PART 4

TARIFF COMMISSION

Sec. 501. Chief Officials of the Tariff Commission. — The Officials of the Tariff Commission shall be the Chairman and two (2) Member Commissioners to
be appointed by the President of the Philippines.
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Sec. 502. Qualifications. — No person shall be eligible for appointment as Chairman and Tariff Commissioners unless they are natural-born citizens of
the Philippines, of good moral character and proven integrity, and who by experience and academic training are possessed of qualifications requisite for
developing expert knowledge of tariff problems. They shall not, during their tenure in office, engage in the practice of any profession, or intervene
directly or indirectly in the management or control of any private enterprise which may, in any way, be affected by the functions of their office nor shall
be, directly or indirectly, financially interested in any contract with the Government, or any subdivision or instrumentality thereof.
Sec. 503. Appointment and Compensation of Officials and Employees. — All employees of the Commission shall be appointed by the Chairman in
accordance with the Civil Service Law except the private secretaries to the Chairman, Commissioners and Executive Director.

The Tariff Commission shall be reorganized in accordance with the requirements of its reorganized functions and responsibilities. The Chairman of the
Commission, subject to the approval of the Director-General of the National Economic and Development Authority, shall determine the new
positions-designations and salary scales of the officials and employees of the Commission by taking into account the degree of responsibilities of each
position: Provided, That the Office of Compensation and Position Classification shall be furnished a copy of the new plantilla of positions incorporating
the new designations to be automatically included in its manual of positions: Provided, further, That the reorganization shall not in any way affect
whatever benefits the officials and employees of the Commission are allowed under existing law and/or authority.

Sec. 504. Official Seal. — The Commission is authorized to adopt an official seal.

Sec. 505. Functions of the Commission. — The Commission shall investigate —

(a) the administration of, and the fiscal and industrial effects of, the tariff and customs laws of this country now in force or which may hereafter be
enacted;
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(b) the relation between the rates of duty on raw materials and the finished or partly finished products;
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(c) the effects of ad valorem and specific duties and of compounds specific and ad valorem duties;
(d) all questions relative to the arrangement of schedules and classification of articles in the several sections of the tariff law;

(e) the tariff relations between the Philippines and foreign countries, commercial treaties, preferential provisions, economic alliances, the effect of
export bounties and preferential transportation rates;

(f) the volume of importations compared with domestic production and consumption;

(g) conditions, causes and effects relating to competition of foreign industries with those of the Philippines, including dumping and cost of production;

(h) in general, to investigate the operation of customs and tariff laws, including their relation to the national revenues, their effect upon the industries
and labor of the country, and to submit reports of its investigation as hereinafter provided; and

(i) the nature and composition of, and the classification of, articles according to tariff commodity classification and heading number for customs
revenue and other related purposes which shall be furnished to NEDA, Board of Investments, Central Bank of the Philippines, and Secretary of Finance.

Sec. 506. Assistance to the President and Congress of the Philippines. — In order that the President and the Congress may secure information and
assistance, it shall be the duty of the Commission to —
(a) Ascertain conversion costs and costs of production in the principal growing, producing or manufacturing centers of the Philippines, whenever
practicable;
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(b) Ascertain conversion costs and costs of production in the principal growing, producing or manufacturing centers of foreign countries of articles
imported into the Philippines whenever such conversion costs or costs of production are necessary for comparison with those in the Philippines;
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(c) Select and describe representative articles imported into the Philippines similar to, or comparable with, those locally produced; select and
describearticles of the Philippines similar to, or comparable with, such imported article; obtain and file samples of articles so selected whenever
advisable;
(d) Ascertain import costs of such representative articles so selected;

(e) Ascertain the grower's, producer's or manufacture's selling prices in the principal growing, producing, or manufacturing centers in the Philippines,
of the articles of the Philippines, so selected;

(f) Ascertain all other facts which will show the difference in, or which affect competition between, articles of the Philippines and those imported in the
principal markets of the Philippines;

(g) Ascertain conversion costs and costs of production including effects of tariff modifications or import restrictions on prices in the principal growing,
producing or manufacturing centers in the Philippines, whenever practicable; and

