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Vital Notes On Tariff and Custom Code
Vital Notes On Tariff and Custom Code
quantity, character, and value thereof, and the Collectors own finding as to the
applicable rate of duty.
Is the final computation or ascertainment of the duties accruing on
merchandise.
Liquidated, when stamped by a collector of customs on the entry of
goods at a customhouse, meant that the entry had been passed regularly
through the various divisions of the collectors office, and the duties thereon
had been finally ascertained and fixed by the customs officials.
Purpose and Function of Liquidation
From a reading of Sec. 1601 of the Code, it is evident that liquidation of
entries (tentative or final) is the only function and duty of customs assessors,
the sole purpose of which is to determine the exact amount due under the law,
no more, no less.
In essence, it is merely to correct errors in the computation of duties,
taxes, fees and other charges on the face of the entry which may include errors
on the application of the conversion rate of exchange, freight and arrastre
charges, imposition of surcharge under Sec. 2503 of the Code, and the like.
Reason why called Liquidation and Billing Division
If additional duties, taxes, fees and other charges are found upon
liquidation, i.e., there is short-payment, the law mandates that a notice (billing)
shall promptly be sent to the interest parties, the reason why the unit is called
Liquidation and Billing Division.
Customs assessors must and should not on their own usurp the
functions of customs officers (examiners and/or appraisers) whose duties are
expressly mandated under Sec. 1403 of the Code, as amended by R.A. 7650,
which further states that it is to be under pain of penalties prescribed under
Sec. 3604 if they fail in their duties.
Tentative Liquidation
SEC. 1602. Tentative Liquidation. If to determine the exact amount due
under the law in whole or in part some future action is required, the liquidation
shall be deemed to be tentative as to the item or items affected and shall to that
extent be subject to future and final readjustment and settlement within a period
of six (6) months from date of tentative liquidation. The entry in such case shall
be stamped Tentative liquidation.
While the Code has not defined what the term liquidation means, we can
deduce from a reading of Sec. 1602 aforequoted that it is to determine the
exact amount due under the law from imported articles, either in whole or in
part. The law further provides that if some future action is required, the
liquidation shall be deemed tentative and the entry shall be stamped Tentative
Liquidation.
What specific examples of importations which may fall under tentative
liquidation?
Ans: For obvious reasons, the law did not mention or enumerate what the
required future action is or are but it mostly refer to importations which under
the law may be authorized for release under bond (cash or surety). Specific
examples are:
1. Importations which fall under sub-section d, of Sec. 105 (ConditionallyFree Importations) of the Code on articles brought in for repair,
processing or reconditioning.
2. Those which fall under sub-section I, on articles used exclusively for
public entertainment, and for display in public expositions, or for
exhibition or competition for prizes, and devices for projecting pictures
and parts and appurtenances thereof.
3. Duty and/or tax exempt importations which may be released under bond
conditioned on submission of an endorsement from the Department of
Finance (DOF) that the importation is qualified for duty and/or tax free
release.
Thus, if some future action is still required before the exact amount due
under the law can be determined, its only in such case that an entry shall be
deemed under tentative liquidation. Conversely, if no future action is required
and the exact amount due is determined upon liquidation of the entry, and full
payment already tendered, it would logically follow that the entry is finally
liquidated and no longer under tentative liquidation. If short payment is found
upon liquidation and the additional duties, taxes and other charges assessed
have been paid, the same is likewise true. This view finds support in the law
which further mandates that A daily record of all entries liquidated shall be
posted in the public corridor of the customhouse (I express doubts whether
this mandate of law is still being followed.)
When is a liquidation considered made on the entry?
Ans: Liquidation is considered to have been made when the entry is officially
stamped liquidated, and is dated in accordance with a customs regulation,
although as appears, where there is a discrepancy between the date so
stamped and the date given in the public bulletin of liquidation, for purposes of
filing a protest, the latter date governs.
Liquidation- A mandatory process
From the above-quoted provision of law, it is obvious that liquidation is a
mandatory process required for every entry of imported articles. For it is
through this legal process that a determination is made of the exact amount of
duty, tax and other charge due under the law for which the importer is liable
(Sec. 1602, TCC). Section 2308 of the Code presupposes that a ruling or
decision of the Collector has been made whereby liability for duties, taxes,
Ans: Generally, liquidation becomes final and conclusive after 3 years from the
date of the final payment of duties in the absence of fraud, protest, and
compliance audit unless the liquidation of the import entry was merely
tentative.
