Edit 11 May 2009: The issue has slowly started to attract mainstream media and political attention: check out the posts of the jester-in-exile and the UP Hobbygamers Circle for their aggregation of links culled from throughout the blogosphere.
EDIT (7 May 2009): Lots of updates, including a BDAP position paper.
EDIT (6 May 2009): There were some new developments on this matter over the past day or so. Updates are at the end of the post.
A post on the Philippine Genre Stories blog brought to my attention an article written by Robin Hemley, who is spending a year on a Guggenheim Fellowship in the Philippines. In sum the article, The Great Book Blockade of 2009, alleges that the Bureau of Customs is attempting to impose a duty on imported books in contravention of previous practice and an international treaty: the Agreement on the Importation of Educational, Scientific and Cultural Materials a.k.a. the Florence Agreement. Here’s an excerpt:
The importer of Twilight made a mistake and paid the duty requested. A mistake because such duty flies in the face of the Florence Agreement, a U.N. treaty that was signed by the Philippines in 1952, guaranteeing the free flow of “educational, scientific, and cultural materials” between countries and declaring that imported books should be duty-free. Mr. Agulan told the importer that because the books were not educational (i.e., textbooks) they were subject to duty. Perhaps they aren’t educational, I might have argued, but aren’t they “cultural”?
No matter. With this one success under their belt, customs curtailed all air shipments of books entering the country. Weeks went by as booksellers tried to get their books out of storage and started intense negotiations with various government officials.
What doubly frustrated booksellers and importers was that the explanations they received from various officials made no sense. It was clear that, for whatever reason—perhaps the 30-billion-peso ($625 million) shortfall in projected customs revenue—customs would go through the motions of having a reasonable argument while in fact having none at all.
Customs Undersecretary Espele Sales explained the government’s position to a group of frustrated booksellers and importers in an Orwellian PowerPoint presentation, at which she reinterpreted the Florence Agreement as well as Philippine law RA 8047, providing for “the tax and duty-free importation of books or raw materials to be used in book publishing.” For lack of a comma after the word “books,” the undersecretary argued that only books “used in book publishing” (her underlining) were tax-exempt.
“What kind of book is that?” one publisher asked me afterward. “A book used in book publishing.” And she laughed ruefully.
Now, a caveat–the Hemley article is the only source of news I’ve seen with regard to this matter, and as such I’m not sure how accurate the details he provides are (comments in the PGS post above seem to indicate that Undersecretary Estela Sales is mistakenly identified with the Bureau of Customs when she’s actually with the Department of Finance–although the BoC is under the DoF so… *shrugs*). I certainly would love to hear the side of the book importers on the matter for one thing–you’d think they’d be the ones to raise a ruckus themselves.
Still, should the substance of the allegations in the Hemley article be true, this is a cause for concern. However should the proper media attention be raised (Manuel L. Quezon III of the Inquirer has a post on the matter up already. A good start.) and the proper challenge to the basis for the new duties made, I am hopeful that these duties can be overturned. This is as it should be since an analysis of the Florence Agreement and the applicable law seems to show that the imposition any such duties would be illegal.
[Warning: Lengthy post and legal garble follow after the break]
The pertinent provisions of the treaty with regard to book duties are clear and succinct:
1. The contracting States undertake not to apply customs duties or other charges on, or in connection with, the importation of:
(a) Books, publications and documents, listed in Annex A to this Agreement;
(b) Educational, scientific and cultural materials, listed in Annexes B, C, D and E to this Agreement; which are the products of another contracting State, subject to the conditions laid down in those annexes.
Note that the exemption of books from any importation duties or charges is not qualified by the phrase “educational, scientific and cultural.” It merely refers to those enumerated in Annex A. Annex A says thusly:
Books, publications and documents
(i) Printed books.
(ii) Newspapers and periodicals.
(iii) Books and documents produced by duplicating processes other than printing.
The list goes on–it’s fairly comprehensive. The first listed item (Printed books) is already broad enough, however, to encompass our current areas of concern. Granted there are a few printed materials that are not covered by Annex A:
(The exemptions provided by Annex A shall not apply to:
(b) Books, publications and documents (except catalogues, travel posters and travel literature referred to above) published by or for a private commercial enterprise, essentially for advertising purposes;
(c) Newspapers and periodicals in which the advertising matter is in excess of 70 per cent by space;
(d) All other items (except catalogues referred to above) in which the advertising matter is in excess of 25 per cent by space. In the case of travel posters and literature, this percentage shall apply only to private commercial advertising matter.)
Note that the focus here is to exclude from the exceptions documents/materials made purely or primarily for advertising purposes; hence even the most craptacular, irrelevant book on the market today would still qualify for the customs duty exemption, as long as its plot was more than: Kim buys a Coca-cola, opens it, and finds happiness. (Wow, three act structure )
In case one needs further clarification, the Reading Guide on the UNESCO page is explicit:
Under the Agreement, books, newspapers, periodicals and many other categories of printed matter are granted duty-free entry. Printed music, maps and even tourist posters are similarly exempt. All the items of this annex to the Agreement, except architectural plans and designs, enjoy exemption from customs duties regardless of destination. Books are the most important category. The exemption granted to books is not subject to any qualifications as to their educational, scientific and cultural character. (Emphasis added)
So what have we learned then? Under the Florence Agreement, a binding international treaty which the Philippines has already ratified, any book that isn’t an advertisement should be exempt from customs duties, whatever its content. Most books as we know them, from Twilight to to War and Peace to Paris Hilton’s Diary Part Two (the Sequel) should therefore be exempt from customs duties.
