ORIGIN OF TARIFF

The word “Tariff” originated from old Spanish coast town of Tarifa, 21 miles from
Gibraltar, which received its name in the Arab who are said to named it after “Tariff Iban
Malik”. This historic little town has existed far more than twelve centuries. Like Gibraltar,
Tarifa is a high promontory and is connected to the coast only by a narrow cause way, easily
defended. When the moors, many centuries ago, founded the town of Tarifa, they prepared the
way for a system that is probably the most important factor in the international trade. As the
name suggest, this factor is the tariff.
In the days when commerce began to expand from the Mediterranean, a gang of racketeers
made Tarifa their headquarters, held up all merchant ships at this point and levied tribute
according to a fixed rate on all merchandise passing in and out of the Straits of Gibraltar. The
mariners called this tribute a tariff and the word became current in England whose vessels
formed the majority in the merchant trade. The word has adopted, doubtless for same reason,
into the Spanish tarifa (price list, rate book) Portuguese tarifa (schedule), French tarifa or tariff
rate and Italian tarifa (price list), the government of Europe began to make similar levies on
imports and tariff became a prolific source of revenue. The tariff system was already established
in the Old World when the American colonies were founded.
In the days of the Moors, the tariff was little better than to hold up. The fierce fighters of Tarifa
levied at will. Because of its position, steady and fruitful source of revenue it controlled, Tarifa
was the scene of much warfare and changed hands many times in its early history.
 TARIFF DISTINGUISHED FROM CUSTOMS

Tariff” may be distinguished from “customs” although the two are often used
interchangeably.

TARIFFS – a term found in many languages, denotes the list of schedules of

commodities with the particular duties or charges upon each.

CUSTOMS – is the English term which originally denoted all “customary” tolls or
dues paid by merchants upon commodities on their way to and from the market, not
necessarily differentiated by the class of goods, for the benefit of the king, lord, local
government of the authority. In the course of time, as the national state became the
dominant economic as well as political unit, the complex structure of multiple local
and provincial tolls on trade was substantially replaced by those levied only upon
crossing the frontier of the country. The Term then became restricted, in most
centuries by the late 18th or early 19th century, to taxes on importation or
exportation of commodities across national boundaries.
 MODERN CUSTOMS TARIFF, DEFINED

Modern customs tariffs are a systematic arrangement of customs

duties levied on goods when they cross the border of a political
unit. They are an official list of schedule setting forth the several
customs duties to be imposed on imports and export of goods in
transit. Import duties are by far the most important these modern
tariff changes, because practically no self-governing nation is
entirely free of it. For example, the Philippine Tariff Act of 1903,
was an import tariff.

Tariff exerts a profound influence upon international trade. They

have become an important issue in the affairs of nations. World
peace and harmony are influenced to no little extent by tariffs.
 HISTORY OF PHILIPPINE TARIFF

I. Philippine Foreign Trade during the Pre-Spanish Period

Long before the history of the Philippines by Magellan, the ancient Filipinos were
already trading with China, Japan, Siam (Thailand), Cambodia, Indonesia, Burma,
Sumatra, Java and other neighboring islands. An interesting Spanish document of
1586 narrated that they “are keen traders and have traded with China for many
years, and before the advent of the Spaniards they sailed to Mulloco Malacca,
Hazian (probably Anchen, Sumatra), Parani, Brunie and other kingdoms.”
The customary way of trading with other people was by barter in which the
Filipinos offered their home products in exchange for the products of other
countries. Sometimes a price was fixed for the commodities which was paid in
gold as agreed upon or in metal bells (gongs) brought from China. The Chinese
writers Chao Ju-Kua (1209-1214) and Wang Tay –Uan(1349) observed that the
ancient Filipinos were honest in the commercial dealings.
History records show that even before the arrival of Magellan in the Philippines,
Chinese, Japanese and other foreign traders who brought silks, woolens, bells,
porcelains, perfumes, iron tin, colored cotton cloth and other small wares to the
country paid tariff duties on them.

