TC has the following functions:
 1. Adjudicate cases on the application of trade remedies against imports;
2.
3. Study  the impact of tariff policies and programs on national competitiveness and consumer
welfare in line with the economic objectives of the government;
4.

3.    Administer the Philippine tariff schedules and tariff nomenclatures;

5. Issue advance rulings on tariff classification of imported goods and render rulings on disputes
over tariff classification of goods;
6.

5.    Provide the President and Congress with independent analysis, information and technical support
on matters related to tariff and non-tariff measures affecting Philippine industries and exports for policy
guidance;

7. Analyse 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 certain government agencies;
8.

7.     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; and

9. Conduct public consultations and public hearings pursuant to its functions.

10.

To date, the TC is an agency attached with the National Economic Development Authority.

TC VISION

The Tariff Commission shall be the principal and independent authority in tariff and trade remedy
measures to enhance industry competitiveness and promote consumer welfare.

TC MISSION
The Tariff Commission is a key adviser to the executive and legislative branches of the government on
tariff and trade matters, and adjudicatory body on trade remedy cases and advocate a strong
competition law and policy, remains committed to the pursuit of good and effective governance.

ORGANIZATIONAL STRUCTURE OF THE TARIFF COMMISSION

PROVISIONS UNDER THE CMTA: TITLE XVI CMTA

Sec. 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.

Sec. 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.

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

Sec. 1603. Functions of the Commission. – The Commission shall have the following functions:

(a) Adjudicate cases on the application of trade remedies against imports pursuant to Sections 711,
712 and 713 of this Act;

(b) 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;

(c) 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;

(f) Analyse 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;

(g) 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;

(h) Conduct public consultations and public hearings pursuant to its functions; and

(i) 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.

Sec. 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.
Sec. 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. 

Sec. 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.

Sec. 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.

FLEXIBLE TARIFF CLAUSE

Sec. 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:

1. 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 per cent (100%) ad valorem;
2.
3. Establish import quotas or ban imports of any commodity, as may be necessary; and
4.

3.    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.

© 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.

(d) 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.

€ 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.
 Sec. 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:

(1) Enter into trade agreements with foreign governments or instrumentalities thereof; and

(2) 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.

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

(1) 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.

(2) The NEDA shall evaluate the report of the Commission and submit recommendations to the
President.

(3) 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.

Last modified: Tuesday, 23 February 2021, 4:09 PM

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Bureau of Customs

HISTORY OF THE BUREAU OF CUSTOMS

Historical records show that the Philippine Customs Service started many centuries back long before the
Philippines was discovered by the eastern and western expeditionaries. The Philippines had already a
flourishing trade with countries of Southeast Asia, but since money at that time was not yet the medium
of exchange, people then resorted to the barter system of commodities. The rules of the barangays
known as the “datus” or “rajahs” collected tributes from the people before they were allowed to engage
in their trade.

THE SPANISH REGIME

After Spain had taken full control of almost all the trades of the country, it passed three important
statutes:

a. Spanish Customs Law which was similar to that of the Indies enforced in the country
from 1582 to 1828. It was a concept of ad valorem levied on import and export.
 b. A Tariff Board was established which drew up a tariff of fixed values for all imported
articles on which 10% ad valorem duty was uniformly collected.

c. Another Tariff Law was introduced in 1891, which established the specific duties on all
imports and on certain exports and this lasted till the end of the Spanish rule in the
Philippines.

THE AMERICAN REGIME

When the American came into the Philippines, the Military Government continued to enforce the
Spanish Tariff Code of 1891, which remained in effect until the Philippine Commission enacted the Tariff
Revision Law of 1901.

On October 24, 1900, the Philippine Commission passed Act No. 33 abolishing and changing the position
of Captain of the Port to Collector of Customs in all ports of entry except the Port of Manila. The
designation of the Captain of the Port in the Port of Manila was retained.

When the Civil Government was established in the Philippines, the most important laws passed by the
Philippine Commission were the following:

a. Tariff Revision Law of 1902 based in the theory that the laws of Spain were nit as
comprehensive as the American Customs Laws to conform with the existing conditions of the
country.

b. Philippine Administrative Act No. 355 passed by the Philippine Commission on February 6,
1902. The full implementation of this Act, however, was considered inadequate and incomplete,
 so the Customs Service Act No. 355, called the Philippine Customs Service Act was passed to
amend the previous laws. After several modification and amendments, the Philippine Customs
Service finally became a practical counterpart of the American Customs Service.

c. Act No. 357 reorganized the Philippine Customs Service and officially designated the Insular
Collector of Customs as Collector of Customs for the Port of Manila.

d. Act No. 625 abolished the Captain of the Port for the Port of Manila.

e. Public Act No. 430 transformed the Philippine Customs Service to a Bureau of Customs and
Immigration under the supervision and control of the Department of Finance and Justice.

When the Department of Justice became a separate office from the Department of Finance, the
Customs Service remained under the umbrella of the latter which set-up remained up to this time.

THE COMMONWEALTH GOVERNMENT

After the Commonwealth government was established in the country, the Philippine Legislature enacted
Commonwealth Act No. 613 forming the Bureau of Immigration as a separate office from the Bureau of
Customs.

On May 1, 1947, the Bureau of Customs has its head, the Insular Collector of Customs. He was assisted
by the Deputy Insular Collector of Customs. Both officials were concurrently Collector of Customs and
Deputy Collector of Customs of Port of Manila.
THE REPUBLIC

Pursuant to EO No. 94 of RA 52, the President of the Philippines reorganized the different departments,
bureaus, offices and agencies of the government of the Republic of the Philippines. Consequently, the
Insular Collector of Customs was changed to Collector of Customs for the Port of Manila. The
reorganization took effect on July 1, 1947.

In 1957, Congress enacted the Tariff and Customs Code of the Philippines (TCCP) known as RA 1937. This
took effect on July 1, 1957. The passage of this Act by the defunct Congress of the Philippines subject to
the provision of the Laurel-Langley Agreement became the first official expression of an autonomous
Philippine Tariff Policy.

Before the passage of RA 1937, all importations from the US enjoyed full exemptions pursuant to the
Tariff Act No. 1902 which was adopted by RA 3 as the Tariff Laws of the Philippines.

REORGANIZATION OF THE BUREAU OF CUSTOMS

On February 4, 1965, the Bureau of Customs was reorganized pursuant to Customs Administrative Order
No. 4-65 by authority of Sec 550 and 551 of the Revised Administrative Code of Republic Act 4164.
During the reorganization, offices under the direct supervision and control of the Commissioner were
elevated to Department Level with ranks higher than Division Level. These Departments were the
following: Public Relations, Personnel, Legal, Administrative Service, Budget and Finance, and the
Management Improvement. Likewise, three ranking Customs positions were created, namely: Assistant
Commissioner for Revenue, Assistant Commissioner for Security and Director for Operations.
Later, Customs Administrative Order No. 4065 was amended abolishing the position of Assistant
Commissioner for Security and creating the position of Director for Administration.

In 1972, Congress passed the law revising the Tariff and Customs Code of the Philippines. However,
before it can be implemented, the President issued Proclamation No. 1081 on September 21, 1972
declaring Martial Law in the country.

On October 27, 1972, President Ferdinand Marcos signed Presidential Decree No. 34 amending the Tariff
and Customs Code of the Philippines. The New Code took effect on November 26, 1972 except for
Section 104 thereof which became effective only on January 1, 1973.

Another reorganization of the Bureau of Customs took effect on September 24, 1972, pursuant to
Presidential Decree No. 1 creating 6 Customs Service under the Office of the Commissioner and creating
jurisdictional limits of 12 collection districts with the principal ports and sub-ports of entry under the
supervision and control of the Collector of the Principal Port of Entry.

As a result of this reorganization, the designation of the heads of different services were called Customs
Service Chiefs, and heads of offices with rank of division were designated Customs Operation Chiefs and
the Head of the National Customs Police as Director. It was in this reorganizational set-up that the
Director for Administration and Operations, and the Assistant Commissioner for Revenue were
abolished.
In 1975, the Bureau undertook reorganization under PD 689 and the result is what you see now as the
Organizational Chart, except for some slight changes and modifications.