A strange interpretation of the “Book Publishing Industry Development Act” is also allegedly cited as a source of the new customs duties. This apparently centers around the interpretation of this phrase:
SECTION 8. Powers and Functions. The Governing Board shall have the following powers and functions:
(l) import books or raw materials used in book publishing which are exempt from all taxes, customs duties and other charges in behalf of persons and enterprises engaged in book publishing and its related activities duly registered with the Board;
(Sidenote: Now I don’t know how the importing of books works here, but it seems that importation has to be done through the Governing Board of the National Book Development Board. Perhaps the NBDB can shed some light on this matter?)
Honestly I’m not sure why this particular law is being quoted, as it seems primarily to deal with book publishing as opposed to book importing. Since this was passed a good deal of time after the Florence Agreement (the law was enacted in 1994 while the treaty was made in 1950), it might be helpful for parties contesting the new customs duties to see if there was a prior and still subsisting law which was executed in compliance with the Florence Agreement and which gave books their exemption from duties. If RA 8047 doesn’t apply to the importation of books, then any argument of the government based on an interpretation of RA 8047 is instantly undermined.
In the strange event that RA 8047 applies to book importation, I’ll leave it to more fastiduous grammarians to debate the significance, if any is to be attributed, to the absence of a comma between “books” and “or”–I’ve never been comfortable with that level of hair-splitting literalism.
Luckily, the law doesn’t have to be interpreted in a strictly literal sense. A wiser, more practical, and legally acceptable approach is to go into the so called “spirit of the law.” It is understood and accepted that (a) laws are not to be interpreted in such a way as to lead to an absurdity; and (b) as much as possible, all the provisions of the law should be interpreted in a harmonious way, such that all provisions are given effect (i.e. if Sec. 1 says kill all rabbits, and Sec. 2 says kill all brown rabbits, then you interpret the law to mean you should kill all brown rabbits, because that interpretation allows both Sec. 1 and 2 to be correct).
With that in mind, the aforementioned provision of the law must be interpreted in a manner consistent with the declared policy of the law to “ensure an adequate supply of affordable, quality-produced books” (Sec. 2) and to ensure an adequate, affordable, and accessible supply of books for all segments of the population” (Sec. 4). An interpretation that would impose greater costs on the importation of books would run counter to these express policies, and as such cannot be valid.
In any event, I may be rusty in International Law, but I’m fairly certain that a national/municipal law is no excuse to derogate from an international obligation such as a treaty. Whatever the interpretation of RA 8047, the Florence Agreement is clear: no customs duties on books.
So then–what can be done?
Raising awareness of the issue is important, although it is best to do this in a manner that does not involve bridge-or-torch burning: people in power are always more likely to reverse bad decisions if they can do so in a way that does not involve losing face. If anyone has any contact with the NBDB, their assistance would be helpful since part of the controversy revolves around an interpretation of their charter. I’ll try to send them an email myself but someone with a personal contact there would probably have more luck. Contacting the PCIJ and Newsbreak might also help. (Again, will try an email but I don’t know anyone at either site personally).
Almost as important, the most affected parties, namely the importers, should step forward and point out the problems themselves. Again, this issue is important enough to take some form of action based on word-of-mouth but we’d all have firmer ground to stand on if we have peple with first hand knowledge of the problem speaking out.
Last caveat: I haven’t had to go into International Law since reviewing for the Bar in 2006, so if I’ve made any errors or missed out on anything in the treaty/law during my midnight survey, please let me know.
6 MAY 2009 Update: The intrepid editor of Philippine Genre Stories made a call to the DOF and was graciously accomodated by Undersecretary Sales herself. He posts the contents of their discussion in the comments section:
I called the DOF, and believe it or not, I was given time by Undersecretary Estela Sales herself, and really, I’m thankful that she would take my call and spend long minutes talking about this issue with me in a cool, calm, respectful manner, explaining the side of the DOF on this matter.
I’m composing all that she said carefully because I don’t want to misquote or take her statements out of context, so hang on, and I’m going to put it down here in this comments section as soon as I can. This can serve to answer some of the issues raised in the original Robin Hemley article. So, please wait! I think I’ve got some free time left during this lunchbreak to get it down and summarized in easy to understand points. It’s only fair, after all, to let the DOF have a say.
Okay, here goes.
