WT/TPR/S/59 Trade Policy Review
Page 28
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) INTRODUCTION
1. Since its previous Trade Policy Review in 1993, economic reform in the Philippines has been
accompanied by a continuous process of trade liberalization.  This has included in particular the Tariff
Reform Program (TRP) outlining tariff reduction schedules, and the Import Liberalization Program
aimed at removing non-tariff import restrictions and promoting "tariffication".  Through steady tariffreductions across the whole spectrum of imports, applied tariffs have more than halved since 1992, to
an average of just over 10% in 1999.  This has occurred despite some slippage or reversal in the tariff
reduction process, as well as the persistence of tariff escalation and increased tariff dispersion
observed in various sectors.
2. Changes since 1993 have also resulted in enhanced transparency and predictability.  Almost
all agricultural and about half of manufacturing tariff lines have been bound as a result of the
Uruguay Round.  Quantitative restrictions have been curbed or eliminated, involving the introduction
of tariff quotas for sensitive agricultural products, but with the notable exceptions of rice.  Reform of
customs procedures, as well as some streamlining of preshipment inspection has taken place.
Customs valuation no longer uses the "home consum ption value" method, and is envisaged to shift to
the "transaction value" method in year 2000.  Minimum import prices remain in use.
3. Exporters have continued to benefit from tax exemptions on imported and locally supplied
inputs;  such exemptions are provided through bonded warehouses, duty exemptions or a drawback
system.  Additional tax incentives for export activities were provided by the Export Development Act
of 1994.  Textiles and garments have remained subject to bilateral restraints.
4. Incentives are still provided by the Board of Investments and the Philippine Economic Zone
Authority, among others, to influence the magnitude, direction, location, and composition ofinvestment.  Although important sectors are restricted to foreign participation, a rapid increase of
investment has been observed;  this was particularly noticeable between 1995 and 1997 in the special
economic zones due mainly to the establishment of new zones and the surge of investments in
manufacturing.  Trade-related investment measures (TRIMs) affecting the motor vehicle, and soap
and detergent subsectors are in place.  Progress in the privatization of state corporations has reducedthe degree of state intervention in the economy.  A comprehensive competition law might help ensure
that the full benefits of privatization are not dampened by limited market competition.
5. About half the standards in the Philippines are a ligned to international standards, a significant
increase since 1993.  A new law on intellectual property was adopted in 1998 to reflect the
requirements in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights;further legislative changes are envisaged to provide protection to layout designs of integrated circuits,
and plant varieties.
(2) M
EASURES DIRECTLY AFFECTING IMPORTS
(i) Registration, documentation and customs procedures
6. The Tariff and Customs Code of 1978 (PD 1464) and the New Central Bank Act (Republic
Act (RA) 7653) of 1978 provide the primary legal bases for the regulation of imports in the
Philippines.  Other specific laws govern the importation of, and designate the appropriate agencies
that administer the licensing regime for specific commodities or groups of commodities.  Importers
may, in general, freely use any mode of payment to finance imports;  when a letter of credit is used,
an advance duty deposit is required.The Philippines WT/TPR/S/59
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7. Imports of packaged food products require registration with the Bureau of Food and Drug
(BFAD).  Importation of meat and meat products must be accompanied by an SPS or Veterinary
Quantitative Clearance certificate issued by the Department of Agriculture (DA), Bureau of Animal
Industry.  The importation of other agricultural products requires an SPS certificate issued by the DA,
Bureau of Plant Industry, for plant and plant products, or by the DA, Bureau of Fisheries and Aquatic
Resources, for fish and fish products;  the importer must also be registered with BFAD.  Failure tomeet these requirements may result in confiscation of the product by BFAD.
8. Import documents can be lodged for customs clearance either through the Community
Trading Center (CTC), the Direct Traders Input, or the Electronic Data Interchange (EDI).  The CTC,
run by the Philippine Chamber of Commerce and Industry, converts submitted paper declarations into
electronic form for calculation of the duties and taxes payable.  Through the Direct Traders Input, animporter can link directly to the BOC computer sy stem to register a declaration.  EDI allows an
importer to prepare a declaration through an EDI service provider, a third party who provides the
interface service to facilitate transmission of messages associated with making a cargo claim to all
offices concerned.
9. The Philippines employs UNCTAD's Automated System for Customs Data (ASYCUDA), a
computerized customs management system.  Major components of ASYCUDA implemented in the
Philippines included the computerization of BO C's customs clearance procedures through the
Automated Customs Operations Procedures (ACOS) , which can provide remote lodging of entries
from the premises of clients to the BOC.
1  The ACOS accepts, validates, and processes electronic
declarations, lodges the processed declaration, indicates the corresponding duties and taxes, and sends
the responses electronically to the client.  The ACOS has a programme that determines the risk profile
of shipments and classifies them into red, yellow, and green-lane shipments according to the degree ofinspection required.  Average clearance times as of February 1999 are shown in Table III.1.  The
authorities indicated that the shares of green, yellow, and red-lane shipments in total imports were
70%, 15% and 15%, respectively.
Table III.1
Average customs clearance times for sea and air cargoes
Manila International
Container Port (MICP)Port of Manila (POM)Manila's Ninoy Aquino
International Airport (NAIA)
Green-lane shipments 35 minutes to ½ day 35 minutes 30 minutes
Yellow-lane shipments 24 hours 26 hours 24 hours
Red-lane shipments 48 hours 48 hours Within 48 hours
Source: Information provided by the Philippine authorities.
(ii) Preshipment inspection
10. The Philippines has continued to employ the Comprehensive Import Supervision Scheme
(CISS) involving the preshipment inspection (PSI) of Philippine imports in the country of supply.
The CISS includes physical inspection of goods agai nst shipping documents, assessing and reporting
dutiable values, and issuing of the clean report of findings (CRF) required for customs clearance. The
authorities noted that only 1.5% of dutiable shipments have been either refused a CRF or found to
contain problems of classification and valuation in the last five years.   The Société General de
Surveillance (SGS) is the designated inspector.
                                                     
1 Details of ACOS are described in Customs Memorandum Order (CMO) No. 4-97, 28 January 1997.WT/TPR/S/59 Trade Policy Review
Page 30
11. All imports appear to receive the same  CISS treatment regardless of country of origin.  All
shipments except for goods listed in Table III.2 are subject to the CISS.  Joint Order 1-91 of
2 September 1991, describing the implementation of the CISS, has undergone several amendments to
include articles exempt from PSI.  The latest amendment was made in March 1998 to implement the
Selective Pre-shipment Inspection Advance Clearance System (SPACS), which introduced self-
assessment to determine whether physical preshipment inspection is required.
Table III.2
Goods exempt from preshipment inspection prior to importation in the Philippines
Goods imported pursuant to Section 105 of the Tariff and Customs Code of the Philippines, but not including commercial imports under
consignment basis.
Crude oil and petroleum products in bulk, such as, but not limited to, crude oil, LPG, naptha, gasolines, reformates, kerosenes , aviation
fuels, gas oils, base oil for lubricants, fuel oils, asphalt – all in bulk but not including chemicals and their products, petr oleum additives
and lubricating oils.
Shipments of explosives, ammunition, arms and equipment and other strategic materials, certified as such by the Department ofNational Defense but not including raw materials such as chemicals for the manufacture of explosives and firearms and ammunitio n
for commercial use.
Precious stones, artifacts and precious metals.
Fresh, frozen or chilled foodstuff and fruits.
Live animals.
Works of art.
Current newspapers and periodicals.
Parcel post.
Individually owned motor vehicles qualifying under the provisions of Executive Order No. 248, Vehicle Development Program, Seri es
of 1987, specifically relating to the non-dollar importation of second-hand motor vehicles of returning residents or immigrants .
Goods whose value, as declared in the Letter of Credit, is less than US$500 f.o.b. or its equivalent in other currencies at the  time of L/C
opening, but not including part shipments invoiced at less than US$500 f.o.b. against a Letter of Credit, the value of which ex ceeds
US$500 f.o.b.  In the case of goods financed by means other th an a Letter of Credit, goods where the value of the total invoice
covering the shipment is less than US$500 or its equivalent in other currencies.  This exemption will not apply to goods invoic ed or
declared in the shipping documents, as off-quality under such descriptive terms as stock-lots, side-runs, cull rolls, seconds, mill lots,
scraps, off-grade, reconditioned, used, junk, or similar terms conveying or purporting to convey the condition of the article a s sub-
standard or off-grade and not of prime quality.
Importation into the Philippines where the consignee is either the Government of the Philippines or any of its corporations, ag encies,
and instrumentalities, but not including goods imported on behalf of these entities by private importers.
Importation of semi-conductor and allied enterprises subject to the qualification requirements of the Board of Investments.
Importation of export processing zone enterprises duly registered as such with the Philippines Economic Zone Authority.
Importation by member firms of the automotive wiring harness industry.
Importation of pre-cut fabrics and accessories for processing into finished garment and textile products for export by firms wh ich have
been engaged in the garment and textile exports for the last five years subject, however, to the following conditions:  (i) the  firm and/or
any of its officers have not violated any rules and regulations of the GTEB and BOC governing import/export operations during t his
five-year period nor have any pending case whether administrative or judicial regarding the conduct of importation of its raw m aterials;
(ii) the firm must not be delinquent in the liquidation of imported raw materials;  (iii) the said pre-cut fabrics and accessor ies are
directly used in the manufacture of the products to be exported;  and (iv) the firm must present an exemption certificate issue d by the
Ad Hoc Committee on the CISS through the Garments Textile Export Board.
Importations by enterprises/firms registered with the Subic Bay Metropolitan Authority (SMBA) and Clark Special Economic Zone(CSEZ), subject to the implementing rules and regulations jointly promulgated by the SBMA, CSEZ and the Bureau of Customs,
except for shipments, bound for duty-free shops, outlets or trading warehouses catering to duty-free shops and outlets.
All duty and tax exempt shipments including those entered under the CBMW (Customs Bonded Manufacturing Warehouse).
Source: Information provided by the Philippine authorities.The Philippines WT/TPR/S/59
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12. The Government has established  a Technical Committee to ensure compliance by the SGS
with all aspects of the PSI contract, except matters related to issuance of the CRF (the BOC-SGS
Appeals Committee has responsibility for appeals on valuation and classification in CRFs).  The
Committee is comprised of representatives from various government agencies and the Central Bank.
A concerned party having problems with the operation of the contract may write to the Chairman of
the Committee, who would convene the Committee to discuss the problems raised.  Solutions wouldthen be recommended to the Secretary of Finance and the Monetary Board of the Central Bank for
final approval and implementation.
2
(iii) Customs valuation and rules of origin
13. The Philippines has applied the provisions allowing developing countries to delay application
of the WTO Agreement on Implementation of Article VII of the General Agreement on Tariffs andTrade 1994, including the use of the "transaction value" valuation method and reservations concerning
minimum values
3
14. RA 8181 of 28 March 1996 abolished the use of "home consumption value", and adopted the
use, as an interim measure, of "export value", and authorized a shift to the use of "transaction value"
method not later than 1 January 2000.4  Declared export values are based on the CRF unless there is a
higher published value, invoice value or declared value by the importer.  If the export value cannot be
established, cost at country of origin, third country cost or domestic wholesale selling price is used as
a basis for valuation.
15. The Philippines uses minimum import prices through the issuance of published values, which
apply to all commercial goods on an MFN basis.   According to the authorities, published minimum
prices are sourced from CRFs, commercial attache's reports, and BOC-SGS Appeals Committee
discussions.
16. Appeals against customs valuations and classi fication may be made to the BOC-SGS Appeals
Committee on Valuation and Classification after tentative release of the shipment.5  Importers may
secure release of the goods upon filing of a bond in cash or through a bank guarantee.  An importer
not satisfied with the decision may file a formal protest.  Between 1993 and 1998, 24,344 cases were
appealed to the BOC-SGS Committees, of which about 24,000 have been resolved.
17. Appeals may also be initiated by filing a formal protest as defined in Section 2308 of the
Tariff and Customs Code.  Upon filing the protest, payment of duties and taxes should be made.  The
Law Division of the BOC then conducts hearings, and the Collector of the Port issues the decision
subject to review by the Commissioner of the BOC, and final approval by the Department of Finance
(DOF).  The authorities indicated that final approval by the DOF may be appealed to the courts.
(iv) Tariffs
(a) Introduction
18. The fiscal contribution of import-related taxes is of considerable importance to government
revenue.  For example, tariffs on imports, and associated value-added tax accounted for some 23% of
total central government revenue in 1997 (Table III.3).  Export taxes are negligible.  
                                                     
2 WTO document G/PSI/WP/W/7/Rev.1, 28 October 1997.
3 WTO document WT/Let/1/Rev.1, 2 March 1995.
4 WTO document G/VAL/W/24, 5 May 1998.WT/TPR/S/59 Trade Policy Review
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Table III.3
National government tax revenues by collecting agency, 1992-98
(Per cent of total tax)
1992 1993 1994 1995 1996 1997 1998
Bureau of Internal Revenue 64.2 63.4 69.1 67.7 70.9 76.4 80.9
Bureau of Customs 34.9 35.6 30.1 31.4 28.4 23.0 18.2
Other offices 0.9 1.0 0.8 0.9 0.7 0.6 0.8
Motor vehicle tax 0.8 0.8 0.6 0.7 0.6 0.6 0.7
Forest charges 0.1 0.2 0.2 0.2 0.1 0.0 0.1
Total tax revenues (P million) 208,706 230,170 271,304 310,517 367,895 412,165 416,585
(per cent of GDP) (15.4) (15.6) (16.0) (15.8) (16.9) (17.0) (15.9)
Source: Information provided by the Philippine authorities.
19. The Philippines adopted the 1996 amendments to the Harmonized Commodity Description
and Coding System (HS) Nomenclature on 1 January 1996.  The decision-making process on tariff
rates on the Philippines is described in Box III.1.
Box III.1
Decision-making process on tariffs in the Philippines
Pursuant to Section 401 of the Tariff and Customs Code of the Philippines, upon the recommendation of
the National Economic and Development Authority, the President is empowered to increase, reduce orremove existing rates of import duty including any necessary change in classification. The existing ratesmay be increased or decreased to any level, in one or several stages but in no case should the increased rate
of import duty be more than 100 % ad valorem .
The President's authority to modify tariff rates is a delegated authority from Congress, which is mandated
under the Constitution to increase, reduce or remove existing rates of duty.
The private sector or concerned government agencies can file petitions for tariff modification with the
Tariff Commission (TC).  The Commission conducts an investigation in the course of which it holds publichearings wherein interested parties are given the opportunity to be present, produce evidence and to beheard.  The Commission submits its findings and recommendations to the National Economic andDevelopment Authority (NEDA).
The NEDA then convenes the Technical Committee on Tariff and Related Matters (TRM) to deliberate on
the TC findings and recommendations.  The decisions/recommendations of the Technical Committee areelevated to the Tariff and Related Matters Cabinet Committee for approval.  Once approved by the TRM
Cabinet, these recommendations are submitted to the NE DA Board, which is chaired by the President, for
confirmation.  Thereafter, a draft executive order (EO)  is prepared for the approval and signature of the
President.  The draft EO takes effect as provided in its final publication in two newspapers of general
circulation.
Source: Information provided by the Philippine authorities.
20. The Philippines’ steady trade liberalization, particularly the Tariff Reform Program (TRP),
has more than halved the simple average tariff since the previous Trade Policy Review, to about
10.1% in 1999 compared with about 25.6% in 1992 (Table III.4).6  In 1999, the simple average tariff
                                                                                                                                                                    