If there is no fraud, protest or in the absence of non-compliance audit
under Sec. 3515 of the TCCP as amended, liquidation on the expiration of three
(3) years from the date of the final payment of duties, becomes final and
conclusive on all persons including the Philippine government or any of its
officer.
Exception to the general rule: When the liquidation made on the entry in the
first place is merely tentative.
Note: The implementing rules further clarify the finality of liquidation of import
entries as follows:
The liquidation of an import entry shall be deemed final and conclusive
upon all parties after the expiration of three (3) years from the date of the final
payment of the duties due, except where:
1. Fraud as defined in Section VI.C.1.c hereof as committed;
2. A protest has been filed under the provision of Section 2308 of the
Customs Code;
3. Where the import entry is selected for post audit within the three (3)
year period required for record-keeping provided that once started, the
audit can be completed beyond said period;
4. The liquidation of the import entry was merely tentative.
The first exception speaks of fraud. Fraud is abroad term, not just the
acts or omissions mentioned in Sec. 3611 of the Code relative to compliance
audit, and the Philippine Law Dictionary is replete with citations on what is
meant by fraud or what constitutes fraud. The bottom line is that fraud is and
illegal act under any law, to be condemn.
The second exception covers protests. Sec. 2308 of the Code on protests
provides that it shall be presented at the time when payment of the amount
claimed to be due the government is made or within fifteen (15) days thereafter.
It further provides that no protest shall be considered unless there is payment
of the amount due after final liquidation. In reference to protests, final
liquidation as contemplated in Sec. 1601 and Sec. 1407 of the Code is not the
same as finality of liquidation contemplated in Sec. 1603 of the same Code.
This is easily discernible if one reads closely the provisions of Sec. 1407 in
comparison with the provisions of Sec. 1603. The exceptions mentioned in Sec.
1407 cannot be interpreted to mean the some future action is required
contemplated under Sec. 1602. The exception enumerated are only
contingencies which may later arise after final liquidation which is evident from
a close reading of Sec. 1407 which states to read: Such appraisal,
classification or return as finally passed upon and approved or modified by the
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Reliquidation, defined
A reliquidation is a new liquidation, made for the purpose of correcting
mistakes or errors of fact or law. It constitutes an abandonment of all prior
liquidations and becomes in their stead the final decision of the collector,
having all the validity of the original liquidation.
III ABATEMENTS AND REFUNDS
General rule: It is the general rule that customs revenue may be collected only
on the quantity of the taxable subject matter which is actually imported and
received by the importer, so as to come into the consumption of the country.
Duties are not to be estimated on goods, which never arrived in port, merely
because they are included in the invoice, regardless of whether the shortage is
due to theft, evaporation, destruction or other loss on the voyage, or to short
shipment.
Duties assessed on goods entered at customhouse
Duties are required by law to be assessed on the goods, and the
assessment is uniformly made on the quantity entered at customhouse,
without any allowance for ordinary leakage and deterioration during delay in
completing the appraisement.
Except those specially provided for in the Tariff and Customs code of the
Philippines, no abatement of duties shall be made on account of damage
incurred or deterioration suffered during the voyage of importation. Duties will
be assessed on the actual quantity imported, as shown by the return of the
weighers, gauges, measurers, examiners or appraisers, as the case may be.
Abatement, defined
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SEIZURE/FORFEITURE PROCEEDINGS
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Issuance of Warrant
Upon making any seizure, the Collector shall issue a warrant for the
detention of the property.
Upon probable cause, that the articles were imported or attempted to be
exported contrary to tariff and customs laws, the Collector of Customs shall
issue a Warrant of Seizure and Detention (WSD) in customs form W7651.
Who has the burden of proof in seizure and/or forfeiture case?
Ans: In all proceedings taken for the seizure and/or forfeiture of any vessel,
vehicle, aircraft, beast or articles under the provisions of the tariff and customs
laws, the burden of proof shall lie upon the claimant. However, the government
must first show probable cause before seizure/forfeiture proceedings may be
instituted.
Has the Bureau of Customs jurisdiction even if no WSD was issued?
