DOJ Opinion No. 072, s. 2004

DOJ OPINION NO. 072 , s. 2004 July 6, 2004 Secretary Ricardo L. Saludo Presidential Management Staff Arlegui St., San Miguel, Manila Attention: The Cabinet Secretariat Sir : This has reference to the request for opinion on the feasibility of amending the Tariff and Customs Code for the purpose of granting incentives to car manufacturers via tariff reduction on their imports in the amount corresponding to the value of their export of completely build-up units (CBU's). The query stemmed from the Cabinet Meeting held last August 5, 2003 on the subject " Roadshows to Various Business Chambers and Resolution of Bottlenecks to Sustain Reforms and Prospects in the Economy ". It appears that among the concerns raised at the meeting was the need to sustain investor confidence by ensuring substantial progress in major reforms being implemented by the government. Article VI of the 1987 Constitution, insofar as pertinent, clearly provides: SEC. 24. All appropriation, revenue or tariff bills , . . . shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. xxx xxx xxx SEC. 28. . . . xxx xxx xxx (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 . 2004cdtai xxx xxx xxx. (stress ours) Apart from the express mandate of Section 28(2), earlier-quoted, that authority given must be exercised within the framework of the national development program of the government, Section 401 clearly enumerates the specific limitations and restrictions upon the said exercise, namely: SEC. 104. Rates of Import Duty . All Tariff Sections, Chapters, headings and subheadings and the rates of import duty under Section 104 of Presidential Decree No. 34 and all subsequent amendments issued under Executive Orders and Presidential Decrees are hereby adopted and form part of this Code. There shall be levied, collected, and paid upon all imported articles the rates of duty indicated in the Section under this section except as otherwise specifically provided for in this Code: Provided, that, the maximum rate shall not exceed one hundred per cent ad valorem . The rates of duty herein provided or subsequently fixed pursuant to Section four hundred one of this Code shall be subject to periodic investigation by the Tariff Commission and may be revised by the President upon recommendation of the National Economic and Development Authority. ITScHa Indubitably, the power to tax is a legislative function. 1 However, as an exception to the cardinal principle of non-delegation of powers, 2 the Constitution expressly authorizes Congress to delegate to the President its power to fix the "tariff rates", among others, "within specified limits, and subject to such limitations and restrictions as it may impose". 3 This delegation has been effected through Section 104, in relation to Section 401 of the Tariff and Customs Code, which provide: Section 401. Flexible Clause . 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. 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 . c. The power of the President to increase or decrease rates of import duty within the limits fixed in subsection "a" 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 duty with respect to import from the principal competing foreign country for the most recent representative period shall be used as bases. d. The Commissioner of Customs shall regularly furnish the Commission a copy of all customs import entries as filed in the Bureau of Customs. The Commission or its duly authorized representatives shall have access to, and the right to copy all liquidated customs import entries and other documents appended thereto as finally filed in the Commission on Audit. e. The NEDA shall promulgate rules and regulations necessary to carry out the provisions of this section. f. 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 (10) per cent ad valorem which shall take effect at the discretion of the President. (Italics supplied) Thus, provided the restrictions and limitations enunciated by the Constitution and the Tariff and Customs Code are met, we see no obstacle to the implementation of the proposal to grant incentives to car manufacturers via tariff reduction on their imports which may be effected through an Executive Order. 4 Please be guided accordingly. Very truly yours, (SGD.) MA. MERCEDITAS N. GUTIERREZ Acting Secretary Footnotes 1. See also, Tolentino vs. Dept. of Finance , 235 SCRA 630, 661; Beach vs . Bradstreet , 82 A. 1030. 2. Malcolm: Philippine Constitutional Law, p. 266; Cooley: Constitutional Limitations, 8th ed., p. 224. 3. See also, Garcia vs. Executive Secretary , 211 SCRA 219, 223224. 4. Acts of the President for rules of a general or permanent character in implementation or execution of constitutional or statutory powers shall be promulgated in executive orders . (Sec. 2, Chap. 2, Title I, Book III, E.O. No. 292).