II. Spanish Period

As soon as the Islands were acquired by Spain, the ancient almojarifazgo (a three
(3) percent ad valorem duty) imposed on both imports and exports was amplified to
the Philippine customs house and was established in Manila by Governor Guido R.
de Lavizares in 1573. However, according to the report of the Viceroy of Mexico to
the Spanish King of 1573, the governor-general did not enforce the almojarifazgo
at once. It took Gonzalo Ronquillo de Penalosa, the fourth Spanish governor-
general to impose the almojarifazgo in 1582. Duty on Chinese goods was increased
to six (6%) percent in 1606.
It was not until more than two and half centuries later that other ports of the
archipelago were opened to foreign commerce. Zamboanga was opened in
1833, Cebu in 1842, Iloilo and Sulu in 1855 and Legaspi and Tacloban in
1874.

Philippine exports consisted mainly of rice, coconuts, palm oil, sugar, fiber,
straws, cane, dyewoods and lumber and luxuries such as sea snails, beches
defmerk, edible bird’s nests, tortoise shell, pearls and mother-of-pearls shells.
These goods were brought to China by Chinese junks which in turn carried
to the Philippines, cotton, grass linen, silk, iron and iron implements,
households utensils and manufactured wares.
These Chinese wares were later on shipped to Mexico to be sold, the proceeds
of which were made to cover the regular contribution of Mexican
US$250,000.00 for support of the insular treasury. Luxury items sent to
Mexico included silks fine woven fabrics of Persia and India, gold, silver and
spices.
The galleons brought back to Manila Mexican dollars, Spanish wines and
manufactures which gave a profit of 100% to 400%. All foreign commerce was
required to be carried in government vessels except those with China, Japan and other
oriental countries. Not until 1834 when Philippine trade was opened to the world and
ships other than those of Spain permitted to share in Philippine commerce.

The Customs house became a distinct department in 1779 and was made an
independent branch of the Treasury in 1805. While duties in theory is ad valorem,
they were in reality specific by the fixing of arbitrary values. Prior to 1734, these
values were assessed by a board composed of a royal officer and two merchants with a
royal fiscal as intervenor.

In 1734 a permanent board of valuation called as “Junta de Valoraciones”. This was

abolished in 1782, followed by tariff board in 1828 called “Junta de arancelus”. Trade
during the interim was in the hands of Compania Real de Filipinas.
 Primary Functions of Tariff

1.to serve as a source of revenue

2. to protect domestic industries
3.to remedy trade distortions (punitive function).
 Tariff

 A list or system of duties imposed by a government on imported or

exported goods.
 A duty or duties so imposed.
 A schedule of prices or fees.
 A schedule of rates for common carrier services.
 A taxation imposed on goods and services imported into a country
( known as a duty tax)
 Schedules of rates or fares in the transportation industry.
 Tax levied upon goods as they cross national boundaries.
 A list of duties to be paid on imports.
 A list of taxes on goods imported.
 A tax on foreign goods upon importation.
 Types of Tariff

 Ad Valorem Tariff - The kind commonly used, is one that is calculated as a

percentage of the value of the imported goods- for example, 10%, 3% or
35%. This may be based, depending on the country, either on destination
(CIF), or on the value of the goods at the port in the country of origin (FOB)
.
 Specific Tariff – is a tax on the goods imported(based on quantity, weight,
volume or other unit of measurements. Specific duties are often levied on
foodstuffs and raw materials.
 Revenue Tariff – a set of rates designed primarily to raised money for the
government. A tariff on coffee imports, for example ( imposed by countries
w/c do not grow coffee) raises a steady flow of revenue.
 Protective Tariff – is intended to artificially inflate prices of imports and
protect domestic industries from foreign competition.
 Prohibitive Tariff – a tariff so high that it shuts out foreign goods.
Purpose of Tariff
 Marilou P. Mendoza
Chairperson

Ernesto L. Albano Allan B. Gepty

Commission Member III Commission Member III
OFFICE OF THE CHAIRPERSON AND COMMISSIONERS

Ma. Lourdes M. Saluta

Angelita R. Fernando Elvira C. Ignacio Director II
OIC- Director III OIC- Director III

FINANCE, MANAGEMENT AND RESEARCH, INVESTIGATION AND INTERNATIONAL

ADMINISTRATIVE SERVICES TRADE ANALYSIS SERVICE
(FMAS) (RIITAS)
 Tariff Commission

The Tariff Commission (TC) performs governmental and quasi-judicial functions.

