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PRESIDENTIAL DECREE NO. 1419
PRESIDENTIAL DECREE NO. 1419 -
PRESCRIBING INCENTIVES FOR THE ESTABLISHMENT OF MULTINATIONAL REGIONAL
WAREHOUSES BY MULTINATIONAL COMPANIES SUPPLYING SPARE PARTS OR
MANUFACTURED COMPONENTS AND RAW MATERIALS TO THE ASIA-PACIFIC AREA
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chanroblesvirtualawlibrary
(REPEALED
BY EXECUTIVE ORDER NO. 226, S. 1987)
WHEREAS, the objective of accelerating the development of the
Philippines as the business and financial capital of Southeast Asia and
thereby hastening the economic and social development of the country
can be accomplished further by attracting multinational companies to
base their regional warehouse in the Philippines;chanroblesvirtualawlibrary
WHEREAS, the said regional warehouse will not earn or derive any income
from the host country and all their expenses are financed by their head
offices or parent companies;chanroblesvirtualawlibrary
WHEREAS, the attainment of the aforesaid goal will mean the creation of
a new source of dollar revenue for the government and the increase of
foreign exchange receipts for export of Philippine products; a boost
tor travel, new construction and real estate development, new job
opportunities, increase in local tourism and potential investors;chanroblesvirtualawlibrary
WHEREAS, the establishment of regional warehouses in the Philippines by
multinational companies would prevent and spare local industries from
incurring substantial but needless losses from factory down time
because of lack of imported spare parts of raw materials and from the
heavy cost of inventory financing due to unavailability of imported
spare parts or manufactured component and raw materials;chanroblesvirtualawlibrary
WHEREAS, the establishment of regional warehouses in the Philippines by
multinational companies will also promote trade, communication and
cooperation between the Philippines and other member-nations of the
Association of Southeast Asian Nations (ASEAN) and will thereby serve
its goal towards regional self-reliance.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
order and decree:cralaw:red
Section 1. A multinational company organized and
existing under any laws other than those of the Philippines which is
engaged in international trade and supplies, spare parts or
manufactured components and raw materials to its distributors or
markets in the Asia-Pacific area and which has established or will
simultaneously establish a regional or area headquarters in the
Philippines in accordance with the provisions of Presidential Decree
No. 218, as amended, and the rules and regulations implementing the
same may also establish regional warehouse or warehouses in the
Philippines, after securing a license therefore from the Secretary of
Trade, upon the favorable recommendation of the Bureau of Customs.
The following minimum requirements shall be submitted or complied with
by the said foreign entity in accordance with the rules and regulations
to be issued by the Secretary of Trade as provided for in Section 10
hereof.
(a) A certification from the Philippine Commercial
Attache or in the absence of such an official, a Philippine Consul in
the foreign firms home country that said foreign firm is engaged in
international trade and supplies or will supply spare parts or
manufactured components and raw materials to its distributors or
markets in the Asia-Pacific Region.
(b) A certification from a principal officer of the
foreign entity to the effect that the said foreign entity has been
authorized by its Board of Directors or governing body to establish its
regional warehouse in the Philippines, specifying that:cralaw:red
(1) The activities of the regional warehouse shall be
limited to serving as a supply depot for the storage, deposit,
safekeeping of its spareparts or manufactured components and raw
materials including the packing, covering, putting up, marking,
labelling and cutting or altering to customers specification, mounting
and/or packaging into kits or marketable lots thereof, to fill up
transactions and sales made by its head offices or parent companies and
to serving as a storage or warehouse of goods purchased locally by the
home office of the multinational for export abroad; Provided, That,
said locally purchased goods for export may be stored in the Regional
Warehouse only after they have been cleared for exports in accordance
with the laws and regulations governing exports. The regional warehouse
shall not directly engage in trade nor directly solicit business,
promote any sale, nor enter into any contract for the sale or
disposition of goods in the Philippines.
(2) The regional warehouse will not derived any
income from the sources within the Philippines and its personnel will
not participate in any manner in the management of any subsidiary
affiliate, or branch office it might have in the Philippines.
(3) The personnel of the regional headquarters shall
be responsible for the operation of the regional warehouse subject to
Section 9, subsection (a) hereof.
