DOJ Opinion No. 171, s. 1988

DOJ OPINION NO. 171 , s. 1988 August 22, 1988 The Director General National Economic and Development Authority NEDA sa Pasig, Amber Avenue Pasig, Metro Manila M a d a m : This is with reference to your request for opinion ( a ) on the nature and extent of the financial obligations attendant to Philippine participation in the Common Fund for Commodities (the Common Fund ) and ( b ) on whether there is need for an enabling legislation prior to the adoption by the Philippine government of the Harmonized Commodity Description and Coding System (the Harmonized System ). Re the Common Fund Article 10 of the Agreement Establishing the Common Fund for Commodities (the Agreement ), insofar as pertinent, provides: 1. Each Member referred to in Article 5(a) shall subscribe as set forth in schedule A: (a) 100 Paid-in Shares; and (b) any additional Paid-in and Payable shares. xxx xxx xxx" 3. Each Member may allocate to the Second Account a part of its subscription under paragraph 1(a) of this article with a view to an aggregate allocation to the Second Account, on a voluntary basis, of not less than 52,965,300 Units of Accounts. (Emphasis supplied) Under the foregoing provisions, a Fund member is obligated to contribute an amount as payment of its subscription to the Paid-in and Payable Shares assigned to it in Schedule A of the Agreement as its contribution to the Directly Contributed Capital of the Fund, which, incidentally, forms part of the Funds First Account , set up for the financing of the Commodity stocking (par. 2, Art. 16-B, the Agreement). A Fund member is, however, authorized to allocate a portion of such amount as its share to the Funds Second Account , set up to finance measures in the field of commodities other than stocking ( supra ). In short, while a Fund member is mandated to contribute to the First Account , it is allowed discretion to allot a part of said contribution as its voluntary contribution to the Second Account . prLL Moreover, any decision to withdraw membership in the Common Fund , which may be done anytime, unless there is in the meantime a decision to terminate the Fund (Art. 30, in relation to Art. 35, Agreement), shall subject the Philippine Government to certain financial liabilities, namely, (1) that relating to any outstanding payments for its subscription to the Paid-in Shares and for its subscription to the Payable Shares which have already been called; and (2) that relating to its obligations in respect of its Guarantee Capital (see Art. 32, par. 2, in relation to Art. 11, pars. 3 and 4, Agreement ). Re the Harmonized System We understand that the adoption of the Harmonized System by the Philippine Government , while involving a complete revision of the existing tariff schedule and commodity classification, would not require any change in existing tariff rates and that the Tariff Commission will simply align and transpose the Philippine Tariff Nomenclature into the Harmonized System . You query, we take it, is whether or not there is need for new legislation to enable the Philippine Government to integrate the Harmonized System as part of the existing tariff schedule and commodity classification. Section 401 of P.D. 1464 (the Tariff and Custom Code of 1978) provides in part: 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 but in no case shall the reduced rate of import duty be lower than the basic rate of ten (10) per cent ad valorem , nor shall the increased rate of import duty the 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 action. In addition, Section 104 of said P.D. empowers the President to revise existing tariff rates upon recommendation of NEDA. Pursuant to Section 401, abovequoted, the then President Marcos issued Executive Order No. 688, which directed the Tariff Commission to prepare a draft of Philippine Tariff Nomenclature provided for under Section 104 of [the abovecited decree] in accordance with the Custom Cooperation Council Nomenclature (Sec. 1) and to submit a revised tariff nomenclature and rules of classification not later than two months after the effectivity of this Order to the National Economic and Development Authority provided that the revised tariff nomenclature and the rules of classification shall become effective thirty (30) days after approval and issuance by the National Economic and Development Authority (Sec. 3). On November 25, 1987, NEDA, by Resolution No. 28, adopted the Harmonized System and manifested Philippine Government accession to the Convention on the Harmonized System. The above-mentioned statutory provisions and executive issuances provide the legal bases for the valid adoption of the Harmonized System as part of the existing tariff and commodity classification system. It is noted, in this connection, that under Section 3, Article XVIII of the Constitution, all existing laws, decrees, executive orders . . . and other executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed or revoked. prcd Furthermore, it bears emphasis that the adoption of the Harmonized System is an entirely different issue from the accession to the Convention on the Harmonized System. While, as previously stated, the Systems adoption may be done solely by executive action on the basis of current laws, accession to the said Convention requires Senate concurrence, pursuant to Section 21, Article VII of the Constitution. Please be advised accordingly. Very truly yours, (SGD.) SEDFREY A. ORDOEZ Secretary of Justice