Her Excellency, Madam President Gloria Macapagal–Arroyo Graces

FPI’s 16th Annual General Assembly, As Guest of Honor and Keynote Speaker

CLIMATE CHANGE, GLOBAL WARMING AND INVESTMENTS ON

GREENHOUSE GAS EMISSIONSWake Up Call . . . . . .

FORMER Environment and Natural Resources Secretary Angelo Reyes warned that the country’s environment is in a very precarious situation because of climate change and global warming resulting from man’s continuous abusive practices.

Reyes called on the people to “wake up” and reconsider the unrelenting cutting down of trees, pollution of water bodies and other activities that have a negative impact on the environment.

Sec. Reyes lamented, “We are the only specie on earth (homo sapiens) that is systematically destroying our own

F

Continued on page 3

Facts:On October 24, 2002 herein Respondent Margarita A. Adala filed an application with the National Water Resources Board (NWRB) for the issuance of a Certificate of Public Convenience (CPC) to operate and maintain waterworks system in sitios San Vicente, Fatima, and Sambag in Barangay Bulacao, Cebu City.

However, Petitioner Metropolitan Cebu Water District (MCWD), a government-owned and controlled corporation created pursuant to P.D. 198, which took effect upon its issuance by then President Marcos on May 25, 1973, as amended, opposed the application contending that the consent of its Board of Directors is a condition sine qua non for the grant of the CPC citing Section 47 of P.D. 198 which states:

Sec. 47. Exclusive Franchise. — No franchise shall be granted to any other person or agency for domestic, industrial or commercial water service within the district or any portion thereof unless and except to the extent that the board of directors of said district consents thereto by resolution duly adopted, such resolution, however, shall be subject to review by the Administration. (Emphasis and underscoring supplied by Petitioner MCWD)

Petitioner contends that “franchise” should be broadly interpreted, such that the prohibition against its grant to other entities without the consent of the district’s board of directors extends to the issuance of CPCs.

Respondent, on the other hand, proffers that the same prohibition only applies to franchises in the strict sense – those granted by Congress by means of statute – and does not extend to CPCs granted by agencies such as the NWRB.

After hearing and an ocular inspection of the area, the National Water Resources Board (NWRB), in its Decision dated September 22, 2003, dismissed Metropolitan Cebu Water District’s (MCWD) Opposition and ruled in favor of respondent.

Issues: a) Whether the term franchise as used in Sec. 47, PD 198, as amended, means a franchise granted by congress through legislation only or does it also include a certificate of public convenience (CPC) issued by the NWRB?

b) Is Sec. 47, PD 198 constitutional and therefore applicable in the present case?

Ruling: a) The term franchise includes a certificate of public convenience. The Supreme Court cited its previous ruling in Philippine Airlines, Inc. v. Civil Aeronautics Board, G.R. No. 119528, March 26, 1997, 270 SCRA 538 where it construed the term “franchise” broadly so as to include, not only authorizations issuing directly from Congress in the form of statute, but also those granted by administrative agencies to which the power to grant franchises has been delegated by Congress, to wit:

“Congress has granted certain administrative agencies the power to grant

licenses for, or to authorize the operation of certain public utilities. With the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency towards the delegation of greater powers by the legislature, and towards the approval of the practice by the courts. It is generally recognized that a franchise may be derived indirectly from the state through a duly designated agency, and to this extent, the power to grant franchises has frequently been delegated, even to agencies other than those of a legislative nature. In pursuance of this, it has been held that privileges conferred by grant by local authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the Legislature.” (Emphasis and underscoring supplied by the Supreme Court)

b) Sec. 47, PD 198 is unconstitutional. The Supreme Court held that while the prohibition in Section 47 of P.D. 198 applies to the issuance of Certificate of Public Convenience (CPCs), the same provision, is deemed void ab initio for being irreconcilable with Article XIV Section 5 of the 1973 Constitution which was ratified on January 17, 1973 – the constitution in force when P.D. 198 was issued on May 25, 1973. Section 5 of Art. XIV of the 1973 Constitution reads:

SECTION 5. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of the capital of which is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Batasang Pambansa when the public interest so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in the capital thereof. (Emphasis and underscoring supplied by the Supreme Court)

This provision has been substantially reproduced in Article XII Section 11 of the 1987 Constitution, including the prohibition against exclusive franchises.

The Supreme Court also quoted its earlier ruling in National Power Corporation v. Court of Appeals (G.R. No. 112702, September 26, 1997; 279 SCRA 506, 523), that:

A “public utility” is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. x x x (Emphasis and underscoring supplied)

Since Section 47 of P.D. 198, which vests an “exclusive franchise” upon public utilities, is clearly repugnant to Article XIV, Section 5 of the 1973 Constitution, it is unconstitutional and may not, therefore, be relied upon by petitioner in support of its opposition against respondent’s application for CPC and the subsequent grant thereof by the NWRB.

METROPOLITAN CEBU WATER DISTRICT (MCWD) vs. MARGARITA A. ADALA, G.R. No. 168914, July 4, 2007 (En Banc)

Franchise on Public Utilities

S u p r e m e C o u r t D e c i s i o n D i g e s t :by: Atty. Rufino M. Margate Jr.