5 The detailed procedure is described in Secion 201 of the Tariff and Customs Code.
6 GATT (1993), Vol.1, p. 70;  and WTO Secretariat estimates.The Philippines WT/TPR/S/59
Page 33
was 8.9% for manufactures (HS25-97) (Chart III.1) , and 16.6% for agricultural products (HS01-24)
(Chart III.2).
21. Under the revised Tariff  Reform Program (TRP) of 1995, set forth in EO 264 (effective
28 August 1995) and EO 288 (effective 15 January 1996), the Philippines unilaterally targets a
uniform rate of 5% by 2004, except for some sensitive agricultural products.  As a result of the
Government's review of the TRP in 1997, two execu tive orders, EO 439 and EO 465, were issued in
1998 to modify the scheduled phased reduction of tariffs up to year 2000.
22. The latest version of the TRP includes the decision on tariff modification specified in EO 465
of 22 January 1998 and EO 486 effective 10 July 1998.  Under EO 465, tariff rates for certain
products, e.g. garments and textiles, were either increased or reduced more gradually than the
schedule provided for in EO 264.   EO 465 also increased tariffs on completely-knocked-down (CKD)
automotive vehicles from 3 % to 7 % in 1998, and to 10 % in 1999.
23. The authorities indicated that to provide temporary relief from the adverse effects of the
Asian financial crisis and a surge of low-priced imports, EO 63 (effective 21 January 1999) was
subsequently enacted, modifying MFN tariff rates on more than 700 lines, including increases for
yarns, textiles, garments, paper, polyamide and polystyrene, and steel wire rods.  Tariff rates on steelslabs and scrap, certain chemical products and ba ttery components, on the other hand, were reduced.
The preferential tariff rates under the ASEAN Common Effective Preferential Tariff were not affected
by the tariff modifications during 1998 and 1999, except that where the MFN rate was lower than the
CEPT rate.
24. The Philippines is a party to the WTO In formation Technology Agreement (ITA) under
which it is to eliminate tariffs on substantially all information technology products by the year 2000.
The Philippines signed the ITA on 25 April 1997;  it was ratified by Congress it on 3 December 1998.
Table III.4
Summary of the Philippine tariff analysis, 1998-99
1998 1999a1999a
Tariff average No. of linesbRangeShare of bound
linesc
A. Including "in" and "out" of quota rates
Simple average 10.7 10.1 100.0 0-65 64
Agriculture (HS01-24) 18.9 16.6 15.1 3-65 86
Manufactures (HS25-97) 9.2 8.9 84.9 0-40 60
Agriculture (WTO definition)d18.5 16.0 14.3 3-65 100
Manufactures (WTO definition)d9.4 9.1 85.5 0-40 58
By sectore
Agriculture and fisheries 13.0 11.5 5.8 0-65 81
Mining 3.4 3.4 1.9 3-10 31
Manufacturing 10.7 10.1 92.3 0-65 63
By stages of processing
Raw materials 9.6 8.7 12.1 0-65 68
Semi-processed products 7.6 8.0 31.5 0-65 70
Fully processed products 12.6 11.5 56.5 3-65 60
B. Excluding "out-of-quota" rates
Simple average 9.9 9.5 100.0 0-60 63
Agriculture (HS01-24) 13.9 12.8 14.0 3-60 85
Manufactures (HS25-97) 9.2 8.9 86.0 0-40 60
Table III.4 (cont'd)WT/TPR/S/59 Trade Policy Review
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1998 1999a1999a
Tariff average No. of linesbRangeShare of bound
linesc
Agriculture (WTO definition)d13.1 12.1 13.2 3-60 99
Manufactures (WTO definition)d9.4 9.1 86.6 0-40 58
By sectore
Agriculture and fisheries 10.3 9.4 5.6 0-50 80
Mining 3.4 3.4 1.9 3-10 31
Manufacturing 10.0 9.6 92.5 0-60 63
By stages of processing
Raw materials 7.8 7.4 11.9 0-50 67
Semi-processed products 7.5 7.9 31.8 0-60 70
Fully processed products 11.7 10.8 56.3 3-50 59
C. Excluding "in-quota" rates
Simple average 10.4 9.7 100.0 0-65 63
Agriculture (HS01-24) 17.3 14.8 14.0 3-65 85
Manufactures (HS25-97) 9.2 8.9 86.0 0-40 60
Agriculture (WTO definition) d16.8 14.1 13.2 3-65 99
Manufactures (WTO definition) d9.4 9.1 86.6 0-40 58
By sectore
Agriculture and fisheries 11.9 10.3 5.6 0-65 80
Mining 3.4 3.4 1.9 0-10 31
Manufacturing 10.4 9.8 92.5 0-65 63
By stage of processing
Raw materials 8.8 7.9 11.9 0-65 67
Semi-processed products 7.5 7.9 31.8 0-65 70
Fully processed products 12.3 11.2 56.3 3-65 59
a Estimates for 1999, include changes resulting from EO 63, 15 January 1999, including three extra tariff lines.  Some tariff li nes
on flat rolled products of iron and non-alloy steel could drop to 3% on 1 July 1999, if HRC capacity utilization of National St eel
Corporation (NSC) is not sustained at levels of at least 50%.  Twenty-four seasonal tariffs on fish products in HS03.02 and 03. 04
were included in the analysis.
b Frequency distribution includes the three extra tariff lines from EO 63, 21 January 1999.
c Schedule LXXV, in HS 1992, converted to HS 1996 by the WTO Secretariat.
d The total number of lines in WTO Agriculture and WTO Industry does not add up to the total as ten lines (essentially petroleum
products) are excluded from both definitions.
e Based on ISIC (rev.2) classification.
Source: WTO calculations based on data provided by the Philippine authorities and WTO Schedule LXXV.The Philippines WT/TPR/S/59
Page 35
010203040506070
25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 78 80 82 84 86 88 90 92 94 96Per cent
Average 1999
applied rate 
(8.9%)
HS       Description
25         Salt; sulphur; earths and stone, etc.
26         Ores, slag and ash
27         Mineral fuels, mineral oils, etc.28         Inorganic chemicals; organic or              inorganic compounds of precious             metals, etc.29         Organic chemcials
30         Pharmaceutical products
31         Fertilizers    32         Tanning or dyeing extracts etc. 33         Essential oils and resinoids;             perfumery, cosmetic or toilet             preparations
34         Soap, organic surface-active 
             agent, washing prep., etc.    35         Albuminoidal substances;             modified starches; glues, etc.36         Explosives; pyrotechnic products;             matches, etc
37         Photographic or cinematographic 
             goods38         Miscellaneous chemical products39         Plastics and articles thereof40         Rubber and articles thereof41         Raw hides and skins and leather
42         Articles of leather, etc.
43         Furskins and artifical fur;              manufactures thereof44         Wood and articles of wood, etc.45         Cork and articles of cork46         Manuf. of straw, of esparto, etc.   
47         Pulp of wood or of other 
             fibrous cellulosic materialHS       Description
48         Paper and paper board, etc.
49         Printed books, newspapers, etc.
50         Silk51         Wool; fine or coarse animal             hair, etc.52         Cotton53         Other vegetable textile fibres 
54         Man-made filaments   
55         Man-made staple fibres 56         Wadding, felt and non-wovens;             special yarns; twine, cordage, etc.57         Carpets; other textile floor             coverings
58         Special woven fabrics; lace, etc.
59         Impregnated, coated, covered or             laminated textile fabrics, etc.60         Knitted or crocheted fabrics    61         Articles of apparel and clothing             accessories, knitted or crocheted
62         Articles of apparel and clothing
             accessories, not knitted, etc.63        Other made-up textile articles;             sets, worn clothing, etc.64         Footwear, gaiters, etc.65         Headgear and parts thereof
66         Umbrellas, walking-sticks, etc. 
67         Prepared feathers and down, etc.68         Articles of stone, plaster, etc.69         Ceramic products70         Glass and glassware71         Natural or cultured pearls,
             precious or semi-precious
             stones, precious metals, etc.HS       Description
72         Iron and steel
73         Articles of iron and steel
74         Articles of iron and steel75         Nickel and articles thereof76         Aluminium etc. 78         Lead and articles thereof   79         Zinc and articles thereof 
80         Tin and articles thereof
81         Other base metals, etc.82         Tools, implements, cutlery             spoons and forks, etc.83         Misc. articles of base metals84         Nuclear reactors, boilers,
             machinery, etc.
85         Electrical machinery and             equipment, etc.86         Railway or tramway              locomotives, etc.87         Vehicles other than railway
             or tramway rolling-stock; etc.
88         Aircraft, spacecraft, etc.89         Ships, boats, etc.90         Optical, photographic, etc.              apparatus91         Clocks and watches, etc.
92         Musical instruments, etc.
93         Arms and ammunition, etc.94         Furniture, bedding, etc.95         Toy, games, etc.96         Miscellaneous manuf.              articles
97         Works of art, antiques, etc.Chart III.1
Tariffs on manufactured products by HS chapter, 1998-99
The absence of entries for chapters 46, 49, 67, 93 and 97 is due to non-bindings.
The analysis includes all in- and out-of-quota rates and amendements from EO 63, 21 January, 1999.
Averages for the base and final rates were estimated on bound lines only; four specific base rates in chapter 37 were excluded.
WTO Secretariat calculations, based on data provided by the Philippine authorities; and WTO Schedule LXXV, Philippines.Note:
Source :Applied rates  (1999)
Base rates  (1995)
Final rates  (2005)Applied rates  (1998)WT/TPR/S/59 Trade Policy Review
Page 36
Chart III.2                                  
Tariffs on agricultural products by HS chapter, 1998-99
0102030405060708090100
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24Per cent
Average 1999
applied rate
 (16.6%)
HS
01
02
0304 
05
06
07
08
09
1011
12
13
14
1516
17
18
19
2021
22
23
24Description
Live animals
Meat and edible meat offals
Fish and crustaceans, molluscs and other aquatic invertebratesDairy produce, birds eggs, natural honey, edible products of animal origin  
Products of animal origin, n.e.s.
Live trees and other plants;  bulbs, roots and the like;  cut flowers
Edible vegetables and certain roots and tubers
Edible fruit and nuts;  peel of citrus fruit or melons
Coffee, tea, mate and spices
CerealsProducts of the milling industry;  malt;  starches;  wheat gluten
Oil seeds and oleaginous fruit;  miscellaneous grains, seeds and fruit
Lacs;  gums, resins and other vegetable saps and extracts
Vegetable plaiting materials;  vegetable products n.e.s.
Animal or vegetable fats and oils and other cleavage products;  prepared edible fats; etc.Preparations of meat, or fish or of crustaceans, molluscs or other aquatic invertebrates
Sugars and sugar confectionery
Cocoa and cocoa preparations
Preparations of cereals, flour, starch or milk;  pastrycooks' products
Preparations of vegetables, fruit, nuts or other parts of plantsMiscellaneous edible preparations
Beverages, spirits and vinegar
Residues and waste from the food industries;  prepared animal fodder
Tobacco and manufactured tobacco substitutes
The absence of entries for chapter 3 in agriculture as defined by the Harmonized System, is due to non-bindings.
 The analysis includes all in- and out-of-quota rates and amendements from EO 63, 21 January, 1999.
 Averages for the base and final rates were estimated on bound lines only.
WTO Secretariat calculations based on data 
provided b y the Phili ppine authorities; and WTO Schedule LXXV.Note:
Source :Applied rates (1999)
Base rates   (1995)
Final rates   (2005)Applied rates (1998)The Philippines WT/TPR/S/59
Page 37
(b) Tariff structure
25. All tariffs are ad valorem , and apply to the c.i.f. value of imports.  Seasonal tariffs are
imposed on fish products under HS headings 03.02 and 03.03.
26. The MFN tariff schedule in force as of 1 January 1999 recorded 5,638 lines, in a rate structure
ranging from duty free to 65%.  The tariff range ha s been narrowed since 1993, when the maximum
rate was 80% and the minimum 0%.  The most common tariff range is between zero and 5%, whereabout half of product lines are concentrated (Chart  III.3).
(7.4%)(15.7%)
(6.3%)(17.2%)
(0.3%)(52.2%)
(0.9%)
05001,0001,5002,0002,5003,0003,500
Duty free >0- 5 >5-10 >10-15 >15-20 >20-50 >500.010.020.030.040.050.060.070.080.090.0100.0Chart III.3
Frequency distribution of  MFN tariff rates, 1999
Number of tariff lines Per cent
Cumulative per cent
Number of lines (% of total)
Frequency distribution includes in- and out-of-quota rates, and EO 63 amendments.
WTO Secretariat calculations, based on data provided by the Philippine authorities.Note:
Source :
27. Reflecting the minimum access commitments the Philippines undertook under the WTO
Agreement on Agriculture, a number of agricultural products are subject to a system of in- and out-of
quota tariff rates (section (v) below).  Out-of-quota rates are scheduled to be lowered in July 1999 to a
range of 35% to 65%.  In-quota rates range from a minimum of 10% to a maximum of 50%.
28. Tariff dispersion, as measured by the coefficient of variation, has increased since the previous
Trade Policy Review, from 71% in 1992 to 99% in 1999.  Tariffs greater than 50%, represent about
1%, and those greater than 15% about 24% of all lines.
29. Tariff escalation in the agricultural sector was negligible in 1992 but has become apparent in
1999 (Chart III.4).  This may be explained partly by the previously prohibited agricultural products
having been tariffied as a result of the Uruguay Round.  Most manufacturing activities, notably textile
and leather, display significant tariff escalation.WT/TPR/S/59 Trade Policy Review
Page 38
0510152025
Food,
beverages and
tobaccoTextile and
leatherWood and
wooden
furniturePaper, printing
and publishingChemicals Non-metal
mineral
productsBasic metal Fabricated
metal
products,
machineryOther
manufacturingPer cent
First stage of  processing Fully processed Semi- processedChart III.4
Tariff escalation by 2-digit ISIC industry, 1999
Tariff escalation includes in- and out-of-quota rates, and EO 63 amendments.
WTO Secretariat calculations, based on data  provided by the Philippine authorities.Note:
Source :
(c) Tariff bindings
30. The Philippines bound 64% of all tariff lines as a result of the Uruguay Round, including
nearly 100% of agricultural items and about 60% of manufacturing items (WTO definition of sectors).
Under the Tokyo Round of Multilateral Trade Negoti ations, the Philippines had bound only 7% of its
entire tariff schedule.
(d) Tariff preferences and rules of origin
31. The Philippines extended preferential tariffs to products from ASEAN members under the
Common Effective Preferential Tariff Scheme (CEPT) when AFTA was first initiated in 1993;  under
the CEPT, a product is conferred originating status if it wholly originates in an ASEAN member, or
possesses at least 40% ASEAN content in terms of the f.o.b. value, and the final manufacturingprocess is performed within ASEAN (Chapter II(iii)).
32. The Philippines grants concessions under the Global System of Trade Preferences Among
Developing Countries (GSTP), coveri ng four items (Chapter II(v)).
33. The Philippines participates in the harmonization work being undertaken by the Technical
Committee on Rules of Origin under the World Customs Organization.
7
                                                     
