DOJ Opinion No. 032, s. 2004

DOJ OPINION NO. 032, s. 2004 March 25, 2004 Secretary Romulo L. Neri Secretary of Socio-Economic Planning Co-Chairman, Committee on Tariff and Related Matters (CTRM) National Economic and Development Authority (NEDA) NEDA sa Pasig 12 Blessed Josemaria Escriva Drive Ortigas Center, Pasig City Sir : This refers to your request for opinion on whether the issuance of the proposed executive order (E.O.) removing the duty on corn and reducing the tariff on pork on specific volumes has the effect of increasing the minimum access volumes (MAVs) of the said products, in violation of R.A. No. 8178 1 or any other law, and on whether the National Food Authority (NFA) is mandated under its Charter to undertake importation of corn and pork. It appears that subject request for opinion is made in connection with the proposals of the Department of Agriculture (DA), which were taken up by the NEDA Board on March 16, 2004 and already approved in principle, for zero duty on the importation of 350,000 metric tons (MT) of yellow corn and the reduction in duty on 10,000 MT of pork, in order to alleviate the present rising prices of meat and meat products in the National Capital Region (NCR), particularly in its wet market 2 and to provide temporary relief to the livestock and poultry sector currently experiencing rising prices of feed ingredients. 3 Hence, this query. Section 6 of R.A. No. 8178 provides that "(I)n case of shortages or abnormal price increases in agricultural products, whose quantitative restrictions are lifted under this Act, the President may propose to Congress, revisions, modifications or adjustments of the Minimum Access Volume 4 (MAV): Provided, however , That in the event Congress fails to act after fifteen (15) days from receipt of the proposal, the same shall be deemed approved." Pursuant to Annex 1 of DA's Administrative Order No. 9, s. 1996, 5 the MAVs for maize (corn) and meat of swine (fresh, chilled or frozen) for the year 2004 are 212,118 MT at thirty five per cent (35%) ad valorem and 53,005 MT at thirty per cent (30%) ad valorem , respectively. However, under the DA's proposal, there will be zero duty on the 350,000 MT of yellow corn to be imported by the NFA and a reduced tariff rate of ten per cent (10%) ad valorem for the importation of meat of swine of up to a maximum of 10,000 MT. dojcd2004 This Department is of the view that the removal of the duty on corn will have the effect of expanding its MAV, which, under Section 6 of R.A. No. 8178, necessitates the need for a Congressional approval. As an alternative, it is suggested that the NFA avail of the tax expenditure subsidy scheme provided under Section 13(d) of the Reenacted General Appropriations Act "for the importation of rice and corn as recommended by the NFA Council and approved by the President of the Philippines, in case of calamities or fortuitous events or shortfall in production", subject to the approval of the Fiscal Incentives Review Board (FIRB) pursuant to E.O. No. 93, 6 s. 1986, as amended. However, insofar as the importation of pork is concerned, this Department is of the view that the importation would not be violative of R.A. No. 8178 so long as the same is undertaken within the MAV. Such being the case, the President may, through an E.O., reduce the tariff rate for meat of swine, pursuant to Section 104 of the Tariff and Customs Code of the Philippines (TCCP) provided that all the legal conditions under the Code are met. cCHITA Insofar as the second issue is concerned, we invite your attention to the following relevant provisions of law: P . D . No . 4 7 SEC. 2. Declaration of Policy . It shall be the policy of the State to promote the integrated growth and development of the grains industry (rice and corn and other grains) so that it can adequately function as an institution conscious of its social responsibilities and capable of providing adequate and continuous food supply to the nation and of contributing to its proper share to the national economy. P . D . No . 1770 8 SEC. 2. Declaration of Policy . It shall be the declared policy of the State to promote the integrated growth and development of the food industry so it can adequately function as an institution conscious of its social responsibilities, capable of maintaining an adequate and continuous food supply and contributing its proper share to the economy. SEC. 3. National Food Authority . The National Grains Authority is hereby transformed into the National Food Authority which shall be a government corporation attached to the Office of the President. SEC. 4. Scope . As used in this Decree, the term "Food Industry" shall include , in addition to those enumerated in Section 2 of Presidential Decree No. 4, as amended, raw/fresh and/or manufactured/processed/packaged food products . SEC. 5. Applicability of Presidential Decree No . 4 as amended by Presidential Decree Nos . 699 and 1485 . Except as otherwise herein provided, the provisions of Presidential Decree No. 4, as amended, by Presidential Decree Nos. 699 and 1485, shall govern the National Food Authority and shall be applicable to other food commodities mentioned in the immediately preceding paragraph as the National Food Authority Council may determine from time to time. SEC. 7. Additional Powers, Functions and Exemptions . In addition to the powers, functions and exemptions of the Authority under P.D. No. 4, as amended, the Authority shall have the following powers, functions and exemptions: xxx xxx xxx c. To import /export or cause the importation /exportation of food products/commodities and/or raw materials , equipment and facilities needed in the manufacture/processing of food commodities as may be determined by the Council, and as approved by the President of the Philippines . (emphasis supplied) It is clear from the above-quoted provisions that the transformation of the National Grains Authority (NGA) to the NFA carries with it the authority to, among others, import or cause to import not only grains such as rice and corn, but also food products/commodities such as meat of swine, be it fresh, chilled or frozen. Please be guided accordingly. Very truly yours, (SGD.) MA. MERCEDITAS N. GUTIERREZ Acting Secretary Footnotes 1. Agricultural Tariffication Act. 2. See DA letter dated March 11, 2004. 3. See NEDA Executive Committee Memorandum for the President dated January 29, 2004. 4. "Minimum Access Volume" refers to the volume of a specific agricultural product that is allowed to be imported with a lower tariff as committed by the Philippines to the World Trade Organization (WTO) under the Uruguay Round Final Act. (Section 3[e], R.A. No. 8178). 5. Rules and Regulations for the Implementation of the Agricultural Minimum Access Volumes (MAVs), Implementing Rules and Regulations of Republic Act 8178. 6. Withdrawing all Tax and Duty Incentives, Subject to Certain Exceptions, Expanding the Powers of the Fiscal Incentives Review Board and for Other Purposes. 7. National Grains Industry Development Act. 8. National Food Authority Act; issued on January 14, 1981.