Printed Matter3rd Class Mail- Post paid at MakatiCPO-OM-04-16 NCR.Valid Date:31 December 2007

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or this year’s FPI 16th Annual General Assembly this coming August 13, 2007, the President Of The Republic had

graciously accepted the Federation’s invitation for her to be the guest of honor and keynote speaker.

Articulating the message, for this year’s annual gathering, the Federation forcefully underscores that Philippine made products are world class, in quality, price and prompt availability, likewise, this is also what FPI is all about, what it stands for and the affirmative role the Federation fulfils in its proactive partnership with the government in strengthening our nation.

Moreover, as this is the first time the President will grace the Federation‘s General Assembly, the FPI who truly represents the manufacturing sector of the Philippine economy, will proclaim and demonstrate the true Filipino value of bayanihan, in magnitude, character and in action, of the entire Philippine manufacturing community.

Accordingly, the affair will witness the induction of the Federation’s officers and new members, signing of several memorandum of understanding with the Technical Education and Skills Development Authority (TESDA), Gawad Kalinga, University Of The East (UE) and the Port Users Confederation (PUC), and the presentation of the FPI Annual Report 2006–2007.

habitats”. He said, “It is time to unite and be committed now to the protection of the environment, while it is not yet too late to address the problem, we do not have all the time either.” He stressed that because the Philippines is an agricultural country, climate change will severely affect crop production and food security, adding that the government and the people must take concrete, comprehensive and committed community action

In his speech delivered during the Earth Day celebration on April 22, 2007, he called everyone’s attention on this problem and stressed that beyond the DENR’s 12-point priority agenda, the Department recognizes the need to devote special effort and attention to climate change and global warming which is considered as the biggest and most threatening environmental issue at present.

Photo Credit: Philippine Information Agency (PIA)Philippine Charity Sweepstakes Office (PCSO)

8

The Financial Executives Institute of the Philippines (FINEX) recently conducted a forum on the domestic transport fuel situation to a standing room only crowd at the Manila Golf and Country Club. The five speakers during the forum were all big names in the industry as follows: Engr. Melita V. Obillo, Chief of the Oil Industry Management Bureau (OIMB) of the Department of Energy; Mr. Edgar O. Chua, Country Manager, Pilipinas Shell Petroleum; Ms. Anna Whitehouse, President & Managing Director, Total (Philippines) Corp.; Mr. Francis Glenn L. Yu, President & CEO, Seaoil Petroleum; and Mr. Raf-fy Diaz, Consultant, Chemrez Technologies, Inc.

Engr. Obillo started the forum with an overview of the down-stream industry after deregulation. Essentially, the role of the Department of Energy has shifted to that of monitoring and standard setting. They would monitor the prices of oil prod-ucts in the domestic and international markets, the availabil-ity of supply and inventory levels. Standard setting enables the DOE to improve the quality of the fuel we use by mandat-ing or enforcing certain minimum requirements, the latest of which is the implementation of the Biofuels Law which now mandates the use of at least 1% CME by volume in Biodiesel by May 6, 2007 and to 2% within 2 years. For gasoline, the law requires 5% Bioethanol by 2009 and 10% Bioethanol by 2011.

It was interesting to note that in the presentation of Engr. Obillo, as of the end of June, our unleaded gasoline pump price of P40.45/liter was lower than our neighbor Thailand at P43.51/liter and much lower than Hong Kong which was at P79.55/liter. However, we were slightly higher than Califor-nia where the gasoline pump price was at P38.93/liter. In the case of diesel, the Philippines was at P34.45/liter which is even lower than California at P37.48/liter.

Mr. Chua, the Country Manager of Shell, had a sobering story to tell about the Pandacan Oil Depots. He certainly made his case by presenting the side of the oil companies on a more factual basis. It should be noted that Pandacan supplies 50% of the Philippine’s total demand for fuels and that Shell con-structed its depot in Pandacan in 1914 and it was the residen-tial community that sprouted around it at a much later time. On November 21, 2001 the City Council of Manila rezoned the area from industrial to commercial and required the oil companies to move out in 6 months. Fortunately, the oil com-panies were able to get an injunction from the RTC.

Mr. Chua explained the strategic importance of the Pandacan depots to the transport fuel requirements of the country and the tremendous costs and lack of viable alternatives should they be forced to close down their facilities in the area. Mr. Chua also went through great detail about the security and safety measures they have in place to prevent any untoward incident from happening and the effort they are taking to be responsive to the needs of the surrounding residential com-munity, which Mr. Chua disclosed, did not want the oil com-panies to leave Pandacan.

EXECUTIVE EDITORS:

Jesus L. Arranza;

Henry A. Tañedo;

George S. Chua;

Renato R. Ermita.