First of all, Undersecretary Sales and her team at the DOF spent a lot of time studying the rules/laws/regulations involving this matter beforehand, and found that in Sec. 105 of the Tariffs and Customs Codes, there really is a provision for a 1% duty on imported books (“educational, cultural, etc.”) that are for sale and for profit, and she said that the Florence Agreement was addressed here in this specific section. This 1% has been in existence since way long ago, and in fact, has not been implemented for that long a time. After Undersecretary Sales and her team studied all these laws, the results of this was that this regulation should be followed because it is the law, and forthwith published this information on Easter Sunday 2009, with implementation to follow 15 days after Easter Sunday. From what I understood of what she said, there will be no duty only if these imported books are donations to public schools, readers’ groups, etc., that is, if the books imported are not for sale or for profit. This 1% is for, to use her words, “control/monitorinig” of the imported books coming in. She used the example that if a bookseller brings in P100,000.00 worth of books, the duty on this is only P1,000.00. She told me that she would like to also make clear that vat on books is still 0%, no matter what.
Now, if a book or title does not fall under “cultural, educational, etc.”, then that duty goes up to 5%. However, she points out that the DOF is not the one who determines a title’s labeling of whether it is “educational, cultural, etc.” She said that this labeling belongs to other organizations (she mentioned the DepEd and Unesco).
These laws which she and her team researched were brought up in a respectful meeting with various Congressmen. She said that at first, a number of them were against it, but when she explained that this duty has been in existence in law for so long and really has just not been implemented, they agreed to it. She said that if the Congressmen really want to make it 0% duty for all, then they must pass that law first before the DOF can implement it. In other words, the legislative part of the gov’t, Congress, has to pass it into law before the DOF, the executive branch that “executes” these laws, can enforce it. As of now, after all their study, Undersecretary Sales and her team have seen that this duty exists in law, and they are doing their job in enforcing it.
After this meeting with the Congressmen, Undersecretary Sales and her team also met with various booksellers. She said that her meeting with them was cordial, good, and respectful, as she made all these details clear to them. In other words, her meeting with them went well with no untoward incidents, which is why she was surprised at what came out in the Hemley article. Everything was spelled clearly to the booksellers.
I also asked her about books ordered, say, on Amazon, and picked up at the post office. Should that duty be paid there too? She said, “Yes, but only if that hasn’t been included in the original payment.” In other words, check your receipt and your emails of the online transaction. If duties had already been paid via Amazon or whatever online bookseller, then print that receipt/email and bring that proof with you to show that duties have already been paid. If however your receipt/email doesn’t show this duty, then you are obliged to pay for that duty.
She was particularly disturbed at allegations of “corruption”, because she said she is also head of the DOF’s Revenue Integrity Protection Service, and not just the Revenue Operations Group. In other words, if there are problems of corruption, one can always report this to her department. One can get her department’s contact info over at http://www.dof.gov.ph.
I hope this fairly airs her side of the matter. For my part, I’m grateful to her for giving me, just a regular guy, the time. It was a good, calm, respectful talk. I treated her with respect, and I am so glad that she did so likewise with me. Frankly, I was afraid that her department wouldn’t since I’m just a regular guy, but she gave me all the information I asked for, and answered all my questions cordially. Like I said, she spent long minutes talking to me during both our lunchbreaks, explaining her points and bringing out concrete data of what went on with her study and what she implemented. I’d like to thank her very much for doing so, and for making clear what all this really means. I hope I did the fair thing and aired her side as completely as I could.
Naku, I can see how follow-up questions can crop up, frankly. But I’m hesitant to bother Undersecretary Sales again. I suppose it’s all right for me to say that if you need to ask further questions, you can check her department’s contact info over at http://www.dof.gov.ph and contact/email/fax them (which is what I did).
I hope this helps.
The Bibliophile Stalker comments on the issue:
“The policy of Sales and Hemley’s complaints are two different things. Sales is talking about the new policy, which only took effect last Apr. 27. Hemley’s complaint is most likely about corruption because what he mentioned took place in Feb. and Mar. This was when the stocks of books were being held hostage by Customs. And even then, Customs couldn’t charge you the 1% back in Feb. and Mar. because the new duty hadn’t taken effect yet. It took effect only 2 weeks after Easter.”
oxar2001law also comments:
First, good news. The word is that the National Book Development Board is as upset about this as we are. I’ll leave it up to the board to come out with a public statement, but it is advised that a calmer climate may help smooth things out before this action becomes irreversible. So, steady vigilance for now, not yet time for the pitchforks.
A few thoughts on the DOF response. International treaties such as the Florence Agreement have the force of law in the Philippines, and are of co-equal status with the Tariff and Customs Code. Congress could not by law repeal commitments made via treaties, you need to withdraw from the treaty. So I disagree with her claim that Congress needs to pass a law amending the TCC to impose the 0% duty on books, that law already exists and is called the Florence Agreement.
Section 105(s) does refer to the Florence Agreement. In my earlier comment, I mentioned that Section 105(s) is not as unequivocal as hoped for, but that ultimately is not a problem. Section 105(s) capitalizes on the title of the Florence Agreement, which refers to “Educational, Scientific and Cultural Materials”, and may give the impression that the exemption from duties only applies to such high-minded reading materials. However, the agreement itself is unequivocal that all printed books are exempt from duties. In any event, it is clear from Section 105(s) that the Bureau of Customs is bound to obey the Florence Agreement, even if the text of the provision itself seemingly pretends that only “educational, cultural and scientific materials” are covered by the agreement.