On June 11, 1978, the Tariff and Customs Code was further amended, modified and supplemented by
new positions to make it responsive code in keeping with the development programs of the New
Society. The new Code was embodied in Presidential Decree No. 1464.

With the accession of the Philippines to the Customs Cooperation Council, the Tariff and Customs Code
has to be revised anew in order to align our tariff system with the CCC Nomenclature, and the result was
the Tariff and Customs Code of 1982, revised by virtue of EO No. 688. This New Code also assimilated
various amendments to the Customs Code under PD 1628 and 1980 as well as reprints of the tariff
concessions under the General Agreement on Tariff Multilateral Agreement Negotiations as provided in
EO 578, series of 1980 and the tariff concessions granted to ASEAN member countries as embodied in
various Eos from 1978 to 1981.

The last major reorganization of the Bureau took place in 1986 after the EDSA revolution with the
issuance of EO 127 which expanded the organizational umbrella of the Central Office by providing offices
that will monitor and coordinate assessment and operations of the Bureau and provided for a staff of
about 5,500 customs personnel.

The implementation of the computerization program also necessitated the creation of a new group to
ensure its continuous development and progress. The creation of the Management Information System
and Technology Group (MISTG) under a new Deputy Commissioner with 92 positions was authorized
under EO 463 dated January 91 1998.
BUREAU OF CUSTOMS VISION

A modernized and credible Customs administration that is among the world’s best

BUREAU OF CUSTOMS MISSION

To strengthen border control, enhance trade facilitation and improve collection of lawful revenues

CORE VALUES

· Professionalism

· Integrity

· Accountability

ORGANTIZATIONAL STRUCTURE OF THE BUREAU OF CUSTOMS

Please access https://customs.gov.ph/organizational-chart/

THE OFFICE OF THE COMMISSIONER

The Office has for its main function the supervision and the control of exports, imports, foreign mails
and the clearance of vessels and aircrafts in all ports of entry. It also prevents and prosecutes smuggling
and other illegal activities in all ports under its jurisdiction; it exercises supervision and controls its
constituent Units; and performs other functions as may be provided by law.

INTERNAL ADMINISTRATION GROUP (IAG)

The Group shall be headed by the Assistant Commissioner and shall assist the Commissioner of Customs
in the formation of policies and in the setting up of objectives relative to financial administrative,
personnel, planning and management improvement services of the Bureau.

CUSTOMS REVENUE COLLECTION MONITORING GROUP (RCMG)

Headed by the Deputy Commissioner, this group shall have the functions of maintaining an updated
accounting for all customs revenues collected; administering legal requirements of the Bureau to include
litigation and prosecution of cases; providing the Commissioner with accurate and timely information
and analysis of Collection statistics; conducting a continuing audit of liquidated entries and outstanding
bonds; and performing other functions consistent with the group’s assigned tasks and others which may
be given by the Commissioner.

CUSTOMS ASSESSMENT AND OPERATIONS COORDINATING GROUP

The group shall be headed by a Deputy Commissioner and shall have the functions of gathering and
upon approval of the Commissioner, publishing values of commodities imported into the Philippines,
such values being the basis for the computation of custom duties and other revenues; monitoring for
decision-making purposes the implementation of rules and regulations governing assessment,
warehousing and support operations; monitoring for action and disposal activities together with the
port/airport operations related activities for decision making purposes; and performing other
appropriate functions consistent with the assigned tasks of the group which may be given by the
Commissioner.

CUSTOMS INTELLIGENCE AND INVESTIGATION SERVICE

This Office shall be headed by a Customs Service Chief and shall have direct supervision and control over
the Intelligence Division, Investigation and Prosecution Division and the Internal Inquiry and Prosecution
Division.

THE 17 COLLECTION DISTRICTS AND THEIR SUB-PORTS OF ENTRY

OFFICE

PRINCIPAL PORTS

SUB-PORTS

Port of San Fernando

PEZA Baguio
Sub-port of Sual

Sub-port of Salomague

Port of Manila

South Harbor

Sub-port of Masinloc

Customs Postal Office

PEZA Cavite

EPZA Laguna

2-B

Manila International Container Port

North Harbor

Ninoy Aquino International Airport

Manila Domestic Airport

Airmail Distribution Center

Port of Batangas

Sub-port of Siain

Sub-port of Puerto Princesa

Port of Legaspi

Sub-port of Tabaco

Sb-port of Jose Panganiban

Port of Iloilo

Sub-port of Pulupandan

Kalibo International Airport

7
Port of Cebu

Sub-port of Mactan

Sub-port of Dumaguete

Port of Tacloban

Sub-port of Isabel

Sub-port of San Jose

Sub-port of Catbalogan

Port of Surigao

Sub-port of Bislig

Sub-port of Nasipit

10

Port of Cagayan De Oro

Sub-port of Iligan
Sub-port of Ozamis

Mindanao Container Terminal

11

Port of Zamboanga

Zamboanga International Airport

Sub-port of Jolo

Sub-port of Tawi-tawi

Sub-port of Basilan

12

Port of Davao

Sub-port of Dadiangas

Sub-port of Mati

Sub-port of Parang

13
Port of Subic

14

Port of Clark

15

Port of Aparri

Sub-port of Irene

Sub-port of Currimao

Laoag International Airport

Sub-port of Claveria

Cagayan North International Airport

16

Port of Limay

Sub-port of Mariveles
CMTA PROVISIONS

Sec. 200. Chief Officials of the Bureau. – The Bureau shall be headed by a Commissioner and shall be
assisted by at least four (4) but not more than six (6) Deputy Commissioners.

The Commissioner shall be appointed by the President of the Philippines.

The Deputy Commissioners shall also be appointed by the President and at least majority of whom shall
come from the ranks of the Bureau.

Sec. 201. Powers and Functions of the Commissioner. – The Commissioner shall have the following
powers and functions:

(a) Exclusive and original jurisdiction, to interpret the provisions of this Act, in collaboration with
other relevant government agencies, subject to review by the Secretary of Finance;

(b) Exercise any customs power, duties and functions, directly or indirectly;
© Review any action or decision of any customs officer performed pursuant to the provisions of this Act;

(c) Review and decide disputed assessments and other matters related thereto, subject to review
by the Secretary of Finance and exclusive appellate jurisdiction of the Court of Tax Appeals
(CTA);

€ Delegate the powers vested under this Act to any customs officer with the rank equivalent to division
chief or higher, except for the following powers and functions:

(1) Promulgation of rules and regulations;

(2) Issuance, revocation or modification of rulings; and

(3) Compromise or abate of customs obligations.

(f) Assignment or reassignment of any customs officer subject to the approval of the Secretary of
Finance: Provided, That District Collectors and other customs officers that perform assessment functions
shall not remain in the same area of assignment for more than three (3) years; and

(h) Perform all other duties and functions as may be necessary for the effective implementation of
this Act and other customs related laws.

Sec. 202. Functions of the Bureau. – The Bureau shall exercise the following duties and functions:

(a) Assessment and collection of customs revenues from imported goods and other dues, fees,
charges, fines and penalties accruing under this Act;

(b) Simplification and harmonization of customs procedures to facilitate movement of goods in

international trade;

© Border control to prevent entry of smuggled goods;

(c) Prevention and suppression of smuggling and other customs fraud;

€ Facilitation and security of international trade and commerce through an informed compliance
program

(f) Supervision and control over the entrance and clearance of vessels and aircraft engaged in foreign
commerce;

(g) Supervision and control over the handling of foreign mails arriving in the Philippines for the purpose
of collecting revenues and preventing the entry of contraband;

(i) Supervision and control on all import and export cargoes, landed or stored in piers, airports,
terminal facilities, including container yards and freight stations for the protection of
government revenue and prevention of entry of contraband;

(j) Conduct a compensation study with the end view of developing and recommending to the
President a competitive compensation and remuneration system to attract and retain highly
qualified personnel, while ensuring that the Bureau remains financially sound and sustainable;

(k) Exercise of exclusive original jurisdiction over forfeiture cases under this Act; and
 (l) Enforcement of this Act and all other laws, rules and regulations related to customs
administration.

Sec. 203. Annual Report of the Commissioner. – The Commissioner shall submit to the President, the
Congress of the Philippines and the NEDA an annual report on the performance of the Bureau, on or
before March 31 of the following year.

