Customs valuation and corporation’s implied powers

On Customs Valuations

THE Philippines follows the World Trade Organization (WTO) appraisement hierarchy under the WTO Agreement of Customs Valuation wherein the transaction value of the imported product (i.e., the price actually paid or payable when sold for export to the Philippines) is the principal mode of valuation.

For a number of possible reasons, however, the transaction value may be rejected by Customs (on account of it being relatively low, the presence of a “no sale situation,” suspicions that price was influenced by a related party, etc.). When this happens, five other methods are sequentially applied namely: the transaction value of identical goods, the transaction value of similar goods, the computed value (analogous to “cost plus”), the deductive value (“selling price minus”), and the fall back value (any reasonable method consistent with the WTO Customs Valuation Agreement). For any doubts as to the acceptability of your transaction value or as to which method should be used and how to arrive at the proper customs value using that method, rulings may be sought in advance from Customs.

On Implied Powers

The exercise of implied or incidental powers of a Corporation is expressly recognized by law, particularly under paragraph 11 of Section 36 of the Corporation Code. Based on this statutory provision, implied powers may be defined as those that “may be essential or necessary to carry out its purpose or purposes as stated on its articles of incorporation” [SEC Letter, dated 18 June 1986, citing Agbayani Commercial Laws of the Philippines, vol. 3, 1984 ed., p. 305].

No uniform rule has been or can be laid down as to what is or is not incidental nor any test to determine whether a particular act is “reasonably necessary to the exercise of the corporation’s express powers. Each case must depend upon its particular facts and circumstances and upon the nature of the powers granted. (Agbayani, Supra., citing 6 Fletcher, 195). It is a question, therefore, in each case of the logical relation of the act to the corporate purpose expressed in the charter. If that act, one which is lawful in itself and not otherwise prohibited, is done for the purpose of serving corporate ends and is reasonably tributary to the promotion of those ends in a substantial and not in a remote and fanciful sense, it may fairly be considered within charter powers. The test to be applied is whether the act in question is in direct and immediate furtherance of the corporation’s business fairly incident to the express powers and reasonably necessary to their exercise. Also, the corporation has the power to do it. Otherwise, not” [Montelibano v. Bacolod Murcia Milling Co., Inc. NR No. L-15092, 18 May 1962, citing 6 Fletcher, 1950 Rev. Ed. pp. 266-268, as quoted in Agbayani pp. 305-306].

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