And finally, my own response regarding the possibility of filing a court suit of some kind on the matter:
re: class suit: First, except for very rare instances, I think our courts should be, pardon the phrase, courts of last resort. While there are occasions where a trial court judge resolves a case expeditiously, that’s about as common as a first novel becoming a NYT best seller (i.e. not very). Then of course there is the near certainty of an appeal by the losing party, legal costs etc. (Also, as for class suits specifically, that’s not necessary. A citizen can question the validity of a government issuance without a class suit, but that’s a procedural matter).
I think that if it’s true that the NBDB is willing to argue against this, we should see what kind of influence they can assert, as well as any that may be brought to bear by other parties after MLQ3′s column comes out.
Second, again as the primary goal as I understand it is a return to the former policy, rather than castigation, I recommend a “soft” approach rather than a necessarily adversarial litigation. As I said, the easier we can make it for the government to reverse the alleged policy without too much embarrassment, the easier it might be for the issue to be resolved.
Third and perhaps most importantly, the facts of the matter are still unclear. The basis for most of the data we are working with is either the McSweeney article, or the conversation of Undersecretary Sales with our esteemed PGS editor. However I don’t think any solid legal assessment can be made however without (a) seeing an official government document/correspondence expressing this new policy; and (b) hearing an official first hand statement from the book importers.
Note that while PGS did excellent work getting Sales’ side, I assume that was an unrecorded verbal conversation. It’s not uncommon for any verbal statement to be denied later if it is convenient to the government official concerned, or doesn’t play to what becomes the party line. Likewise the silence of the importers or anyone else with first hand knowledge of the matter leaves out a crucial piece of the picture. We need to know what exactly the policy on book importation was before, what was its legal basis, when this changed and what exactly they were told. Likewise it would be helpful to know the state of compliance of the industry, and what sanctions if ever are being imposed on those who fail to comply.
Apologies if this seems overly cautious, but that’s my training. Anything taken before the courts will deal not just with facts but with Evidence and at the moment there is a dearth of that.
In the meantime, I would counsel that while spreading the word on this issue is important, let’s keep things civil and rational. Again, what is desired is a reversal of policy, not the attack of an individual or an organization. Questioning the legality and wisdom of government acts is our right and obligation as citizens. Questioning the integrity, morality and intentions of government officials on the other hand, without personal knowledge of the acts involved, is neither helpful nor fair. It’s a great stress reliever sure—how does it go again, “Ang tunay na lalake minumura ang gobyerno”?—but that doesn’t make it right. I think we need to remember that government is not some monolithic entity, but composed of people some good, some bad, all imperfect.
EDIT: (7 May 2009)
Robin Hemley, the author of the McSweeney article, has sent an email to the Bibliophile Stalker regarding the matter. Read the entire thing and Charles’ reactions here, but here are some important points raised:
- Virtually all AIR shipments of books into the Philippines were stopped between January and March. Ostensibly, books on freighters were still allowed in and you could receive personal books via Amazon during that time. The exact dates were these: air shipments stopped on January 26th and the first shipments were released on March 17th, a day after Undersecretary Sales spoke with importers and book sellers, and storage fees were paid.
- The Department of Finance initially told Customs to release the books on January 27th, but their order was ignored by the aforementioned examiner Rene Agulan, and eventually, Customs and the Dept. of Finance, found common ground on this issue.
- Hemley mentions a letter dated March 5th to Atty Pasion-Flores of the NBDB, the examiner refused to release the books despite the fact that all previous requirements had been met, including a “certificate of membership with NBDB.” Further, it was required that the Dept. of Ed certify the books as educational, but the Dept. of Ed told the book sellers that the NBDB should rightly issue this certification.
- Hemley originally made mention of Amazon shipments being held up at the post office over the years, and customers made to pay seemingly whimsical amounts for their books to be retrieved. But this part was edited out of the final piece.
This helps makes things a little clearer, and I thank Mr. Hemley for providing additional information (and Charles for posting it). Hemley mentions he got his information from well placed book industry sources, and while I understand their desire to remain anonymous I hope that they now emerge to put a face to these occurrences, and to add weight and first hand knowledge to the on-going discussion.I understand that since the importers have to deal with Customs for their businesses they might not want to ruffle any feathers, but I don’t think a calm narration of facts will cause any more of a ruckus, and might help clarify matters.
Hemley also mentions a photocopy of the powerpoint presentation of Sales and I think we really need to see this hopefully we’ll have a copy of this by next week. Nothing I’ve heard or seen so far justifies any sort of deviation from Florence.
I also got an email response from the NBDB. Not really all that informative but at least it’s confirmation that they are on the ball. Although… if there really was a letter in March to the NBDB, doesn’t that mean they knew about this two months back?
Dear Mr. Paolo:
Thank you for your e-mail. The NBDB is fully aware of the issue at hand and is trying to resolve the problem positively. We will inform you at the soonest time possible on any developments that may arise regarding this matter.
Jun BriolaSalvador D. Briola
Accreditation and Incentives Division
National Book Development Board
One more other thing: Some enterprising lads have put up a cause on Facebook: FILIPINOS AGAINST THE TAXATION OF BOOKS BY CUSTOMS ——- http://apps.facebook.com/causes/280535
Also: Took Charles’ advice and emailed Robin Hemley. He replied quite quickly: he’s not in town at the moment, but when he returns next week he’ll try to give us a copy of the powerpoint presentation, in the event that we don’t have a copy of it by then. Will let everyone know when I next hear from him.
