AMENDING EXECUTIVE ORDER NOS. 250, 250-A s. 1995 AND 419 s. 1997 IMPLEMENTING THE RATIONALIZATION OF DUTY FREE STORES/OUTLETS AND THEIR OPERATIONS IN THE PHILIPPINES PURSUANT TO…

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WHEREAS, Executive Order No. 140  dated 30 November 1993 provides for
the rationalization of duty free stores/outlets and their operations in the
Philippines in order to enhance their conformity with generally observed
practices in most countries and to avoid their possible adverse impact on local
enterprises;

WHEREAS, Executive Order No. 250 dated 2 June 1995, as amended, implements
such rationalization by modifying policies and improving certain operational
aspects of duty free stores/outlets in the Philippines;

WHEREAS, there is a need to further modify policies and guidelines affecting
the duty free stores/outlets in order to prevent abuse of duty free privilege
and to protect local industries from unfair competition;

WHEREAS, the Clark Special Economic Zone will be an important site for the
year-round 100th anniversary celebration of the Philippine Independence in
1998;

WHEREAS, the operation of the duty free shops/outlets in the Subic Special
Economic and Free Port Zone and Clark Special Economic Zone, but under proper
and strict limitations, is needed to enhance domestic tourism and help generate
support for the centennial activities;

NOW, THEREFORE, I, FIDEL
V. RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by law, do hereby order the
following:

Section 1. Disallowing
the Establishment of New Duty Free Shops, Reiterated. As mandated under Executive Order No. 419  dated 16 June 1997,
the establishment of new duty free shops/outlets and the expansion of existing
ones shall no longer be allowed, except as may be authorized by existing laws.

Section 2. Limiting Duty
Free Shops Operations in International Ports of Entry and Fenced-in Areas of
Freeport Zones. The operation of duty free
shops shall be allowed only within the country’s international ports of entry
and the fenced-in areas of the freeport zones, except as provided in the
succeeding section for a limited period as indicated.

Section 3. Special
Shopping Privileges Granted During the Year-round Centennial Anniversary
Celebration in 1998. Upon effectivity of this
Order and up to the Centennial Year 1998, in addition to the permanent
residents, locators and employees of the fenced-in areas of the Subic Special
Economic and Freeport Zone and the Clark Special Economic Zone who are allowed
unlimited duty free purchases, provided these are consumed within said
fenced-in areas of the Zones, the residents of the municipalities adjacent to
Subic and Clark as respectively provided in R.A. 7227  (1992) and E.O.
97-A s. 1993  shall continue to be allowed One Hundred US Dollars (US$100)
monthly shopping privilege until 31 December 1998. Domestic tourists visiting
Subic and Clark shall be allowed a shopping privilege of US$25 for consumable
goods which shall be consumed only in the fenced-in area during their visit
therein.

Section 4. Grant of Duty
Free Shopping Privileges Limited Only to Individuals Allowed by Law. Starting 1 January 1999, only the following persons shall continue
to be eligible to shop in duty free shops/outlets with their corresponding
purchase limits:

a. Tourists and Filipinos
traveling to or returning from foreign destinations under E.O. 97-A s. 1993
– One Thousand US Dollars (US$1,000) but not to exceed Ten Thousand US Dollars
(US$10,000) in any given year;

b. Overseas Filipino
Workers (OFWs) and Balikbayans defined under R.A. 6768 dated 3 November 1989
– Two Thousand US Dollars (US$2,000);

c. Residents, eighteen
(18) years old and above, of the fenced-in areas of the freeports under R.A.
7227 (1992) and E.O. 97-A s. 1993 – Unlimited purchase as long as
these are for consumption within these freeports.

The term “Residents” mentioned
in item c above shall refer to individuals who, by virtue of domicile or
employment, reside on permanent basis within the freeport area. The term
excludes (1) non-residents who have entered into short- or long-term property
lease inside the freeport, (2) outsiders engaged in doing business within the
freeport, and (3) members of private clubs (e.g., yacht and golf clubs) based
or located within the freeport. In this regard, duty free privileges granted to
any of the above individuals (e.g., unlimited shopping privilege, tax-free
importation of cars, etc. ) are hereby revoked.