7 APEC (1998), p. 58.The Philippines WT/TPR/S/59
Page 39
(v) Tariff quotas
34. Implementing the Uruguay Round results, the Philippines converted all quantitative
restrictions on agricultural products, except on rice, into tariffs. The Philippines currently maintains
tariff quotas for agricultural products such as live animals (HS headings 01.01, 01.03-01.05) except
live bovine animals (HS 01.020), pork (HS02.03), sheep or goat meat (HS02.04), poultry meat
(HS02.07), potatoes (HS07.01),  coffee (HS09.01), maize (H S10.05), and sugar (HS17.01)
(Chart III.5).  Import quotas apply to rice (HS10.06 ).  Until the end of 1997, the Philippines also
maintained tariff quotas for live bovine animals and meat of bovine animals (HS0201, 0202).
Chart III.5
In- and out-of- quota tariff rates, 1999a
01020304050607080
01 02 07 09 16 17 21Meat of swine, fresh, chilled or frozenCoffee 
(not decaffeinated)Other prep. or preserved meatHam and pork bellies
a
b
Source:Each tick on the X-axis represents a tariff line. Only HS chapters 01, 02, 07, 09, 10, 16, 17 and 21 are concerned.
The Chart is based on the data used for the analysis of the tariff structure, which included 72 pairs of in - and out-quota rates;  the authorities indicated that there were only 54 tariff lines under tariff rate quotas.
WTO Secretariat estimates, based on data provided by the Philippine authorities.10
In-quota rate Out-of-quota rate
01  Live animals   02  Meat & edible meat offal    07  Edible vegetables    09  Coffee & tea 
10  Cereals            16  Prep. meat & fish                17  Sugar                       21  Misc. edible prep.Per cent; HS2 chapter (72 lines)b
Edible prep. based on coffee or tea 
concentrates 
35. The authorities pointed out that under the Tariff and Customs Code of the Philippines there
are agricultural products with both in- and out-quota tariff rates for which no tariff quotas or
minimum access volumes have been defined.  This has made the in-quota rate technically inapplicable
as import licences for those products (at the lower tariff rate) cannot be issued, thus making the out-
quota tariff rate the only applicable duty.  According to the authorities, there are 25 pairs of such in-
and out-quota tariff lines covering the following pr oduct groups:  meat and edible flours (HS02.10)
affecting four tariff lines;  onions, shallots, garlic (HS 07.0310, 07.0320) affecting two lines;
cabbages (HS07.04.90.10)  affecting one line;  sausages  and similar products (HS16.01) affecting two
lines;  and other prepared meat (HS16.02) affecting 16 lines.WT/TPR/S/59 Trade Policy Review
Page 40
36. The tariff and import quota systems are subject to a complex set of rules and regulations in
the Minimum Access Volume (MAV) system introduced in July 1996 (Box III.2). The size of the
tariff and import quotas is based on the Philippines' Uruguay Round agricultural commitments
(Chapter IV(2)).
Box III.2:  The administration of the Minimum Access Volume (MAV) system
The MAV system was first introduced in July 1996 covering the agricultural products committed by the
Philippines during the Uruguay Round, and including catching up provisions concerning Philippine tariff
quota commitments for 1995.   The current rules and regulations for the administration of the MAV are
contained in Department of Agriculture Administrative Order (AO) 8 of 1997 as amended by AO 1 of1998.  The MAV Management Committee (MMC), chaire d by the Secretary of Agriculture, implements
the MAV system and issues MAV licences.  The MMC is advised by the MAV Advisory Council,
composed of private sector representatives appointed by the MMC
.
Application procedures and eligibility for quota licences differ between the first year of implementation of
the MAV system and subsequent years.  In the first implementation year for each MAV applicable product,the product was defined as either Type A or Type B depending on the imported amount in the three yearsimmediately preceding the first year of implementatio n.  Type A products are those considered to have
been imported regularly and in substantial volumes;  Type B products are those irregularly or scarcely
imported during the period.  Frozen meat of bovine animals, maize, rice, and cane or beet sugar and
chemically pure sucrose were defined as regularly imported products;  all other MAV products weredefined as irregularly imported (Section I.E.1.a of the AO 8.).
Allocation of licences for regularly imported products is based on the import shares of applicants;  for
irregularly imported products allocation is based on the local output share of applicants.  Potential
importers eligible for MAV licences for a Type A product are those that have imported the product during
the representative period;  those eligible for MAV licences for a Type B product are users or sellers of theproduct during the period.
For subsequent years, the allocations from the previous year are carried over, in addition to incremental
volumes arising from annual quota increases, recalls, and cancellations.  If the incremental volumes are lessthan the sum of all the volume requests made by licensees qualified to apply for the incremental volumes,
the incremental volumes are allocated first to the MAV eligible applicants, who are any legal entities that
have operated a business involving the product concerned as of the start of the prior year, and that haveimported the minimum import volume, defined in the Annex II of AO 8, for the product at any time duringthe immediately preceding twelve months.  If the incremental volumes exceed the sum of the requestedvolume, the remaining quota is allocated on a first-come-first-served basis to any legal entities who haveneither operated a business involving a MAV product nor imported the minimum volume of the product.
Unused quotas or cancelled and surrendered licences  are placed in a pool for reallocation.  The MAV
Management Committee may permanently cancel a licence on the grounds of misrepresentation of vitalinformation, submission of spurious or falsified documents, commission of technical smuggling or otheract of deceit by the applicant.  A licensee that decides not use its licence may voluntarily surrender thelicence as provided in the AO 8.  Licensees that surrender or underutilize quotas may be penalized;  for
example, licensees utilizing less than 80% of their net allocations, regular and additional allocations minus
surrendered volumes accepted, may have part of such allocations recalled for purposes of determiningallocations in the following year (details of penalties are found in Section I.H of AO 8).
The list of licensees and their corresponding allocations must be published in two local newspapers of
national circulation.  The time allowed for submitting applications for licences is usually up to the end ofthe authorized period.  The authorities estimate that an application for a licence, if complete in all respects
can normally be granted within two weeks.
Source :  Government of the Philippines.The Philippines WT/TPR/S/59
Page 41
(vi) Other charges on imports
37. Other charges specifically imposed on imports, in addition to tariffs, are fees for various
forms, processing fees on ordinary claim for refund, registration fees for participation in public
auction sales, laboratory fees for services rendered by the Customs Laboratory Unit, and brokerage
fees for licensed customs brokers.  As in the case of domestically produced goods, imports are
generally subject to a 10% value added tax.  Items exempted from the value added tax include salesand importation of certain primary products, books, newspapers and magazines;  importation of
certain vessels;  certain services including medical, educational, and some business services;  sales by
certain cooperatives;  and sale or lease, not exceeding P550,000 per year in general, of certain goods,
properties or the performance of services.
8
38. Excise taxes are levied on alcohol products, automobiles, films, jewellery, minerals, perfume,
cigarettes, and petroleum (Table III.5).  In 1997, specific taxes for beer and cigarettes were
introduced, replacing the previous ad valorem  taxes, and the excise tax rates on distilled spirits and
wines were increased. Imported distilled spirits face higher tax rates compared with domestically
produced spirits; spirits produced from locally available materials, e.g. coconut palm, are taxed P8 per
proof litre, whereas spirits produced from other materials may face duties of P75 to P300 per prooflitre.
Table III.5
Excise taxes in the Philippines
Kind and subject of tax NIRC of 1997 (RA 8424,
effective 1.1.98)Tax base Tax rate
EXCISE TAXES
ALCOHOL PRODUCTSa
Distilled spirits
If produced from sap of nipa, coconut, cassava,
camote or buri palm or from the juice, syrup or
sugar of the cameSec. 141, Per proof litre P8.00
If produced from said sources in a pot still by a
distiller producing not more than 100 lt. a day,
containing not more than 50% of alcohol by
volume"   " P4.00
If produced from raw materials other than
those enumerated in preceding paragraph"   "
If net retail price is:
Less than P250.00P250.00 up to P675.00
More than P675.00P75.00
P150.00
P300.00
Medicinal preparations, flavouring extracts,
and all other preparations, except toiletpreparations with distilled spirits as the chief
ingredientPer proof litre Taxed as
distilled spirits
Wines Sec. 142 Per litre of volume capacity
Sparking wines/champagnes, regardless of
proofIf net retail price is:
P500.00 or less
More than P500.00P100.00
P300.00
Still wines containing 14% of alcohol by
volume or lessPer litre of volume capacity P12.00
Still wines containing more than 14% but not
more than 25% of alcohol by volume"   " P24.00
Table III.5 (cont'd)
                                                     
8 Section 109 of the Tax Reform Act of 1997 (RA 8424).WT/TPR/S/59 Trade Policy Review
Page 42
Kind and subject of tax NIRC of 1997 (RA 8424,
effective 1.1.98)Tax base Tax rate
Fortified wines containing more than 25% of
alcohol by volumePer proof litre Taxed as
distilled spirits
Fermented liquor Sec. 143 Per litre of volume capacity
On beer, lager beer, pale, porter and otherfermented liquors, except tuba, basi, tapuy and
similar domestic fermented liquorsIf net retail price is:
Less than P14.50P14.50 up to P22.00
More than P22.00P6.15
P9.15
P12.15
If brewed and sold at micro-breweries or small
establishments such as pubs and restaurantsPer litre of volume capacity P12.15
TOBACCO PRODUCTSb
Tobacco products (other than cigarettes, cigars
and chewing tobaccoSec 144 Per kg. P0.75
Tobacco specially prepared for chewing so as
to be unsuitable for use in any other mannerPer kg. P0.60
Cigars and cigarettes Sec. 145
Cigars Per cigar P1.00
Cigarettes packed by hand Per pack P0.40
Cigarettes packed by machine Per pack
If net retail price/pack is:
Above P10.00Exceeds P6.50 but not P10.00
P5.00 but not P6.50
Below P5.00P12.00
P8.00
P5.00
P1.00
TOBACCO INSPECTION FEE Sec. 146
Cigars Per thousand or fraction thereof P0.50
Cigarettes Per thousand or fraction thereof P0.10
Leaf tobacco Per kg. or fraction thereof P0.02
Scrap and other manufactured tobacco Per kg. or fraction thereof P0.03
MANUFACTURED OILS AND OTHER
FUELSSec. 148
Lubricating oils and greases, including but not
limited to, basestock for lube oils and greases
and additivesPer litre and kg., respectively P4.50
Processed gas Per litre of volume capacity P0.05
Waxes and petrolatum Per kg. P3.50
Denatured alcohol to be used for motive power Per litre of volume capacity P0.05
Naptha, regular gasoline and other similar
products of distillationPer litre of volume capacity P4.80
Napha, when used as a raw material in the
production of petrochemical products or asreplacement fuel for natural-gas-fired-
combined-cycle power plant in lieu of locally
extracted natural gas during the non-availability thereof, subject to the rules and
regulations to be promulgated by the Secretary
of Energy, in consultation with the Secretary of
FinancePer litre of volume capacity P0.00
Leaded premium gasoline Per litre of volume capacity P5.35
Unleaded premium gasoline Per litre of volume capacity P4.35
Aviation turbo jet fuel Per litre of volume capacity P3.67
Kerosene Per litre of volume capacity P0.60
Table III.5 (cont'd)The Philippines WT/TPR/S/59
Page 43
Kind and subject of tax NIRC of 1997 (RA 8424,
effective 1.1.98)Tax base Tax rate
Diesel fuel oil, and on similar fuel oils having
more or less the same generating powerPer litre of volume capacity P1.63
Liquefied petroleum gas Per litre P0.00
Asphalts Per kg. P0.56
Bunker fuel oil, and on similar fuels having
more or less the same generating powerPer litre of volume capacity P0.30
AUTOMOBILES Sec. 149 Manufacturer's or importer's selling
price, net of excise tax and VAT
Engine displacement (in cc):
Gasoline: Diesel:
Up to 1,600 Up to 1,800 15%
1,601 to 2,000 1,801 to 2,300 35%
2,001 to 2,700 2,301 to 3,000 50%
2,701 or over 3,001 or over 100%
NON-ESSENTIAL GOODS Sec. 150(a)
Jewellery, whether real or imitation, pearls,precious and semi-precious stones and
imitations thereof, goods made of, orornamented, mounted or fitted with precious
metals or imitations thereof or ivory (not
including surgical and dental instruments,silver-plated wares, frames or mountings for
spectacles or eyeglasses, and dental gold or
gold alloys and other precious metals (used infilling, mounting or fitting of teeth));  opera
glasses and lorgnettesWholesale price of the value of
importation used by the BOC in
determining tariff and customs
duties, net of excise tax and VAT20%
Perfumes and toilet waters 20%
Yachts and other vessels intended for pleasure
or sports20%
MINERAL PRODUCTS Sec. 151
Coal and coke Per tonne P10.00
Non-metallic minerals, quarry resources and
locally extracted natural gas and liquified
natural gasActual market value of the annual
gross output at the time of removal2%
Metallic minerals 1%
Copper and other metallic minerals "   " 1.5% until
1.9.99;  2%
thereafter
Gold and chromite "   " 2%
Indigenous petroleum Fair international market price 3%
a The rates of excise tax on all alcohol products will be increased by 12% on 1 January 2000.b The rates of excise tax on cigars and cigarettes will be increased by 12% on 1 January 2000.
Source : Information provided by the Philippine authorities.
(vii) Concessional entry
39. Section 105 of the Tariff and Customs Code, as amended, provides for conditionally free
importation of various articles including articles used exclusively for exhibition, donations to relief
organizations; aquatic products caught by Philippine-registered fishing vessels;  articles for official
use by foreign embassies and other agencies of foreign governments;  equipment for use in the
salvage of vessels or aircraft which is not available locally;  and educational books and publications.
Importation of goods for the purpose of repair or reconditioning, to be re-exported upon completion,WT/TPR/S/59 Trade Policy Review
Page 44
are exempted from duties.  Importation into special economic zones (section (3)(vii) below) is duty
free.
40. Tariff exemptions may be granted through legislation;  the process, as in the case of other
modifications to tariffs, begins at the Trade and Related Matters (TRM) Technical Committee, where
deliberation and consideration of the proposal takes place.  If approved, it is transmitted first to the
TRM-NEDA Cabinet Committee and subsequently to the President for approval.  The proposal is thensubmitted to the appropriate Committee of Congress which conducts a series of deliberations,
consultations and public hearings.  After Congress' approval, the bill is transmitted to the President for
signature.
41. Zero duty may be granted through legislation or presidential executive issuance.  In case of
legislation, consultations and public hearings in congressional committees precede approval byCongress and Presidential signature.  Alternativ ely, under Section 401 of the Tariff and Customs
Code, as amended, the President is authorized by Congress to increase, reduce or remove import
duties upon recommendation of the NEDA.  The authorities noted that in this case the Tariff
Commission holds public hearings before submitting findings and recommendations to the NEDA
Tariff and Related Matters (TRM) Technical Committee, which in turn submits its recommendationsto the TRM Cabinet Committee for approval and subsequent transmission to the NEDA Board for
confirmation.  A draft EO is then prepared for approval and signature by the President.
42. The duty drawback and tax credit scheme, under Section 106 of the Tariff and Customs Code,
allows direct exporters and some indirect exporters to obtain drawbacks on duties and taxes paid on
intermediate goods.   Duty refunds could be less than 100% when tax credits are claimed for imported
materials that were not actually used in the production of exported materials (disallowance), or when
the applicant fails to comply with the one-year grace period of exportation after the importation ofmaterials used for production or manufacture (prescription).  No information was available on the
total amount of tax credit and duty drawback granted.
(viii) Import prohibitions, quantitative restrictions and licensing
(a) Import prohibitions, quotas, and other quantitative restrictions
43. The authorities noted that the Import Liberalization Program has eliminated most non-tariff
measures other than those maintained for reasons of health, safety, and national security.  Since the
previous Trade Policy Review in 1993, various rest rictions have been removed:  CB Circular 92 of
October 1995 lifted restrictions on importation of new motor vehicles and some used trucks and
buses;  the Agricultural Tariffication Act (RA 8178) of March 1996, superseded by RA 8479 of
February 1998, lifted quantitative restrictions on sensitive agricultural products, except rice; andRA 8180 of March 1996, superseded by RA 8479 of February 1998, liberalized the importation (and
exportation) of petroleum products.  To operationalize RA 8178 (the Agricultural Tariffication Act),
BSP Circular 109 of May 1996 eliminated 78 agricultural products from the remaining list of
regulated or prohibited import goods;   BSP Circular 112 waived prior clearance requirements for the
importation and exportation of 17 oil and petroleum products.
44. The only quantitative import restrictions maintained by the Philippines concern rice;  import
licensing requirements on coal and coal derivatives appear to have been eliminated.  Rice is imported
solely by the National Food Authority (section (4)(iii) below).  The volume of rice imported in the
Philippines has generally been increasing since the previous Trade Policy Review (Table III.6).The Philippines WT/TPR/S/59
Page 45
Table III.6
Rice importation into the Philippines, 1993-98
Calendar years
Year Volume (tonnes)
1993 209,994
1994 ..
1995 252,853
1996 906,044
1997 730,711
1998 2,125,662
.. Not available.
Source: Data provided by the Philippine authorities.
(b) Import licensing
45. Imports into the Philippines are free unless otherwise subject to the requirements of prior
approval by appropriate government agencies.  Freely importable products require no prior approval
upon importation.  Imports not freely importable are classified as regulated (Table III.7) or prohibited
(Table III.8);  the importation of regulated or prohibited items requires a permit from the appropriate
government agency.
Table III.7
Regulated importations
Products covered Purpose of the regulation
1. Dangerous drugs To protect human health
2. Rice To ensure food security
3. Cyanide, cyanide compounds To protect the environment and to fulfil obligations under
international treaties
4. Chlorofluorocarbons To protect the environment and to fulfil obligations under
international treaties
5. Penicillin and its derivatives To safeguard public health
6. Mercury and mercury compounds To safeguard public health
7. Colour reproduction machines To ensure national security
8. Various chemicals for manufacture of explosives To ensure national security
9. Firearms, ammunition, and parts To ensure national security
10. Pesticides including agricultural chemicals To protect human and plant health
11. Motor vehicles, used;  parts and components To ensure human safety
12. Truck and automobile tyres and tubes, used, of all sizes To ensure human safety
13. All commodities originating from socialist and other 
centrally planned economy countriesTo monitor and enhance trade
14. Warships of all kinds To ensure national security
16. Coins, banknotes and gold To ensure national security
17. Radioactive materials To ensure national security
Source: Data provided by the Philippine authorities.WT/TPR/S/59 Trade Policy Review
Page 46
Table III.8
Prohibited importations
1. Dynamite, gunpowder, ammunition and other explosives, firearms and parts thereof, except when authorized by law.
2. Written or painted articles in any form containing any matter advocating or inciting treason, or rebellion, insurrection, sed ition or
subversion against the Government of the Philippines, or forcible resistance to any law of the Philippines, or containing any t hreat
to take the life of, or inflict bodily harm upon any person in the Philippines.
3. Written or painted articles, negative or cinematographic fi lm, photographs, engravings, lithographs, objects, paintings, draw ings or
other representation of an obscene or immoral character.
4. Articles, instruments, drugs and substance designed, intended or adapted for producing unlawful abortion, or any printed matt er
which advertises or describes or gives directly or indirectly information where, how or by whom unlawful abortion is produced.
5. Roulette wheels, gambling outfits, loaded dice, marked cards, machines apparatus or mechanical devices used in gambling or th e
distribution of money, cigars, cigarettes or other articles when such distribution is dependent on change including jackpot and
pinball machines or similar contrivances, or parts thereof.
6. Lottery and sweepstake tickets except those authorized by the Philippine Government, advertisements thereof, and lists of
drawings therein.
7. Any article manufactured in whole or part of gold, silver or other precious metals or alloys thereof, the stamps, brands or m arks
which do not indicate the actual fineness of quality of said metals or alloys.
8. Any adulterated or misbranded articles of food or any adulterated or misbranded drug in violation of the provisions of the "F ood
and Drugs Act".
9. Marijuana, opium, poppies, coca leaves, heroin or any other narcotics or synthetic drugs which are or may hereafter be declar ed
habit forming by the President of the Philippines, or any compound, manufactured salt, derivative, or preparations thereof, exc ept
when imported by the Government of the Philippines or any person duly authorized by the Dangerous Drugs Board for medicalpurposes only.
10. Opium pipes and parts thereof, of whatever material.
11. All other articles and parts thereof, the importation of which is prohibited by law or rules and regulations issued by the c ompetent
authority
12. Used clothing and rags.
13. Toy guns.
Source: Information provided by the Philippine authorities.
46. Import licensing requirements and eligibility have remained generally unchanged since the
previous Trade Policy Review, except for modifications reflecting the conclusion of the Uruguay
Round, inter alia , the "tariffication" of restrictions on some agricultural products.9  Import licensing is
intended mainly to safeguard public health, safety, security and welfare, and to meet internationaltreaty obligations related to the regulation of certain products as well as medical, scientific and other
needs.  Licences are not transferable.
(ix) Anti-dumping and countervailing duty actions
47. The Anti-Dumping Act of 1994 (RA 7843) amended the provisions on anti-dumping in
Section 301 of the Tariff and Customs Code.
10  Section 301, as amended, provides that whenever the
Secretary of Finance or the Secretary of Trade and Industry receives an anti-dumping petition or has
reason to believe that a product is being imported into the Philippines at a price less than its normalvalue, the Secretary must determine within twenty days from receipt of such petition or information a
prima facie case of dumping.  The Bureau of Import Services (BIS) of the DTI conducts a preliminary
determination to decide on the imposition of a provisional measure;  a provisional bond, if any, is
imposed no earlier than 60 days from the date of the initiation of the investigation.  The case is then
forwarded to the Tariff Commission for formal in vestigation and, in the case of a preliminary
affirmative finding, the Commissioner of Customs is instructed to apply the provisional measure in
                                                     