FPI SECRETARIAT:

Atty. Rufino M. Margate, Jr., Secretary General:

Bernard M. FelicianoTechnical Staff-Media Affairs

Mauro R. Arce; Technical Staff

Stevenson C. Tavera; Technical Staff

Ellen R. CusilitExecutive Secretary

Jocelyn C.Delos Santos; Accounting Functions

Judanito F. Yap;IT Specialist

Allan A. Salvador.Dispatch Functions

The TAMBULI Magazine, entered as a third-class mail matter at the Makati Central Post Office and published once a month, is the official publication of the Federation of Philippine Industries, Inc., with editorial office located at Suite 701 Atlanta Center, Annapolis St. Greenhills, City San Juan, Philippines. Tel. Nos. 722-3409; 721-9642; 727-4359; Fax: 722-9737 ; E-mail: fpi@fpi.ph or fpi@philonline.com; Website: http://www.fpi.ph

The views expressed in any articles or items appearing in the magazine, are those of the authors and do not necessarily reflect those of the FPI Management.

To contribute any articles, whether in the form of an industry situation analysis, position papers, or feature articles touching on issues related to industry/trade, banking and finance, environment, labor, energy and so forth, please contact the FPI Secretariat in the same address given above.

Ta m b u l iE d i t o r i a l B o a r d

For queries on subscription and/or to advertise, please contact the FPI Secretariat in the same address/contact numbers given above.

Dindo C. MerceneConcept and Layout-Design

Cover & PagesPrinters

Moving on, Ms. Whitehouse presented a new “oil”ternative in the use of LPG for vehicles. She convinced the audience that LPG was indeed a cleaner fuel than gasoline or diesel, that it was super safe to use and that it was quite easy to convert any vehicle including yours to use LPG while keeping the ability of using the vehicle’s original fuel. If that does not convince you to switch to LPG, then the fact that it is a cheaper fuel should. A typical taxi should be able to recover its initial cost of conversion within 3 to 8 months and even a tricycle will have a payback period of 10 to 12 months, from the fuel savings.

Mr. Yu was the fourth speaker and gave an exhaustive presentation on the use of ethanol as an alternative fuel. The beauty with ethyl alcohol or ethanol is that it is a renewable fuel that can be made from indigenous agricultural resources such as corn, sugarcane or cassava. Ethanol also provides better engine performance due to a higher octane rating and better combustion. It also helps clean the fuel line and engine parts, with modern car warranties supporting it as a fuel blend. Another advantage to using ethanol is that it is environment friendly; it reduces carbon monoxide and toxic emis-sions by 30% and 22% respectively.

Currently, the primary use of ethanol, as a fuel is being already carried-out in countries like Brazil; ethanol has displaced as much as 40% of gasoline use in vehicles, with ethanol at only half the price of gasoline. Due to the increasing demand for ethanol, global production is close to 50 billion liters a year. In the Philippines, 400,000 hectares were cultivated to produce 28 million tons of sugar cane, to meet the 10% required ethanol blend in gasoline an-other 100,000 hectares is needed to produce another 7 million tons of sugar cane.

Finally, Mr. Diaz did a wonderful job of explaining the merits of Biodiesel particularly that of Cocobiodiesel. Amongst all of the potential sources of Biodiesel, it would seem that Cocobiodiesel is the best. It is the only one that passed Japan’s standards for high oxidation stability, it has a short-saturated carbon chain that makes it easy to burn, it reduces NOx emission, a high octane number of 70 and it reduces the viscosity of fuel oil by 67% with just a 1% blend.

Biodiesel has the lowest release of CO2, for every 15,500 BTU, at 6.5 lbs. compared to 17.06 lbs. for ethanol, 20.42 lbs for LPG, 23.95 lbs. for gasoline and 24.25 lbs. for petroleum diesel. As a tip, for those of you wanting to pass the emission test the next time you have your diesel vehicle registered make sure you use a biodiesel blend.

With the various fuel alternatives available, LPG, ethanol and bi-odiesel, not only do we assure ourselves of a fuel supply for our vehicles, we also get a cheaper and cleaner burning fuel. That is certainly a great “oil”ternative for all of us!

(Comments may be sent to chua.george@yahoo.com)

“Oil”ternatives: Life after the BioFuels Act

Business Optionsby George S. Chua however, in turn resulted to increased smuggling,

in the form of undervaluation, misdeclaration and

fictitious duty-drawback transactions in Korea.

This is also happening in our country and the effect

is very much injurious to the local industries and in

the collection of government revenues.

While the total number of smuggling cases and the

total value of customs offences posted a 32% decline

in 2001, it is noted that individual values have more

than doubled during the last five years, reaching an

average of US$156,000 per transaction.

This is attributed to the fact that whilst the market has

already been liberalized, and import tariff has been

significantly reduced for most products (weighted

average duty of 8.0% as at 2002), smuggling has

been narrowed down, with growing impunity, to a

number of high-tariff items such as agricultural and

fishery products, garments and textile, alcoholic

drinks and luxury vehicles, and import-restricted

items such as herbal medicine.