The Commission is the principal authority on tariffs and trade remedy measures. It
investigates and recommends/decides on petitions for tariff modification and tariff
classification. It is an independent adjudicatory body on trade remedy cases.

The Commission is a key adviser to the executive and legislative branches of government
on tariff and related matters, promotes trade by providing recommendations on trade
negotiating strategies and participating in policy dialogues and international trade
negotiations, and is an advocate of industry competitiveness and consumer welfare.

The Commission is an attached agency of the National Economic and Development

Authority. Under Republic Act 10863 (s. 2016), known as the “Customs Modernization
and Tariff Act”, the Commission’s functions under Presidential Decree 1464 (s. 1978), also
known as the “Tariff and Customs Code of the Philippines”, were updated and expanded.
Vision

The Tariff Commission shall be the principal and independent

authority on tariff and trade remedy measures to enhance
industry competitiveness and promote consumer welfare. 
 Mission

The Tariff Commission, a key adviser to the executive and legislative branches of government on
tariff and related matters, an independent adjudicatory body on trade remedy cases, and an
advocate of a culture of fair competition, remains committed to the pursuit of good and effective
governance. In the conduct of public hearings and consultations, we commit ourselves to balance
with objectivity the interests of our stakeholders, including consumers. 

The Commission remains committed to investigate and adjudicate trade remedy cases in an
expeditious and judicious manner. Where our competence in tariff commitments is required in
relation to international trade, we work harmoniously with other agencies in promoting the
national interest. 

We endeavor to secure the best for our staff, to hone their skills and develop to the fullest their
potentials even as we instill in them the values of honesty, dignity and the pride inherent in
working for country and people. 

The Tariff Commission discharges its duties and responsibilities with utmost competency and
efficiency as a model of excellence and integrity in government service.
• ANNOUNCEMENTS
 SECTION 1600. Chief Officials of the Tariff
Commission and Qualifications.— 
 Official of the Tariff Commission consist of:
 Chairperson and 2 Commissioner appointed by the President
of the Philippines.
Chairperson and Commissioner:
 Natural born citizens of the Philippines
 Of good moral character and proven integrity
 And who, by experience and academic training possess the
necessary qualifications requisite for developing expert
knowledge of tariff and trade related matters
 During their terms of office:
 The Chairperson and Commissioners shall not engage in the
practice of any profession
 Intervene directly or indirectly in the management or control
of any private enterprise w/c may, in any way, be affected by
the functions of their office
 They shall not be, directly or indirectly, financially interested
in any contract w/ the government, or any subdivision or
instrumentality thereof.
SECTION 1601. Appointment and Compensation
of Officials and Employees.
All employees of the Commission shall be appointed by the
Chairperson in accordance with the Civil Service Law except as
the private secretaries to the offices of the Chairperson,
Commissioners and Executive Director.
 SECTION 1602. Official Seal
The Commission is authorized to adopt an official seal.
SECTION 1603. Functions of the Commission.

The Commission shall have the following functions:

(a) Adjudicate cases on the application of trade remedies against imports
pursuant to Sections 711, 712 and 713 of this Act;
(b) Study the impact of tariff policies and programs on national competitiveness
and consumer welfare inline with the economic objectives of the government;
(c) Administer the Philippine tariff schedules and tariff nomenclatures;
(d) Issue advance rulings on tariff classification of imported goods and render
rulings on disputes over tariff classification of goods pursuant to Section 1100
of this Act, except in cases involving goods on which the Commission has
provided advance ruling on tariff classification:
(e) Provide the President and Congress with independent analysis, information
and technical support on matters related to tariff and nontariff measures
affecting Philippine industries and exports for policy guidance;
(f) Analyze the nature and composition, and the classification of goods
according to tariff commodity classification and heading number for customs
and other related purposes, which information shall be furnished the NEDA
DTI, DA, DOF, DENR, and BSP;
(g) Review the trade agreements for negotiation and trade agreements
entered into by the Philippines and make recommendations, if necessary, on
the consistency of the terms of the agreements with the national policy
objectives;
(h) Conduct public consultations and public hearings pursuant to its
functions; and
(i) Deputize or delegate, to appropriate government agency its function of
rendering rulings on disputes over tariff classification of goods, until the
plantilla positions necessary for undertaking such function have been
approved and filled-up; Provided, That such delegation of function shall not
extend beyond three (3) years from the effectivity of this Act.
 SECTION 1604. Reports of the Commission.