9 See GATT (1993) for details on general import licensing procedures.
10 WTO document G/ADP/N/1/PHL/1, 6 November 1995.The Philippines WT/TPR/S/59
Page 47
the form of a cash bond equal to the provisionally estimated margin of dumping in addition to the
regular duty.
48. Investigations by the Tariff Commission include a public hearing, and any aggrieved party
has the right to appeal against the amount of the dumping duty to the Court of Tax Appeals.  The
Tariff Commission, in establishing the normal value of the product, uses either the domestic selling
price prevailing in the country of export or origin or an alternative value based on the export price inthird country markets or a constructed value.  The Tariff Commission must submit its findings, within
60 days from the termination of its investigation, to the Special Committee on Anti-Dumping, and the
Committee must take a decision within 15 days on whether to instruct the Commissioner of Customs
to impose a dumping duty.  Dumping decisions are effective for an extendable period of five years.
49. The anti-dumping cases investigated by the Tariff Commission between 1994 and 1998 are
shown in Table III.9.  Since 1994, five cases (terry towelling products imported from China and Hong
Kong, China, newsprint from Finland,  magnesite-based refractory bricks from Germany, galvanized
malleable coated fittings and zinc coated fittings from China, and sodium tripolyphospate from China)
resulted in the imposition of definitive duties.  The number of anti-dumping cases appear to have been
reduced under the new anti-dumping law (RA 7843).
Table III.9
Inventory of anti-dumping cases investigated by the Tariff Commission and decided by the Secretary of Finance,
January 1994-D ecember 98
Action taken
Country Product Date of initiationEffective date of
provisional measurea
Tariff CommissionDepartment of
Finance
Old law (Section 301 of the Tariff and Customs Code)
Singapore
and ChinaHubless cast
iron, soil pipes
and fittings10 March 1994 11 July 1994 Report and
recommendationsubmitted to DOF on
15 November 1995Case dismissed on
8 April 1996
China Calcium carbide 12 May 1994 6 December 1994 Report and
recommendationsubmitted to DOF on
14 June 1996Case dismissed on
26 July 1997
Indonesia Gadjah tunggal
tyres20 May 1994 2 December 1994 Report and
recommendationsubmitted to DOF on
16 January 1996Case dismissed on
8 February 1996
Indonesia Monosodium
glutamate24 August 1994 26 October 1994 Report and
recommendationsubmitted to DOF on
3 July 1996Pending resolution
by the DOF
China andHong Kong,
ChinaTerry towelling
products26 September 1994 4 April 1995 Report and
recommendationsubmitted to DOF on
9 February 1996Dumping margin
(US$3.85-6.02/kg.)imposed on
30 August 1996
Canada Hubless cast
iron pipes and
fittings27 October 1994 1 September 1995 Resolution by the
parties for amicablesettlement submitted
to DOF on
16 July 1996.
Table III.9 (cont'd)WT/TPR/S/59 Trade Policy Review
Page 48
Action taken
Country Product Date of initiationEffective date of
provisional measurea
Tariff CommissionDepartment of
Finance
Chinese
TaipeiCarbon black 7 December 1994 12 September 1995 Report and
recommendation
submitted to DOF on
24 October 1996Case dismissed on
25 June 1998
Finland Newsprint,
offgrade4 March 1993 8 March 1994 Report and
recommendation
submitted to DOF on
21 July 1995Dumping margin
(US$156.92/tonne)
imposed on
26 December 1996
China Galvanized
malleablecoated fittings
and zinc coated
fittings6 March 1998 Not applicable (Sunset
Review)Report and
recommendationsubmitted to the
Special Committee on
Anti-Dumping on
1 July 1998Dumping margin
(US$1.36/kg. toUS$0.70/kg.)
imposed on
12 September 1998
New law (RA 7843)
Germany Magnesite-based
refractory bricks4 December 1996 12 February 1997 Report and
recommendation
submitted to the
Special Committee onAnti-Dumping on
3 June 1997Dumping margin
(DM 257/tonne)
imposed on
9 July 1998
Republic ofKoreaElectrolytic
tinplates17 April 1997 9 July 1997 Report and
recommendation forsubmission to the
Special Committee on
Anti-DumpingPending resolution
by the Special
Committee
China Sodium
tripolyphosphates
(STPP)13 June 1997 1 October 1997 Investigation still in
progressDumping margin
(US$31-42/tonne)
imposed on
17 December 1998
Thailand PVC floor
coverings26 July 1995 13 December 1995 Report and
recommendation
submitted to the
Special Committee onAnti-Dumping on
7 September 1998Pending resolution
by the Special
Committee
Russia,
ChineseTaipei and
UkraineCold rolled coils
and sheets16 September 1998 22 December 1998 Evaluation of the case
and preparation ofreport and
recommendation is in
progress
Russia Hot rolled steel
coils and sheets27 February 1999 4 June 1999 Awaiting transmittal
of Bureau of Import
Services (BIS) for
formal investigation
Russia Billets 28 May 1999 Still with BIS
a Cash Bond is required as a provisional measure.
Source: Information provided by the Philippine authorities;  and WTO notifications up to December 1998.
50. Since 1985, there have been no changes in Section 302 of the Tariffs and Customs Code of
the Philippines, which embodies the countervailing duty law of the Philippines.11  The Philippines has
not imposed countervailing duty on any product  since the previous Trade Policy Review.
                                                     
11WTO document G/SCM/N/1/Phl/1, 3 November 1995.The Philippines WT/TPR/S/59
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51. The Philippines' anti-dumping and countervailing legislation has been discussed and
questions have been raised in the WTO Committees on Anti-Dumping Practices and on Subsidies and
Countervailing Measures.12  The Countervailing Act of 1999, scheduled for signing by the President
as of June 1999, seeks to strengthen the mechanism for the imposition of countervailing duty and the
alignment of the existing domestic legislation with the WTO Agreement on Subsidies and
Countervailing Measures.  The approval of the anti-dumping bill by both Houses of Congress wouldamend RA 7843 and, according to the authoritie s, align the anti-dumping law with the WTO
Agreement on Anti-Dumping Practices.
(x) Safeguards
52. Following the Philippines legal principle that inte rnational treaties form part of the law of the
land, the WTO Agreement on Safeguards provides the basis for safeguard actions.   Currently, there
exists no specific safeguard legislation in the Philippines.
13  However, the Government is in the
process of drafting a bill to introduce such legislation.
53. The Philippines did not invoke the WTO special safeguard provisions for agricultural
products during the period 1995-97 (the most recent for which information was available).14  The
Philippines notified to the Textile Monitoring Body that it wished to retain the right to use the specifictransitional safeguard mechanisms for textiles, as stipulated in Article 6 of the Agreement on Textiles
and Clothing.
15
54. The Common Effective Preferential Tariff Scheme of ASEAN contains safeguard provisions.
In 1993, the Philippines lifted a safeguard measure against Thailand on refractory bricks;  no CEPT
safeguard provisions have been enacted by the Philippines since then.
(xi) Balance-of-payments measures
55. Balance-of-payments restrictions on coal and coal products in force in early 1999 appear to
have been eliminated;  their liberalization had been foreshadowed for end 1997.16  The Philippines
had undertaken to disinvoke Article XVIII:B subject to the liberalization of remaining balance-of-
payments restrictions by 31 December 1997.  The WTO Committee on Balance-of-Payments
Restrictions agreed that, if the Philippines fulfilled the time-frames envisaged for the disinvocation of
Article XVIII:B, there would be no need for a further full consultation.17  Restrictions on agricultural
products were lifted in March 1996.18
(xii) Government procurement
56. Government procurement in the Philippines is highly decentralized;  the agency concerned
advertises its procurement activity, pre-qualifies all interested entities and awards the contract
following the procedures prescribed under the appropriate implementing rules and regulations (IRRs),and final contract approval rests on the respective head of agency.  In  November 1998, however, a
Memorandum from the President was circulated requiri ng the submission of all government contracts
                                                     
12 WTO document G/ADP/Q1/PHL/1 (G/SCM/Q1/Phl/1), 23 July 1996.
13 WTO document G/SG/N/1/PHL/1, 18 October 1995.
14 WTO documents G/AG/N/PHL/5, 9, and 18, 11 November 1996, 15 September 1997, and
9 September 1998.
15 WTO document G/TMB/N/28, 6 March 1995.
16 WTO document WT/BOP/R/9, 24 November 1995.
17 WTO document WT/BOP/R/10, 4 December 1995.
18 WTO document WT/BOP/R/19, 5 November 1996.WT/TPR/S/59 Trade Policy Review
Page 50
involving the amount of P50 million and above for review by the Office of the President.  For
procurement of common-use supplies, materials and equipment, the Procurement Service, supervised
by an inter-agency Procurement Policy Board, implements and operates a central procurement system
for the Government, nationwide, as one of the alternative modes in procuring such goods, as
stipulated in the Implementing Rules and Regulations of EO 302.  The advertisement is conducted
through a Pre-qualification, Bids and Award Committee (PBAC) or a Pre-qualification, Evaluationand Award Committee (PEAC), in the case of consulting services procurement.
57. The authorities noted that it is difficult to estimate the value of government procurement
because of its decentralized nature.  However, the size of the government sector (about 10% of GDP),
and the still substantial involvement in the economy of enterprises fully or partially owned by the
Government, suggest that public expenditure on goods and services is substantial, and thus that publicpurchasing practices, technical specifications, and choice of suppliers are likely to be of significant
economic importance.
58. The Philippines is not a party to the WTO Agreement on Government Procurement (GPA).
The Philippines is a signatory to the ASEAN Preferential Trading Arrangements (PTA), which
provide for a 2.5% preferential margin (not to exceed US$40,000 worth of preferences per tender) inrespect of international tenders for government procurement of goods and auxiliary services from
untied loans submitted by ASEAN countries vis-à-vis non-ASEAN countries.
19  The ODA Act
(RA 8182) of 1996, as amended by RA 8555 of 1997, includes a provision on presidential waiver on
the granting of preference or imposition of restrictions in the procurement of goods and services (civil
works deemed included) for procurement financed partly or wholly from foreign official development
assistance.
59. The policy of the Government has been to procure goods and services from local suppliers,
except under certain specified circumstances.  Suppliers and manufacturers of goods procured by the
Government must be at least 60% owned by Filipinos, while civil works contractors of government-
financed projects must be at least 75% owned by Filipinos.  In several sectors, the Government
favours Philippine firms for government contracts.20  Commonwealth Act (CA) 138 (the Flag Law) of
1936 accords preferential margins in favour of domestic bidders, and Letter of Instruction (LOI) 501of 1977 mandate the purchase of locally manufactured products.    Under the Flag Law, "only
unmanufactured articles, materials or supplies of the growth or production of the Philippines or of the
United States and only such manufactured articles, materials and supplies as have been manufactured
in said countries substantially from articles, materials and supplies of the growth, production, or
manufacture of the Philippines or the United States shall be purchased for public use".
(xiii) Countertrade
60. The Philippine International Trade Corporation (PITC) engages in countertrade deals.
EO 120 of August 1993 encourages the inclusion of counter-purchase or offset obligations in
government procurement projects worth at least US$1 million.  Accordingly, various countertrade
projects have been undertaken.  Successful countertrade deals since 1993 include, inter alia , the
countertrade portions of US$70 million on the sale of armoured personnel carriers and ancillary
equipment to the Philippine army and of US$30 million on the sale of Italian jet trainer planes to the
air force.
                                                     