Korea’s Interdiction Policy: Korea’s interdiction

policy is 2-pronged. (1) Discouraging demand for

smuggled goods, this basically calls for stepped-

up and no-nonsense enforcement activities AFTER

customs clearance. These include spot checks at

market level and stiff penalties for smugglers. The

strategy is to significantly increase the risk involved

in the circulation of smuggled goods, with the

end in view of decreasing motivation for handling

smuggled goods. Decreased demand at market

level leads to price reduction, which in turn leads to

lower profit for the smuggler. Low incentive finally

leads to reduced smuggling. (2) 24-hour Customs

hotline for reporting suspected smuggling cases

and informant reward of up to US$20,000.

SINGAPORE: Singapore, being a free trade country,

does not have specific policies or measures imposed

by the government with regards to controlling illegal

importation. According to the Ministry of Trade

and Industry, the Customs and Excise Department

(CED) of Singapore is very capable enough to track

illegal importation, if there is any. They are very

strict in monitoring the importation requirements

of goods coming into Singapore. Should there be

suspicious shipment, CED will hold it for inspection

and will seize the goods if found to be illegal.

Singapore adopts the free market system so that the

industries could respond quickly to market signals

and adjust their strategies accordingly. This also

ensures that Singapore economy’s scarce resources

are allocated efficiently.

As a free trader and a small and open economy

highly dependent on trade, Singapore has a strong

interest in ensuring that global trade is based on a

strong rule-based multilateral trading system where

goods and services can flow freely with minimum

impediment.

As far as possible, the government does not

intervene in the economic decision of firms, unless

overriding social or political concerns prevail. With

rare exceptions, entrepreneurs are free to set up

businesses in any sector.

As a result of their openness, Singapore has

benefited from the presence of foreign investments.

They bring in capital; technology, management

know-how and access to world export markets.

With the free market system, Singapore allowed

open competition not only among domestic firms,

but also from foreign firms and products. This

ensures that local companies remain competitive

without having to shut themselves out from

external competition. Consumers also benefit from

lower prices.

HONG KONG: Hong Kong is a free port, which

thrives on free trade. The free trade policy means

Hong Kong maintains no barriers on trade. Thus,

Hong Kong does not charge tariff on importation or

exportation of goods. Import and export licensing

is also kept to a minimum. Licensing is only

imposed when there is a need to fulfill obligations

undertaken by Hong Kong to its trading partners or

to meet public health, safety or internal security.

Labeling, Product Standards and Consumer

Protection. Hong Kong’s Consumer Council is

a statutory body established for the purpose of

protecting and promoting the interest of consumers

of goods and services, mortgagors and lessees of

immovable property in Hong Kong.

UNITED ARAB EMIRATES: The United Arab

Emirates (UAE) has been pursuing policies and

measures to curb illegal importation in the country.

Stringent controls have been established at ports and

airports in each of the seven emirates constituting

the UAE. Import licenses, tariffs and standards

and procedures on goods and commodities are in

place to regulate their entry into the UAE. Regular

inspections and monitoring are conducted to ensure

compliance to these regulations and procedures.

Confiscation, fines and even closures are also

imposed on violators of these regulations.

USA: The success of the US Government in curbing

smuggling or illegal importation is based mainly

on three policies or measures, such as keep the

tariffs low enough to prevent giving an incentive

to smuggling. The average US tariff is 4%; maintain

a capability for honest enforcement by the US

Customs and supporting agencies; and maintain a

coast guard large enough to police the coastline of

the United States. For special products like textile

and sugar, a special regime of quotas is maintained.

The most serious problems of smuggling in the US

are those related to drugs, where the incentive for

smuggling is very high and illegal immigration,

especially from Mexico, with which the US shares

a very long and inadequately policed border, and

where the economic incentives for doing so are

irresistible.

(Source of information – Foreign Trade Service

Corps; Philippines’ Trade and Investment Promotion

Offices in Japan, Korea, Singapore, Hong Kong,

UAE and USA).

2 7

In line with its intention to stimulate growth and development of Philippine industries, generate public awareness on the role of Philippine industries in the vitality of our economy and the importance of patronizing locally produced goods and to showcase/promote world-class Philippine-manufactured products, the Federation of Philippine Industries’ (FPI) 1st Philippine Industries Exposition 2007 (PHILINDEX 2007) is scheduled this coming December 14, 15 & 16, 2007 (Friday, Saturday and Sunday), 10:00 AM – 9:00 PM at the Mega Trade Hall, Mega Mall, EDSA, Mandaluyong City, Metro-Manila, Philippines.

PHILINDEX 2007 will showcase domestically produced goods, highlighting products manufactured by FPI Members.

This event would also be expecting foreign guests/buyers to visit the industry fair.

In view of its limited slots, reservations will be on a “first-come, first-served” basis. For update on available slots, please contact the FPI Secretariat

1st Philippine Industries Exposition(PHILINDEX) 2007

GREENHOUSE GAS EMISSIONS ..... continued from page 1

In line with the above, this year’s theme on the celebration of the Philippine Environment Month is “Beat the Heat: Let Us Work Towards A Safer Climate”, which focuses on the importance of taking a unified action to help reduce, if not eliminate, the worldwide problem on climate change.