Sec. 204. Promulgation of Rules and Regulations. – The Commissioner, subject to the approval of the
Secretary of Finance, shall promulgate rules and regulations for the enforcement of this Act. The
Commissioner shall regularly prepare and publish an updated customs manual, and the rules,
regulations and decisions of the Bureau. The Commissioner shall furnish the Congress of the Philippines,
the NEDA and the Tariff Commission with electronic copies of department orders, administrative orders,
circulars, and rules and regulations promulgated pursuant to this Act.

Sec. 205. Copies of Goods Declaration. – The Commissioner shall regularly furnish the NEDA, the
Philippine Statistics Authority (PSA), the Bureau of Internal Revenue (BIR.) and the Tariff Commission
electronic copies of all customs goods declaration processed and cleared by the Bureau.

Upon request, the Tariff Commission shall have access to, and the right to be furnished with copies of
liquidated goods declaration and other documents supporting the goods declaration as finally filed in
the Commission on Audit (COA).
For this purpose, the Bureau shall maintain electronic records of goods declaration and other
documents supporting the declaration.

Terminologies

TERMINOLOGY

DEFINITION

Abatement

Refers to the reduction or diminution, in whole or in part, of duties and taxes where payment has not
been made.

Actual or Outright Exportation

Refers to the customs procedure applicable to goods which, being in free circulation, leave the
Philippine territory and are intended to remain permanently outside it.

Admission

Refers to the act of bringing imported goods directly or through transit into a free zone.

Airway Bill (AWB)

Refers to a transport document for airfreight used by airlines and international freight forwarders which
specify the holder or consignee of the bill who has the right to claim delivery of the goods when they
arrive at the port of destination. It is a contract of carriage that includes carrier conditions, such as limits
of liability and claims procedures. In addition, it contains transport instructions to airlines and carriers, a
description of the goods, and applicable transportation charges.

Appeal

Refers to the remedy by which a person who is aggrieved or adversely affected by any action, decision,
order, or omission of the Bureau, seeks redress before the Bureau, the Secretary of Finance, or
competent court, as the case may be.

Assessment

Refers to the process of determining the amount of duties and taxes and other charges due on imported
and exported goods.

Authorized Economic Operator

Refers to the importer, exporter, customs broker, forwarder, freight forwarder, transport provider, and
any other entity duly accredited by the Bureau based on the World Customs Organization (WCO)
Framework of Standards to Secure and Facilitate Global Trade, the Revised Kyoto Convention (RKC), the
WCO Supply Chain Management Guidelines and the various national best practices to promote trade
facilitation and to provide a seamless movement of goods across borders through secure international
trade supply chains with the use of risk management and modern technology.

Bill of Lading (B/L)

Refers to a transport document issued by shipping lines, carriers and international freight forwarders or
non-vessel operating common carrier for water-borne freight. The holder or consignee of the bill has the
right to claim delivery of the goods at the port of destination. It is a contract of carriage that includes
earner conditions, such as limits of liability and claims procedures. In addition, it contains transport
instructions to shipping lines and carriers, a description of the goods, and applicable transportation
charges.

Bureau
Refers to the Bureau of Customs

Carrier

Refers to the person actually transporting goods or in charge of or responsible for the operation of the
means of transport such as airlines, shipping lines, freight forwarders, cargo consolidators, non-vessel
operating common carriers and other international transport operators.

Clearance

Refers to the completion of customs and other government formalities necessary to allow goods to
enter for consumption, warehousing, transit or transshipment, or to be exported or placed under
another customs procedure.

Commission

Refers to the Tariff Commission

Conditional Importation

Refers to the customs procedure known under the RKC as temporary admission in which certain goods
can be brought into a customs territory conditionally relieved, totally or partially, from payment of
import duties and taxes; such goods must be imported for a specific purpose and must be intended for
reexportation within a specified period and without having undergone any substantial change except
due to normal depreciation.

Customs Broker

Refers to any person who is a bona fide holder of a valid Certificate of Registration/Professional
Identification Card issued by the Professional Regulatory Board and Professional Regulation Commission
pursuant to Republic Act No. 9280, as amended, otherwise known as the “Customs Brokers Act of
2004”.
Customs Office

Refers to any customs administrative unit that is competent and authorized to perform all or any of the
functions enumerated under customs and tariff laws.

Customs Officer

As distinguished from a clerk or employee, refers to a person whose duty, not being clerical or manual in
nature, involves the exercise of discretion in performing the function of the Bureau. It may also refer to
an employee authorized to perform a specific function of the Bureau as provided in this Act.

Customs Territory

Refers to areas in the Philippines where customs and tariff laws may be enforced.

Entry

Refers to the act, documentation and process of bringing imported goods into the customs territory,
including goods coming from free zones.

Exportation

Refers to the act, documentation, and process of bringing goods out of Philippine territory.

Export Declaration

Refers to a statement made in the manner prescribed by the Bureau and other appropriate agencies, by
which the persons concerned indicate the procedure to be observed for taking out or causing to be
taken out any exported goods and the particulars of which the customs administration shall require.

Flexible Clause
Refers to the power of the President upon recommendation of the National Economic and Development
Authority (NEDA): (1) to increase, reduce or remove existing protective tariff rates of import duty, but in
no case shall be higher than one hundred percent (100%) ad valorem; (2) to establish import quota or to
ban importation of any commodity as may be necessary; and (3) to impose additional duty on all import
not exceeding ten percent (10%) ad valorem, whenever necessary.

Foreign Exporter

Refers to one whose name appears on documentation attesting to the export of the product to the
Philippines regardless of the manufacturer’s name in the invoice.

Free Zone

Refers to special economic zones registered with the Philippine Economic Zone Authority (PEZA) under
Republic Act No. 7916, as amended, duly chartered or legislated special economic zones and freeports
such as Clark Freeport Zone; Poro Point Freeport Zone; John Hay Special Economic Zone and Subic Bay
Freeport Zone under Republic Act No. 7227, as amended by Republic Act No. 9400; the Aurora Special
Economic Zone under Republic Act No. 9490, as amended; the Cagayan Special Economic Zone and
Freeport under Republic Act No. 7922; the Zamboanga City Special Economic Zone under Republic Act
No. 7903; the Freeport Area of Bataan under Republic Act No. 9728; and such other freeports as
established or may be created by law.

Goods

Refer to articles, wares, merchandise and any other items which are subject of importation or
exportation.

Goods Declaration

Refers to a statement made in the manner prescribed by the Bureau and other appropriate agencies, by
which the persons concerned indicate the procedure to be observed in the application for the entry or
admission of imported goods and the particulars of which the customs administration shall require.
Importation

Refers to the act of bringing in of goods from a foreign territory into Philippine territory, whether for
consumption, warehousing, or admission as defined in this Act.

Freight Forwarder

Refers to a local entity that acts as a cargo intermediary and facilitates transport of goods on behalf of
its client without assuming the role of a carrier, which can also perform other forwarding services, such
as booking cargo space, negotiating freight rates, preparing documents, advancing freight payments,
providing packing/crating, trucking and warehousing, engaging as an agent/representative of a foreign
non-vessel operating as a common carrier/cargo consolidator named in a master bill of lading as
consignee of a consolidated shipment, and other related undertakings.

International Freight Forwarder

Refers to persons responsible for the assembly and consolidation of shipments into single lot, and
assuming, in most cases, the full responsibility for the international transport of such shipment from
point of receipt to the point of destination.

Jurisdictional Control

Refers to the power and rights of the Bureau in exercising supervision and police authority over all seas
within the jurisdiction of the Philippine territory and over all coasts, ports, airports, harbors, bays, rivers
and inland waters whether navigable or not from the sea.

Lodgement

Refers to the registration, of a goods declaration with the Bureau; r (ee) Non-Vessel Operating Common
Carrier (NVOCC) refers to an entity, which may or may not own or operate a vessel that provides a point-
to-point service which may include several modes of transport and/or undertakes group age of less
container load (LCL) shipments and issues the corresponding transport document.
Outright Smuggling

Refers to an act of importing goods into the country without complete customs prescribed importation
documents, or without being cleared by customs or other regulatory government agencies, for the
purpose of evading payment of prescribed taxes, duties and other government charges.