19 APEC (1998), p. 53.
20 APEC Secretariat [Online].  Available at:  http//www.apecsec.org.sg/govtproc/gp-phl.html.The Philippines WT/TPR/S/59
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(3) MEASURES DIRECTLY AFFECTING EXPORTS
(i) Registration and documentation
61. Upon shipment of goods out of the Philippines, all exporters must file export declarations
providing the full particulars of a shipment, either to the One Stop Export Documentation Center
(OSEDC) or the Bureau of Customs (BOC).  The Ba ngko Sentral ng Pilipinas (BSP) liberalized all
regulation on payments for exports in 1996.  As a result of the liberalization, exports can be paid in
any manner without BSP approval, and foreign exchange remittances for exports is no longermandated;  the export declaration does not need prior approval from the BSP nor from any of its
Authorized Agent Banks.  On 30 April 1996, the authority to issue the export declaration was
transferred from the BSP to the DTI, and the authority delegated to commercial banks and offshore
banking units to issue and register export declarations was withdrawn.
(ii) Export restrictions and licensing
62. Exports are allowed without restriction except for certain products classified as "regulated"
for reasons of national interest and international agreements, or "prohibited" for environmental
reasons or to conserve depletable raw materials (Table III.10).  The regulated and prohibited exportproducts require export clearance from appropriate government agencies prior to filing an export
declaration and shipment.  Exports classified as prohibited may not be for exported except for
scientific or testing purposes.
63. Since the previous Trade Policy Review in 1993, the following items have been deleted from
the list of regulated or prohibited exports:  oil and petroleum products, aircraft, and cement andclinker.  Clearance requirements for gold exports is confined to gold from small-scale mining and
panned gold.
64. Since 1993, exports to China, South Africa and Vi et Nam have been liberalized.  At the time
of the previous review in 1993, the Philippines had imposed a trade embargo on Yugoslavia in order
to implement United Nations Resolution No. 757.
Table III.10
Products requiring prior export approval/permit from relevant government agenciesa
Office/agency Regulated Prohibitedb
Garments and Textile Export Board
(GTEB)1. Garments and textiles, carpets,
polyester staple fibre, filament yarns,fabrics, upholstered furniture and other
natural and synthetic fibres and all
products made up in whole or part ofthese fibres for export to all countries
with or without quota
Board of Investments (BOI) 2. Copper concentrates
Bureau of Plant Industry (BPI) 3. All plants, planting materials and plant
products capable of harbouring pests,
insect specimens, live and dead
Bureau of Animal Industry (BAI) 4. Animals, animal pr oducts and animal
effects
Sugar Regulatory Administration (SRA) 5. Sugar and molasses
International Coffee OrganizationCertifying Agency (ICO-CA)/Departmentof Trade and Industry (DTI)6. Coffee
Table III.10 (cont'd)WT/TPR/S/59 Trade Policy Review
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Office/agency Regulated Prohibitedb
Fibre Industry Development Authority
(FIDA)7. Natural fibres:  abaca, ramie, salago,
maguey, sisal, kenaf, coir, buntal, cabo
negro, cotton kapok, sabahon, piña,banana fibre, silk, loofah, pacol, musa
species, RSA (secondary abaca fibre),
canton, raffia, tikog and cocoon1. Abaca and ramie seeds, seedlings,
suckers and root stocks
2. Buri seeds and seedlings, buri fibres
National Museum (NM) 8. Antiques, cultural artifacts and
historical relics
Forest Management Bureau (FMB),Department of Environment of NaturalResources (DENR)9. Logs, poles and piles including log
core and flitches/railroad ties3. Bakawan (Mangrove)
10. Lumber
Bureau of Fisheries and Equatic Resources
(BFAR)4. Bangus fry
5. Mother Bangus (sabalo)
6. Prawn-spawner and fry
11. Shells: 7. Shells:
Undersized raw shells of Trocas, Gold
lip, Black lip, Turbo mamoratus andKapisTrumpet shells (Triton);  helmet shells
(Cassis);  live specimens, raw shells,meat and by-products of giant clams
(Tridacna gigas, T. derasa,
T. squamosa, T. maxima, T. crocea,hippopus porcellanus, H. hippopus)
12. Wildlife species: 8. Wildlife species:
a.1. Wild, marine species, e.g. water snakes
(cerberus rynhops);  seasnakes;  live
skin or products from the skin or meata. Wild marine species e.g. precious,
semi-precious and all ordinary corals,
raw and by-products
Protected Areas and Wildlife Bureau
(PAWB)a.2. Frogs;  live, skin or products from the
skin or meat
b. Wild terrestrial species, to include live,
stuffed, preserved, by-products andderivatives, e.g.:b. Wild terrestrial specis whether live,
stuffed or by-products, e.g.:
b.1. Mammals (i.e. Philippine monkeys,
cloud-rats, ant eaters, Philippine tarsierand skunk)b.1. Mammals (i.e. tamaraw, tarsier, deers,
sea cow, fruit bats)
b.2. Aves (i.e. bleeding heart pigeons, java
sparrows, tree sparrow, parrot finches,Philippine white-eye, Philippine
starlings, hanging parakeets, brush
cuckoo, plaintive cuckoo, amethystfruit dove, blue-tailed bee-eater,
crested mynah, pink-necked green
pigeon, painted quail, button quails,bended rail, plain swamphen, green-
winged dove, slender-billed cuckoo,
white-eared brown dove, kingfishers,black-naped oriole, black-naped
monarch, red amadavat guiaberol)b.2. Aves (i.e. eagles, redvent cockatoo,
Palawan peacock pheasant, Palawanmynah, horn bills, nicobar pigeon,
Mindoro imperial pigeon, Peregrine
falcon, spotted green shank, kotch'spitta, giant scops own and Eastern
sarus crane
b.3. Reptiles (i.e. gecko, monitor and sail-
finned lizards, land turtles)b.3. Reptiles (e.g. crocodiles, marine
turtles, pythons)
Table III.10 (cont'd)The Philippines WT/TPR/S/59
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Office/agency Regulated Prohibitedb
b.4. Flora (i.e. tree ferns, cycas plant, all
species of orchids, aloe plant, sanders
alocasia, striped alocasia, volavol,bungang ipod, cactus, Philippine
camia/garland, Himalayan yew, Agar
wood, eagle wood, big-leaf mahoganyand red-sandersb.4. Flora (i.e. lady's slipper orchid, vanda
sanderiana, pitcher plant, dendrobicum
cruenthum
b.5. All species of butterflies
b.6. Exotic wildlife species found under
Appendix II of CITES such as parrots,
macaw, pigeons and conuresb.5. Exotic wildlife species found under
Appendix I of the CITES such as
buffon macaw, scarlet macaw
Firearms and Explosives Office, PNP,
DILG13. Firearms, ammunition and explosives
Bangko Sentral ng Philipinas (BSP) 14. Gold from small-scale mining or
panned gold
15. Philippine notes, coins, cheques,
money orders and other bills ofexchange drawn in pesos against banks
operating in the Philippines greater
than P10,000
National Food Authority (NFA) 16. Grain and grain by-products
Philippine Coconut Authority (PCA) 9. Matured coconuts and coconut
seedlings
10. Raw materials for cottage industries:
Department of Environment and NaturalResources (DENR)- bamboo, monkey pod (acacia), 
rattan (including poles)
Fiber Industry Development Authority
(FIDA)- buri fibres, raffia fibres
Bureau of Fisheries and Aquatic Resources
(BFAR)- Semi-finished or semi-processed 
capiz shells
(DENR) 11. Stalactites and stalagmites
Movie and Television Review and
Classification Board (MTRCB)17. Motion pictures/television films and
related publicity materials
Philippine Nuclear Research Institute(PNRI)18. Radioactive materials
Philippine International Trading
Corporation (PITC)19. All exports to the following socialist
and centrally planned economy
countries (Albania, Lao People'sDemocratic Republic, Ethiopia,
Mozambique, Angola, Mongolia ,
Democratic People's Republic ofKorea, Nicaragua, Libya, Myanmar)
a This list may be amended from time to time based on decisions taken by the inter-agency committee created under Executive 
Order 1016 dated 25 March 1985)
b These products are prohibited for export under existing policies of the government office concerned, except for scientific or 
testing purposes.
Source: Information provided by  the Philippine authorities.
65. Textiles and garments, and sugar subject to bilateral restraints require export permits.  Under
the WTO Agreement on Textiles and Clothing, the Philippines maintains bilateral quotas on exports
to Canada, the European Union and the United States.  Under the Agreement, those quotas are to be
removed by 1 January 2005 by integrating textiles and garments fully into GATT rules
(Chapter IV(4)(iii)).  The Philippines is also a member of the International Sugar Agreement and theWT/TPR/S/59 Trade Policy Review
Page 54
International Coffee Agreement.  It has a quota covering the export of sugar to the United States
(Chapter IV(2)(iii)(c));  the export quota for sugar is monitored by the Sugar Regulatory Authority.
66. Payments for exports may be made under any of the following modes without prior BSP
approval:  letters of credit (L/C), documents against payment, cash against document, documents
against acceptance, open account, intercompany open account offset arrangement, exports on
consignment, and export advance.  Buyer's cheques require clearance with the BSP before shipment.
(iii) Export taxes:  charges and levies
67. Export taxes are levied only on logs.  The export of logs is generally banned;  however, when
exports of logs are permitted they are subject to an export tariff of 20% of their f.o.b. value, which is
levied for the purpose of conserving the country's natural resources.  Exporters pay the documentary
stamps for the processing of the export declar ation, and inspection and processing fees for the
issuance of commodity clearances, if required.
68. In addition to export duties, a premium duty has occasionally been levied on exports of
certain wood, mineral, plant, and vegetable products, depending on the prevailing prices of the export
products in the world market.  Since the previous Trade Policy Review, there have been no minimum
export price regulations.
(iv) Export subsidies, and duty and tax concessions
(a) Financial assistance to exports
69. The authorities indicated that no subsidy has been granted to any export product since 1993.
70. The Export Development Act of 1994 provides export incentives to accredited exporters,
including the exemption from the advanced payment of duties for importations under letters of credit;
the duty-free importation of machinery and equipment, and tax credit for use of local raw materials
(effective until December 1998);  tax credit for the importation of raw materials and inputs that arenot readily available, for the production of export products (effective until 1999);  and tax credit for
incremental export revenue (not yet implemented).
(b) Duty and tax concessions
71. The authorities noted that there had been no changes since 1993 in the three types of
temporary admission schemes available to exporting manufacturers, i.e. bonded manufacturingwarehouses (BMW), customs common bonded warehouses, (CCBW), and a duty exemption scheme
(DES).  The BMW scheme exempts exporter-manufacturers from payment of duties and taxes on their
imports;  requirements for the establishment of a BMW include that the company must export at least
70% of its production.  The CCBW is a modification of the BMW that allows small and medium-
scale exporters who cannot afford to operate individual BMWs to import their intermediate inputs taxand duty free through the CCBW facility to which they are accredited.  The DES allows exporters
located in the economic zones duty-free importation of raw materials that are to be processed into
finished products for export.
21
                                                     
21 See GATT (1993), Vol. 1, pp. 107-111 for further details on duty and tax concession schemes
available to exporters.The Philippines WT/TPR/S/59
Page 55
72. In 1998, the Manila Economic and Cultural Office (MECO) and the Taiwan Economic and
Cultural Office (TECO) signed a Memorandum of Agreement concerning temporary duty-free
importations between the Philippines and Chinese Taipei.
73. Since the previous Review in 1993, there have been no changes in the duty drawbacks and tax
credit scheme under Section 106 of the Tariff and Customs Code of the Philippines.  The scheme
allows direct and some indirect exporters to obtain drawbacks on duties and taxes paid onintermediate goods.
(v) Export finance, insurance and guarantees
74. Government financing institutions and commercial banks are the primary sources of financing
assistance to exporters.  Exporters may borrow in an y currency from banks, which turn to the BSP for
rediscounting.  Most banks have special lending windows for exporters on a short- or long-term basis.The Export Development Act provided for the setting up of an export-import bank which, however,
has not been established by the Government due to lack of funds.  The private sector in the meantime
set up the Export and Industry Bank in 1997 to service the financing needs of exporters.
75. The Trade and Investment Corporation (for merly Philguarantee), the Guarantee Fund for
Small and Medium Enterprises (GFSME), and th e Small Business Guarantee Corporation (SBGFC)
provide guarantees for exporters' loans.  In view of the financing difficulties brought about by the
Asian financial crisis of 1997, these institutions have expanded their services to exporters and SMEs
through loan restructuring and direct lending schemes.  The Trade & Investment Development
Corporation has also embarked on the first export credit insurance (ECI) programme in the
Philippines.   The ECI protects exporters against the risk of non-payment by a foreign buyer of an
export shipment on credit;  the insurance coverage is up to 85% of the amount of loss.  Any company
doing business in the Philippines whose exports contain at least 20% local value added (f.o.b.) iseligible for ECI.
(vi) Export promotion and marketing assistance
76. In order to strengthen and institutionalize export promotion measures and their supporting
policy framework, the Export Development Council  (EDC) was created by virtue of the Export
Development Act of 1994.  The role of the EDC includes overseeing the implementation of thePhilippine Export Development Plan (PEDP) and coordinating the formulation and implementation of
policy reforms to support the Plan, the periodic review and assessment of the country's export
performance and reasons for it, and mandating specific departments and agencies to attend to any
problems.  The EDC may recommend, to Congress, legislation that contributes to export
development, and impose sanctions on any party that impedes the efficient exportation of Philippinegoods.  The EDC meets on a monthly basis, and is chaired by the President every quarter.
77. The Center for International Trade Expositions and Missions (CITEM), a corporation
attached to the Department of Trade and Industry (DTI), is tasked to implement the country's export
promotion programmes.  CITEM promotes the Philippines as a source of products and services
through trade fairs, trade missions, and other export promotion programmes and activities within thecountry and abroad.  
78. The authorities indicated that their export promotion and marketing activities focus on
electronics, garments, processed food, motor vehicles and components, marine products, decorative
crafts, footwear and leather goods, furniture, fresh fruit, carageenan and seaweeds, and services
(information technology, construction, professional consultancy, educational services, biotechnology
services).WT/TPR/S/59 Trade Policy Review
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(vii) Export processing zones
79. In 1995, the Philippine Economic Zones Authority was established, replacing the Export
Processing Zones Authority, to operate and supervise special economic zones, which include the
export processing zones (section (4)(i)(c) below).
(4) MEASURES AFFECTING PRODUCTION AND TRADE
(i) Investment regulation and promotion
80. Since the previous Trade Policy Review in 1993, the scope of investment restrictions in the
Philippines has been considerably reduced to encourage foreign direct investment (FDI) in sectors
such as telecommunications, financial services, transport, energy, and motor vehicles (Chapter IV).
Simultaneously, the Government has continued to influence the size, location, composition, and
competitiveness of private investment in the Philippines through a variety of industrial policymeasures, including tax holidays, duty exemptions on imports of capital equipment, and simplified
customs procedures for foreign investors.
81. Although no estimates of annual tax revenue forgone are available, the implicit fiscal cost of
investment incentives is probably high. Intended to be comprehensive, the incentive system for
investment has also become complex and burdensome to administer as a result of the proliferation ofeligibility criteria, conditions and requirements.  The proliferation of FDI-related authorities may have
compounded these problems.
22  While reflecting a legitimate concern about the Philippines'
attractiveness as a location for investment, together with a desire to match incentives offered by
neighbouring countries, such support could have significant drawbacks:  it may potentially divert
investment from efficient uses, attract rent-seekin g companies that are already world-competitive or,
on the contrary, attract inefficient producers that need extra financial assistance.
82. In the case of the Philippines, reforms undertaken since the mid 1980s have been conducive
to a stable, predictable, and transparent business environment, and appear to have been important
elements in attracting foreign investors.  The Philippines' large potential consumer market (75 million
people) and the education and skills of its labour force are also considered a major factor attracting
FDI into the country.23
(a) Basic framework
83. The basic legal framework for the FDI regime has generally remained unchanged since 1993;
the Foreign Investment Act (FIA) of 1991 continues to provide the main rules and principles
regulating the establishment, operations, rights and benefits of companies with foreign participation
(the Act appears to have been amended to reflect the more recent liberalization of foreign
investment).24  The FIA amended and complemented the Omnibus Investment Code of 1987, which
regulated the entire investment framework, except fo r some financial services;  the Act also clarified
the kind of investment an investor may engage in .  Various statutes concerning special economic
zones stipulate incentives to enterprises located within the zones (see below).  The Export
Development Act (RA 7844) of 1994 provides incentives to exporters to encourage investments in the
export sector.
                                                     