7 May Afternoon Update: The esteemed Jessica Zafra has a post up on the matter, including the text of a letter from the Book Development Association of the Philippines.
7 May Evening Update: Ms. Zafra has posted in the comments section of her abovementioned post a position paper from the Book Development Association of the Philippines (BDAP)–it mentions the Florence Agreement.
This is what I got in a nutshell from their stand:
* The only law that currently applies to the importation of books is RA 8047
*RA 8047 is consistent with and adapts the broad definition of “books” and the broad importation exemption in the Florence Agreement
* The deliberations of Congress in enacting RA 8047 clearly show their intent that the law should enable books to be imported duty-free, consistent with the Florence Agreement (it quotes a speech by Senator Angara)
* Once the NBDB says the books may be imported duty-free, no other agency can say no
* It’s absurd to interpret the law as only allowing duty-free importation of books related to book publishing
* “Book Publishing” is an activity intended to disseminate information to the public. The importation of a book, of whatever nature, is an activity intended to disseminate the information contained therein to the public.
* under the Florence Agreement, contracting states have the right to take measures to limit the importation of duty free books. But the limitations pertain directly to national security, public order or public morals. Loss of revenue is not a valid ground to limit the importation of the matters stated under the Florence Agreement.
Here’s the text (Bold print is mine, to emphasize certain points):
POSITION PAPER OF THE BOOK DEVELOPMENT ASSOCIATION OF THE PHILIPPINES RE TAX AND DUTY FREE IMPORTATION OF BOOKS INTO THE COUNTRY
The Book Development Association of the Philippines, composed of various stakeholders such as publishers, authors, distributors, book sellers and others who are actively involved in pursuing the development of the Book Industry in the country, are one in vehemently opposing the issuance of Department Order 17-09 dated 24 March 2009 and issued by the Hon. Secretary of Finance, Mr. Margarito B. Teves, which itself was based on the Memorandum re Clarificatory Guidelines on Duty Free Importation of Books dated 10 March 2009 issued by the Hon. Undersecretary Estela V. Sales.
With all due respect, the said Department Order and the Memorandum are legally infirm and without any basis under the present state of the law affecting book importation.
DOF’S OWN MANDATE, VIOLATED
On its website, the Department of Finance (DOF) is described to have “the critical tasks of revenue generation, resource mobilization and fiscal management rest on the shoulder of the Department of Finance.” Admittedly then, the DOF must always be ready with the funds to sustain the government machinery in providing the general populace with all its basic needs.
Undoubtedly, it is an unenviable mandate, considering the gargantuan fiscal problems facing the DOF. However, in its zeal to perform its duties and functions, the DOF sometimes loses track of its focus and implements questionable ideas that causes undue hardships to the very citizens for whom its fiscal and fiduciary duties primarily are directed and are also its ultimate beneficiaries. This is one instance of such lack of focus. This is all the more surprising too, considering that the very law directly affected, i.e. Republic Act No. 8047, was also authored by non other than the Hon. Secretary of the Department of Finance, who was then a lawmaker and part of the 9th Congress when said RA 8047 was enacted.
I. Republic Act No. 8047 (henceforth “RA 8047”), i.e. the Book Publishing Industry Development Act, which created the National Book Development Board (NBDB) is the latest law that directly governs the importation of books into the country. As the latest legislative enactment from our lawmakers covering the specific subject of book importation, it must, by necessity, take precedence over all others. Thus, all other laws which previously governed and affected the importation of books into the country were either directly or indirectly repealed or modified accordingly. One such affected law is Section 105 (s) of the TCCP, as amended. RA 8047 is entirely anathema to Section 105 (s) of the TCCP. The Florence Agreement, which was clearly taken into account during the enactment of RA 8047, does not affect the proper implementation of RA 8047 with regard to book importation. In fact, the goals of the Florence Agreement is strengthened by RA 8047.
1.1 We respectfully disagree that, outside of importation of books done by non-stock, non-profit educational institutions and those with special Charters, there are three (3) instances wherein duty-free importation of books may be allowed: under Sec. 105 (s) of the TCCP, under the Florence Agreement and under RA 8047. With all due respect, there has been a gross mis-appreciation of the said laws, and the Guidelines that were issued have no basis under the present state of the law affecting book importation.
It is clear as daylight that whenever books are imported into the country, (other than those governed by special Charter), the law that would now govern is Republic Act No. 8047. To say otherwise would be to disregard the clear import of the said law, which involves itself strictly with the development of the Book Publishing Industry as well as all its ramifications. One such ramification is the importation of “books” per se. And consequently, the definition of which (i.e. books) the law has not placed any limitations whatsoever in full deference to the rationale for the law’s enactment as well as in complete accord with the UNESCO Florence Agreement.