Perishable Good

Refers to goods liable to perish or goods that depreciate greatly in value while stored or which cannot
be kept without great disproportionate expense, which may be proceeded to, advertised and sold at
auction upon notice if deemed reasonable.

Port of Entry

Refers to a domestic port open to both domestic and international trade, including principal ports of
entry and subports of entry. A principal port of entry is the chief port of entry of the Customs District
wherein it is situated and is the permanent station of the District Collector of such port. Subports of
entry are under the administrative jurisdiction of the District Collector of the principal port of entry of
the Customs District. Port of entry as used in this Act shall include airport of entry.

Port of Discharge (Port of Unloading)

Refers to a place where a vessel, ship, aircraft or train unloads its shipments, from where they will be
dispatched to their respective consignees.

Re-exportation

Means exportation of goods which have been imported

Release of Goods
Refers to the action by the Bureau to permit goods undergoing clearance to be placed at the disposal of
the party concerned.

Refund

Refers to the return, in whole or in part, of duties and taxes paid on goods.

Security

Refers to any form of guaranty, such as a surety bond, cash bond, standby letter of credit or irrevocable
letter of credit, which ensures the satisfaction of an obligation to the Bureau.

Smuggling

Refers to the fraudulent act of importing any goods into the Philippines, or the act of assisting in
receiving, concealing, buying, selling, disposing or transporting such goods, with full knowledge that the
same has been fraudulently imported, or the fraudulent exportation of goods. Goods referred to under
this definition shall be known as smuggled goods.

Taxes

Refer to all taxes, fees and charges imposed under this Act and the National Internal Revenue Code
(NIRC) of 1997, as amended, and collected by the Bureau.

Technical Smuggling

Refers to the act of importing goods into the country by means of fraudulent, falsified or erroneous
declaration of the goods to its nature, kind, quality, quantity or weight, for the purpose of reducing or
avoiding payment of prescribed taxes, duties and other charges.

Tentative Release
Refers to a case where the assessment is disputed and pending review, an importer may put up a cash
bond equivalent to the duties and taxes due on goods before the importer can obtain the release of said
goods.

Transit

Refers to the customs procedure under which goods, in its original form, are transported under customs
control from one customs office to another, or to a free zone.

Transshipment

Refers to the customs procedure under which goods are transferred under customs control from the
importing means of transport to the exporting means of transport within the area of one customs office,
which is the office of both importation and exportation.

Traveller

Refers to any person who temporarily enters the territory of a country in which he or she does not
normally resides (non-resident), or who leaves that territory, and any person who leaves the territory of
a country in which he or she normally resides (departing resident) or who returns to that territory
(returning resident).

Third Party

Refers to any person who deals directly with the Bureau, for and on behalf of another person, relating to
the importation, exportation, movement or storage of goods

Collection districts and ports of entry

Sec. 206. Customs Districts. – For administrative purposes, the Philippines shall be divided into as many
Customs Districts as necessary, the respective limits of which may be changed from time to time by the
Commissioner, with the approval of the Secretary of Finance.
Each Customs District shall be supervised by one (1) District Collector, assisted by as many Deputy
District Collectors as may be necessary. The choice of the location of a District Office, its business hours
and the staffing pattern thereof, shall be based on the particular requirements of each district.

Sec. 207. Ports of Entry. – All ports of entry shall be under the supervision and control of a Customs
District. A District Collector shall be assigned in the principal ports of entry while a Deputy District
Collector may be assigned to other types of ports of entry.

The principal ports of entry shall be located in Aparri, San Fernando, Manila, Manila International
Container Port, Ninoy Aquino International Airport, Subic, Clark, Batangas, Legaspi, Iloilo, Cebu,
Tacloban, Surigao, Cagayan de Oro, Zamboanga, Davao, Limay and such other ports that may be created
pursuant to this Act.

For the effective enforcement of the Bureau’s functions and without hampering business and
commercial operations of the ports, sea ports and airport authorities and private ports and airport
operators shall provide suitable areas for examination and for other customs equipment free of charge
within, a definite period of time, as agreed with private port and airport operations, if any.

Classification of Ports of Entry

a. Principal Port

It is the chief port of entry of the Customs District wherein it is situated and is the permanent station of
the District Collector.
 b. Subports of Entry

Are under the administrative jurisdiction of the District Collector of the principal port of entry of the
District Collector of the principal port of entry of the Customs District.

Sec. 208. Power of the President to Open and Close Any Port. – Upon the recommendation of the
Secretary of Finance, the President may open or close any port of entry. Upon closure of a port of entry,
the existing personnel shall he reassigned by the Commissioner, subject to the approval of the Secretary
of Finance,

Sec. 209. Assignment of Customs Officers and Employees to Other Duties. – The Commissioner, with the
approval of the Secretary of Finance, may assign any employee of the Bureau to any port, service,
division or office of the Bureau within the Bureau’s staffing pattern or organizational structure, or may
assign any employee other duties: Provided, That such assignment shall not affect the employee’s
tenure of office nor result in a change of status, demotion in rank and/or salary deduction.

Sec. 210. Duties of the District Collector. – The District Collector shall have the following duties in their
assigned Customs District:

(1) Ensure entry of all imported goods at the customs office;

(2) Prevent importation and exportation of prohibited goods;

(3) Ensure legal compliance of regulated goods and facilitate the flow of legitimate trade;

(4) Examine, classify and value imported goods;

(5) Assess and collect duties, taxes and other charges on imported goods;

(6) Hold and dispose imported goods in accordance with this Act;

(7) Prevent smuggling and other customs fraud; and

(8) Perform other necessary duties that may be assigned by the Commissioner for the effective
implementation of this Act.
Subject to the supervision and control of the District Collector, the duties and functions of the District
Collector may be delegated to the Deputy District Collector. The Deputy District Collector assigned to a
sub-port shall be under the supervision and control of the District Collector of the corresponding
principal port.

Sec. 211. Temporary Succession of Deputy District Collector to Position of Acting District Collector. – In
the absence or disability of a District Collector or, in case of vacancy, the Deputy District Collector shall
temporarily discharge the duties of the District Collector. Should there be no Deputy District Collector,
the District Collector shall designate, in writing, a senior ranking customs officer to temporarily perform
the duties of the District Collector. In case there are two (2) or more senior ranking customs officers with
equal length of service, a drawing of lots shall be undertaken. The District Collector shall report the
designation to the Commissioner within twenty-four (24) hours after the designation.

Sec. 212. Records to be Kept by Customs Officers. – District Collectors, Deputy District Collectors, and
customs officers acting in such capacities must maintain permanent records of official transactions and
turn-over all records and official papers to their respective successors or other authorized officials. The
records shall be made available for inspection by other authorized officials of the Bureau.

If required, the District Collector shall affix the official dry seal of the Bureau on all documents and
records requiring authentication.

Sec. 213. Reports of the District Collector to the Commissioner. – The District Collector shall report to
the Commissioner any probable or initiated litigation within the Customs District and shall submit
regular monthly reports on all district transactions.
Relationship of the BOC with other Government Agency

1. THE TARIFF COMMISSION

The Tariff Commission is the principal and independent authority on tariff and trade remedies, and a key
adviser on non-tariff measures and international trade issues. In addition, it also helps the Bureau of
Customs with the right tariff classification of goods entering the Philippines for the correct computation
of customs duties and taxes collected by the Bureau.

2. DEPARTMENT OF FINANCE

The Department of Finance is the government’s steward of sound fiscal policy. It formulates revenue
policies that will ensure funding of critical government programs that promote welfare among our
people and accelerate economic growth and stability. The Department of Finance is the mother agency
of the Bureau of Customs. It has a say on the policy, rules and regulations formulation of the Bureau of
Customs. It approves some of the decision of the Commissioner.

VISION

· A strong economy with stable prices and strong growth;

· A stable fiscal situation with adequate resources for government projects, infrastructure,
education, health and other basic services;

· A borrowing program that is able to avoid the crowding-out effect on the private sector and
minimizes cost;
· A public sector debt profile with long maturities and an optimum mix of currencies that minimizes
impact of currency movements; and

· A strong economic growth with equity and productivity.