22 World Bank (1997), Vol.II, p. 43.
23 World Bank (1997), Vol. I, p. 17.
24 See GATT (1993), Vol. I, p. 50, for details.The Philippines WT/TPR/S/59
Page 57
84. Foreign investors are entitled to the basic rights and guarantee of the Constitution, in
particular the right of free and unrestricted repatriation of capital and benefits for registered foreign
investments, and the guarantee against expropriation, except for public use or in the interest of
national welfare and defence upon payment of compensation.  Investors are allowed to repatriate the
proceeds of investment liquidation and earnings in the original currency, and at the prevailing
exchange rate. Article XII of the Philippine Constitution provides that the State must providepreference to qualified Filipinos in the grant of rights, privileges and concessions covering the
national economy and patrimony;  the operation of public utilities has been reserved for citizens of the
Philippines, or corporations or associations at l east 60% of whose capital is owned by such citizens.
85. FDI generally does not require approval, except in certain sectors specified in the Foreign
Investment Negative List.  This list defines economic activities reserved for Philippine nationals
(List A), and foreign investment in activities and enterprises regulated by specific laws (List B).
Apart from the restrictions in the Negative List, all other activities are opened to 100% foreign
ownership.  Executive Order (EO) 11 of 1998 deleted private domestic construction contracts fromthe Negative List, thus allowing 100% foreign equity participation, and approved a new NegativeList (Table III.11).
86. Other changes that have affected the list concern the opening up of key infrastructural
services sectors such as telecommunications, water supply, and electricity to limited foreign
participation, and the increase in ownership limits in Philippine financial institutions, specifically
financing companies and investment houses, from 40% to 60% foreign ownership,  reflecting newcommitments made in the Second and Fifth Protocols to the GATS.
Table III.11
Foreign Investment Negative List
I. LIST A:  FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE CONSTITUTION AND SPECIFIC LAWS
A. No foreign equity allowed
1. Mass media except recording
2. Services involving the practice of licensed professions, such as:
(a) Engineering (k) Interior design
(b) Medicine and allied professions (l) Landscape architecture
(c) Accountancy (m) Law
(d) Architecture (n) Librarianship
(e) Criminology (o) Marine deck officers
(f) Chemistry (p) Marine engine officers
(g) Customs brokerage (q) Master plumbing
(h) Environmental planning (r) Sugar technology
(i) Forestry (s) Social work
(j) Geology (t) Teaching
3. Retail trade
4. Cooperatives
5. Private security agencies
6. Small-scale mining
7. Utilization of marine resources in archipelagic waters, territorial sea, and exclusive economic zone
8. Ownership, operation and management of cockpits
9. Manufacture, repair, stockpiling and/or distribution of nuclear weapons
10. Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons
Table III.11 (cont'd)WT/TPR/S/59 Trade Policy Review
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11. Manufacture of firecrackers and other pyrotechnic devices
B. Up to twenty-five per cent (25%) foreign equity allowed
12. Private recruitment, whether for local or overseas employment
13. Contracts for the construction and repair of locally funded public works except:
(a) Certain infrastructure/development projects
(b) Projects which are foreign funded or assisted and required to undergo international competitive bidding
C. Up to thirty per cent (30%) foreign equity allowed
14. Advertising
D. Up to forty per cent (40% foreign equity allowed
15. Exploration, development and utilization of natural resources
16. Ownership of lands
17. Operation and management of public utilities
18. Ownership/establishment and administration of educational institutions
19. Engaging in the rice and corn industry
20. Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or
municipal corporation
21. Contracts for the construction of defence-related structures
22. Project proponent and facility operator of a BOT project requiring a public utilities franchise
23. Operation of deep sea commercial fishing vessels
24. Adjustment companies
25. Ownership of condominiums
E. Up to sixty per cent (60%) foreign equity allowed
26. Financing companies regulated by the Securities and Exchange Commission (SEC)
27. Investment houses regulated by the SEC
II. LIST B:  FOREIGN OWNERSHIP LIMITED FOR REASONS OF SECURITY, DEFENCE, RISK TO HEALTH AND
MORALS AND PROTECTION OF SMALL AND MEDIUM-SCALE ENTERPRISES
Up to forty per cent (40%) foreign equity allowed
1. Manufacture, repair, storage, and/or distribution used in the manufacture thereof, requiring Philippine National Police (PNP)
clearance:
(a) Firearms (handguns to shotguns), parts of firearms and ammunition therefor, instruments or implements used or intended for 
use in the manufacture of firearms
(b) Gunpowder
(c) Dynamite
(d) Blasting supplies
(e) Ingredients used in making explosives
(f) Telescopic sights, sniperscope and other similar devices
2. Manufacture, repair, storage and/or distribution of products requiring Department of National Defense (DND) clearance:
(a) Guns and ammunition for warfare
(b) Military ordnance and parts thereof (e.g. torpedoes, mines, depthcharges, bombs, grenades, missiles)
(c) Gunnery, bombing and firecontrol systems and components
(d) Guided missiles/missile systems and components
(e) Tactical aircraft (fixed and rotary-winged), parts and components thereof
(f) Space vehicles and component systems
(g) Combat vessels (air, land and naval) and auxiliaries
(h) Weapons repair and maintenance equipment
(i) Military communications equipment
(j) Night vision equipment
Table III.11 (cont'd)The Philippines WT/TPR/S/59
Page 59
(k) Stimulated coherent radiation devices, components and accessories
(l) Armament training devices
(m) Others as may be determined by the Secretary of the DND
3. Manufacture and distribution of dangerous drugs
4. Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of risks they impose to public  health
and morals
5. Other forms of gambling, e.g. race-track operation
6. Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
7. Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct employees with paid-in equ ity
capital of less than the equivalent of US$100,000
Source : Information provided by the Philippine authorities.
87. All domestic and foreign investors applying for tax and other incentives available under the
Omnibus Investments Code of 1987 need to have th eir investment approved by and registered with
the Board of Investment (BOI).  Foreign investment in companies and partnerships must be registered
with the Securities and Exchange Commission (SEC), while sole proprietorships must register with
the Department of Trade and Industry.
88. RA 8179 of 1996 amended the FIA to allow,  inter alia , domestic market enterprises (i.e.,
those exporting less than 60% of their output) to immediately change their status to export-oriented
enterprises.  RA 8179 also deleted Negative List C, which reserved certain areas of business to
Philippine nationals, and lowered the minimum paid-in equity requirements for foreign owned
domestic market-oriented firms from US$500,000 to US$200,000.
89. Foreign investors have been encouraged to engage in build-operate-transfer (BOT) projects
under the BOT Law, as amended (Chapter IV(3)(iv), whereby the investors received concessions to
operate facilities built by them, with the requirement to transfer ownership to their Philippine partner
at the end of the concession.
(b) Incentives
90. For many years, the Government has sought to encourage investment in selected economic
activities and geographical areas.  To this aim, it offers to investors a comprehensive but complex
multi-layer package of tax and non-tax incentives in which the level of benefits may depend on the
fulfilment of the Government's objectives.  While in general the system does not discriminate againstforeign investors, the definition of export-oriented enterprises, in the case of BOI, introduces a slight
element of differentiation between Filipinos and foreigners, to the benefit of the former.
91. The basic system of incentives is defined in and regulated by the Omnibus Investment Code.
The Code provides for investment incentives made under the Philippines Investment Priorities Plan
(IPP), which includes a list of promoted areas of investment eligible for Government incentives, andincentives granted to export-oriented enterprises,  regardless of whether they fall within the IPP.
Export-oriented industries under the Code are defined as enterprises that export at least 50% of their
production if Filipino-owned, and 70% of their production if foreign-owned (i.e. firms with more than
40% foreign equity).  Inclusions and deletions to the IPP are drawn up and revised annually in
consultation with the private sector.  In early 1999, the IPP list includes, as priority investment areas,inter alia , industries that are undergoing industrial adjustments (e.g. chemical products and
engineered products and components), agriculture and fisheries, iron and steel, minerals, petroleum,
infrastructural services, transport carriers, social and housing projects, motor vehicles and
components, tourism, and research and development activities.WT/TPR/S/59 Trade Policy Review
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92. The incentives under the IPP include, inter alia , corporate income tax holidays for a
minimum of four years and a maximum of eight year s, during which the cost is borne by the State
budget;  and other benefits such as simplified customs procedures.  Tax and duty exemptions on
imported capital equipment and accompanying spare parts, materials, and supplies, and tax credits on
domestic capital equipment were abolished in December 1997.
93. Under the Export Development Act, additional incentives have been made available to
enterprises that earn at least 50% of their total revenue from export, regardless of ownership.  The
additional benefits include exemptions from advance payments of customs duties, tax credits on the
importation of raw materials (effective until December 1999), and enhanced tax credits based on
export performance.  Furthermore, exporters of non-traditional products ("pioneer" enterprises25) who
use locally produced raw materials, capital equipment, or spare parts qualify for tax credits equivalentto 25% of the duties that would have been paid if these inputs had been imported.  The incentive is
available for three years, extendable for another three years.  According to the authorities, the
extension as well as the enhanced tax credits based on export-performance described above are not
being implemented.  The list of eligible companies is determined by the Department of Finance, in
consultation with the Export Development Council.
94. BOI-registered enterprises locating in a less developed area, stipulated in the IPP, may receive
additional incentives (section (iv) below).  Small- and medium-sized enterprises may also receive
additional incentives under the IPP (section (v) below).
(c) Special economic zones
95. The Special Economic Zone Act of 1995 (RA 7916) governs the establishment and operation
of special economic zones (ecozones).  Ecozones ha ve received a rising level of investment since
1995, and have generated increasing exports;  their share in total Philippine non-traditional exportsrose to over 40% in 1997 (Chart III.6).  Ecozones may contain export processing zones, industrial
estates, free trade zones, and tourist or recreational centers established either by private or public
entities.  The authorities regard ecozones as separate customs territories.  Their establishment,
operation and management is the task of the Philippine Economic Zone Authority (PEZA), which
replaced in 1995 the former Export Processing Zone Authority (EPZA).  The PEZA operates fourexport processing zones, in Bataan, Mactan, Baguio and Cavite, all of which had been operated by the
EPZA.
96. PEZA's policy is to concentrate on supporting private-sector initiatives and investment for the
development of existing ecozones, rather than establishing additional public ecozones.  As of
January 1999, 109 ecozones were registered with PEZA, 56 were already operational and theremainder were under various stages of development.
26  PEZA accepts applications for new ecozones,
but ensures that proponents are fully aware of the operational zones and those under development.
PEZA plans to register a maximum of six ecozones in 1999.  It appears that ecozone developers must
be Filipinos or at least 60% Filipino-owned firms.
                                                     
25 Pioneer status is given to activities that (i) involve the manufacture of a product that has never been
commercially produced in the Philippines;  (ii) use new technology or processes that have never been tried in
the Philippines; (iii) are essential in the attainment of goals;  or (iv) use or produce non-conventional energy.
26 The figure does not include the Clark Special Economic Zone, Subic Special Economic Zone, Camp
John Hay Economic Zone, Cagayan Special Economic Zone and Zamboanga City Economic Zone, which aremanaged by independent authorities.The Philippines WT/TPR/S/59
Page 61
03,0006,0009,00012,00015,00018,000
1990 1991 1992 1993 1994 1995 1996 1997 19980102030405060Chart III.6
Exports from and investment in ecozones, 1990-98
US$ million Per cent
EPZA figures from 1990 to 1994 and PEZA figures from 1995 to 1998.
Data provided by the Philippine authorities.Note:
Source:Share of non-traditional exports  
(Right hand scale)Exports  (Left hand scale )Investment  (Left hand scale )
97. Companies operating in ecozones are entitled to incentives comparable to those granted to
export-oriented industries operating outside ecozones.  However, additional benefits are conferred
regarding immigration, import duty exemption on some capital goods and machinery, and local taxes.Eligible companies must register at the PEZA.
98. Incentives for export  enterprises and for enterprises located in free-trade areas may include
the following:
- corporate income tax exemption for four years to a maximum eight years;
- exemption from duties and taxes on imported capital equipment, spare parts,
materials, and supplies;
- a special 5% tax rate on gross income in lieu of exemption from national and
local taxes, after income tax holidays lapse;
- tax credit for import substitution, where preferential treatment is given to
projects utilizing indigenous raw materials and capital goods;
- exemption from wharfage dues;
- tax credit on domestic capital equipment;
- tax and duty-free importation of breeding stocks and genetic materials;WT/TPR/S/59 Trade Policy Review
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- deduction for training expenses;
- permanent resident status for foreign investors investing at least US$150,000
and their immediate family;
- provision of expatriate worker visas for up to 5% of the labour force of each
company;
- deduction for labour expenses (equivalent to 50% of wages on direct labour
added, subject to conditions);  and
- exemption from preshipment inspection.
99. Incentives for activities by developers, operators, and facilities of ecozones, and utilities,
tourism, and domestic market enterprises include a 5% gross income tax rate in lieu of national and
local taxes;  additional deductions for labour and management training;  permanent resident status forforeign investors and their family;  incentives un der build-operate-transfer (BOT) law;  and other
incentives available under the Omnibus Investments Code as may be determined by the BOI.  The
authorities indicated that there were no preferred industries per se  in ecozones, but the IPP list was
valid in them.
(d) International initiatives and agreements
100. To date, the Philippines has signed bilateral investment guarantee and protection agreements
with 26 countries, i.e. Australia, Bangladesh, Belgium, Canada, Chile, China, Chinese Taipei,
Czech Republic, Denmark, Finland, France, Germany Iran, Italy, Korea, Myanmar, the Netherlands,
Pakistan, Romania, Russia, Spain, Switzerland, Thailand, Turkey, the United Kingdom, and Viet
Nam.  It has also signed bilateral agreements on the avoidance of double taxation with 29 countries,
i.e. Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Hungary, India,
Indonesia, Israel, Italy, Japan, Korea, Malaysia, the Netherlands, New Zealand, Norway, Pakistan,
Romania, Russia, Singapore, Spain, Sweden, Tha iland, the United Kingdom, and the United States.
101. In the context of the first WTO Ministerial Conference, while not opposing the adoption of a
work programme on investment in the WTO, the Philippines nevertheless expressed doubts on its
urgency.  At the second WTO Ministerial Conferen ce, however, it supported the continuation of the
"educational process" in this area, but stressed that any decisions regarding further work needed to betaken by consensus.  The Philippines participates in the WTO Working Group on the Relationship
between Trade and Investment.
(ii) Trade-related investment measures
102. The Philippines has notified the WTO Committee on Trade-Related Invest Measures (TRIMs)
of local-content and foreign-exchange requirements under the Car Development Programme (CDP),the Commercial Vehicle Development Programme, and the Motorcycle Development Programme, as
well as local-content requirements for coconut-based chemicals.
27  All requirements that might be
inconsistent with the TRIMs Agreement must be eliminated by the year 2000, unless an extension is
granted by the WTO Council for Trade in Goods.
103. Participants in the CDP are subject to a local-content requirement of 40%;  participants in the
Commercial Vehicle Development Program must fulfill at least 45% local content, depending on the
                                                     
27 WTO document G/TRIMS/N/1/PHL/1, 25 April 1995.The Philippines WT/TPR/S/59
Page 63
type of commercial vehicle;  motorcycle assemblers  must comply with 45% local content;  and three-
wheelers assemblers must achieve a 35% local content.  Participants in these programmes must also
obtain foreign exchange through exports at prescribed rates depending on the type of CKD vehicle
being imported;  the rates range from 5% to 75% of exports. The authorities envisaged that these
requirements would be terminated by the year 2000 consistent with the TRIMs Agreement.
104. All local soap and detergent manufacturers are required to use at least 60% locally produced
cocochemical surfactant, as stipulated in EO 259 of 1987.
(iii) Privatization, public enterprises and state trading
105. Since the previous Trade Policy Review in 1993, the Philippines has continued to implement
the privatization programme and has wholly or partially privatized a number of state corporations and
acquired assets.  Privatized enterprises include banks, an airline, steel and mining companies, and apetroleum refinery (Table III.12).  As of 31 December 1998, total cumulative gross revenues
generated from the privatization of 455 accounts (including 163 partially sold accounts) amounted to
P185.2 billion  (Table III.13).  Major government corporations scheduled for privatization include the
National Power Corporation, the PNOC-Energy Development Corporation, and the Food Terminal
Inc. According to official data, total government as sistance, i.e. subsidies, equity, and net lending, to
government-owned and controlled corporations ( GOCCs) declined from about P16.1 billion in 1993
to about P5.8 billion in 1998;  during the period 1993-98, total government assistance to GOCCs
amounted to about P67.8 billion.
Table III.12
Major privatizations, 1993-98
Gross sales (P billion) Per cent privatized Activities
Petron Corporation 25.0 60.0 Petroleum refining
National Steel Corporation 17.1 87.5 Steel making
Philippine Airlines 10.7 67.0 Air transport
Philippine National Bank 6.5 50.5 Banking
Interbank 2.2 100.0 Banking
PHILSECO 2.1 87.0 Shipping
MARINA Properties 1.8 100.0 Land development
Philippine Plaza 1.5 100.0 Hotel
Union Bank 1.3 87.0 Banking
Source:  Data provided by the Philippine authorities.
Table III.13
Gross revenues from privatization, 1987-98
Year Gross revenues (P billion)
1987-93 81.28
1994 50.33
1995 43.85
1996 1.43
1997 7.22
1998 1.09
Total 185.2
Source: Information provided by the Philippine authorities.WT/TPR/S/59 Trade Policy Review
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106. Article XII of the Constitution defines various areas reserved exclusively to the State.  Under
the provision, the exploration, development and utilization of natural resources must be under the full
control of the State;  the State may, however, ente r into co-production, joint venture and/or product-
sharing agreements with Filipino entities as well as technical and/or financial assistance agreements
with foreign-owned corporation for su ch activities.  The Article also provides that, in times of national
emergency and in the interest of the public, the State may, under reasonable terms, temporarily takeover or direct the operation of a privately owned public utility or business.  The State may also
establish and operate vital industries in the interest of national welfare and defence.
107. The National Food Authority (NFA) has been notified as the sole state-trading enterprise in
the Philippines.
28  The NFA is the unique exporter and importer of rice;  it may also trade in
commodities as authorized by the President of th e Philippines.  Under Executive Order 398, the NFA
also  engages in the import and export of sugar.  Starting 1999, and in support of the food security
agenda of the current administration, the NFA has been engaged in the procurement and sale of non-
grain basic commodities including cooking oil, sardines, and milk, in coordination with the local
government units.  The authorities pointed out that the importation and exportation of corn, traded
solely by NFA until the ratification of the WTO Ag reements in 1994, were fully liberalized at the
time the WTO Agreement was ratified.
108. NFA maintains a buffer stock of rice to address emergencies, i.e., a 15-day buffer stock
requirement at any time and a 30-day buffer stock requirement by 1 July of each year or at the
beginning of the traditional lean season for rice (July-September).  In addition, NFA undertakes price
and supply stabilization of rice and handles the stocking of other basic commodities as needed, which
private traders are allowed to export and import depending on the supply-demand situation of the
country. The Inter-Agency Committee on Rice and Corn conducts regular assessment of the supply-demand situation and recommends import or export volumes to the Secretary of Agriculture and NFA
Administrator, depending on the excess or shortfall of the actual or projected national inventory
compared to the desired buffer stock of the country. Export prices are primarily based on world
market prices.
29
(iv) Measures affecting prices and marketing
109. According to the authorities, there remain no pri ce controls in the Philippines.  However, the
Government retains the right to provide protection to consumers by stabilizing the prices of basic
necessities and prime commodities, and by prescribing measures against undue price increases during
emergency situations, as prescribed under the Price Act of 1992 (RA 7581).
110. The National Food Authority maintains a price stabilization mechanism for rice and corn
through its regular procurement and distribution programmes, to help stabilize the prices of these two
staples.  The procurement programme involves purchases by the Authority from individual and
organized small farmers at the government support prices, which were  P8.00 per kg. for palay rice
and  P6.00 per kg. for corn grains during the period February 1996-January 1999;  the palay price was
raised in February 1999 to  P10.00 per kg. for harvest between March and August (dry season), andP9.00 per kg. for harvest between September and February (main season).  The distribution
programme involves direct sales of rice and corn to end-consumers or through accredited retailers at
fixed release prices.
                                                     
28 WTO document G/STR/N/1/PHL, 16 November 1995.
29 WTO document G/STR/N/1/PHL, 16 November 1995.The Philippines WT/TPR/S/59
Page 65
(v) Regional assistance
111. Regional development has been encouraged through the establishment of Regional
Agri-Industrial Growth Centers (RAICs), currently totalling 21, and ecozones located in the different
parts of the country. To lure investments away from Manila and decongest the National Capital
Region, the Government provides off-site infrastruc ture facilities in RAICs, and, to firms located in
ecozones, offers incentives such as net operating loss carry over, accelerated depreciation, andexemption from export tax and other national and local taxes.  The setting up of RAICs and
promotion of ecozones are also intended to establish linkages among industries and create livelihood
and employment opportunities in the regions.
112. The Investments Priorities Plans (IPPs) also identified less developed areas (LDAs).
Enterprises that locate in LDAs are eligible for ad ditional incentives including a six year income tax
holiday, regardless of status (pioneer or non-pioneer) or type of project (new or expansion), as well as
deductions from taxable income equivalent to expenses incurred in the development of necessary and
major infrastructure facilities. To complement the above measures for LDAs, the 1998 IPP stipulates
that firms that locate in the congested National Capital Region, with certain exceptions, are not
entitled to income tax holiday incentives.  The 1999 IPP identified preferred sectors in specificregions so as to guide investors towards what is thought to be the most appropriate regional base for
an economic activity;  eligibility for certain incentives is determined by the location of the projects.
(vi) Assistance to small and medi um-sized enterprises (SMEs)
113. In order to foster dynamic and globally competitive SMEs, the Magna Carta for Small
Enterprises (Republic Act No. 6977) was amended in 1996.  The amendment included mandatory
allocation by all lending institutions  of at least 6%  and 2% of their total loan portfolio for small and
medium enterprises, respectively.  The Small Bu siness Guarantee and Finance Corporation (SBGFC)
was created in 1992 to provide various modes of financing for SMEs, e.g. venture capital, financial
leasing, secondary mortgage and rediscounting of loan papers as well as guarantee of loans.
114. The Entrepreneurial Development and Services Department (EDSD), established under the
BOI, aims to provide assistance in project st udy preparation, technical services, and access to
financing for SMEs that seek to register with BOI.  BOI assistance is provided to SMEs whoseactivities will support export-oriented activities, priority government programmes and those with
strong or potential industrial linkage.  Under the IPP, SMEs are given assistance including preparation
of investment opportunity studies, matching of SM E suppliers with assemblers, assistance in sourcing
financial support, consultancy, and technical assistance.  SMEs exporting less than 60% of their
output with paid-in capital less than the equivalent of US$200,000 or less than US$100,000 with"advanced technology" or at least 50 direct employees are reserved for Philippine nationals, i.e.
Filipino natural persons and juridical entities with a maximum of 40% foreign equity.
30
115. There are about 145 credit facilities under which loans, guarantee and equity assistance are
provided to SMEs.  These facilities include, inter alia , the Industrial Guarantee and Loan Fund
(IGLF), Small Business Guarantee and Finance Co rporation (SBGFC), Guarantee Fund for Small and
Medium Enterprises (GFSME), Philippine Expo rt and Foreign Loan Guarantee Corporation
(PHILGUARANTEE), and Private Enterprise Credit and Support Program (PECSP).
                                                     