Climate is not weather. Weather is the condition of the atmosphere at a particular place and time measured in terms of wind, temperature, humidity, atmospheric pressure, cloudiness, and precipitation (rain, snow, etc.), which change all the time-hour-to-hour, day-to-day, and season-to-season. While climate is the average weather pattern in a place, which usually stays pretty much the same for centuries if it is left to itself. Yet, people actions have changed the earth and its climate in a number of significant ways. Without corrective measures, climate change will cause the extinction of countless species and destroy some of the world’s most precious ecosystems, putting millions of people at risk.

Carbon Dioxide… the main culprit

Carbon dioxide, which is the most important among the greenhouse gases is also the main culprit due to its large impact in climate change. Carbon dioxide traps solar heat in the atmosphere, partly in the same way as glass traps solar heat in a sunroom or a greenhouse, which for this reason it is called “greenhouse gas” (GHG).

Human activities such as burning of fossil fuels like coal, oil, and natural gas release carbon dioxide to the atmosphere. These fuels contain long carbon chains and burning them makes carbon dioxide gas with longer carbon chains.

Since the early 1800s when people began burning large amounts of coal and oil, the amount of carbon dioxide in the earth’s atmosphere has increased by nearly 30% and the average global temperature appears to have risen between 1° and 2°F. And as more fossil fuels for energy are burned, more carbon dioxide are added to the atmosphere, which increases the average temperature of the atmosphere.

Other GHG- Methane and Nitrous Oxide

Living trees remove carbon dioxide from the atmosphere. And carbon contained in the trees is released as carbon dioxide when woods are burned. Methane gas another GHG is produced when wood rots in swamps. Rice paddies, cattle, coal mines, gas pipelines, and landfills also produce the methane gas, which causes about 30% as much warming as carbon dioxide. Methane and nitrous oxide together accounts for almost half as much of global warming.

Global Warming occurs when the average temperature in most places will be warmer than its normally does and is accompanied with significant changes in the: amount and pattern of rain and snow, length of cultivating seasons, frequency and severity of storms, and the rise of sea level.

The global warming phenomena severely affect human beings, farms, forests, plants and animals in the natural environment. Scientists’ best predicts that the amount of global warming will be about 2.5°F (1.4°C) by the year 2050.

Ozone Hole is different from GHG Problems

Many people are confused on the hole in the ozone layer with climate change. However, these two problems are not closely related.

Without the ozone layer, harmful ultraviolet lights which penetrate the earth’s atmosphere, can cause skin cancer and damage plants and animals. The use of chlorofluorocarbons (CFCs), which are gases, used in refrigerators, air conditioners, and industrial applications causes the hole in the ozone layer. But prior to 1978, most uses of the CFCs under an international agreement are now being phased out to protect the ozone layer.

Ways How Industries Can Be A Climate/GHG Saver

1. Energy source switching from fossil based to clean and renewable energy sources like wind power, on-site solar, solar generation systems, low-impact hydro, and

other renewable energies

2. Fuel switching from fossil based fuel to alternative fuel source• Use of Biomass to fuel co-generation plant • Use of Compressed-Natural-Gas (CNG) to CNG vehicles.• Use of industrial by-products as fuel source- cement plants fly ash from coal-fired power plants- slag from the steel industry

3. GHG Capture as to alternative fuel sourceConverting methane gas collected e.g. from landfill, animal feces, etc. into biogas fuel to energize co-generation system.

4. Energy Conservation• Observe best practices e.g. fuel saving driving practices like turning off vehicles when idling • Purchase of more concentrated formula raw materials e.g. resins and paints to reduce the number of truck trips.•Observe of day-to-day simple energy saving practices.

5. Increasing Energy Efficiency• Replacement of compressors, chillers, boilers, hot water systems, lighting systems and motors with more efficient ones to reduce the amount of electricity used.• Replacement of light switches with motion and light sensors on facilities that have many locations. • Streamlining production process without sacrificing product quality to reduce energy consumption per unit product production• Installations of wind turbines with computerized controls facilities.

As we all know, the power sector is responsible for over 40% of all manmade heat-trapping carbon dioxide emissions. The current thrust is - moving towards a Carbon Dioxide Free Power Sector

Today, investments in carbon reducing or Clean Development Mechanism (CDM) projects are under development in countries such as Kenya, Uganda, Brazil and the Philippines in order to obtain CDM credits.

Six (6) CDM projects in the Philippine were already approved and granted carbon credit financing by World Bank.

affected party has to submit written information

to the Ministry of Finance on the following:

- Description, name of manufacturer, type, model

and feature of the goods;

- Name of exporter;

-Summary of the incident of dumping and the

injury caused by such importation; and

- Request for confidentiality and reasons thereof.

The Ministry of Finance will investigate and make

public announcements in Official Gazette, call a

meeting of both parties and require the importer

to post a bond before determining whether a fine

is to be imposed or not.

3. Illegal goods infringing on Intellectual Property

Rights (IPR) covering patents, utility models,

designs, trademarks, copyrights, circuit layouts,

etc.

