Teodoro L. Locsin Jr To President Gloria Macapagal-arroyo

___ April 2009 HER EXCELLENCY THE PRESIDENT OF THE PHILIPPINES Malacañan Palace Manila Madam President: I respectfully write bring to your attention the new, unprecedented, legally baseless and whimsical policy of the Department of Finance (DOF) to assess tariffs and duties on the importation of books, in flat contravention of half a century of Customs policy and practice and in complete violation of our treaty obligations as a signatory to the Florence Agreement and the Nairobi Protocol. Not to mention every government’s declared policy to encourage reading and spread and deepen literacy in the country. No duties have ever been officially assessed, and paid, on the importation of books, for whatever purpose, over the last half-century; a laudable and universal practice that was formally recognized by the Florence Agreement on the Importation of Educational, Scientific, and Cultural Materials (copy attached), a multinational treaty, contracted to by more than 100 countries, which seeks to further the cause of peace through the free exchange of ideas and knowledge across national boundaries, primarily by means of the elimination of tariffs on “educational, scientific and cultural materials”, which is to say books. The Florence Agreement encourages its contracting States to affirm their political commitment to favor the free trade and distribution of books, to wit: “The contracting States undertake not to apply customs and duties and other charges on, or in connection with, the importation of: “(a) Books, publications and documents, listed in Annex A to this Agreement …”

Ever since the Government of the Republic of the Philippines (GRP) ratified the Florence Agreement on 30 August 1952, Philippine Customs have allowed the duty-free importation of books of the sort listed and described under Annex A of the said treaty: that s to say, all books. Unfortunately, one (1) month ago, after one importer inadvertently paid customs duties on imported books, the DOF decided that the GRP has been consistently misinterpreting the Florence Agreement, and that for the last fifty (50) years, has failed to assess a 1% - 5% duty on book importations by book traders or individual book-reading citizens of our Republic.

1

In its recently issued guidelines to the Bureau of Customs (BOC), the DOF instructed the BOC to assess a 1% - 5% duty on books and other printed materials if the importer intended to sell or trade the said books, even if the importer claimed the duty-free privileges under the Florence Agreement. Needless to say, in the case of individual citizens, officialdom routinely makes the assumption our book-reading countrymen are racketeers not to be trusted, and insists on imposing duties. But in the case of booksellers, why else would books be imported if not to be sold? The Republic of the Philippines adopted this view and, over half a century, made it law. And if in the past booksellers were not penalized for the temerity of thinking they could sell books, why are ordinary citizens being treated as potential criminals intent on peddling their books to others? The DOF, however, has adopted the position that imported books which were to be sold and traded were not entitled to the duty-free privileges granted by the Florence Agreement and the Nairobi Protocol. This interpretation is, as we argued with DOF at the time it attempted consultations with Congress, without basis either in fact or law, and flouts half a century of established Customs policy and practice. The DOF said that half a century of policy and practice must yield to the eureka moment of its legal department when, in a flash of inspiration – really, imagination bordering on delusion- it devised a scheme in which all books imported for sale should be taxed. Neither estoppel nor prescription, said the DOF, can run against the State, citing no authority on the matter because, in law, both can run against the State. What the DOF really meant to invoke is the outdated not to say obnoxious principle that the State, like the King, can do no wrong. Madam President, the DOF is legally wrong. The law is what an international treaty solemnly ratified by our Republic and further confirmed by half a century of tax free importation of books has made it. I offered to introduce legislation imposing a tax on books if that is the DOF’s pleasure but it cannot, on its own authority, wake up one morning and say that half a century of state policy and practice are wrong. The DOF said there was no need for a law, as its interpretation is now the law. It is not. An international treaty, in this case, says what is law and its legal enforcement over half a century underscores the treaty’s true meaning. Nowhere in the Florence Agreement does it state or even imply that the book or printed matter should not be for sale for it to be duty-free. Indeed, the only requirement for duty-free treatment is that the book or printed matter is listed or described in Annex A of the treaty. And so it has been, in Philippine practice and policy for half a century. Indeed, none of the contracting States to the Florence Agreement imposed qualifications like the proposal of the DOF that the books imported should not be for sale or trade, in order for imported books to be duty-free. If imported books were not for resale they would be personal effects and dutyfree by definition.

2

The treaty’s goal is not merely to promote the charitable distribution of books or to simply allow individuals who had purchased books abroad to be able to bring them home duty-free, as the DOF insists. Rather, the purpose of the Florence Agreement is to spread knowledge and ideas across national boundaries through books to as many people as possible, which is to say principally by trade and commerce in line with the market philosophy of the Free World since the end of World War II. Despite uninterrupted practice and a consistent history of implementation of the spirit of the agreement, the DOF now insists that the GRP, over the past half a century, has been negligent or inept for failing to impose duties on books in violation of its treaty obligations. Other than the DOF’s whimsical and wrong interpretation of the Florence Agreement, the DOF in its guidelines also usurped the powers of the National Book Development Board (NBDB), an agency created under Republic Act No. 8047, with regard to setting our national book policy. The DOF gave itself the authority and expertise to define what an “educational, technical, historical, professional, and cultural book” is. And it has chosen to interpret the largest volume of books to be taxable. In short, the DOF has arrogated unto itself the nonexistent, that is, unconstitutional, power to regulate if not censor books by theme and content—a power that exists nowhere in the structure of our government. After much discussion with DOF officials, I attended a meeting last month with your Secretary, Margarito B. Teves, his Undersecretary Estela V. Sales, and NBDB Executive Director Atty. Andrea Pasion-Flores, along with most of the major players in the book industry, to resolve this problem. The arguments above, among others, were relayed to the DOF team present in the meeting. Despite this, the DOF issued the guidelines imposing a 1% - 5% duty on book importations by book traders and, indeed, by all book-reading citizens. Hence, I now come before you to seek your intervention. We have exhausted all administrative remedies. Despite their patent inability to answer our arguments, the DOF panel has insisted on having its way. Its last argument was that it has marching orders from you to raise revenues by any means necessary. We assume this order excluded illegal measures and those that contradict national policy and international treaty obligations. Let me say in the most categorical terms that imposing a duty of 1% 5% on book importations by our book traders and our book-reading countrymen will not only make books less accessible and affordable to the Filipino people as a whole, but will expose our government to criticism and outright ridicule, not to mention sparking formal protests from the civilized members of the international community who are all signatories to the Florence Agreement, thereby embarrassing your administration. With a stroke of a pen, the DOF replaced our status as an internationally acknowledged frontrunner in having a national book policy consistent with the Florence Agreement and the Nairobi Protocol with the

3

dubious distinction of being the only contracting State in the Florence Agreement which will impose duties on book importations listed in Annex A of the said treaty. I attach for your reference copies of: (1) the letter dated 6 March 2009 of NBDB Executive Director Atty. Pasion-Flores to Secretary Teves; and (2) the Memo to the BOC dated 10 March 2009 of DOF USEC Sales; which discuss thoroughly positions of the NBDB and the DOF on the matter. Madam President, I appeal for your intervention. The DOF is beyond reason; and having tasted that mistaken payment of duties, will not let go of books as a source of revenue even if this contravenes policy, practice, law and treaty. The DOF would like booksellers to take the protracted judicial route, perhaps joined by irate private citizens, but I have convinced them to go directly to one who has both the overriding authority and the background as an educator to provide timely relief.

Respectfully yours, Teodoro L. Locsin, Jr. Representative for the First District Makati City

4