(c) The multinational company shall pay the
government through the Department of Trade a license fee of Five
Thousand Pesos (P5,000.00) per annum and through the Regional Collector
of Customs a storage fee equivalent to Ten Pesos (P10.00) for the first
Four Thousand Pesos (P4,000.00) worth of articles to be stored in the
Regional Warehouse on the basis of their C & F value and One Peso
(P1.00) for every One Thousand Pesos (P1,000.00) worth of articles in
excess of the said first Four Thousand Pesos (P4,000.00). Of the total
fees collected, seventy-five per cent (75%) shall accrue to the general
and twenty-five percent (25%) shall accrue to a special account in the
General Fund for the Department of Trade to support its trade promotion
projects.
(d) An application for the establishment of a bonded
regional warehouse shall be made in writing to the Department of Trade.
The application shall describe the premises, the location, and capacity
of the regional warehouse and the purpose for which the building is to
be used.
The Department of Trade in consultation with the Regional Collector of
Customs of the district where the Warehouse will be situated shall
cause an examination of the premises to be made with reference
particularly to its location, construction and means provided for the
safekeeping of it articles and if found satisfactory, it may authorize
its establishment subject to the following conditions: chanroblesvirtualawlibrary
(1) That the articles to be stored in the warehouse
are spare parts or manufactured components and/or raw materials of the
multinational company operator for distribution and supply to its
Asian-Pacific markets;chanroblesvirtualawlibrary
(2) That the entry or importation, storage or
re-export of the goods destined for or to be stored in the regional
warehouses will not involve any dollar outlay from Philippine sources;chanroblesvirtualawlibrary
(3) That they are such character as to be readily
identifiable for re-export; and in case of local distribution they
shall be subject to Section 2, subsection (b) and Section 3, subsection
(b) hereof; chanroblesvirtualawlibrary
(4) That they shall be identified, examined and
appraised by the Regional Collector of Customs and they shall be
directly delivered to and kept in the regional warehouse and released
therefrom only in accordance with Section 2, subsection (b) and Section
3, subsection (a) and (b) and Section (4) hereof;chanroblesvirtualawlibrary
(5) Each shipment of goods which will be stored in
the regional warehouse shall be covered by an affidavit of the
multinational company operator setting forth that said articles shall
be exclusively used as supply for its Asian-Pacific markets and stating
the C & F price thereof;chanroblesvirtualawlibrary
(6) The multinational company operator shall file an
ordinary warehousing bond in an amount equal to ONE HUNDRED PER CENT
(100%) of the ascertained customs duties on the articles imported
without prejudice to its filing a general warehousing bond in lieu of
the ordinary warehousing bond.
Section 2. Tax Treatment of Imported Articles in the
Regional Warehouse. —
(a) Except as otherwise provided in this Decree,
imported spare parts or manufactured components, raw materials and
other items including any packages, covering, brands and labels and
warehouse equipments as may be allowed by the Department of Trade for
use exclusively on the goods stored, except those prohibited by law,
brought into the regional warehouse from abroad to be kept, stored
and/or deposited or used therein and re-exported directly therefrom
under the supervision of the Regional Collector of Customs for
distribution to its Asian-Pacific markets according to Section 3,
subsection (a) hereof/shall not be subject to custom duty, internal
revenue tax, export tax nor to local taxes, the provisions of law to
the contrary notwithstanding.
(b) Any spare parts, manufactured components, raw
materials and other items sent, delivered, released or taken from the
regional warehouse to the local market in accordance with Section 3,
subsection (b) hereof shall be subject to the payment of customs
duties, taxes and other charges and for which purpose, the proper
commercial invoice of the head offices or parent companies shall be
submitted to the Regional Collector of Customs; and shall be subject to
laws and regulations governing imported merchandise, provided that in
case any of the foregoing items are sold, bartered, hired or used for
purposes other than that they were intended for without prior
compliance with Section 3, subsection (b) hereof and without prior
payment of the duty, tax or other charge which would have been due and
payable at the time of entry if the articles had been entered without
the benefit of this decree, shall be subject to forfeiture and the
importation shall constitute a fraudulent practice against customs
revenue punishable under Section Thirty-Six Hundred and Two, as
amended, of the Tariff and Customs Code of the Philippines; Provided,
further that a sale pursuant to a judicial order shall not be subject
to the preceding proviso without prejudice to the payment of duties,
taxes and other charges. chanroblesvirtualawlibrary
Section 3. Procedure for Withdrawal of Articles from
Regional Warehouse. —
(a) The provision of the law to the contrary
notwithstanding, articles received into such regional warehouse may be
withdrawn or removed therefrom or direct shipment and for
re-exportation to foreign countries under the supervision of the
Regional Collector of Customs, who shall certify to such shipment and
exportation, or lading for immediate exportation as the case may be,
describing the articles by their mark or otherwise, the quantity, the
date of exportation, and the name of the vessel orrcraft. All labor
performed and services rendered under these provisions shall be under
the supervision of the aforesaid customs official and at the expense of
the multinational company operator.
