Title
EXECUTIVE ORDER NO. 444
Date
Sep 26, 1997
Executive Order No. 444, issued by President Fidel V. Ramos, amends previous regulations to restrict the establishment and operation of duty-free stores in the Philippines, enhance compliance with international practices, and protect local industries from unfair competition, while allowing limited shopping privileges during the 1998 centennial celebrations.
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Law Summary

Introduction

Executive Order No. 444, signed on September 26, 1997, amends previous executive orders related to the operation and regulation of duty free stores/outlets in the Philippines. This order aims to enhance compliance with international standards, protect local industries, and regulate the privileges associated with duty free shopping.

Section 1: Prohibition on New Duty Free Shops

  • Legal Principle: The establishment of new duty free shops/outlets is prohibited unless authorized by existing laws.
  • Key Requirements:
    • No new duty free shops shall be created.
    • Expansion of existing shops is restricted.
  • Cross-Reference: Aligns with Executive Order No. 419 dated June 16, 1997.

Section 2: Location Limitations for Duty Free Operations

  • Legal Principle: Duty free shops are limited to specific locations.
  • Key Definitions:
    • International Ports of Entry: Authorized points for duty free shopping.
    • Fenced-in Areas of Freeport Zones: Designated zones where shops can operate.
  • Important Details:
    • Shops are only allowed in specified areas, with exceptions to be defined in subsequent sections.

Section 3: Special Shopping Privileges for Centennial Celebration

  • Legal Principle: Special shopping privileges granted for the 1998 Centennial Anniversary.
  • Key Requirements:
    • Permanent residents, locators, and employees in designated zones can make unlimited duty free purchases.
    • Adjacent municipality residents can purchase up to $100 monthly until December 31, 1998.
    • Domestic tourists allowed a shopping privilege of $25 for consumables within the fenced areas.
  • Timeframe: Privileges valid until December 31, 1998.

Section 4: Eligibility for Duty Free Shopping

  • Legal Principle: Eligibility for duty free shopping is limited post-1998.
  • Key Definitions:
    • Balikbayans: Filipinos returning from abroad.
    • Overseas Filipino Workers (OFWs): Filipinos working overseas.
  • Important Requirements:
    • Tourists: Up to $1,000 (annual cap of $10,000).
    • OFWs/Balikbayans: Up to $2,000.
    • Residents of fenced-in areas can purchase unlimited items for personal use.
  • Exclusions: Certain individuals, such as temporary residents and club members, are excluded from these privileges.

Section 5: Permissible Items in Duty Free Stores

  • Legal Principle: Restrictions on items sold in duty free stores.
  • Key Requirements:
    • Only consumables, light and heavy durables, and specific television sets allowed.
    • Heavy durables limited to balikbayans, OFWs, and freeport residents.
  • Prohibited Items:
    • Locally manufactured goods and sensitive agricultural products cannot be sold.
  • Encouragement: Sale of locally manufactured goods is encouraged.

Section 6: Prohibition on Pull-out of Duty Free Goods

  • Legal Principle: Duty free goods cannot be removed from designated zones.
  • Key Requirements:
    • Sale of duty free goods is restricted to authorized shops within freeport zones.
  • Consequences: Violation of this provision is prohibited.

Section 7: Pre-shipment Inspection Requirement

  • Legal Principle: Goods entering freeports require inspection.
  • Key Requirements:
    • Pre-shipment inspection by authorized organizations mandated within 30 days.
    • Costs of inspection borne by importers.
  • Initial Oversight: Customs Commissioner authorized to inspect shipments before the scheme's implementation.

Section 8: Control Measures to Prevent Abuse

  • Legal Principle: Implementation of measures to prevent misuse of duty free privileges.
  • Key Requirements:
    • Permanent labels on duty free items indicating "Not for resale."
    • Background checks on shop operators and computerized tracking systems.
  • Internal Audit: Regular checks by an internal audit team.

Section 9: Administrative Sanctions

  • Legal Principle: Violations of the order result in penalties.
  • Key Requirements:
    • Sanctions may include suspension or cancellation of operations for offending duty free shops.
  • Implementation: Rules and regulations to be established by the Department of Finance.

Section 10: Separability Clause

  • Legal Principle: Provisions are separable.
  • Key Detail: If any provision is declared unconstitutional, remaining provisions remain effective.

Section 11: Amending Clause

  • Legal Principle: Repeal of inconsistent previous issuances.
  • Key Requirements: All prior executive orders and regulations inconsistent with this order are modified.

Section 12: Effectivity

  • Legal Principle: Immediate effectivity.
  • Key Detail: The order takes effect upon signing.

Key Takeaways

  • Executive Order No. 444 imposes stringent regulations on duty free shops to protect local industries and prevent abuse of privileges.
  • New duty free shops are prohibited, and existing ones face significant operational restrictions.
  • Special privileges for the Centennial celebration are temporary and will end by December 31, 1998.
  • Strict controls and inspections are mandated to ensure compliance and prevent misuse of duty free privileges.

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