The Commission shall place at the disposal of the President and

any Member of the Congress of the Philippines all information at
its command. It shall conduct such investigation and submit
reports as may be required by the President and the Congress of
the Philippines. It shall likewise report to the President and
Congress on the first Monday of December of each year and
hereafter, a statement of methods adopted and a summary of all
reports made during the year.
 SECTION 1605. Access to Documents and
Assistance to the Commission.
The Commission or its duly authorized representative shall have
access to any document, paper or record pertinent to the subject
matter under investigation, in the possession of any person, firm,
copartnership, corporation, or association engaged in the
production, importation, or distribution of goods under
investigation, and shall have power to summon witnesses, take
testimony, administer oaths, and to issue subpoena duces
tecum requiring the production of books, papers, or documents
relating to the matter under investigation. The Commission may
also request the views, recommendations, and assistance of any
government office, agency, or instrumentality who shall be
expected to cooperate fully with the Commission.
 SECTION 1606. Sworn and Verified
Statements.—
The Commission may order the taking of sworn statements
at any stage of any proceeding or investigation before it. The
sworn statements must be made before a person duly
authorized to administer oaths.
The Commission is authorized to require any importer,
grower, producer, manufacturer or seller to file with the
Commission a statement, under oath, giving the selling prices in
the Philippines of goods imported, grown, produced, fabricated
or manufactured by such person.
 SECTION 1607. Implementing Rules and
Regulations
The Commission shall promulgate and adopt such rules and
regulations as may be necessary to carry out the provisions of
this Act.
 Section 800 Conditionally Tax and /or Duty
Exempt Importation
• The following goods shall be exempt from the payment of import duties upon compliance w/
the formalities prescribed in the regulations w/c shall be promulgated by the Commissioner
w/ the approval of the Secretary of Finance: Provided, That goods sold, bartered , hired or
used for purposes other than what they were intended for and w/o prior payment of the
duty, tax or other charges w/c would have been due and payable at the time of entry the
goods have been entered w/o the benefits of this section, shall be subject to forfeiture and the
importation shall constitute a fraudulent practice against customs law: Provided, however,
That a sale pursuant to a judicial order or in liquidation of the estate of a deceased person
shall not be subject to the preceding proviso ,w/o prejudice to the payment of duties, taxes
and other charges. Provided, further, That the President may upon the recommendation of
the Secretary of Finance, suspend, disallow or completely withdraw, in whole or in part, any
conditionally free importation under this section:

• a. Aquatic product such as (fishes, crustaceans , mollusks, marine animals, seaweeds,

fish oil, roe), caught or gathered by fishing vessels of Philippine registry : Provided, That they
are imported in such vessels or in crafts attached thereto: Provided, however, That they
have not been landed in any foreign territory or, if so landed, that they have been landed
only for transshipment w/o having been advanced in condition.
 That the fishing vessel is a Philippine registry
 They are imported in such vessel or in crafts attached thereto
 They have not been landed in any foreign territory or, if so landed, they have
been landed solely for transshipment w/o having been advanced in condition

advanced in condition = undergo processing (canning)

b) Equipment for use in the salvage of vessels or aircrafts, not available locally, upon
identification and the giving of a security in an amount equal to one hundred percent
(100%) of the ascertained duties, taxes and other charges thereon, conditioned for the
exportation thereof or payment of corresponding duties, taxes and other charges
within six (6) months from the date of acceptance of the goods declaration; Provided,
That the Bureau may extend the time for exportation or payment of duties, taxes and
other charges for a term not exceeding six (6) months from the expiration of the
original period;
(c) Cost of repairs, excluding the value of the goods used, made in foreign
countries upon vessels or aircraft documented, registered or licensed in the
Philippines, upon proof satisfactory to the Bureau: (1) that adequate facilities
for such repairs are not afforded in the Philippines; or (2) that such vessels or
aircrafts, while in the regular course of their voyage or flight, were
compelled by stress of weather or other casualty to put into a foreign port to
make such repairs in order to secure the safety, seaworthiness, or
airworthiness of the vessels or aircrafts to enable them to reach their port of
destination;