Based on Customs Tariff Law, the Regional

Customs Office is empowered to enforce

confiscation, rejection and reshipment of the

goods back to the importers. The holder of the

patent, trademark or copyright could apply for

import suspension by informing the Director

General of Customs the following information:

• Type of right that was violated

• Name of the cargo

• Period of effective application

• Proof attesting to the infringement

The suspension procedure covers investigation

by the IPR special investigator of the Customs

Headquarters; filing of the proof of infringement

(within 10 days); imposition of the cargo

disposition (on a voluntary basis either by

discarding, destroying, abandoning or reshipping

(at the cost of the importer). In case the applicant

wants to apply for a bond, the amount of money

In this issue of the TAMBULI Magazine, we

will be highlighting some countries’ approach

in reducing, if not eliminate smuggling or the

illegal importation of goods into their respective

countries. By this information, our Bureau of

Customs can gain insights as to how these

countries tackle this economic menace.

JAPAN: This country has a well-structured

control system for illegal importation of goods in

the following manner of –

1.Smuggling (through commercial cargoes,

passengers, international mails, ships, and

aircrafts). In 2002, smuggling by commercial

cargoes in Japan on the basis of import permits/

approvals numbered 1,214, an increase of 127.6%

from 1990. As smuggling incidents increased

in number, the Japanese government has

adopted various methods in consolidating its

enforcement capability by the carrying–out the

following countermeasures: (a) strengthening

and establishing of special inspection units,

surveillance mobile units and enforcers; (b)

reinforcement of collection and analysis of

information on smuggling by introducing

new intelligence-related posts (centrally and

regionally); strengthening cooperation with trade

circles (vessels, aircraft, commercial cargoes) by

signing MOUs; linkages with associations under

the Customs and Tariff Bureau of the Ministry of

Finance (shipowners, brokers, forwarders, etc);

cooperation with bonded warehouse associations,

fishery cooperatives, etc., by the Regional

Customs Offices; and (c) Public dissemination of

information through media, etc.

2. Anti-dumping: Even with the WTO rules,

Japan still imposes Anti-Dumping Measures on

products especially those coming from China

in order to protect its own local industries. To

request for levy of anti-dumping duties, the

deposit is computed by totaling the storage cargo,

loss of profit and other damages.

Over and above this law, Japan imposes various

requirements on standards and certifications for

every type of imports, namely;

a. Labeling (especially for foods and household

products). Under the Japan Agricultural Act (JAS),

all food items must follow the labeling law stating

the product name, ingredients/materials, content

volume, manufacturers, shelf life, and preservation

methods.

In the Food Sanitation Law, food containers must

indicate the product category, use-by date, name

and address of manufacturer, preservation method,

food additives and etc.

For Household Goods Quality Labeling Law,

information on raw materials, performance, usages

and etc are required.

b. Product standards: strict compliance with the

products standards set for food, pharmaceuticals,

household goods, industrial products, etc.

c. Consumer Protection Laws: Certification by the

government for testing concerning the confirmation

of an establishment or third party certification

(private sector)

REPUBLIC OF KOREA: In the Republic of Korea

(ROK) there has been a steady growth, both in the

volume of trade (US$292 billion as at 2001) and the

number of travelers into Korea (20 million for 2001).

As a result of, and with the end in view of reducing

Customs Clearance Costs, the Korea Customs Service

has since implemented what they call as “simplified

clearance procedures” very much similar to the

Philippines’ color-coded “express” lanes (“Green

Lane”, “Red Lane” and “Yellow Lane”). This,

A LOOK AT OTHER COUNTRIES’ APPROACH TO CURB SMUGGLING

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I. Rationale :

This Act is the State’s declared policy to promote good governance in the following manner, namely –

a) integrity, accountability and proper management of public affairs and public property;

b) establish effective practices aimed at the prevention of graft and corruption in the government;

c) maintain honesty and responsibility among public officials and employees;

d) take appropriate measures to promote transparency in every government agency, by means of adopting simplified, i.e. efficient and productive procedures, that will reduce red–tape and expedite transactions, in their interaction with the public.

II.Coverage :

The Act encompasses all government instrumentalities such as –

a) offices and agencies;b) local government units; andc) government owned/controlled corporations that provide frontline services.

III. Definition Of Terms :

a) simple transactions – requests or applications of uncomplicated issues from clients submitted to any government agency/office requiring only ministerial action/s on the part of the government official for prompt resolution.

b) complex transactions – requests or applications of complicated issues from clients submitted to any government agency/office requiring discretion on the part of the government official for prompt resolution.

c) frontline service – the interaction between requesting party/clients and government offices/agencies involving applications such as the following –

c.1) privilege, c.2) right,c.3) permit,c.4) reward,c.5) license,c.6) concession or any c.7) modification, renewal or extension of any of the above.

d) action – the written approval or disapproval of the government agency/office on the application/request submitted by a requesting party/client for processing.

e) requesting party or client – an individual, group of individuals or any entity whose intent is to conduct transaction, whether simple or complex,

A Layman’s Guide To Understand The Anti–Red Tape Act Of 2007 (R.A. # 9485)

and with the interest of availing aforementioned frontline services from any government agency/office.

f) officer or employee – a government personnel whose duties and responsibilities is to act on the application/request submitted by a client for processing.

g) irrelevant requirements – any document or action that is directly immaterial (thus either hinders, protracts or obfuscates) the prompt resolution of the application/request submitted by a client for processing.

h) fixer – any individual, who may or may not be officially involved in the operation of a government office/agency and may or maybe not be in collusion with people working therein, facilitates the speedy completion of transactions for monetary gain, any other advantage or consideration.