30 Section 8 of the Foreign Investment Act of 1991.WT/TPR/S/59 Trade Policy Review
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(vii) Assistance to research and development (R&D) and modernization
116. The Department of Science and Technology (DOST) is the principal government agency
charged with the development of science and tec hnology in the Philippines.  The DOST has seven
R&D institutes, and five sectoral planning councils, which formulate policies, strategies, plans,
programmes, and projects for the development of science and technology (S&T, including R&D) in
specific sectoral areas.  The DOST is specifically mandated to promote, assist, and undertake R&D intechnological areas vital to economic development.
117. Under the Science and Technology Master Plan, programmes for S&T promotion are
classified into three strategies:  modernization of the production sectors through large-scale
technology transfer from domestic and foreign sources;  upgrading of R&D capability through
intensified activities in high priority sectors;  and the development of science and technologyinfrastructure, including institution building, ma npower development, and development of a science
and technology culture.
118. Under the strategy to modernize the production sectors, a Comprehensive Technology
Transfer and Commercialization (CTTC) Program has been implemented.  The Program includes
national and regional technology fairs, investors'  fora, production of technology packages, and DOST
technology training centres.
119. The programme of upgrading R&D capability has provided incentives for private investors in
R&D activities under the Investment Priorities Plan.  The incentives include income tax holidays,
duty-free importation of capital equipment, incentives for infrastructures in less developed areas, and
access to the bonded warehousing system.  Investment areas eligible for incentives under the IPP are
S&T parks, S&T centers, technology business incubators, and modernization programmes.  Similarly,
the Research and Development Priorities Plan (R DPP) has been adopted as the basis for funding
research projects.
(viii) Standards and other technical requirements
120. The Philippines acceded to the Tokyo Round Ag reement on Technical Barriers to Trade in
1980.  As part of the Single Undertaking of the Uruguay Round, the Philippines automatically became
bound by the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) and theAgreement on Technical Barriers to Trade Agreement (TBT).  The national enquiry point foreseen in
Articles 10.1 and 10.3 of the TBT Agreement is the Bureau of Product Standards (BPS).
31  Since
1995, the Philippines has made 23 notifications under the TBT Agreement, and 12 notifications under
the SPS Agreement.  The BPS accepted the Code of Good Practice of the TBT Agreement in
March 1995.32
(a) Standards, certification and testing
121. The authorities indicated that there were a total of 1,371 Philippine national standards (PNS).
These include 69 technical regulations (mandatory standards) covering products such as electrical
goods, fire-fighting equipment, construction materials, and certain chemical products.
122. The BPS represents the Philippines as the Na tional Standards Body in the International
Organization for Standardization (ISO) and the In ternational Electrotechnical Commission (IEC), of
which the Philippines became a full member in September 1997.  There are no industrial or
                                                     
31 WTO document G/TBT/2/Add.11, 11 June 1996.
32 WTO document G/TBT/CS/N/2, 24 April 1995.The Philippines WT/TPR/S/59
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commercial associations with regulatory authority delegated by the Government in the area of
technical requirements.  Importers, exporters, and di stributors of medical equipment, or food and food
products are required to contact the Department of Health – Bureau of Food and Drugs, and Radiation
and Health Service for licencing and/or registration purposes.
123. New standards may be developed and existing standards reassessed through BPS technical
committees comprising representatives of the BPS, manufacturers, consumers, academics, and othergovernment agencies.  Other regulatory agencies empowered by the Consumers Act (RA 7394) to
develop and implement standards are the Department of Health (regarding food, drugs, cosmetics, and
devices) and the Department of Agriculture (agricultural products).
124. No distinction is made between standards used for domestic and imported goods.  Voluntary
international standards widely accepted in the Philippines are the ISO 9000/14000 series, which havebeen adopted as PNS 1000 and 14000 by the BPS.  As of 31 December 1998, 645 (or 47%) of all PNS
were aligned with international standards (ISO, IEC, and Codex Alimentarius).  Fifty domestic
standards, all included in the PNS, have no corresponding foreign standards.  As of 1998, within the
aligned standards 641were either identical or equivalent to international standards.   The Government
intends to align 50% of PNS with international standards by 2005 and 100% by 2020.
125. Product certification for PNS is regulated thr ough the Charter of the BPS (RA 4109) and the
Consumers Act.  The BPS offers national product ce rtification marks, the Philippine Standard (PS)
Quality Mark and PS Safety Mark for domestic products and the Imported Commodity Clearance
(ICC) Quality Mark for imported products.  Both PS and ICC marks are voluntary except for the 69
products covered under the mandatory standards whereby domestic manufacturers and importers are
required to secure the PS and/or ICC marks from the BPS;  though all of the 1,371 PNS encourage
manufacturers to affix the PS mark on their products, for those 69 products manufacturers must securethe PS mark as a proof of compliance with the relevant PNS.  BPS is mandated to operate a
third-party certification scheme, where a manufacturer, after factory and product assessment by BPS,
is granted the licence to use the PS Quality Mark on its products.
33  The BPS, in accordance with the
ISO/IEC Guide 62, also accredits conformity assessment bodies on behalf of the PS mark scheme.
Foreign firms may apply for PS certification through a BPS recognized counterpart national standardsbody (NSB) or an inspection and/or certification body.     As of June 1999, three companies had been
granted the licence to use the PS Quality Mark and PS Safety Mark;  the companies were involved in
the production of pneumatic tyres, fluorescent lamps, inner tubes and incandescent lamps.
126. Foreign firms apply for PS Quality Marks through a BPS recognized foreign national
standards body or an inspection/certification body that has either a Memorandum of Understanding(MOU) or Mutual Recognition Arrangement (MRA) with the BPS.  Importers of products covered by
mandatory PNS are subject to evaluation by BPS, through sampling and testing, to verify that they
meet the requirements of the applicable technical regulations, as a precondition for the issue of ICC
marks.  Imports certified abroad as meeting the requ irements of foreign or international standards are
also subject to the evaluation.  Those not accepted by BPS as meeting the mandatory requirements aredenied entry by the customs and are subject to seizure, re-export, or destruction. The BPS also
conducts random checks at market outlets to verify that imported shipments meet mandatory
standards.   Domestically produced products covered by mandatory PNS are evaluated through a
quality system audit involving a visit to the company's plant by BPS assessors, and product audit, i.e.
in-plant testing involving the testing of product samples using the company's own facilities and
resources, and independent testing involving sample testing by BPS or a BPS-accredited laboratory.
                                                     
33 WTO document G/TBT/W/43/Add.2, 19 September 1997.WT/TPR/S/59 Trade Policy Review
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127. The BPS has concluded MRAs with Japan Electrical Safety and Environmental Testing
Laboratories regarding third-party inspection;  it also has MRAs with Standards Australia Quality
Assurance Pty.  Limited and the Standardization Council of Indonesia regarding a "sub-contractor"
arrangement to provide audit services on each other’s behalf in connection with product certification
and approval schemes.  Since 1995, bilateral agreements on food standards have been in place with
other APEC economies.
128. The BPS Laboratory Accreditation Scheme (BPSLAS), established in 1995, covers the
accreditation of testing or calibration laboratories.  Under the BPSLAS, BPS assesses laboratories for
their conformance to ISO/IEC Guide 25, which sets out the basic requirements for a laboratory’s
quality management system and has been adopted by BPS as PNS 1600.   As of June 1999, no foreign
test laboratory  had been accredited under BPSLAS.  To date, 15 domestic laboratories have been
accredited in accordance with PNS 1600.  The BPS has not concluded any bilateral or multilateral
agreement on laboratory accreditation with foreign accredited bodies.  The BPS participates in the
Asia Pacific Accreditation Coope ration (APLAC) and the Internati onal Laboratory Accreditation
Cooperation (ILAC), the Asia-Pacific Metrology Pr ogram (APMP) and the Pacific Accreditation
Cooperation (PAC).
(b) Marking and labelling
129. Article 77 of the Consumer Act stipulates minimum labelling requirements for consumer
products domestically sold, whether manufactured locally or imported.  The requirements include the
indication of product and business names, trade mark, general make or active ingredients, quantity,
and country of manufacture for imported items.  Othe r requirements are specified in Chapter IV of the
Act.  The Act is enforced by the Department of Health with respect to food, drugs, cosmetics, devices,
and substances;  by the Department of Agriculture with respect to agricultural products;  and by theDepartment of Trade and Industry with respect to other consumer products.
130. Imports into the Philippines must be marked clearly in English, with details such as the name
of the product, the name and address of the manufacturer, the size in metric units, and the country of
origin. Imported food products must be labelled with the name and address of the importer.  Marking
and labelling requirement for the importation of garments, textiles and raw materials for themanufacture of garments, and other textile products generally require an invoice containing the
following information:  name and address of manufacture or supplier, and importer or consignee,
description of the goods, quantity, f.o.b. value, and terms of payment.
131. No eco-labelling scheme appears to exist in the Philippines.
(c) Sanitary and phytosanitary (SPS) measures
132. The Philippines' policy regime regarding SPS measures has generally remained the same
since 1993.  Plant Quarantine in the Philippines has been enforced by the Plant Quarantine Law of
1978 (PD 1433).  The Bureau of Plant Industry (BPI) of the Department of Agriculture (DA) requires
phytosanitary certification pursuant to the FAO International Plant Protection Convention covering
fresh fruit and vegetables, live insects, seeds and nuts for planting and consumption, spices, andmedicinal herbs.  The importation of meats requires a Veterinary Quarantine Clearance certificate
from the Bureau of Animal Industry of the DA.
133. Table III.14 summarizes the SPS measures taken by the Philippines since the previous Trade
Policy Review.The Philippines WT/TPR/S/59
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Table III.14
Trade measures taken on health, safety or sanitary grounds
Regulations DateApplicable to
imports fromContents
BPI Plant Circular
Nos. 01, 02 and 03Series of 1996 All countries Guidelines providing quarantine requirements for the importation of
white potato, garlic and onion requiring the evaluation and pest risk
analysis prior to the issuance of import permits, inspection uponarrival, and post-entry quarantine monitoring.
DA MemorandumOrder22 April 1997 Switzerland, the
United Kingdom,
Ireland, Portugal,
France, Germany,Italy, and  the
NetherlandsTemporary ban on the importation on live cattle, sheep and goats,
their meat and meat products; bovine semen and embryo; meat and
bone-meal and other feed ingredients from the said animals due to the
increasing incidence of Bovine Spongiform Encephalophaty (BSE).The ban was lifted on 21 July 1997 for France and the Netherlands;
and 30 September 1997 for Germany, Ireland, Italy, Portugal and
Switzerland.
DA Memorandum
Order23 April 1997 Chinese Taipei Temporary ban on the importation of livestock, meat and meat
products due to the outbreak of foot and mouth disease.
Germany and the
NetherlandsTemporary ban on the importation of live pigs, pork and pork
products due to an outbreak of swine fever.  The ban was lifted on
31 October 1997 for the Netherlands.
Fisheries
Administrative
Order No.912Series of 1997 All countries Setting the organizational structure, functions and responsibilities of
the Fisheries Quarantine Service of the DA, covering quarantine
regulations for import and exports of fish and fishery products, and
domestic movement of fishery products, including the media used intransporting products potentially carriers of pests or diseases.
DA MemorandumOrder No.27 January 1998 Singapore and
IndonesiaConditions to be met by Singapore in order to secure a Veterinary
Quarantine Clearance necessary to export the following products tothe Philippines: pork belly, pork trimmings, pork legs, and pork fat
from swine originating from Indonesia for the purpose of further
processing.
DA Memorandum
Order Nos. 3 and 47 January 1998
and
16 January 1998China and
Hong Kong, ChinaTemporary ban on the importation of domestic and wild birds; day-
old chicks; turkey poults and other newly hatched avian species;
hatching eggs; semen of domestic and wild birds; and products, due
to avian influenza virus outbreak.  The ban was lifted on 8 June 1998.
Source : Information provided by the Philippine authorities.
(ix) Intellectual property rights (IPRs)
134. The Philippines is a member of the World Intellectual Property Organization (WIPO) and a
party to the Paris, Berne and Rome Conventions.  The Philippines has also adhered to the BudapestTreaty on International Recognition of the Deposit of Microorganisms for the Purposes of Patent
Procedure, and the ASEAN Framework Agreem ent on Intellectual Property Cooperation.  The
Philippines is not party to the Patent Cooperation Treaty.
135. IPRs administration falls within the competence of the Intellectual Property Office (IPO),
which replaced the Bureau of Patents, Trademarks and Technology Transfer in 1998.  The role of theIPO is to publish various registered IPRs regularly;  to administratively adjudicate contested
proceedings affecting IPRs;  and to coordinate with other government agencies and the private sector
to formulate and implement plans and policies to strengthen IPR protection.
136. On 1 January 1998, RA 8293, or the Intellectu al Property Code (IP Code) took effect
covering, inter alia,  patents, industrial designs, copyright and related rights, trade marks, and
geographical indications.  The IP Code also defines undisclosed information as intellectual property.
The authorities consider that the Code has aligned existing laws on patents, trade marks, geographicalindications, and copyrights with the WTO Agreement on Trade-Related Aspects of IntellectualWT/TPR/S/59 Trade Policy Review
Page 70
Property Rights (TRIPS Agreement) .  In early 1999, a bill was being drafted on the protection of
layout designs of integrated circuits, and a draft bill on plant variety protection had been submitted to
Congress.  The Philippines is a signatory of  the ASEAN Framework Agreement on Intellectual
Property Cooperation.
(a) Administrative procedures
137. For the registration of patents, a formality examination is conducted, after filing, to ascertain
compliance of the application with the IP Code and related regulations.  A search is then conducted
for the preparation of a search report, followed by  publication of the application, together with the
report, in the official Gazette.  Publication is made 18 months after the filing date or priority date in
accordance with the Paris Convention.  A substantive examination on the published application is
made only upon the filing of a request for examination by the applicant within six months of the dateof publication.  The examination had been mandatory before the IP Code took effect.  A patent grant
is made and published in the Gazette  if the application is found to comply with the patentability
requirement of the IP Code.  Applicants whose application is rejected may opt for appeal procedures.
A patent application and all related documents are subject to confidentiality before publication.  No
consideration is given to opposition to the patent while it is under examination.  Following thepublication of the patent application, any observation on the patentability of the invention may be
presented in writing.  After the grant of patent, any interested person may, upon payment of the
required fee, file petition with the Director of the Bureau of Legal Affairs to cancel the patent or any
claim thereof, or parts of the claim.
138. For utility model and industrial design applications, formality examination and preliminary
search are conducted after filing and the applicant is notified of the result.  The applicant may request
a registrability report.  A registration is then made and published, together with the preliminary searchreport, and, if requested, the registrability report.
139. Literary and artistic works, including works of applied art, enumerated under Section 172 of
the IP Code are regarded as original intellectual creations and their copyright is protected from the
moment of their creation;  hence, registration is not necessary.  However, for the purpose of
completing the records of the National Library and the Supreme Court Library, certain classes ofwork must be registered and deposited.
140. For trade mark registration, a search is made, after filing, to determine marks that may be
identical or confusingly similar with the mark in the application.  An examination is then made to
determine the compliance of the trade mark application with the IP Code.  An application favorably
recommended for allowance is published in the Gazette for opposition;  an approval for registration of
the trade mark application is made if no opposition is filed within 30 days of publication.  The
registration is then published in the Gazette .  The registration process for geographical indications
follows that for trade marks.
141. According to a study conducted by the Government in 1993, average approval times for
applications were 20 months for patents, 14 months for utility models, 12 months for industrialdesigns, and 12 months for trade marks.  No data are yet available on approval times under the IP
Code.  To improve registry operations, electronic databases for inquiry and retrieval have been made
available to the public, covering areas such as trade mark renewals assignments for publication,
applications, registration, and cancellations.The Philippines WT/TPR/S/59
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(b) Protection of intellectual property rights
Patent
142. Patents are granted protection for a period of 20 years (17 years before the IP Code took
effect), from the filing date of the patent application.  Utility model protection is granted for a period
of seven years without renewal, (previously five years with two renewals of five years each).  A
patentable invention is defined as any technical solution of a problem in any field of human activitywhich is new, involves an inventive step, and is industrially applicable.
34   The holder of a patent is
guaranteed an additional right to the exclusive importation of his invention.
143. The IP Code adopted the first-to-file system, replacing the first-to-invent system;  and the
applications for patent for utility models and industrial designs no longer require substantive
examination.  When an application for a patent is made in the Philippines after having been appliedfor in other countries, the filing date in the country of first filing may be recognized as the date of
priority, provided that the filing date in the Philippines occurs within the periods specified in the
relevant international treaties or within 12 months of the filing of the application for patent in the
country of origin.
144. The registration of technology transfer arrangements is no longer required provided that they
comply with Chapter IX of RA 8293.
35  The authorities noted that restrictions on the amount of
royalties that can be paid no longer exist.  Parties to technology transfer arrangements can now in
principle freely negotiate for the rate of royalties without government intervention.  However, when
the parties submit the agreements for settlement of  disputes on the payments, the IPO can fix the rate
of royalty based on evaluation of facts presented during the mediation process.
145. In the IP Code, compulsory licensing is provided only for patents under limited
circumstances, such as where the manner of exploitation by the owner of the patent or his licensee isregarded as anti-competitive.  These circumstance s, determined by the relevant authorities, also
include national emergency or other circumstances of extreme urgency;  where required by the public
interest (i.e., inter alia,  national security, nutrition, health, or the development of other vital sectors of
the national economy);  in case of public non-commercial use of the patent by the patentee;  or if the
patented invention is not being worked in the Philippines on a commercial scale, although capable ofbeing worked, without satisfactory reason, provided that the importation of the patented article
constitutes working or using the patent.  Since 1993, six compulsory licensing cases have been
granted (Table III.15).
Copyright and related rights
146. The IP Code provides copyright protection to literary, scholarly, artistic, musical and
scientific works.  Works are protected from the moment, and by the sole fact, of their creation,
irrespective of their mode or form of expression, as well as of their content, quality and purpose.
Neighbouring rights (i.e. the performer’s rights, sound recording producer’s rights, and broadcasting
organization’s rights) are also protected under the Code.  Computer software is defined as a literary
work under the Code, and the Code includes a fair-use provision on decompilation of software.
                                                     