Section 5. Allowable
Items in Duty Free Stores/Outlets. – The range
of items to be sold in all duty free stores/outlets shall be limited only to
consumables, light and heavy durables,  and television sets of sizes not
manufactured in the Philippines, subject to the following conditions:

a. Imported heavy durables 
shall only be sold to balikbayans, OFWs and residents of the secured and
fenced-in area of freeports. In availing of this privilege, the following shall
be presented as proof of entitlement:

Filipino citizen who has been
continuously out of the country for at least one (1) year from date of last
departure:

Philippine Passport showing date
of last departure

2. Foreign passport holder
(Balikbayan):

Passport and any one of
the following:

• Old Philippine Passport

• Foreign naturalization papers
to show former Philippine citizenship

• Certification from adopted
country

3. Filipino OCW or Filipino
Overseas Worker (OFW):

Passport and any of the
following:

• POEA-approved contract of
employment

• Certificate of employment by
the foreign employer

• Certificate of employment by
the Philippine Embassy/Consulate

• Prior year’s income tax return
to prove gainful employment abroad

• Seaman’s Service Record Book

Family members of the balikbayan
who are traveling with the balikbayan should present:

Passport and any of the
following:

• Birth certificate, in the case
of children

• Marriage certificate, in the
case of the spouse

• Adoption papers, in the case
of legally adopted children.

b. Duty free stores/outlets are
restricted from selling the following heavy durables  to tourists and
Filipinos arriving from foreign destinations:

1. Television sets of sizes made
or manufactured in the Philippines;

2. Karaokes/videokes not using
laser disk or CD videos;

3. Stereos;

4. Residential type ovens and
ranges;

5. Washing machines with
capacity of not more than 10 kilograms;

6. Furniture;

7. Kitchenware;

8. Refrigerators of not more
than 15 cubic feet top mount;

9. Electric fans;

10. Airconditioners; and

11. Basic and prime commodities
as indicated in the price watch list.

c. The sale of all locally
manufactured goods in duty free stores shall be encouraged, subject to the
rules and regulations of the Department of Finance.

d. No sensitive/critical
agricultural products shall be sold in all duty free stores. These products
include rice, sugar, corn, corn starch, flour, coffee beans, garlic and other
products that may be determined by the Duty Free Oversight Committee created
under EO 250.

Section 6. Pull-out of
Duty Free Goods, Prohibited. The pull-out of
duty free goods from the Freeport and Special Economic Zones into a customs
territory or the practice of allowing duty free operators to sell their goods
outside the freeport and special economic zones, even after paying the tax
therefor, is hereby prohibited. Thus, goods that are originally imported duty
free shall only be sold at the duly authorized duty free shops.

Section 7. Requirement
of Pre-shipment Inspection of Goods. Goods
which are brought into the Freeport and Special Economic Zones shall be covered
by a pre-shipment inspection scheme to be conducted by an organization which is
duly authorized by the Secretary of Finance after 30 days from the effectivity
of this Order. The fees for the pre-inspection scheme shall be shouldered by
the concerned importer. Prior to the implementation of the pre-shipment scheme,
the Commissioner of Customs is authorized to inspect shipments of goods to the
Freeport and Economic Zones to ensure correctness of the declaration of their
contents and values.

Section 8. Control
Measures to Curb Abuses of Duty Free Privileges. The Bureau of Customs, in close coordination with the Zone
authorities and other concerned agencies is hereby tasked to implement strict
control measures to curb the abuses of the duty free privilege. Among others,
these should include but not limited to the following:

a. Place special permanent
labels on duty free items with the following inscription: “Not for resale,
imported duty free”;

b. Conduct thorough background
checks on duty free shop operators to ascertain track record;

c. Implement a computerized
accounting system to track the duty free operations; and

d. Create an Internal Audit team
to conduct regular spot checks on the operation of duty free stores/outlets.

Section 9.
Administrative Sanctions. Violation of any of
the provisions of this Order shall be subject to administrative sanction of
suspension or cancellation of the operation of the concerned duty free shop
under the implementing rules and regulations to be prepared by the Department
of Finance.

Section 10. Separability
Clause. The provisions of this Executive Order
are hereby declared separable. In the event that provisions of this Executive
Order are declared illegal or unconstitutional, the other provisions not so
declared shall remain in full force and effect.

Section 11. Amending
Clause. All provisions of executive orders,
letters of instruction, issuances, memoranda and proclamations not consistent
with the provisions of this Executive Order are hereby repealed or modified
accordingly.

Section 12. Effectivity. This Executive Order shall take effect immediately.

Done in the City of Manila, this
26^th day of September in the year of Our lord Nineteen Hundred and
Ninety-Seven.

(Sgd.) FIDEL
V. RAMOS
President of the Philippines

By the President:

(Sgd.) RUBEN D. TORRES
Executive Secretary

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