MISSION

Our economy must be one of the most dynamic and active in the world, globally competitive and
onward looking. The DOF shall take the lead in providing a solid foundation for the achievement of this
objective by building a strong fiscal position, through the:

· Formulation, institutionalization and administration of sound fiscal policies;

· Improvement of tax collection efficiency and non-tax revenue efforts;

· Mobilization of adequate resources on most advantageous terms to meet budgetary

requirements;

· Sound management of public sector debt; and

· Initiation and implementation of structural and policy reforms.

3. BANGKO SENTAL NG PILIPINAS

The Bangko Sentral ng Pilipinas is the central bank of the Republic of the Philippines. It was established
on July 3, 1993 pursuant to the provision of the 1987 Philippine Constitution and the New Central Bank
Act of 1993. The BSP took over from the Central Bank of the Philippines, which was established on
January 3, 1949, as the country’s central money authority. The BSP enjoys fiscal autonomy from the
National Government in the pursuit of its mandated responsibilities.
The Bangko Sentral ng Pilipinas publishes the currency exchange rate which will be used as the basis of
the Bureau of Customs in collecting the duties and taxes levied on imported goods. The exchange rate
published by the BSP every Friday will be the exchange rate to be used by the Bureau for all imports the
following day upto Friday the next week.

4. DEPARTMENT OF TRADE AND INDUSTRY

The Department of Trade and Industry has six major functional groups which report directly to the Office
of the Secretary. One of the major function which is related to the mandates of the Bureau is their
Industry Development and Trade Policy Group which is responsible for trade and industry policy
formulation and implementation of the Manufacturing Resurgence Program; and their Trade
Promotions Group which is responsible for DTI’s export and investment development program. One of
the umbrella agency of the DTI is the Bureau of Import Services.

The DTI is responsible for realizing the country’s goal of globally competitive and innovative industry and
services sector that contribute to inclusive growth and employment generation.

5. PHILIPPINE ECONOMIC ZONE AUTHORITY

The Philippine Economic Zone Authority (PEZA) is an agency attached to the Department of Trade and
Industry. It is the Philippine agency tasked to promote investment, extend assistance, register grant
incentives to and facilitate the business operations of investors in export-oriented manufacturing and
service facilities inside selected areas throughout the country proclaimed by the President as PEZA
Special Economic Zones.
It oversees and administers incentives to developers/operators of and locators in world-class, ready-to-
occupy, environmental-friendly, secured and competitively priced Special Economic Zones.

PEZA’s dynamic, responsive and client-oriented ethics have earned the trust and confidence of investors
in it Special Economic Zones, the local business sector, and the foreign chambers of commerce in the
Philippines.

As provided in the Special Economic Zone Act, the PEZA Board is chaired by the Secretary of Trade and
Industry. The Vice Chair is the Director General of PEZA. The Members of the Board are the
Undersecretaries representing nine key government departments, to ensure efficient coordination
between PEZA and their respective departments on matters pertaining to investor’s operations inside
the Special Economic Zones.

Importation and Exportation in General

WHAT IS IMPORTATION?

Importation refers to the act of bringing in goods from a foreign territory into the
Philippine territory, whether for consumption, warehousing or admission as defined in
this Act.

Importation consists of bringing an article into the country from the outside.
Importation is complete when the taxable dutiable commodity is brought within the
limits of the port of entry.

KINDS OF IMPORTATION
 

1.   Actual Importation

Refers to the goods being brought into the Philippine territory from a foreign territory.
This is the type of importation referred to in CMTA, Section 103.

a.    For Consumption

The term means imported goods that are brought in the Philippine territory for
domestic use.

b.   For Warehousing

The term means that the imported goods that are brought into the Philippines are to be
placed on a structure called bonded warehouse which is under customs control.

2.   Constructive Importation

Refers to the purchase of goods from free zones, bonded warehouses and other
transactions falling under constructive exportation under the CMTA, Section 102 (b)

SECTION 115 – TREATMENT OF IMPORTATION

Imported goods shall be deemed “entered” in the Philippines for consumption when the
goods declaration is electronically lodged, together with any required supporting
documents, with pertinent customs office.

TYPES OF IMPORTATION AND EXPORTATION

 
A.   FREE IMPORTATION/EXPORTATION

Unless otherwise provided by law or regulation, all goods may be freely imported into
and exported from the Philippines without need for import and export permits,
clearances and licenses.

B.   REGULATED IMPORTATION/EXPORTATION

Goods which are subject to regulation shall be imported or exported only after securing
the necessary goods declaration or export declaration, clearances, licenses, permits or
any other requirements, prior to importation or exportation. In case of importation,
submission of requirements after arrival of the goods but prior to release from customs
custody, shall be allowed but only in cases provided for by governing laws or
regulations.

C.   PROHIBITED IMPORTATION/EXPORTATION

The importation and exportation of the following goods are prohibited:

ü  Written or printed goods in any form containing any matter advocating or inciting
treason, rebellion, insurrection, sedition against the government of the Philippines, or
forcible resistance to any law of the Philippines, or written or printed goods containing
any threat to take the life of, or inflict bodily harm up on any person in the Philippines;

ü  Goods, instruments, drugs and substances designed, intended or adapted for

producing unlawful abortion, or any printed matter which advertises, describes or gives
direct or indirect information where, how or by whom unlawful abortion is committed;

ü  Written or printed goods, negatives or cinematographic films, photographs,

engravings, lithographs, objects, paintings, drawings or other representation of an
obscene or immoral character;

ü  Any goods manufactured in whole or in part of gold, silver or other precious metals
or alloys and the stamp, brand or mark does not indicate the actual fineness of quality
of the metals or alloys;

ü  Any adulterated or misbranded food or goods for human consumption or any

adulterated or misbranded drug in violation of relevant laws and regulations;
ü  Infringing goods as defined under the Intellectual Property Code and related laws;
and

ü  All other goods or parts thereof which importation and exportation are explicitly
prohibited by law or rules and regulations issued by the competent authority.

D.   RESTRICTED IMPORTATIOM/EXPORTATION

Except when authorized by law or regulation, the importation and exportation of the
following restricted goods are prohibited:

ü  Dynamite, gunpowder, ammunitions and other explosives, firearms and weapons of

war, or parts thereof;

ü  Roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus or
mechanical devices used in gambling or the distribution of money, cigars, cigarettes or
other goods when such distribution is dependent on chance, including jackpot and
pinball machines or similar contrivances, or parts thereof; (c) Lottery and sweepstakes
tickets, except advertisements thereof and lists of drawings therein;

ü  Marijuana, opium, poppies, coca leaves, heroin or other narcotics or synthetic drugs
which are or may hereafter be declared habit forming by the President of the
Philippines, or any compound, manufactured salt, derivative, or preparation thereof,
except when imported by the government of the Philippines or any person duly
authorized by the Dangerous Drugs Board, for medicinal purposes;

ü  Opium pipes or parts thereof, of whatever material; and

ü  Any other goods whose importation and exportation are restricted.

The restriction to import or export the above stated goods shall include the restriction
on their transit.

WHEN IMPORTATION BEGINS AND DEEMED TERMINATED (SEC 103)

Importation begins when the carrying vessel or aircraft enters the Philippine territory
with the intention to unload therein. Importation is deemed terminated when:
1.    The duties, taxes and other charges due upon the goods have been paid or secured
to be paid, at the port of entry unless the goods are free from duties, taxes and other
charges and legal permit for withdrawal has been granted: or

2.    In case the goods are deemed free of duties, taxes and other charges, the goods
have legally left the jurisdiction of the Bureau.

WHEN DUTY AND TAX ARE DUE ON IMPORTED GOODS

Except as otherwise provided for in this Act or in other laws, all goods, when imported
into the Philippines, shall be subject to duty upon importation, including goods
previously exported from the Philippines.

Unpaid duties, taxes and other charges, shall incur legal interest of twenty percent (20%)
per annum computed from the date of final assessment under Section 429 of this Act,
when payment becomes due and demandable. The legal interest shall likewise accrue
on any fine or penalty imposed.

Upon payment of the duties, taxes and other charges, the Bureau shall issue the
necessary receipt or document as proof of such payment.