1.1.1 RA 8047, which originated in the Senate in 1992 (Senate Bill No. 252) and its counterpart bill in the House of Representatives (House Bill No. 12614) had a long an arduous journey in the deliberations between the various committees of both legislative chambers before it was submitted to the Bicameral Committee which eventually came into law as RA 8047 in 1995. Perhaps it would serve the DOF well to put some effort to delve into the Legislative History of the said law before it comes out with pronouncements that adversely affect the proper implementation of the law. Especially so in this case when the Hon. Secretary of the Department of Finance, who at that time was a Member of the House, is also an acknowledged author of said law.
1.1.2 With all due respect, at present, the DOF does not have any authority to issue any prior approval for the importation of books, of whatever nature or type; and neither for their tax and duty free release by the Bureau of Customs (BOC). If such authority to approve is actually necessary, this authority properly rests with the present National Book Development Board (NBDB) and its Directorate. This was clearly the import of the lawmakers when they came out and enacted RA 8047: so that one law (other than those directly affecting educational institutions that are non-stock and non profit and those with their own Charters) would govern all aspects of the Book Industry. Too many laws being implemented merely gives opportunity for the commission of graft and corruption as well as tax evasion.
1.1.3 Admittedly, Section 105 (s) of the TCCP had already been amended by several subsequent enactments. It is thus untrue for the Memorandum of 10 March 2009 to state that no amendments have been made. And as stated in the questioned 10 March Memorandum, one later enactment in particular (i.e. PD 1464) even gave the Department of Education, Culture and Sports (DECS) the authority to issue certifications to support the release of imported books held by the Bureau of Customs (BOC).
1.1.4 That change by itself removed any authority for the DOF to issue any sort of approval regarding the importation of books into the country. Section 105 (s), as amended, clearly provides that once the certifications were issued by the DECS, it simply became a MINISTERIAL duty on the part of the Bureau of Customs to allow the tax and duty-free entry into our country of the imported books. Otherwise stated, the BOC and/or its parent, the DOF had no authority to disallow the tax and duty–free entry of the imported books once the DECS certifications were already in place. The law did not give the BOC/DOF any right to PREVENT the tax and duty-free entry of the imported books once the DECS certification was submitted. For the DOF to now argue otherwise would be to arrogate unto itself legislative powers which it does not have.
1.1.5 Certainly, under the said previous law, the types of books covered were only those of an economic, technical, vocational, scientific, philosophical, historical or cultural nature. Thus, going by the legal maxim “Expressio Unius Est Exclusio Alterius” whereby the express mention of one thing means the exclusion of all the others, it necessarily dictates that those books that do not come under the types enumerated are not covered by the DECS certifications and thus comes under the general scope of the taxing powers of the DOF/BOC.
1.1.6 Nevertheless, even this authority of the DECS to issue certifications as well as all the related ramifications thereof was subsequently removed in 1995 through the enactment by Congress of Republic Act No. 8047, entitled the Book Publishing Industry Development Act of 1995.
1.2 Notably, the Fiscal Incentives provision, i.e. Section 12 of RA 8047 specifically provides that “In the case of tax and duty-free importation of books or raw materials to be used in book publishing, the Board and its duly authorized representatives shall strictly monitor the quality and volume of imported books and material as well as their distribution and the utilization of the said imported materials” (Italics ours). Necessarily therefore, if any sort of certification of the type that is to be presented to the Bureau of Customs (BOC) is required regarding the importation of books, it is the NBDB Board, to the exclusion of all other government agencies that has the authority under the applicable law to issue such certifications, if it all this becomes necessary.
1.3 Verily, the DECS’ authority in regards to the importation of books had been stripped by RA 8047 as early as 1995. Still, as part of the governing board of the NBDB, the DECS as well as the CHED is still part and parcel of the protocols involved in the importation of books into the country.
However, such is not the case with the DOF. Under the present state of the law affecting the importation of books, the DOF has not been given any authority at all to DISAPPROVE once the importation of books has been given a go signal, so to speak, by the NBDB. Therefore, it is abundantly clear that the DOF simply has no authority and in fact has nothing to do with regard to the importation of books except to impose no taxes or duties on the same.
II. It is erroneous to conclude that the imported books should be used for book publishing, equating it to a raw material. This is an absurd misreading of the law. Once a book is released to the public, it is already deemed published. How then can a published book be used for book publishing? The DOF seems to equate “Book Printing” with “Book Publishing”. This is a major misapprehension which is quite far from the true intent of RA 8047 as envisioned by its authors.
2.1 It is worthwhile to note that even from the time Republic Act No. 8047 was still in its infant stages before the Senate (i.e SB No. 252) and the House of Representatives (HB No. 12614), it was fully understood by the lawmakers even then that the importation of books by themselves, as part of the activities related to the book publishing industry, was tax and duty-free. And by “books” the lawmakers meant ANY kind of book and of whatever nature, as long as it comes into the definition culled from the UNESCO backed Florence Agreement. And under the Florence Agreement, Annex A (i) simply points to “Printed Books” as the first class of “books” that is tax and duty exempt.