(h) Submit annual reports of these to the President of the Philippines, copy of which shall be furnished to the NEDA, Central Bank of thePhilippines,
Department of Finance and the Board of Investments.
Sec. 507. Reports of the Commission. — The Commission shall place at the disposal of the President and any member of the Congress of the Philippines
or its member thereof all information at its command; shall make such investigation and report as may be required by the President and the Congress of
the Philippines and shall report to the President and Congress on the first Monday of December of each year hereafter a statement of methods adopted
and a summary of all reports made during the year.
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Sec. 508. Access to Documents and Assistance to the Commission. — The Commission or its duly authorized representative shall have access to any
document, paper or record, pertinent to the subject matter under investigation, in the possession of any person, firm, co-partnership, corporation or
association engaged in the production, importation or distribution of any article under investigation, and shall have the power to summon witnesses,
take testimony, administer oaths, and to issue subpoena duces tecum requiring the production of books, papers or documents relating to the matter
under investigation. The Commission may also request the views, recommendations and/or assistance of any government office, agency or
instrumentality, and such office, agency or instrumentality shall cooperate fully with the Commission.
Sec. 509. Sworn Statements. — The Commission may order the taking of sworn statements at any stage of any proceeding or investigation before
it. Such sworn statements may be taken before any person having power to administer oaths.

Sec. 510. Verified Statements. — The Commission is authorized to require any importer, grower, producer, manufacturer or seller to file with the
Commission a statement, under oath, giving his selling prices in the Philippines of any article imported, grown, produced, fabricated or manufactured by
him.

Sec. 511. Rules and Regulations of the Commission. — The Commission shall adopt and promulgate such rules and regulations as may be necessary to
carry out the provisions of this Code.
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Sec. 512. Appropriation. — In addition to its current appropriation the amount of Six Hundred Thousand is hereby appropriated to carry out the
purpose of sections five hundred one and five hundred three of this Code.

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TITLE III

a. A” can compel Citibank to re-credit to his account the amount of the forged check, he being not a party to the
instrument. Forgery renders the forged signature totally inoperative. Additionally, the drawee bank is charged
with knowledge of the drawer’s signature.
b. Citibank has no right of recourse against Bank of P.I. having gone through “the normal course of clearing”, the
latter can assume that the check was properly drawn by the drawer. The drawee bank is charged with knowledge
of the drawer’s signature. The negligence, if at all, is attributed more to Citibank than with the bank of P.I.
c. Recourse may be had by either against “C” as indorser because of his warranty. In the case particularly of Bank of
P.I., its right of recourse may be based likewise on the agency rule that puts the risk of loss on the principal (Bank
of P.I.)

Q: Mario Guzman issued to Honesto Santos a check for P50, 000 as payment for a second-hand car. Without the knowledge of Mario,
Honesto changed the amount to P150, 000 which alteration could not be detected by the naked eye. Honesto deposited the altered
check with Shure Bank which forwarded the same to Progressive Bank for payment. Progressive Bank without noticing the alteration
paid the check, debiting P150, 000 from the account of Mario. Honesto withdrew the amount of P150, 000 from Shure Bank and
disappeared. After receiving his bank statement, Mario discovered the alteration and demanded restitution from Progressive
Bank.

Discuss fully the rights and liabilities of the parties concerned. (1995 Bar)

A: The demand of Mario for restitution of the amount of P150, 000 to his account is tenable. Progressive Bank has no
right to deduct said amount from Mario’s account since the order of Mario is different. Moreover, Progressive Bank is
liable for the negligence of its employees in not noticing the alteration which, though it cannot be detected by the naked
eye, could be detected by a magnifying instrument used by tellers.

As between Progressive Bank and Shure Bank, it is the former that should bear the loss. Progressive Bank failed to
notify Shure Bank that there was something wrong with the check within the clearing hour rule of 24 hours.

Q: True or False: “A bank is bound to know its depositor’s signature” is an inflexible rule in determining
the liability of a bank in forgery cases. (2009 Bar)
A: False. In cases of forgery, the forger may not necessarily be a depositor of the bank, especially in the case of a drawee
bank. Yet in many cases of forgery, it is the drawee that is held liable for the loss.
Q: Jose loaned Mario some money and, to evidence his indebtedness, Mario executed and delivered to Jose a promissory note
payable to his order.

Jose endorsed the note to Pablo. Bert fraudulently obtained the note from Pablo and endorsed it to Julian by forging Pablo’s
signature. Julian then endorsed the note to Camilo.

