The exclusive franchise to operate duty and tax free shops was originally granted to a private corporation called Tourist Duty Free Shops, Inc. (TDFS) by virtue of Presidential Decree No. 1193 (P.D. 1193) and Letter of Instruction No. 595 (LOI 595) both dated September 6, 1977. TDFS was authorized to establish, operate and maintain duty and tax free stores at all international airports and seaports, selected hotels, tourist resorts, and commercial or trading centers throughout the country for a period of twenty-five (25) years. This franchise was revoked by Executive Order No. 24 dated June 27, 1986.
Executive Order No. 46 (E.O. 46) dated September 4, 1986, authorized the Department of Tourism (DOT), through the Philippine Tourism Authority (PTA), to establish and operate a duty and tax free merchandising system in the Philippines for the purpose of augmenting service facilities for tourists and generating foreign exchange and revenue for the government. Under this system, PTA has the exclusive authority to operate shops and stores that sell tax and duty free merchandise, goods, and articles in international airports and sea ports throughout the country or to contract private parties through public bidding to operate these stores.
On March 1, 1987, a twelve-man task force headed by Mr. Jose N. Esteban III, was created to lay down Duty Free Philippines’ (DFP) initial operations. DFP’s capitalization was only $91,000. On March 28, 1987, Customs Administrative Order No. 3-87 (CAO 3-87) was issued, prescribing the rules, regulations, and procedures for the establishment, operation, and control of duty and tax free stores and warehouses.
On May 2, 1987, the first duty free outlet, located at the Arrival area of the Ninoy Aquino International Airport (NAIA), started its operations, initially offering liquor, tobacco, fragrances, and confectionery. One month later, DFP stores with sleek and modern designs opened at the Departure area of NAIA. A third outlet opened at the Mactan International Airport in Cebu at the end of the year. The Manila Hotel and Manila Garden order centers were established in 1988.
On April 2, 1989, DFP’s first off-airport shop and the country’s largest duty free outlet --- the Fiesta Shopping Center (FSC) – was opened. FSC, a concept taken from DOT’s Fiesta Islands Philippines promotion, was an 8,000 sq.m. facility located right across NAIA. More new shops were opened in 1992: the DFP Arrival store at Fort Ilocandia in Laoag, Ilocos Norte; Departure and Arrival outlets in the new terminal building of the Mactan International Airport in Cebu; and an off-airport store at the Paskuhan Village in San Fernando, Pampanga. A downtown shop opened in 1993 in Davao.
DFP’s flagship store opened on April 1997. Called Fiestamall, its building sits on a 5-hectare lot built for duty free retailing and it boasts of a 24,000 sq.m. selling area and state-of-the-art facilities.
In 2009, DFP was reorganized into Duty Free Philippines Corporation with the signing of the Tourism Act of 2009 (Republic Act No. 9593). As a government corporation, DFPC is tasked to operate the duty-and tax-free merchandising system in the Philippines to augment the service facilities for tourists and to generate foreign exchange and revenue for the government as mandated by E.O. No. 46.