Proposing an Easy, Not Too Embarrassing Way Our for the Dept. of Finance on the Book Import Controversy

Copies of the controversial DOF Dept. Order No. 17-09 have emerged online, courtesy of Manolo Quezon (who credits Twitterer jtnord for scanning the same). Page 1 is here, while Page 2 is here. Manolo Quezon also provides a very useful Timeline and Readings, which better illuminate the factual background.

No surprises from the text of D.O. No. 17-09. As expected, it presumes that the Florence Agreement exempts only "educational, scientific and cultural materials" from import duties even though the text of the Agreement itself clearly exempts all printed books. D.O. No. 17-09 also assumes that Rep. Act No. 8047 only covers the tax-free importation of books Both premises are wrong. If any one of them is debunked in court, the custom duties on imported books will be invalidated as well. The Florence Agreement is clear-cut in itself, and its provisions alone should be sufficient to invalidate the duties. However, Republic Act No. 8047 provides for an equally potent basis for annulling the tariff. Under the Section 28(2), Article VI of the Constitution, the power of the President to impose tariffs and duties must be delegated by Congress, which has the constitutional authority to impose limitations on such power of the President. Republic Act No. 8047, by itself, restricts the President from imposing duties on books and could be enough to invalidate the duties.

Still, this need not go to court. Reading D.O. No. 17-09, as well as Section 105(s) of the Tariff and Customs Code, I think all the ingredients are there for the Department of Finance to back away from its position, with minimum embarrassment, and without having to cite pressure from the public or the blogosphere as basis for backing away from the D.O.

In all candor, the Florence Agreement is not a highlighted area of study in law school. I myself had forgotten all about it until this controversy emerged. It is apparent that the BDAP lawyers who drafted the 30 April 2009 letter to DOJ Secretary Gonzales were not familiar with the Agreement as well (otherwise, they would have cited it). The Agreement first came into the forefront on 3 May 2009, when Robin Hemley cited it in his Mcsweeney's article.

It is plausible to assume that the DOF had not read the text of the Florence Agreement when it drafted the Department Order in mid-April. That may seem damning to the layperson, but as I said, the Florence Agreement is hardly in the consciousness of the Filipino lawyer. What the DOF lawyers had most certainly read is Section 105(s) of the Tariff and Customs Code. The provision reads in part:

s. Economic, technical, vocational, scientific, philosophical, historical, and cultural books and/or publications: Provided, That those which may have already been imported but pending release by the Bureau of Customs at the effectivity of this Decree may still enjoy the privilege herein provided upon certification by the Department of Education, Culture and Sports that such imported books and/or publications are for economic, technical, vocational, scientific, philosophical, historical or cultural purposes or that the same are educational, scientific or cultural materials covered by the International Agreement on Importation of Educational Scientific and Cultural Materials signed by the President of the Philippines on August 2, 1952, or other agreements binding upon the Philippines.

Section 105(s) of the Tariff and Customs Code incorrectly presumes (whether knowingly or unknowingly) that the Florence Agreement only covers "educational, scientific or cultural materials" as exempt from import duties. It does this by capitalizing on the title of the Agreement, even if the text clearly states that all printed books are exempted. If the DOF (or any other lawyer for that matter) relies solely on the text of Section 105(s) of the TCC, without reading the text of the Florence Agreement itself, then it would conclude that imported books which are neither educational, scientific or cultural materials may be the subject of import duties. It is apparent from the new Department Order that it is from that framework that the DOF was coming from.

So, how could the DOF back away from its Department Order? By saying that it was misled by Section 105(s) of the TCC into thinking that it could generally impose duties on imported books; that upon reading the text of the Florence Agreement itself, it realized that virtually all imported printed books were exempt from import duties. It may be harder for the general public to swallow that the DOF had not read the Florence Agreement itself, but lawyers who themselves may be until recently unfamiliar with the Agreement would be more sympathetic. Besides, the language of Section 105(s) itself, deceptive as it is, appears to carry much of the blame for this controversy.

In one sense, the fact that this mess has barely penetrated the mainstream media has allowed some leeway for the DOF to back away from its position. For as long as the outrage has not yet reached critical mass, there would be time for the DOF to change its mind with minimum hassle and embarrassment on its part.