DOJ Opinion No. 037, s. 1992

DOJ OPINION NO. 037 , s. 1992 March 23, 1992 Commissioner Tomas V. Apacible Bureau of Customs Manila Sir : This refers to your request for interpretation of Section 201 of the Tariff and Customs code (the "Code"), particularly the phrase "wholesale price in the principal markets of exporting country". LibLex You state that the abovesaid request is made in connection with the proper determination of the value of imported commodities for duty purposes; that traditionally, such dutiable value is base on the home consumption value of the imported commodity; that the current Code utilizes the term "fair market value",in lieu of the "home consumption value" but nonetheless attaches a meaning to the former similar to the latter and for which reason, the Bureau interprets fair market value as the home consumption value; and that this manner of interpretation has generated complaints from importers and consumers since it has resulted in higher tariffs for imported articles. The first paragraph of Section 201 of the Code reads: "The dutiable value of an imported article subject to an ad valorem rate of duty shall be based on the cost (fair market value) of same, like or similar articles, as bought and sold or offered for sale freely in the usual wholesale quantities in the ordinary course of trade in the principal markets of the exporting country ." (Emphasis supplied) It is your position that the "fair market value" of an imported commodity "in the principal markets of the exporting country" may be interpreted to mean its value in the markets other than the domestic market of the exporting country, the reason being that in today's international trading, the principal markets may not necessarily be the domestic markets; moreover, current practice gives discounts to exported products which may not be available in the domestic markets. We find merit in the above view. Contemporary history shows that economic progress of nations are achieved mainly by relying more on international trade than the development of domestic markets for the products of their agriculture and industry. Among the reasons for this is a developing country's need for foreign exchange and the desire to achieve a favorable balance of trade. Thus, national economic policies put more emphasis on the development of the export markets than the promotion of domestic consumption for manufactured goods. It has been said, in this connection, that as contemplated in the abovequoted provision of law, the term "principal markets" means places where merchandise is freely and openly bought, sold and delivered, but that the place of manufacture is not necessarily its principal market (see Tejam, Commentaries on the Tariff and customs, 1973 Ed.,pp. 2173-2174). It is reasonable to suppose that the abovestated considerations were in the mind of the lawmaking authority when it substituted the "fair market value" for the "home consumption value" as basis for the dutiable value of imported articles. The rule is that in the construction of a statutory provision, the conditions obtaining at the time of its enactment should be taken into consideration and that a change in the phraseology of the law indicates a legislative intent to modify the meaning it originally had (Agpalo, statutory Construction, 1986 Ed.,pp. 76 & 81). prcd Moreover, interpreting the phrase "principal markets of the exporting country" as likewise including its export markets could result in lower valuation of imported products to the advantage of local exporters in terms of impossible duties and to domestic consumers in terms of prices for imported products. Hence, such interpretation conforms to the well-settled rule that statutes levying taxes or customs duties should be construed strictly against the government and liberally in favor of the taxpayer (Quimpo vs. Mendoza, 107 SCRA 73; Collector of Internal Revenue vs. Angeles, 101 Phil. 1026). Please be advised accordingly. Very truly yours, (SGD.) EDUARDO G. MONTENEGRO Acting Secretary