2.1.1 This matter regarding “tax and duty free book importation” was already a foregone conclusion, and even a cursory look at the deliberations done before both the House and the Senate would show that fact. The earliest recorded reference concerning the fact that book importation per se (without specifying the type or nature of the book) is clearly understood to be tax and duty free is the Explanatory Note of Senate Bill No. 252 given by then Senator Angara in his sponsorship speech on 16 November 1992. It was clearly stated therein that “…..While imported books are tax and duty free, following the Florence Agreement on the Free Flow of Information, imported paper to be used in the production of the same books are heavily taxed. The country imports finished books tax-free….” Sen. Angara continued to say that “It is much better to import books than to print books in this country because imported books do not attract any duty or tax at all.”
2.2 On the other hand, Section 105 (s) of the TCCP refers to books and other publications that are of “Economic, technical, vocational, scientific, philosophical, historical, and cultural” and even religious nature. However, as clearly understood by the lawmakers at the time RA 8047 was enacted, the importation of books as an independent activity and as part of the paradigm of “Book Development” is by itself tax and duty-free. In other words, it is separate and entirely distinct from importation of raw materials.
2.3 It is thus palpably wrong to conclude that the importation of books would be for the purpose of using these as some sort of raw material for “book publishing” purposes. This would be illogical considering that once a book is released to the general public, it is already considered published because the information contained therein is already made available to the public. Which is precisely the reason for being of the Florence Agreement, i.e. the Free Flow of Information, as taken into account in the enactment of RA 8047.
III. Verily, the word “books” as provided under RA 8047 refers to ANY and ALL types and kinds of books, not only to those that are for “economic, technical, vocational, scientific, philosophical, historical, and cultural books and/or publications” as the questioned Department Order No. 17-09 would like everyone to believe. This conclusion is amply supported by the Florence Agreement, of which our country has been a signatory since 1952, and which was taken into account when RA 8047 was being deliberated on until fully enacted into law.
3.1 It is unfortunate that the Hon. Secretary of Finance has taken a very myopic view of the definition of the word “book”. Unfortunate because it shows an apparent disregard of the workings and extent of RA 8047; as well as the UNESCO backed Florence Agreement, of which the Philippines has officially been recognized as a signatory since 30 August 1952. And as earlier intimated, this is all the more unfortunate because the Hon. Sec. Teves was also an author of RA 8047 and hence is presumed to intimately know the Congressional deliberations conducted prior to the enactment of that law.
3.2 With specific regard to the Florence Agreement and the Protocol of Nairobi (1976), despite the somewhat limited connotation of its title , it cannot be said enough that the main goal therefore was the Free Flow of Information among the signatory nations. Accordingly, that was one of the pillars of the Agreement and the subsequent Protocol.
3.2.1 More importantly, the Florence Agreement DID NOT put any limitation as to the TYPE or KIND of book that the contracting states undertook not to impose or apply customs duties or other import taxes. This is well illustrated by the fact that the types of books that are referred to under its Article 1 (a) simply refer to them as “Books, publications and documents, listed in Annex A to this Agreement.” And a quick look at said Annex A reveals that the “books” referred to therein are simply called “Printed Books” . The term “Printed books” does not have any limitations attached to it, thus the books covered therein need not be of a purely scientific, technical or cultural nature. It is Article 1 (b) of the Florence Agreement that specifically mentions “educational, scientific and cultural materials”, and that these are listed in Annexes B, C, D and E of the Agreement. That this is rightly so is quite understandable given the primary goal of Free Flow of Information espoused by the Florence Agreement. This goal would not be served well if the term “books” were considered of limited scope only.
3.3 Notably, and as correctly pointed out by the DOF Undersecretary in the Memorandum of 10 March 2009, RA 8047 referred to the Florence Agreement in coming up with its definition of “books” in Section 1 of said law. However, note that even our own lawmakers in Section 3 of RA 8047 saw it fit not to limit the definition of “books” into strictly scientific, technical, cultural, etc. This was merely reflective of their understanding of the all encompassing scope of the provisions of the Florence Agreement and its Annexes.
3.4 Had the lawmakers really intended to limit the tax and duty free importation of books to those specific subjects as provided under Sec. 105 of the TCCP, they could have easily done so. Yet, it is clear as daylight that there was no limitation imposed. It is thus conclusive that Republic Act No. 8047, which specifically provides for an exclusion from the imposition of taxes and duties on “books” per se already covers ALL types of books, and not only those within the list provided under Sec. 105 (s) of TCCP. Thus, effectively, Section 12 of RA 8047, in conjunction with Sec. 19 thereof, repealed by implication Sec. 105 (s) of the TCCP in that the two provisions cannot stand on their own. The all encompassing scope of RA 8047 simply trumps the limited scope of Sec. 105 (s) of the TCCP.
IV. Unarguably, one of the primary duties of the NBDB is to require and accept the registration of entities engaged in book publishing and its related activities. Section 3 (g) of RA 8047 stated that book publishing is the process of choosing and making books…..” To someone who may not be well versed in the industry, the terms “book publishing” would apparently connote simply “printing” or “production”. However, publishing encompasses more than just simply printing and production. It is an activity intended to disseminate information to the public. The importation of a book, of whatever nature, is an activity intended to disseminate the information contained therein to the public.
4.1 As stated earlier, one vital activity in book development is book importation, which is a distinctly separate activity from the manufacture and printing of books (of which the importation of raw materials becomes relevant). To say that book importation per se is not part of our national book development program is to lose track of the actual legislative intent of the lawmakers at the time RA 8047 was enacted.