(b) The provision of the law to the contrary
notwithstanding articles received into such regional warehouses may be
withdrawn or removed therefrom to fill up orders or contracts of sale,
distribution or supply made by and between the local buyers,
distributors of indentors and the head offices or parent companies of
the multinational company subject to Section 2, subsection (b) hereof;
under the supervision of the Regional Collector of Customs, who shall
certify to such delivery, removal or release as the case may be,
describing the articles by their mark or otherwise, the quantity, the
date of delivery, distributors or indentors to whom they were delivered
and subject to Section 2, subsection (b) and Section 7, subsection (b)
hereof. The withdrawal must be made by a person to whom the articles
are ordered to be delivered by the head office of parent company of the
multinational company. All labor performed and services rendered under
these provisions shall be under the supervision of the aforesaid
customs official and at the expense of the multinational company
operator.
Section 4. Period of Storage in Regional Warehouse. —
The provision of the law in Section 1908 of the Tariff and Customs Code
of the Philippines, as amended, to the contrary notwithstanding,
article duly entered for warehousing may remain in regional warehouses
for a period of five (5) years from the time of their transfer to the
Regional Warehouse, which period may be extended with the approval of
the Secretary of Trade for additional periods of two (2) years upon
payment of the corresponding storage fee on the unexported articles, as
provided for under section 1 subsection (c) for each such extension
until they are re-exported in accordance with Section 3, subsection (a)
hereof or delivered locally in accordance with Section 3, subsection
(b) hereof. Any articles withdrawn, released or removed contrary to the
provisions of said Section 3, subsection (a) and (b) shall be forfeited
pursuant to the provisions of Section 2, subsection (b) hereof. chanroblesvirtualawlibrary
Section 5. Regional headquarters of multinational
companies which have been licensed to operate regional warehouses in
the Philippines and their foreign personnel, their respective spouses
and unmarried children under twenty-one (21) years of age shall be
governed by the provisions or Presidential Decree No. 218, as amended,
and shall be entitled to all the benefits provided thereunder.
Section 6. Jurisdiction and Control over Articles
Stored in Regional Warehouse. —chanroblesvirtualawlibrary
The provisions of law to the contrary notwithstanding, the Regional
Collector of Customs shall exercise jurisdiction and supervision over
all articles entering the Philippines destined for regional warehouses
including the following:cralaw:red
(a) Supervise the receiving, handling, custody,
entry, examination, classification, appraisal and delivery of articles
destined for regional warehouses, causing all said articles to be
entered at the customhouse and causing all such articles to be
identified, classified, and appraised in accordance with existing
customs laws and regulations unless herein otherwise provided.
(b) Require the invoice to state the place from which
the articles are shipped, the date when and the person to whom and the
person by whom they are shipped; the port of entry to which the
articles are destined a detailed description of the articles according
to the terms of the heading or sub-headings, if especially mentioned in
this Code; Otherwise, the description must be in sufficient detail to
enable the articles to be identified both the Tariff classification and
statistical purposes, indicating their correct commodity description,
in customary terms or commercial designation, including the grade or
quality, numbers, marks or symbols under which they are sold by the
seller or manufacturer, together with the marks and numbers of the
packages in which the articles are packed; the quantities in the weight
and measures of the country in the place from which the articles are
shipped, and in the weights and measures used in the Code; the value of
each articles in the unit of quantity in which the articles are usually
bought and sold, in the currency in which the transactions are usually
made, or, in the absence of such value, the price in such currency
which the manufacturer, seller, shipper or owners would have received,
or was willing to receive for articles if sold in the ordinary course
of trade and in the usual wholesale quantities in the country of
exportation; all charges upon the articles itemized by name and amount
when known to the seller or shipper; or all charges by name (e.g.,
insurance, freight, cases, containers, coverings and cost of packing)
included in invoice prices when the amounts for such charges are
unknown to the manufacturer or shipper.