IV. Reengineering Of Systems And Procedures :

Mandates that all government agencies/offices undertake efficiency and productivity interventions in order to continually improve their transaction systems, processes and procedures, in turn, reduce bureaucratic red–tape and accelerate processing time.

V. Citizen’s Charter :

Directs that that all government agencies/offices set–up their respective service standards known as Citizen’s Charter.

The foregoing is to be disseminated through billboards posted at the main entrance and/or at the most conspicuous place of offices. Materials written in English, Filipino or in the local dialect shall also be published detailing the following –

a) the procedure to obtain a particular service;b) the person/s responsible for each of the step;c) the maximum time to conclude the process;d) the document/s to be presented by the client, if necessary;e) the amount of fees, if necessary; andf) the procedure for filing complaints.

VI. Accountability Of The Heads Of Offices/Agencies :

The head of the office/agency shall be primarily responsible for the following –

a)implementation of this Act; and b)shall be held accountable to the public in rendering prompt, efficient, convenient and reliable service.

VII. Accessing/Availing Of Frontline Services :

a)Acceptance Of Applications/Requests –

a.1) all government agency personnel shall accept written applications, requests and/or documents

being submitted by clients.

a.2) the personnel in–charge shall acknowledge receipt of application/request by clearly printing his/her name, the unit where personnel belongs, and the time and date of receipt.

a.3) the receiving personnel shall perform an initial assessment to determine a more expeditious action on the submitted application/request.

b) Obligatory Action Of Offices –

b.1) the assigned government personnel, as stated in the Citizen’s Charter – b.1.a) shall act upon all applications/requests, in cases of simple transactions, not longer than five (5) working days;

b.1.b) shall act upon all applications/requests, in cases of complex transactions, not longer than ten (10) working days.

b.1.c) in instances that the maximum time prescribed above may require extension, the concerned government office shall notify the requesting party, in writing, one) the reasons for the extension; two) the final date of release for the extension; and three) the final date of the release of the services requested. b.2) all formally submitted applications/requests shall be promptly acted upon. In cases of disapproval the personnel who rendered the decision shall –

b.2.a) send a formal notice to the requesting party within five (5) working days from receipt of request/application;

b.2.b) an explanation for the disapproval;

b.2.c) and the list of specific requirements requesting party failed to submit.

c) Denial Of Request For Access To Government Service –

Any denial of request/application for government service shall require the following –

c.1) full written explanation;c.2) identity of the personnel making the denial; andc.3) basis of the denial.d)Limitation Of Signatories –

The number of signatories in any document shall be limited to a maximum of five (5) signatures of persons in authority directly supervising the office concerned.

e)Adoption Of Working Schedules To Serve Clients –

Heads of offices/agencies rendering frontline services shall adopt appropriate working schedules

to ensure that all clients within their premises prior the end of the official working hours are –

e.1) systematically attended to;e.2) served even lunch breaks; and e.3) after regular working hours.

f)Wearing Of Identification Cards –

All government personnel transacting with the public shall be provided with the appropriate official identification card which should be visibly worn at all times during office hours.

g)Required Establishment Of Public Assistance/Complaint Desk –

Every government office/agency providing frontline service shall establish a public assistance/complaints desk in all their offices.

h)Automatic Extension Of Permits And Licenses –

In case a government office/agency fails to act on an application/request for renewal of a license, permit or authority within the prescribed period, said license, permit or authority shall automatically be extended

The weekly meeting held by the Customs Bonded Warehouse Committee of the Bureau of Customs every Thursday afternoon, said committee had deliberated on the following issues in relation to the accreditation of new applications. The foregoing was either to operate bonded warehouses or the renewal of expired licenses. Any reactions or comments regarding any of these items, please address them through the FPI Secretariat.

Application for renewal of License to Operate CBW: Games & Garments, Inc., operator of CBW #997, located at No. 6 Brgy. Dalig, Circumferential Road, Antipolo City, manufacturer of adult tracksuits, children’s shorts, men’s polo shirts, and men’s shirts imports fabrics and woven accessories as raw materials; Philippine Carageenan Worldwide, operator of CBW No. M-1753, located at B1, L10, Mt. View, Industrial Complex, Bancal, Carmona, Cavite, manufactures carageenan for export to Japan, Mexico, Italy, Chile, France and USA; Central Visayas Warehousing & Logistics Corporation, operator of ICBW No. 89, manufactures furniture and home furnishings and imports rattan poles, plywood, lumber, synthetic leather, fabric, nails, screws, and bolts, etc.; TA Philippines, Inc., operator of CBW No. M-1035 is in the manufacturer of tapes (polypropylene, BOPP Packaging, adhesive transfer tapes for export to the USA, Venezuela and Hong Kong. This firm imports BOPP film, matte film, acrylic emulsion (adhesive), paper core tubes, boxes, white glassine paper.