4.2 Admittedly, RA 8047 stated that the NBDB was tasked with the duty of coming up, within 120 days from enactment of the law, with the guidelines and also to prescribe rules and regulations specifically those concerning Sec. 6 re Registration of Entities with the NBDB; Sec. 10 re Public School and Textbook Publishing; and the aforesaid Sec. 12 re Incentives to Book Development. As also earlier stated, it is Section 12 of RA 8047 that provides fiscal and tax incentives, and these incentives include tax and duty free importation of books and their exclusion from the E-Vat. Another incentive is the tax and duty-free importation of raw materials to be used for book publishing.
4.3 Under Section 13 of RA 8047, the guidelines, rules and regulations pertaining to the Fiscal and Tax Incentives provision (i.e. Sec. 12) would be done in consultation with, among others, the Board of Investments, the Bureau of Customs “and other appropriate agencies from the government and private sectors….” Additionally, Congress would be given copies of the guidelines. Unquestionably, said guidelines were made in consultation with the government agencies concerned, or else these could not have been issued. Thus, it is quite surprising that the DOF belatedly raised this issue as to the proper agency concerned with book importation certifications, etc. Clearly, under the law, the agency that has cognizance is the NBDB.
4.3.1 Correspondingly, the NBDB, in coming out with the Implementing Rules and Regulations for RA 8047, was correct in directing that it shall liaise directly with the BOC, the agency directly affected by the book and raw material importations, rather than with the DOF. The IRR simply was a reflection of the provisions of the law, Section 13 of RA 8047. The law itself stated that the implementing rules would be done in consultation with the appropriate agency, and that would refer to the BOC in cases of importation. To refer the matters to the DOF would just create more red tape and thus more opportunities for graft and corruption to occur, in addition to putting another level of complexity in the importation procedures.
V. True, that under the Florence Agreement, contracting states have the right to take measures to prohibit or limit the importation of the tax and duty free books. But the limitations pertain directly to national security, public order or public morals. Clearly, loss of revenue is not a valid ground to limit the importation of the matters stated under the Florence Agreement.
5.1 The Memorandum dated 10 March 2009 also rationalized that the Florence Agreement has given the contracting states, such as our country, the right to limit the duty free importation of books.
5.1.1 Admittedly, this is true. And in fact, the quoted provision has been reproduced in the Memorandum verbatim. However, even a cursory reading of the said provision of the Florence Agreement would make anyone conclude that the limitations contained therein refer only to matters which directly affect national security, public order or public morals. Thus, limitations which are imposed due to a palpable or even apparent loss of government revenue occurring as a result of the tax and duty-free allowance of books into the country is not a valid ground for the imposition of limitations or prohibitions thereof. It would be quite a long stretch to think that revenue generation is directly related national security, public order or even public morals. If such were the case then almost all aspects of government service could be read into those categories. That would be ridiculous at the very least.
5.1.2 It is thus an egregious error to quote a provision and read something into it that blatantly goes against the plain reading of the provision. Especially so in this case when the provision quoted is glaringly clear and precise.
VI. We agree that it is correct that a State may make such modifications in its legislation as may be necessary to ensure the fulfillment of its obligations in international contracts or agreements. Thus, RA 8047 as presently enacted specifically supercedes the erroneous complexities created by Sec. 105 (s) of the TCCP.
6.1 Sec. 105 (s) of the TCCP concerns itself only with the importation of books that are of a specific nature, i.e. educational, scientific, economic, technical, religious, etc. Notably, RA 8047 was enacted subsequent to Sec. 105 (s) of the TCCP.
6.2 It is a fact that RA 8047 has not provided for any definition of the specific nature for the term “books”, except that it is a “printed, non periodical publication of at least forty eight (48) pages, exclusive of cover page, published in the country and made available to the public”.
6.2.1 This is contained in Section 3 (a) of RA 8047, which also stated that it is a definition adopted by the “United Nations Education Scientific and Cultural Organizations (UNESCO)….” Thus, there is a reference in RA 8047 to the Florence Agreement, which as earlier discussed above only had the words “Printed Books” in its Annex A (i). It is clear that under both the Florence Agreement and as reflected in RA 8047, there was no specific mention of the nature of the books, as to their scientific, educational, etc. nature.
If revenue collection, efficiency and consistency are the avowed goals of the DOF, then there is all the more reason that only one agency that should govern the importation of books into the country. The same agency that has been tasked by law to uphold the goals of the National Book Development Act. This agency is the National Book Development Board. The NBDB as such shall be the one to issue certifications as to the importation of books of whatever nature and type. Hence, the importer need only secure the necessary papers from the NBDB in order to validly import the books into the country, without anymore stating the nature or type of the books being imported, or under which law it is being imported. Accordingly also, the imported need not state the fact that the books are being imported for purpose of eventual sale, because RA 8047 encompasses all types and nature of books and does not discriminate as to the purpose of the importation. Neither does the importer have to state that fact the imported books will be used as raw materials for book publication, because this is quite absurd and illogical. Such are the ramifications of the enactment of RA 8047.