ADJUSTING TARIFF RATES

The power of taxation is lodged with the Legislative Branch of the

Government. However, the 1935, 1973 and the present 1987 Philippine
Constitution allowed the delegation of said power to the President under Sec.
28 (2), Article VI, to wit,:
(2) The Congress may, by law, authorize the
President to fix within specified limits, and subject to
such limitations and restrictions as it may impose,
tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts within
the framework of the national development program
of the Government.

To give teeth to the aforequoted provision of the Constitution the

Congress enacted Republic Act No. No. 1937 on June 22, 1957 entitled Tariff
and Customs Code of the Philippines. However, due to many amendments to
said law, Presidential Decree No. 1464 entitled Tariff and Customs Code of
1978 was enacted and became effective on June 11, 1978 and is the
subsisting Tariff and Customs Code of the Philippines at present.

Title II, Part 3, Sec. 401 of the said law which is almost the same
provision of Title II, Part 3, Sec. 401 of Republic Act No. 1937 provides:
PART 3
FLEXIBLE TARIFF
Sec. 401. Flexible Clause.

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a. In the interest of national economy, general

welfare and/or national security, and subject to the
limitations herein prescribed, the President, upon
recommendation of the National Economic and
Development Authority (hereinafter referred to as
NEDA), is hereby empowered: (1) to increase,
reduce or remove existing protective 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 (100) per
cent ad valorem; (2) to establish import quota or
to ban imports of any commodity, as may be
necessary; and (3) to impose an additional duty
on all imports not exceeding ten (10%) per
cent ad valorem whenever necessary; Provided,
That upon periodic investigations by the Tariff
Commission and recommendation of the NEDA, the
President may cause a gradual reduction of
protection levels granted in Section One Hundred
and Four of this Code, including those subsequently
granted pursuant to this section.

As can be inferred from the above-quoted provision, it is very clear

that the President is empowered to do the following:
1. To increase, reduce or remove existing protective rates of
import

duty

(including

classification);
2. To establish import

quota

any
or

necessary
to

ban

change

imports

of

in
any

commodity, as may be necessary; and

3. To impose an additional duty on all imports not exceeding ten
(10%) per cent ad valorem whenever necessary.

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However, before the President can exercise said powers there should
be

favorable

recommendation

from

the

National

Economic

and

Development Authority (NEDA) to modify the existing tariff rates.

Sec. 401 (b) imposes the following duty to the Tariff Commission:
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 (10) per cent ad valorem, the
Commission shall conduct an investigation in
the course of which they shall hold public
hearings wherein interested parties shall be
afforded reasonable opportunity to be present,
produce evidence and to be heard. The Commission
shall also hear the views and recommendations
of
any
government
office,
agency
or
instrumentality concerned. The Commission shall
submit their findings and recommendations to the
NEDA within thirty (30) days after the termination of
the public hearings.

A prior investigation by the Tariff Commission through public hearings

is needed before NEDA can submit to the President the recommendation of
adjusting or modifying the existing tariff rates. Interested parties as well as
any government office, agency or instrumentality concerned will be afforded
reasonable opportunity to be present, be heard and produce evidence to
their claims. After said public hearings, the Tariff Commission will now
submit the outcome to NEDA.

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The Committee on Tariff and Related Matter (CTRM) under the

umbrella of NEDA is tasked to advise the President and the NEDA Board on
Tariff and related matters and on the effects on the country of various
international developments and recommends to the President a continuous
rationalization program for the country's tariff structure.

CTRM is composed of the Secretary of Trade and Industry, as

chairman, with the Director-General of the NEDA, as co-chairman. Its
members are the Executive Secretary, the Secretaries of Foreign Affairs,
Agriculture, Transportation and Communications, Environment and Natural
Resources, Budget and Management, and Finance, the Governor of the
Central Bank, and the Chairman of the Tariff Commission.

Said Committee reviews the findings of the Tariff Commission. This

Inter-Agency Committee is responsible for giving recommendation to the
President for the possible adjustment and modification of tariff rates.

It is important to note that the modification of tariff rates should

always be necessary in the interest of national economy, general welfare
and/or national defense. Without such justification, any modification or
adjustment to tariff rates can be stricken off.

The President in a numerous Executive Orders exercises his power to

modify tariff rates. Some of which are the following:

Page 4 of 5

1. E. O. No. 885 Modifying the Nomenclature and the Rates of

Duty

on

Imported

Education,

Technical,

Scientific

and

Historical or Cultural Books under Section 104 of the Tariff

and Customs Code of 1978 (Presidential Decree No. 1464), as
amended which became effective on July 4, 2010.
2. E. O. No. 890 Modifying the Nomenclature and the Rates of
Import Duty on Crude Oil, Petroleum Products and Asphalt
under Section 104 of the Tariff and Customs Code of 1978
(Presidential Decree No. 1464), as amended which became
effective on July 5, 2010.

With everything in mind, it is crystal clear, after complying with all the
requisites under Sec. 401 of P.D. No. 1464, that the President has a
delegated power to modify tariff rates. It is not the Congress alone that has
the sole power to exercise such power.

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