REGULATED IMPORTS AND THEIR REGULATORY AGENCIES

REGULATED IMPORTS REGULATING AGENCIES

Essential Chemicals and Philippine Drug Enforcement Agency (PDEA) and
Controlled Precursors; Dangerous Dangerous Drugs Board (DDB)
Drugs (Ketamine,
Pseudoephedrine, Oripavine,
Ameneptine, etc.)
Chemicals under the Philippine DENR – Energy Resource Development Bureau
Priority Channel List
Cyanide, Mercury, Asbestos, DENR – Environmental Management Bureau
Polychlorinated Biphenyl,
Chlorofluorocarbon and other
ozone depleting substances  

   

Recyclable materials containing  

hazardous substances (scrap
metals, solid plastic materials,  
electronic assembles and scraps,
used oil, fly ash and used lead DENR – Energy Resource Development Bureau
acid batteries
Coal, Anthracite DENR – Energy Resource Development Bureau
Wildlife DENR – Protected Areas and Wildlife Bureau
Live Animals; Animal products Department of Agriculture – Bureau of Animal Industry
and by-products
Fishery and aquatic products Department of Agriculture – Bureau of Fisheries and Aquatic
Resources
Plants, planting materials and Department of Agriculture – Bureau of Plant Industry
plant products
Cane or beet sugar, and other Sugar Regulatory Administration
artificial sweeteners
Chainsaw Wood Products DENR – Forest Management Bureau
Semi-synthetic antibiotics (all DOH – Food and Drugs Administration
forms of salt of ampicillin,
amoxicillin and cloxacillin)

Wheat flour; iodized salt; and all

health products
Color reproduction machines with NBI and Central Bank
2400 dots per inch or higher
Explosives, blasting agents and PNP – Firearms and Explosive Office
detonators

Chemicals used in the

manufacture of explosives
All fertilizers, pesticides and Department of Agriculture – Fertilizer and Pesticide
other such chemical products Authority
intended for agricultural use
Used motor vehicles, trucks, and DTI – Bureau of Import Services
buses including used parts and
 components
Used vehicles for the use of Department of Foreign Affairs
foreign diplomatic corps and
accredited international
organizations
Aircrafts, engines and propellers Civil Aviation Authority of the Philippines
All types of ships not wooden Maritime Industry Authority (MARINA)
hulled, including fishing
vessels/boats
All commodities originating from Philippine International Trading Corporation
the following socialist and
centrally-planned economy
countries: Albania, Angola,
Ethiopia, Laos, Libya, Mongolia,
Mozambique, Myanmar,
Nicaragua and North Korea
Nuclear and radioactive DOST – Philippine Nuclear Research Institute
materials; nuclear-related dual-
use equipment and materials
Household appliances and DTI – Bureau of Product Standards
lamp/lighting products; Wiring
devices, wires and cables,
mechanical and construction
materials
Selected medical devices; toys; DOH – Food and Drug Administration
water and medical waste
treatment devices
Radio transmitters/transceivers National Telecommunications Commission
Optical and Magnetic media Optical Media Board
products
Electronic Gaming Machines and Philippine Amusement and Gaming Corporation
Products
Legal tender Philippine notes and Central Bank
coins, checks, money order and
other bill of exchange drawn in
pesos against banks operating in
the Philippines in amount
exceeding P10,000
 

For more of the regulated importations and their regulating agency, please see CMC 44-
2019.
International Trade Organizations
THE WORLD CUSTOMS ORGANIZATION

The World Customs Organization is an independent intergovernmental organization

exclusively to international customs and border control matters. It works in areas
covering the development of international conventions, instruments and tools on topics
such as commodity classification, valuation, rules of origin, collection of customs
revenue, supply chain security, international trade facilitation, customs enforcement
activities, combating counterfeiting in support of intellectual property rights, integrity
promotion and delivering sustainable capacity building to assist with customs reforms
and modernization.

Established in 1952 as the Customs Cooperation Council (CCC)., the WCO maintains the
Harmonized Commodity Description and Coding System (HS), and internationally
accepted goods nomenclature, and administers the technical aspects of the WTO
Agreements on Customs Valuation and Rules of Origin. It adopted the informal working
name “World Customs Organization” in order to indicate more clearly its nature and
worldwide status. However, the Convention establishing the CCC has not been amended
thus CCC remains its official name.

MAIN FUNCTIONS OF THE WCO

1.    To study all questions relating to cooperation in customs matters;

2.    To examine the technical aspects, as well as the economic factors related thereto, of
customs systems with a view to proposing to its members practical means of attaining
the highest possible degree of harmony and uniformity;

3.    To prepare draft conventions and amendments to conventions and to recommend

their adoption by interested governments;

4.    To make recommendations to ensure the uniform interpretation and application of

the conventions concluded as a result of its work as well as those concerning the
Nomenclature for the Classification of goods in customs tariffs and the valuation of
goods for customs purposes and, to this end, to perform such functions as may be
expressly assigned to it in those conventions in accordance with the provisions thereof;
5.    To make recommendations, in a conciliatory capacity, for the settlement of disputes
concerning the interpretation or application of the conventions referred to in paragraph
(4) above;

6.    To ensure the circulation of information regarding customs regulations and

procedures;

7.    On its own initiative or on quest, to furnish interested governments information or

advice on customs matters within the general purposes of the present convention and
to make recommendations thereon; and

8.    To cooperate with other intergovernmental organizations as regards matters within

its competence.

HOW DOES THE WCO OPERATE?

The WCO is the only international organization dealing exclusively with customs
matters. It provides for a forum where delegates representing a large variety of
members could tackle customs issues on equal footing. Each member has one
representative and is entitled to one vote.

THE DIFFERENT WORKING BODIES IN THE WCO

1.   Council

The highest body composed of the Directors-General of Customs from all members and
is assisted by the Finance Committee (17 members) and by the Policy Commission (24
members). The Council meets once a year with the aim of securing the highest degree
of harmony and uniformity in the customs systems of Member Governments, and
especially to study the problems inherent in the development and improvement of
customs techniques and customs legislation in connection therewith.

2.   Policy Commission

Established to act as a dynamic steering group to the Council

 

3.   Finance Committee

Acts under the overall direction of the WCO Council with administrative support
provided by the WCO Secretariat.

4.   Tariff and Trade Affairs

a.    HS Committee

Administers the International Convention on the Harmonized System to ensure that the
HS keeps abreast of technical progress and international trade developments; resolves
specific classification problems; and acts as an arbitrator in customs disputes between
countries and make decisions regarding the tariff code applicable to goods;

b.   HS Review Sub-Committee

Acts under the overall direction of the HS Committee on the review and amendments of
the HS having regard to the needs of the users and to changes in technology or in
patterns of international trade, and on the preparation of consequential amendments to
the Explanatory Notes and Compendium of Classification Opinions;

c.    Scientific Sub-Committee

Assists the HS Committee and the Review Sub-Committee in their technical work,
particularly on the draft HS legal texts and Explanatory Notes involving scientific issues,
and with regard to questions involving the classification of chemical products and those
involving scientific issues.

d.    HS Working Party

Under the overall direction of the HS Committee, drafts the texts of the possible
amendments to the HS Nomenclature, Explanatory Notes and Compendium of
Classification Opinions before their final adoption by the HS Committee.

e.    Technical Committee on Rules or Origin

Together with the WTO Committee on Rules of Origin, is charged with the
implementation of the work program on the harmonization of rules of origin; examines
specific technical problems arising in the day-to-day administration or the rules of origin
of Members and gives advisory opinions on appropriate solutions based upon the facts
presented; and furnishes information and advice on any matter concerning the origin
determination if goods as may be requested by any member.

f.     Technical Committee on Customs Valuation

Responsible for matters pertaining to customs valuation; and prepares opinion

commentaries, explanatory notes, case studies and surveys.

THE WORLD TRADE ORGANIZATION

The World Trade Organization (WTO) is the only formal and international organization,
composed of member governments, dealing with the rules of trade between nations.
Trade liberalization is the main approach that WTO Members have adopted to promote
economic growth and development. The WTO deals with the regulation of trade
between participating countries by providing a framework for negotiating trade
agreements and a dispute settlement mechanism aimed at enforcing participant’s
adherence to the WTO agreements signed by the WTO members.