(c) Authorize the immediate transfer of the entered
articles to the regional warehouse where the examination,
classification and appraisal of the articles pursuant to sub-section
(a) hereof may be conducted.
Section 7. Waiver of Consular Invoice. —
(a) No consular invoice need be presented for
articles destined for regional warehouses. However, in lieu thereof, a
certificate of export from the Philippine Consular official in the
country of origin of the shipment attesting to the origin of
exportation and the C & F value of the articles shall be required.
In case of distribution to local buyers, distributors or indentors, the
head office's or parent company's commercial invoice shall be presented
to the Regional Collector of Customs supervising the distribution or
release. chanroblesvirtualawlibrary
(b) The provisions of law to the contrary
notwithstanding, after the articles shall have been examined by the
Regional Collector of Customs, in accordance with Section 1401-1403 of
the Tariff and Customs Code, the Collector of Customs shall determine
the accurate tariff bought and sold. Moreover, in case of local
distribution to local buyers, distributors or indentors the proper
customs official shall require the presentation of the head office's or
parent company's commercial invoice and impose the proper duties, taxes
and other charges thereon in accordance with the Tariff and Customs
Code and other applicable law.
Section 8. (a) Supervision and Storekeeping of the
Regional Warehouses. — The regional warehouse operator shall submit to
the Collector of Customs for approval the name of a qualified and
responsible person who will take charge of managing the regional
warehouse. Said person (Manager) who shall be responsible for the goods
in the warehouse shall be subject to the supervision of the Collector
of Customs. chanroblesvirtualawlibrary
The Regional Warehouse storekeeper shall be regular Customs personnel.
(b) Packing, Covering, Branding, Labelling, and
Cutting to Customers Specification. — All labor performed for packing,
covering, branding, labelling, mounting and cutting or adjusting of the
articles to customers' specification shall be subject to the
supervision of the Collector of Customs.
Section 9. Rules and Regulations. — The Secretary of
Trade in consultation with the Secretary of Finance shall, within
thirty (30) days from the effectivity of this Decree, issue the
implementing rules and regulations governing the establishment of a
regional warehouse by a regional or area headquarters in the
Philippines and for the effective implementation of this Decree
including Section 10 hereunder.
The Commissioner of Customs in consultation with the Secretary of Trade
and with the approval of the Secretary of Finance, shall issue the
rules and regulations to implement the provisions in this Decree are
intended to facilitate and assure the smooth and speedy inflow of the
articles to and from the regional warehouses.
Section 10. Penalties. — Any willful violation by the
regional or area headquarters of a multinational company which has
established regional warehouse or warehouses of any provision of this
Decree, or its implementing rules and regulations, or any provision of
existing laws shall constitute a sufficient cause for the cancellation
of its license or registration in addition to the penalties hereinabove
provided in Section 2, sub-section (b) and Section 4 hereof.
Section 11. The regional or area headquarters of
multinational companies establishing regional warehouses shall be
exempt from the provisions of Republic Act No. 5455. chanroblesvirtualawlibrary
Section 12. Definition of Terms. — For purpose of
this Decree:cralaw:red
1. "Spare parts or manufactured components" shall
mean any article designed or manufactured for the special purpose of
being used or to replace, a component or integral part of a machine,
equipment, vehicle or industrial plant and which by reason of some
characteristics is generally classified as capital goods and, is
primarily adapted for use a component part of such machines, equipment,
vehicles or industrial plant, as may be allowed by any implementing
rules and regulations.
2. "Raw materials" shall mean materials in their
natural state or in crude form as well as products made from crude
material or materials which may have undergone manufacturing or process
as may be allowed by any implementing rules and regulations.
3. "Code" shall mean the tariff and Customs Code of
the Philippines as amended.
Section 13. Any provision of existing laws, decrees,
orders, rules or regulations inconsistent with this decree are hereby
repealed, modified or amended accordingly.
Section 14. This Decree shall take effect immediately.
Done in the City of Manila,
this 9th day of June, in the year of Our Lord, nineteen hundred and
seventy-eight.
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