Application for accreditation as member of a ‘mother’ CBW operator: Lapanday Foods Corporation as member of Luzviminda Bonded Warehouse Services, operates CBW No. 107, located at Brgy. Mandug, Buhangin District, Davao City. With a reported paid-up capital of PhP3,499,500.00, this company manufactures plastic packaging materials and corrugated fiberboard. It imports polyethylene resin (LLDPE) at 16,750 kgs per month (with estimated wastage of 1.69% or 283.08 kgs) and polyethylene resin (LLDPE) for vacuum packing at 33,250 kgs per month (with estimated wastage of 1.40% or 465.52 kgs). The company also imports Kraft linerboard and semi-chemical medium, with aggregate raw material requirements of 2,112,335.06 kgs. per month.

CUSTOMS ISSUANCES

CMO 13-2007: This Order provides supplemental guidelines in the conduct of x-ray inspection and which fully operationalizes the implementation of the Bureau of Customs’ X-Ray Inspection Project pursuant to Customs Memorandum Order No. 6-2007.

CMO 14-2007: This Order implements the Memorandum of Agreement (MOA) entered into by the Bureau of Customs (BOC), Philippine Nuclear Research Institute (PNRI) and the Philippine Ports Authority (PPA), and the Memorandum of Undertaking (MOU) executed by the International Container Terminal Services, Inc. (ICTSI) and Asian Terminal Inc. (ATI) regarding the operation of Megaports Initiative Project to prevent the illicit trafficking of nuclear and other radioactive materials.

CMO 15-2007: This Order provides guidelines for the implementation of the MOA among the DTI, LTO and BOC pursuant to the DTI-DAO No. 8, series of 2003 on the mandatory accreditation of rebuilding centers. This Order is

being applied to importations of used trucks/buses entered in disassembled form and/or used parts/components for rebuilding trucks and buses falling under categories M3, N1, and N3 of the Philippine National Standards (PNS) 1891:2000 (Road Vehicles Classification). Importations of used parts/components by participants of the Motor Vehicles Development Program (MVDP) are not covered by this Order.

CMO 16-2007: This Order provides for additional guidelines on Customs Administrative Order No. 4-2007 and Executive Order No. 592, thereby facilitating the collection of Container Security Fee and their acceptance of payment through the Land Bank of the Philippines (LBP) and Philippine National Bank PNB).

CMO 17-2007: This Order clarifies the imposition of Mandatory Security Fee (CSF) on foreign transshipments although landed in the Philippines but are intended for export to foreign destinations, which are not included in the imposition of CSF as implemented by CAO 4-2007.

CMO 18-2007: This Order provides for the rules and regulations implementing the Customs Voluntary Disclosure Program (VDP) pursuant to CAO 5-2007.

CAO 1-2007: This Order pertains to penalties related to inward foreign manifest (IFM) and Consolidated Cargo Manifest (CCM). This is to make available to the different offices of the BOC, accurate data and information concerning vessels and cargoes at the earliest possible time. This is to ensure that said offices may utilize whatever legal security measure is applicable in order to ascertain that IFM and CCM are submitted in the prescribed form, with all the required information, at the prescribed time and to the designated customs officials and offices. The preceding will provide the BOC the advance information of cargoes destined to the Philippines enabling them to evaluate the risk of smuggling, require shipping lines and non-vessel operating common carriers/cargo consolidators/co-loaders/break bulk agents to electronically transmit manifest information to customs 12 hours before arrival and to expedite the release of legitimate cargo upon arrival in the Philippine area of responsibility.

CAO 2-2007: This Order provides for the accreditation, establishment and operation of e-Customs Value Added Service Providers.

CAO 6-2007: This Order amends CAO 1-2007, Rules and Regulations on Penalties Related to IFM and Consolidated Cargo Manifest.

CMC 67-2007: This Circular provides for “Product Specific Rule (PSR) for the Priority Integration Sectors (PIS) under CEPT-AFTA Rules of Origin”. This same letter circularizes the letter of Dir. Ramon Kabigting of the DTI-Bureau of International Trade Relations, endorsing the list of Product Specific Rule for the Priority Integration Sectors under the Common Effective Preferential Tariff for ASEAN Free Trade Area (CEPT-AFTA) Rules of Origin. It also provides for listing of various commodities under this Scheme.

CMC 167-2007: This Circular provides for the reduction of rate of Container Security Fees at US$10 for every 40-footer and US$5 for every 20-footer container vans.

until a decision/resolution is rendered.

Disclaimer: The above is only applicable and enforceable as long as the automatic extension of the permit, license or authority will not endanger the following –

h.1) public health;h.2) public safety;h.3) public morals; or toh.4) public policy including, but not limited to, natural resource extraction.

UPDATES ON CUSTOMS BONDED WAREHOUSES (CBWS)

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