The WTO came into being on January 1, 1995 as a result of a long an intense Uruguay
Round of Negotiations. The Philippines is one of the founding members of the WTO,
alongside several AMSs, namely Brunei Darussalam, Indonesia, Malaysia, Myanmar,
Singapore and Thailand.

MAIN OBJECTIVES OF THE WTO

1.    To raise living standards;

2.    To ensure full employment;

3.    To ensure a large and steadily growing volume of real income and effective
demand;
4.    To expand production of and trade in goods and services while allowing for optimal
use of the world’s resources in accordance with the objective of sustainable
development; and

5.    To make “positive efforts to ensure that developing countries, and especially the
least-developed among them, secure a share in the growth in international trade
commensurate with … their economic development.”

FUNCTIONS OF THE WTO

1.    To facilitate the implementation, administration and operation, and further the
objectives of the WTO Agreements through its bodies and committees;

2.    To serve as a forum for members to settle their disputes;

3.    To review member’s trade policies;

4.    To coordinate with relevant international organizations in global economic policy-

making, including the WB and the IMF; and

5.    To provide technical assistance and capacity building for developing and least-
developed countries.

FUNDAMENTAL PRINCIPLES OF THE WTO

·         Non-discrimination

Members shall not discriminate between their trading partners (MFN Principle); or
between national and foreign like products, services or nationals (national treatment
principle).

·         More open trade

Involves efforts in reducing or eliminating obstacles to trade.

·         Transparency and Predictability

Traders and members need to know how trade rules around the world (transparency)
and that trade measures will not be raised/introduced arbitrarily (predictability).

·         Special and differential treatment for less developed members

Developing and least developing members face particular challenges when dealing with
trade liberalization; therefore, they are provided greater flexibility, given more time to
adjust to the rules, and granted other special rights.

THE ORGANIZATIONAL STRUCTURE OF THE WTO

THE MINISTERIAL CONFERENCE (Highest Authority)

The highest decision-making body of the WTO, the Ministerial Conference shall meet at
least once every two years to review the on-going work, provide political guidance and
direction to that work and set the agenda for further work as necessary.

THE GENERAL council (Second Level)

The General Council is composed of representatives from all members: they are usually
members’ ambassadors or permanent representatives based in Geneva. The GC meets
as appropriate to adopt decisions, on behalf of the MC, when the latter is not in session.

The GC has authority over the Trade Negotiations Committee (TNC), which is in charge
of the negotiations mandated by the Doha Development Agenda. The GC also meets as:

·         Dispute Settlement Body

Establishes panels of independent experts to resolve the disputes, adopts the rulings of
the panels and oversees the implementation of those rulings

 
·         Trade Policy Review Body

Administers trade policy reviews as mandated by the Trade Policy Review Mechanism of
the WTO.

HOW ARE DECISIONS MADE AT THE WTO

The WTO continues GATT’s tradition of making decisions not by voting but by
consensus. Where consensus is not possible, the WTO Agreement allows for voting – a
vote being won with a majority of the vote cast, unless otherwise provided in said
Agreement. At meetings of the MC and the GC, each WTO Member shall have one vote.

Decisions on the WTO are taken through its various councils and committees, whose
memberships consist of all WTO Members. The highest decision-making body is the MC.

IN WHAT WAY DOES THE WTO OPERATE?

1.    As a set of multilaterally agreed rules governing the trade behaviour of

governments providing, in essence, the rules of the road for trade.

2.    As a forum for trade negotiations in which the trade environment is liberalized and
made more predictable either through the opening of national markets or the
reinforcement and extension of the rules themselves.

3.    As an international court where governments can resolve disputes with other WTO
members.

ASSOCIATION OF SOUTHEAST ASIAN NATIONS

The Association of Southeast Asian Nations (ASEAN) was established in August 8, 1967
through the Bangkok Declaration and is a regional organizations created to promote
political and economic cooperation and regional stability among the countries in the
Southeast Asian region. Among the founding members of the ASEAN were Indonesia,
Malaysia, Philippines, Singapore and Thailand. Brunei Darussalam joined on January 7,
1984, Vietnam on July 28, 1995, the Lao PDR and Myanmar on July 23, 1997 and
Cambodia on April 30, 1999 – thus constituting what is today the ten Member States of
the ASEAN.

ASEAN’s main objectives are to accelerate economic growth, enhance social progress
and cultural development, and to promote regional peace and stability in the region.

FUNDAMENTAL PRINCIPLES OF ASEAN

In their relations with another, the ASEAN Member States have adopted the following
fundamental principles, as contained in the Treaty of Amity and Cooperation in
Southeast Asia of 1976:

·         Mutual respect for the independence, sovereignty, equality, territorial integrity,

and national identity of all nations;

·         The right of every State to lead its national existence free from external
interference, subversion or coercion;

·         Non-interference in the internal affairs of one another;

·         Settlement of differences or disputes by a peaceful manner;

·         Renunciation of the threat or use of force; and

·         Effective cooperation among each other.

THE ASEAN CHARTER

The ASEAN Charter refers to the legal document that provides the legal status and
institutional framework for cooperation within the ASEAN region and towards the
formation of the ASEAN Community. The Charter also codifies ASEAN norms, rules and
values; sets clear targets for ASEAN; and presents accountability and compliance.

 
Overall, the ASEAN Charter establishes the rules-based systems and structures for the
conduct of ASEAN affairs.

The ASEAN Charter was signed by the Governments of the 10 AMSs on November 20,
2007 and entered into force on December 15, 2008.

THE MAIN DECLARATIONS UNDER THE ASEAN CHARTER

·         To maintain and enhance peace and stability in the region, and to preserve
Southeast Asia as a nuclear weapon-free zone;

·         To create a single market and production base, which is highly competitive and
economically integrated with free flow of goods, services and investment, facilitated
movement of labor, and free flow of capital;

·         To strengthen democracy, enhance good governance and the rule of law, and to
promote human rights. The ASEAN shall establish a human rights body, with terms to be
decided by foreign ministers;

·         To respect the independence, sovereignty, territorial integrity and national identity
of all AMSs;

·         Renunciation of aggression and threat or use of force in any matter inconsistent

with international law, and reliance on peaceful settlement of disputes’

·         Non-interference in the internal affairs of Member States;

·         To alleviate poverty and narrow the development gap within ASEAN;

·         To promote sustainable development to protect the environment, natural

resources and cultural heritage;

·         To develop human resources and well-being through cooperation on education,

equitable access to development opportunities, social welfare and justice; and

·         To promote an ASEAN identity through awareness of culture.

 
HOW COUNTRIES BECOME A MEMBER OF THE ASEAN

The procedure for application and admission to ASEAN shall be prescribed by the
ASEAN Coordinating Council. Admission shall be based on the following criteria:

ü  Location in the recognized geographical region of Southeast Asia;

ü  Recognition by all AMSs;

ü  Agreement to be bound and to abide by the ASEAN Charter; and

ü  Ability and willingness to carry out the obligations of Membership.

Admission shall be decided by consensus by the ASEAN Summit, upon the

recommendation of the ACC. An applicant State shall be admitted to ASEAN upon
signing an Instrument of Accession to the Charter.

WHAT IS THE ASEAN SUMMIT AND ITS FUNCTIONS

The organization holds meetings known as the “ASEAN Summit”, where Heads of State
or Government of each Member State meet to discuss and resolve regional issues, as
well as meet with other countries outside of the bloc with the intention of promoting
external relations. It is the supreme policy-making body of the ASEAN.

ASEAN Summit Meetings are held twice annually, and hosted by the Member State
holding the ASEAN Chairmanship; and convened, whenever necessary, as special or ad
hoc meetings chaired by the Member State holding the ASEAN Chairmanship, at venues
to be agreed upon by AMS.

Asia Pacific Economic Cooperation

What is the Asia-Pacific Economic Cooperation?

APEC refers to the association created in 1989 for economies that share the boundaries
of the Pacific Ocean. APEC Member economies work together to reduce barriers to
trade, ease the exchange of goods, services, resources and technical know-how, and
strengthen economic and technical cooperation between and among members.

THE FOUR OBJECTIVES OF APEC

·         Sustain the growth and development of the region for the common good of its
people thus contributing to the growth of the world economy.

·         Enhance the gains of both the regional and world economies by encouraging the
flow of gods, services, capital and technology.

