PRESIDENTIAL DECREE NO. 1419, June 09, 1978
PRESCRIBING INCENTIVES FOR THE ESTABLISHMENT OF MULTINATIONAL REGIONAL WAREHOUSES BY MULTINATIONAL COMPANIES SUPPLYING SPARE PARTS OR MANUFACTURED COMPONENTS AND RAW MATERIALS T…
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;
WHEREAS, the said regional warehouses will not earn or
derive any income from the host country and all their expenses are financed by
their head offices or parent companies;
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 to air
travel, new construction and real estate development, new job opportunities,
increase in local tourism and potential investors;
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 components and raw materials;
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:
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 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. - 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:- The activities of the regional warehouse shall be limited to serving as a
supply depot for the storage, deposit, safekeeping of its spareparts of
manufactured components and law 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. - 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. - The personnel of the regional headquarters shall be responsible for the
operation of the regional warehouse subject to Section 9, subsection (a)
hereof.
- The activities of the regional warehouse shall be limited to serving as a
- 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 per cent (25%) shall
accrue to a special account in the General Fund for the Department of Trade to
support its trade promotion projects. - 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 its articles and if found satisfactory, it may authorize its
establishment subject the following conditions:- 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; - 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; - 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; - 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 warehouses and released therefrom only in accordance with Section 2,
subsection (b) and Section 3, subsection (a) and (b) and Section (4) hereof; - 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; - The multinational company operator shall file an ordinary warehouse bond in
an amount equal to One hundred percent (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.
- That the articles to be stored in the warehouse are spare parts or
SEC.
2. Tax Treatment of Imported Articles in the Regional
Warehouse.
- Except as otherwise provided in this Decree, imported spare parts or
manufactured components, raw materials and other items including any packages,
coverings, brands and labels and warehouse equipment 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 customs duty, internal revenue tax, export tax nor to local
taxes, the provisions of law to the contrary notwithstanding. - 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.
SEC. 3. Procedure for Withdrawal of Articles from
Regional Warehouse.—
- The provision of the law to the contrary notwithstanding, articles received
into such regional warehouse may be withdrawn or relieved therefrom for 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 none of the vessel or aircraft. 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 multi-national company operator. - 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, removal or release,
and the name of the local buyers, 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 or 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.
SEC. 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,
articles 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.
SEC. 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.
SEC. 6. Jurisdiction and Control over Articles Stored in
Regional Warehouse.—
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:
- 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 customshouse and
causing all such articles to be identified, classified and appraised in
accordance with existing customs laws and regulations unless herein otherwise
provided. - Require the invoice to state the place from which the articles are shipped,
the date when and the person to whom and he person by whom they are shipped; the
port of entry to which he 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. - 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.
SEC. 7. Waiver of Consular Invoice.—
- 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. - 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.
SEC. 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.
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.
SEC. 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.
SEC. 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.
SEC. 11. The regional or area headquarters of multinational
companies establishing regional warehouses shall be exempt from the provisions
of Republic Act No. 5455.
SEC. 12. Definition of Terms.—For purpose of this
Decree:
- “Spare parts or manufactured components” shall mean any article designed or
manufactured for the special purpose of being used in 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. - “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. - “Code” shall mean the tariff and customs Code of the Philippines as amended.
SEC. 13. Any provision of existing laws, decrees, orders,
rules or regulations inconsistent with this decree are hereby repealed, modified
or amended accordingly.
SEC. 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.
(Sgd.) FERDINAND E. MARCOS
President of the
Philippines
By the President: (Sgd.) JACOBO C. CLAVE Presidential Executive
Assistant