14
a. May Camilo enforce the said promissory note against Mario and Jose?
b. May Camilo go against Pablo?
c. May Camilo enforce said note against Julian?
d. Against whom can Julian have the right of recourse?
e. May Pablo recover from either Mario or Jose?

Explain your answers. (1990 Bar) A:

a. Camilo may not enforce said promissory note against Mario and Jose. The promissory note at the time of forgery
being payable to order, the signature of Pablo was essential for the instrument to pass title to subsequent parties.
A forged signature is inoperative. Accordingly, the parties after the forgery are not juridically related to parties
after the forgery to allow such enforcement.
b. Camilo may not go against Pablo, the latter not having indorsed the instrument.
c. Camilo may enforce the instrument against Julian because of his special indorsement to Camilo, thereby making
him secondarily liable, both being parties after the forgery.
d. Julian, in turn, may enforce the instrument against Bert who, by his forgery, has rendered himself primarily liable.
e. Pablo preserves his right to recover from either Marion or Jose who remain parties juridically related to him.
Mario is still considered primarily liable to Pablo. Pablo may, in case of dishonor, go after Jose who, by his special
indorsement, is secondarily liable.

Q: A delivers a bearer instrument to B. B then specially indorses it to C and C later indorses it in blank to D. E steals the
instrument from D and, forging the instrument of D, succeeds in "negotiating" it to F who acquires the instrument in good
faith and for value.

a. If for any reason, the drawee bank refuses to honor the check, can F enforce the instrument against the drawer?
b. In case of the dishonor of the check by both the drawee and the drawer, can F hold any of B, C and D liable secondarily
on the instrument? (1997 Bar)

A:

a. Yes, F can proceed against the drawer, A, in case of dishonor by the drawee bank. Section 61 of the NIL provides
that by drawing the instrument, the drawer engages that the instrument will be accepted or paid or both
according to its tenor. Not only is the drawer obliged to pay the amount of the instrument to the holder, but he
shall likewise be liable to the subsequent indorser who was compelled to pay it. The forged signature is
unnecessary to presume the juridical relation between or among the parties prior to the forgery and the parties
after the forgery. Moreover, the only party who can raise the defense of forgery against a holder in due course is the
person whose signature is forged.
b. Only B and C can be held liable by F. According to Section 67, when a person puts his signature on a bearer
instrument as a form of indorsement, he becomes subject to all liabilities of an indorser. D cannot be held liable
as an indorser because his signature is forged by E – hence, there was no consent from D. The forged signature is
deemed inoperative and no right can arise out of it. However, the effect of being inoperative affects only the
signature which is the
 product of forgery. It will not deem to affect other signatures subscribed
with knowledge and voluntariness. Therefore, B and C are liable as
indorsers.

Q: A issued a promissory note payable to B or bearer. A delivered the note to B. B

indorsed the note to C. C placed the note in his drawer, which was stolen by the
janitor X. X indorsed the note to D by forging C's signature. D indorsed the
note to E who in turn delivered the note to F, a holder in due course, without
indorsement. Discuss the individual liabilities to F of A, B and C. (2001, 1997 Bar)

A: A is primarily and unconditionally liable to F as the maker of the

promissory note. Section 60 provides that, by making the instrument, the
maker obliges himself to pay according to the tenor of the instrument. He is
liable to both payee and subsequent holder in due course. Despite the
presence of the special indorsements on the note, these do not detract from the
fact that a bearer instrument, like the promissory note in question, is always
negotiable by mere delivery, until it is indorsed restrictively “For Deposit Only”

B as a general indorser is secondarily liable to F. By placing his signature on the

bearer instrument, he warrants that the instrument is genuine and in all
respects what it purports to be; that he has good title to it; that all prior parties
had capacity to contract; that he has no knowledge of any fact which would
impair the validity of the instrument or render it valueless; that at the time of
indorsement, the instrument is valid and subsisting; and that on due
presentment, it shall be accepted or paid, or both, according to its tenor, and that
if it be dishonored and the necessary proceedings on dishonor be duly taken,
he will pay the amount thereof to the holder, or to any subsequent indorser
who may be compelled to pay.

C, however, cannot be held liable because the signature purporting to be his is

a product of forgery. C can raise the defense of forgery since it his signature
that was forged.

Q: Discuss the legal consequences when a bank honors a forged check. (2006 Bar)

A: When drawer’s signature is forged, drawee-bank by accepting the check cannot set up the defense
of forgery because by accepting the instrument, the dra