·         Develop and strengthen the open multilateral trading system in the interest of the
Asia-Pacific Member economies and all other economies.

·          Reduce barriers to trade in goods and services, and minimize hindrance to

investment among its participants in a manner consistent with GATT/WTO principles,
where applicable, and without detriment to other economies.

THE THREE PILLARS OF APEC

v  Trade and Investment Liberalization

APEC members take actions to reduce tariff and non-tariff barriers to trade and
investment that boosts job creation, incomes and growth. Collaboration is guided
by APEC's Regional Economic Integration agenda and includes the advancement
of bilateral and regional trade agreements and the long-term goal of a Free Trade Area
of the Asia-Pacific (FTAAP).

v  Business Facilitation

APEC members pursue measures to reduce the time, cost and uncertainty of doing
business in the region and open new economic opportunities including for small
firms, women and youth. APEC's Structural Reform agenda supports the development
and harmonization of policies that improve market access and efficiency, and uphold
public interest such as the safeguarding of health and safety.
 

v  Economic and Technical Cooperation

ECOTECH builds the technical capacity of APEC's diverse members to promote trade,

investment and robust, secure and sustainable economic growth that widely benefits the
region's people. Priorities include strengthening anti-corruption, cross-border education
and skills training, emergency preparedness, energy security, environmental
protection, defense against pandemics and infrastructure development, among others.

APEC WORKING LEVEL

APEC's working level activities and projects are guided by APEC Senior Officials from the
21 APEC member economies. These activities and projects are carried out by four high
level committees:

1.    Committee on Trade and Investment;

2.    Senior Official’s Meeting Committee on Economic and Technical Cooperation;

3.    Economic Committee; and

4.    Budget and Management Committee.

Sub-Committees, Experts' Groups, Working Groups and Task Forces all support the
activities and projects led by these four high level committees.

Senior Official’s Meeting (SOM)

Working under direction from APEC Ministers, Senior Officials guide the activities of the
Committees, Working Groups and Task Forces. Senior Officials develop
recommendations for APEC Ministers and APEC Economic Leaders. Senior Officials'
Meetings are held three to four times a year with the chair from the host economy.

What are the Committees, Working Groups and SOM Task Groups?

v  Committee on Trade and Investment

The Committee on Trade and Investment coordinates APEC's work on the liberalization
and facilitation of trade and investment. The Committee on Trade and Investment also
works to reduce impediments to business activity through its Sub-Committees and
Experts' Groups.

v  SOM Committee on Economic and Technical Cooperation

The SOM Committee on Economic and Technical Cooperation assists APEC Senior
Officials in coordinating and managing APEC's economic and technical cooperation
agenda, as well as identifying initiatives for cooperative action by member economies.

v  Economic Committee

The Economic Committee (EC) has a mandate to promote structural reform within APEC
by undertaking policy analysis and action-oriented work. The EC progresses this
mandate in close coordination with other relevant APEC groups; for instance,
the Competition Policy and Law Group (CPDG) and the Finance Ministers' Process
(FMP)

v  Budget and Management Committee

The Budget and Management Committee advises the SOM on budgetary, administrative
and managerial issues. It also monitors and evaluates project management aspects of
the operations of Committees and Working Groups and makes recommendations to
SOM for improved efficiency and effectiveness.
 

ACTION PLANS

In order to meet APEC's Bogor Goals for free and open trade and investment in Asia-
Pacific, APEC member economies follow the strategic roadmap as agreed by APEC
Economic Leaders in Osaka, Japan in 1995. This roadmap is known as the Osaka Action
Agenda.

APEC member economies report progress towards achieving free and open trade and
investment goals through Individual Action Plans (IAPs) and Collective Action Plans
(CAPs), submitted to APEC on an annual basis. Individual and Collective Action Plans are
available through the dedicated e-IAP website. This site provides the ability to search
individual APEC member economy IAPs, compare IAPs across years and view CAPs. 

OSAKA ACTION AGENDA

The Osaka Action Agenda provides a framework for meeting the Bogor Goals through
trade and investment liberalisation, business facilitation and sectoral activities,
underpinned by policy dialogues and economic and technical cooperation. As part of
this framework, General Principles have been defined for APEC member economies as
they proceed through the APEC liberalisation and facilitation process.

The following General Principles are provided in the Osaka Action Agenda and are
applied to the entire APEC liberalisation and facilitation process:

 Comprehensiveness - addressing all impediments to achieving the long-term goal of free

and open trade.
 WTO-consistency - measures undertaken in the context of the APEC Action Agenda are
consistent with the principles of the World Trade Organization (WTO).
 Comparability - APEC member economies endeavour to have comparable trade and
investment liberalisation and facilitation, taking into account the general levels achieved
by each APEC economy.
  Non-discrimination - reductions in barriers to trade achieved through APEC are available
to all APEC Member Economies and non-APEC economies.
 Transparency - the laws, regulations and administrative procedures in all APEC member
economies which affect the flow of goods, services and capital among APEC member
economies are transparent.
 Standstill - APEC Member Economies do not take measures which have the effect of
increasing levels of protection.
 Simultaneous start, continuous process and differentiated timetables  - APEC member
economies began simultaneously the process of liberalisation, facilitation and
cooperation and continuously contribute to the long-term goal of free and open trade
and investment.
 Flexibility - APEC member economies deal with the liberalisation and facilitation process
in a flexible manner, taking into account differing levels of economic development.
 Cooperation - Economic and technical cooperation contributing to liberalisation and
facilitation is actively pursued.

INDIVIDUAL ACTION PLANS

Individual Action Plans are annual reports that record the unilateral steps taken by
members to meet the Bogor Goals. These are prepared for each of the 15 policy action
areas of the Osaka Action Agenda.

APEC member economies regularly submit their Individual Action Plans (IAPs). This is a
record of actions taken to meet its stated goals for free and open trade and investment.
APEC member economies set their own timelines and goals, and undertake these
actions on a voluntary and non-binding basis. 

As specified in the Osaka Action Agenda, reporting is based on the following areas
including:

 
  Tariffs
 Non-tariff measures
 Services
 Investment
 Standards and conformance
 Customs procedures
 Intellectual property rights
 Competition policy
 Government procurement
 Deregulation/regulatory review
 WTO Obligations (including rules of origin)
 Dispute mediation
 Mobility of business people
 Information gathering and analysis
 Transparency
 Regional Trade Agreements / Free Trade Agreements (RTAs/FTAs)

WHY DO MEMBERS NEED TO SUBMIT INDIVIDUAL ACTION PLAN?

·         To improve the transparency of trade and investment regimes, providing valuable
information to business and thereby facilitating intra-APEC trade and investment;

·         To encourage members to focus on policy issues which need to be addressed to

achieve the Bogor goals through annual reporting and a peer review process;

·         To maintain and demonstrate the momentum of APEC trade and investment
efforts, thereby encouraging liberalization in non-APEC economies through WTO
processes; and

·         To enable members to learn from the liberalization and facilitation experiences of
others.

ENVIRONMENTAL GOODS AND SERVICES

The term Environmental Goods and Services (EGS) refers to the industry sector devoted
to solving, limiting or preventing environmental problems. EGS companies may be
involved in manufacturing and/or services related to water or air pollution, waste
management, recycling, renewable energy, monitoring and analysis and assessment.

WHAT ARE THE COVERAGE OF THE APEC ENVIRONMENTAL GOODS LIST?

ü  Renewable and clean energy technologies such as solar panels, gas and wind
turbines;

ü  Wastewater treatment technologies such as filters and ultraviolet disinfection

equipment;

ü  Air pollution control technologies such as soot removers and catalytic converters;

ü  Solid and hazardous waste treatment technologies such as waste incinerators and
crushing and sorting machinery; and

ü  Environmental monitoring and assessment equipment such as air and water quality
monitors, and manometers to measure pressure and water delivery systems.

WHAT IS THE PHILIPPINES’ ENVIRONMENTAL GOODS SCHEDULE?

On June 26, 2015, EO 185 was issued, modifying the MFN rate of certain environmental
goods, in compliance with the Philippines’ commitment. Items subjected to 5% MFN
rates included condensers for stream or other vapour power units, waste incinerators
and filtering machinery and apparatus for liquids or gases.