34 Section 21 of the IP Code.
35 APEC (1998).WT/TPR/S/59 Trade Policy Review
Page 72
Table III.15
Compulsory licensing granted since 1993
Details of petition Date granted
1. United Laboratories, Petitioner v. Jan Heeres, et al Respondent-Patentees, Inter Partes Case
No. 190714 February 1994
under Decision No. 94-16
A petition for compulsory licensing under Letters Patent No. 14635 issued by Philippine PatentOffice on 12 October 1961 in the name of Janessen Pharmaceutical, N.V. was granted since
patented invention relates to medicine as provided in Section 34(e) of Republic Act No. 165 as
amended.  The petitioner has also the capability to make use of the patented product in themanufacture of a useful product.
2. United Laboratories Inc. Petitioner v. Janessen Pharmaceutical, N.V., Respondent-Patentees,
Inter Partes Case No. 206514 February 1994
under Decision No. 94-19
A petition for compulsory licensing under Letters Patent No. 15877 issued on 13 April 1983 to
Janessen Pharmaceutical N.V. for NOVEL N-HETEROCYCLYL-4-PIPERIDINAMINES
PHARMACEUTICAL composition was granted since patented invention relates to medicine asprovided in Section 34(e) of Republic Act No. 165 as amended.  The petitioner also presented
evidence that it has the capability to make use of the patented product in the manufactures of a
useful product.
3. Doctor's Pharmaceutical, Inc. Petitioner v. Smith Kline and French Lab. Ltd. Respondent-
Patentee Inter Partes Case No. 205814 February 1994
under Decision No. 94-20
A petition for compulsory licensing under Letter Patent No. 12207, issued on 29 November 1978
entitled DERIVATIVES OF HETEROCYCLICTHIO OR LOWER ALKOXY OR AMINO
LOWER ALKYL THIOUREA, UREAS AND GUANIDINES in the name of Smith Kline and
French Overseas Company.  The petition was granted since the Letters Patent No. 12207 relates tocompound and compositions used in inhibiting certain actions of histamine not inhibited by known
antihistamines and therefore related to medicine.  It also complies with other requirements of
RA 165 as amended.
4. United Laboratories, Inc. Petitioner v. Kazuyuki Nakagawa, et al. Respondent-Patentees,
Inter Partes Case No. 309815 February 1994
under Decision No. 94-21
A petition for compulsory licensing under Letters Patent No. 19373 issued on 2 April 1986 entitled
CARBOSTYRIL DERIVATIVES AND PROCESS FOR PREPARING THE SAME in the name of
Kazuyuki Nakagawa, Kaoru Tanimura and Shigeharu Tamoda.  The petition was granted since
patented invetion relates to medicine as provided in Section 34(e) of RA No. 165 as amended.
5. Danlex Research Lab., Inc. Petitioner v. Graham John Durant et al Respondent-Patentee,
Inter Partes Case No. 347921 February 1994
under Decision No. 94-22
A petition for compulsory licensing under Letters Patent No. 12207 issued on 29 November 1978entitled DERIVATIVE OF HETEROCYLCLITHIO OR LOWER ALKOXY OR AMINO LOWER
ALKYL in the name of Graham John Durant et al.  The petition was granted since the Letter PatentNo.  12207 relates to compound and compositions used in inhibiting certain actions of histamine not
inhibited by known antihistamines, and therefore relates to medicines, and complies with the
requirements of Sec.  34(3) of RA No. 165
6. Danlex Research Lab., Petitoner v. Barry John, John Watson et al. Respondent-Patentee,
Inter Partes Case No. 348030 April 1997
under Decision No. 97-01
A petition for compulsory licensing under Letter Patent No. 13540 granted on 26 June 1980 entitled
AMINOALKYL FURAN DERIVATIVE in the name of Allen and Nanbury Limited.  The petition
was granted since the chemical compound comprising the invention and which is covered by claims
of Patent No. 13540 is an anti-ulcer drug and is therefore useful as medicine.  Section 34(e) ofRA 165 as amended by PD 1263
Source : Information provided by the Philippine authorities.
147. The IP Code also established exclusive rental rights in some categories of works and sound
recordings, and provides terms of protection for sound recordings, audio-visual works, and
newspapers and periodicals.  Copyright and moral rights are protected during the lifetime of the
author and generally for 50 years after his death.36  Works of applied art are protected for a period of
25 years from the date of making.  Photographic and audio-visual works are protected for 50 years
from publication of the work (or from making of the work, if unpublished).  In the case of
                                                     
36 Section 213 of the IP Code.The Philippines WT/TPR/S/59
Page 73
neighbouring rights, the term of protection, with exception of the broadcaster's (20 years), is 50 years
from the end of the year in which the performance or recording took place.
148. As a result of the Philippines' ratification of the Berne Convention (Paris Act) in June 1997,
the Government no longer allows local publishers to reprint foreign textbooks without the permission
of the copyright holder. A bill to expand the Videogram Regulation Board's enforcement powers and
increase penalties was introduced in 1995 and is  currently before the Congress.
Trade marks, geographical indications and undisclosed information
149. The IP Code defines a trade mark, covering also "service marks" for services, as any visible
sign capable of distinguishing the goods or services of an enterprise including a stamped or marked
container of goods.37  Foreign trade marks can claim priority filing dates under the terms of the Paris
Convention.  Trade mark protection is granted for ten years with an extendable period of ten years(protection had been granted for a renewable period of 20 years before the IP Code took effect).
Under the IP Code, the requirement of prior domestic use or registration as a condition for filing a
trade mark application has been removed.  Applicants must file a declaration of actual use of the mark
with evidence to that effect within three years of filing the application.  Protection of geographical
indications is also found under the Code.
Industrial designs
150. Under the IP Code, industrial design is defined as any composition of lines or colours or any
three-dimensional form, whether or not associated  with lines or colours, provided that such
composition or form gives a special appearance to and can serve as pattern for an industrial product or
handicraft.
38  Only non-technical and non-functional designs are protected.  An application for
industrial design is subject to simple registration as provided under the new implementing rules and
regulations.  An industrial design is protected for a period of five years and may be renewed twice forthe same period.
151. Foreign nationals account for over 90% of the applications filed and registrations granted for
patents and less than 10% for utility models (Table III.16).
Trade secrets
152. According to the authorities, the Rules and Regulations on Voluntary Licensing contain
provisions relative to the protection of undisclosed information.
(c) Enforcement of intellectual property rights
153. In order to coordinate the activities of IPR-related government agencies, the Presidential
Inter-Agency Committee on Intellectual Property Rights (PIAC-IPR) was created in 1993.  In
addition, the Bureau of Legal Affairs was established in 1998 to address administrative complaints onIPR-related cases, and the Documentation, Information Technology Transfer Bureau of IPO was
established in 1998 to implement the Regulations on Dispute Settlement.  Regional Trial Courts,
currently totalling 27, are now designated to hear and decide IPR cases.
39
                                                     
37 Section 121 of the IP Code.
38 Section 112 of the IP Code.
39 As stipulated in AO 112-95.WT/TPR/S/59 Trade Policy Review
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Table III.16
Applications and registrations of industrial property rights, 1990-99a
Year Total Patents Utility models I ndustrial designs Trademarks
Applications
1990 7,137 1,969 337 491 4,340
(4,440) (1,822) (16) (211) (2,391)
1994 10,787 2,146 639 819 7,183
(6,388) (1,965) (34) (222) (4,167)
1995 11,490 2,376 682 724 7,708
(7,524) (2,207) (40) (210) (5,067)
1996 13,521 2,797 602 839 9,283
(9,280) (2,634) (47) (225) (6,374)
1997 15,844 3,565 583 878 10,818
(11,467) (3,440) (66) (296) (7,665)
1998 14,451 3,443 633 726 9,649
(9,448) (3,280) (31) (227) (5,910)
1999b4,498 1,016 171 281 3,030
(2,678) (966) (8) (82) (1,622)
Registrations
1990 4,438 1,092 201 352 2,793
(2,988) (1,059) (3) (195) (1,741)
1994 5,965 802 135 595 3,496
(4,071) (766) (8) (107) (2,416)
1995 4,852 589 224 497 2,729
(3,086) (555) (3) (197) (1,773)
1996 4,152 778 187 281 1,941
(3,110) (755) (10) (84) (1,496)
1997 4,801 916 271 410 2,017
(3,415) (891) (8) (79) (1,536)
1998 2,465 565 3 10 1,319
(2,244) (559) (0) (10) (1,116)
1999b394 318 12 58 6
(345) (314) .. (29) (2)
.. Not available
a The figures in parentheses indicate the number of applicants and registrations involving foreigners.
b As of April 1999.
Source : Information provided by the Philippine authorities.
154. Violation of laws and regulations involving intellectual property rights may be filed before a
regional trial court regardless of the amount of damages claimed.  The IP Code has increased criminal
penalties for trade mark, copyright and patent infringement;  the penalty for repeated patent
infringement is now P100,000 to 300,000 and/or six months to three years imprisonment;  forcopyright infringement P50,000 to P1.5 million and/or  one to nine years imprisonment;  and for trade
mark infringement P50,000 to P200,000 and two to five years imprisonment.  The Code also
expanded the scope of trade mark infringement to include acts preparatory to the sale of goods orThe Philippines WT/TPR/S/59
Page 75
services bearing the infringing work which attach liability to the offender regardless of whether or not
the sale takes place.
155. The aggrieved party may also file an administrative case before the Bureau of Legal Affairs
where the damages claimed must not be less than P200,000.  Administrative penalties include a cease
and desist order, a voluntary assurance, seizure of products, the forfeiture of paraphernalia and
personal properties, administrative fines, cancellation or withholding of permit, the assessment ofdamages, and censure.
40  Table III.17 shows recent trends in the enforcement of the Philippines’
intellectual property measures .
Table III.17
Enforcement of intellectual property rights in the Philippines, 1994-99
1994 1995 1996 1997 1998 1999
Number of apprehensions 2,017 2,145 1,518 669 585 276
Number of confiscated/seized items 165,340 333,309 589,553 10,176,832 557,676 1,984,477
Estimated value of confiscated goods (P '000) 70,481 101,913 47,501 51,405 110,343 36,395
Income from penalties imposed (P '000) 335 16,940 19,636 24,939 28,436 6,455
Source : Information provided by the Philippine authorities.
156. The IP Code also provides that the owner of a registered mark may recover damages from any
person who infringes his rights.  If actual intent to mislead the public or to defraud the complainant is
substantiated, the damages may be doubled.41  Power of Court to order infringing material to be
destroyed is provided in Section 157 of the Code.
157. Section 166 of the IP Code provides that goods bearing infringing marks  or trade names are
not admitted entry at any customhouse.  To aid customs officers enforcing the prohibition, any person
who is entitled to the benefits of the IP Code may be required to submit information regarding his
mark or trade name, to be recorded in the Bureau of Customs for reference.  The Bureau of Customs
does not have the ex-officio power to seize infringing goods.  However, Customs Administrative
Order No. 7-93 of 1993 established procedures to pr event the entry of infringing goods.  A rightful
holder who has valid grounds for suspecting that counterfeit goods will be imported may lodge an
application with the Bureau of Customs for the issuance of a hold order on the release of such goods.The Bureau of Customs also maintains an Alert List on the basis of which an Alert Order is issued
against shipments known or found to be counterfeit or pirated.  Where there is a prima facie case of
infringement, a Warrant of Seizure and Detention is issued, and the patent, trade mark or copyright
owners or their duly authorized agents are notifie d so that they may participate as intervenor and
present evidence to prove infringement.
158. The IP Code does not expressly prohibit or allow “parallel importation” of goods containing
intellectual property.  In the case of copyright, the importation for personal use of a copy of a work by
an individual is allowed, without the authorization of the author of, or other owner of copyright in the
work.
42  According to the authorities, the principle of domestic exhaustion is applied in determining
the rights of foreign IPR holders on parallel importation;  there has been no case taken to courtrelative to this.  The authorities also indicated that there had been cases with regard to exclusive
distributorship, wherein the court had sustained the excl usive distributor;  the court ruled that the right
                                                     
40 Section 10. 2 (b) of the IP Code.
41 Section 156 of the IP Code.
42 Section 190 of the IP Code.WT/TPR/S/59 Trade Policy Review
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to perform an exclusive distributorship agreement and to reap the profits resulting from such
performances are proprietary rights that a party may protect.
(x) Competition policy
159. The Philippine economy is characterized by a high degree of market concentration;  according
to data from the Securities and Exchange Commission, in 1991 ten of the top 1,000 corporations in
the Philippines accounted for 26% of all revenues, 40% of total net income, and 34% of total assets
(the most recent available data).43
160. There is no comprehensive competition law in the Philippines.  Instead, various statutes
prohibit unfair trade practices.  Cartels are governed by Section 19, Article XII of the Constitution,
which requires the State to regulate or prohibit monopolies in the public interest, and prohibits
restraints of trade or unfair competition.  The Law on Monopolies and Combinations (RA 3247, as
amended) and the Revised Penal Code, as amended by RA 1956, are the basic statutes that prohibit
unfair trade practices, monopolies, and combinations in restraint of trade.  RA 3247 prohibits any
person, firm or entity from monopolizing or attemp ting to monopolize, or from taking part in any
conspiracy or combination, i.e. trust, in restraint of trade or commerce, or from restraining free market
competition.
161. Other relevant laws include the Civil Code, which  allows the collection of damages arising
from unfair competition;  the Corporation Code, which provides for rules regarding mergers,
acquisitions and consolidations;  the Revised Securities Act, which prohibits manipulation of securityprices and insider trading;  and the Price Act, which identifies illegal acts of price manipulation such
as hoarding, profiteering, and cartels.  The Retail Trade Nationalization Law (RA 1180) of 1954
stipulates  that only Filipino citizens may engage in retail trade;  under the Act, no person who is not a
citizen of the Philippines and no association of part nership, or corporation, the capital of which is not
wholly owned by such citizens, may engage, di rectly or indirectly, in the retail business.
162. No central government agency oversees the implementation of competition policy;
enforcement of statutes, including regulation and monitoring of unfair trade practices and
anti-competitive behaviour, is vested in various agencies.  For example, the Bureau of Import Services
is mandated to monitor import quantities and prices of selected sensitive items, to anticipate surges of
imports and assist domestic industries against unfair trade practices.  The Securities and ExchangeCommission is mandated to administer the approval and registration of corporate consolidations,
mergers, and combinations;  it also implements the Securities Act of 1982, which penalizes fraudulent
acts in connection with the sale of securities (e.g. price manipulation, insider trading, short selling).
163. Anti-competitive practices may be prosecuted in criminal courts.
164. The Philippines is party to the WTO Working Group on Trade and Competition Policy.
                                                     
43 Free Trade Asia Consulting (1996).