Ans: It is the settled rule, therefore, that the Bureau of Customs acquires
exclusive jurisdiction over imported goods, for the purposes of enforcement of
the customs laws, from the moment the goods are actually in its possession or
control, even if no warrant of seizure or detention had previously been issued by
the collector of Customs in connection with seizure and forfeiture proceedings.
Note: Despite the above pronouncement by the Supreme Court in the above
case, the following C.T.A. Case explains the necessity of the issuance of the
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CMO 8-1984 provides for the guidelines in the application and return of
warrants of seizure and detention to be strictly complied with by the person
empowered under the law to effect customs searches, seizures and arrests.
What is the difference between a warrant of seizure and detention (WSD)
issued by the Collector of Customs and a search warrant issued by the
court?
Ans: A warrant of seizure and detention issued by the collector of Customs is
directed to any person authorized under the customs law to effect search and
seizure of any merchandise upon which duties have not been paid, or which
have been imported contrary to law or released irregularly from the customs
custody.
On the other hand, a judicial search warrant is nothing more than an
order in writing issued in the name of the People of the Philippines, signed by a
judge or a justice of the peace (Municipal Judge) and directed to a peace officer,
commanding him to search for personal property and bring it before the Court.
May the WSD issued by the Collector of Customs be enforced outside the
Customs Zone?
Ans: From the following authorities, it would seem that this question would
call for an affirmative answer:
Any officer of the Customs is authorized by statute to go on board any
vessel or vehicle at any time and at any place in the United States or within the
customs waters, or as he may be authorized, within a custom-enforcement are
established by law, or at any other authorized place, without as well as within
his district, and examine the manifest and other documents and papers and
examine, inspect, and search the vessel or vehicle and every part thereof and
any person, trunk, package, or cargo on board, and to this end to hail and stop
such vessel or vehicle, and to use all necessary force to compel compliance.
Return of WSD by Customs Agents
The officer directed to serve the WSD shall, within ten (10) days after
receipt thereof, make a return of service to the Collector concerned in the form
of endorsement to the warrant. It shall state the relevant details of the service,
inventory and turn over of the seized articles.
Description, Appraisal and Classification of Seized Articles
The collector shall prepare a list and description, clarification and/or
appraisal of the property seized in accordance with the existing customs
valuation.
Notification of the Seizure
a. Known owner/importer
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The Collector shall give the owner or importer of the property or his agent
a written notice of the seizure and shall give him an opportunity to be heard in
reference to the delinquency which was the occasion of such seizure.
Importer, consignee, person holding the bill of lading or his agent
whether in fact or otherwise shall be deemed to be the owner of the article
seized for the purpose of giving above notice.
b. Unknown owner
1. By posting for fifteen (15) days in the public corridor of the
customhouse of the district in which the seizure was made; and
2. By publication in a newspaper; or
3. By such other means in the discretion of the Commissioner of
Customs.
Elementary rule of due process requires notice and hearing
This Court need not emphasize the constitutionally enshrined right to
procedural due process of any person under investigation especially if it will
cause the person his life or property. Sections 2301 and 2303 clearly lay down
the procedure to be observed in as seizure case, that is, a WSD must be issued
upon making any seizure and that written notice of such seizure be served
upon the owner or importer or his agent.
We agree with the petitioner that a notice of hearing posted on the
bulletin board of the public respondent in a forfeiture proceeding where owner
of the alleged prohibited article is known does not constitute sufficient
compliance with proper service of notice and procedural due process.
Time and again, the Court has emphasized the imperative necessity for
administrative agencies to observe the elementary rules of due process. And no
rule is better established under the due process clause of the Constitution that
that which requires notice and opportunity to be heard before any person can
lawfully deprived of his rights.
May a party be declared in default in administrative proceedings?
Ans: We hold that if the party duly summoned, or duly notified, to appear at an
administrative investigation, refuses to appear, he may be declared in default,
and the investigation may proceed without his presence.
Notice not necessary on claimant whose interest on goods seized is not
brought to Collectors cognizance
Where the Collector of Customs had no way of knowing about the alleged
claim of a party who claims interest over the goods seized, said Collector could
not be expected to give him notice of said seizure proceedings.
Regular court has jurisdiction over question of due process in the
imposition of fine
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Where the question involved is not whether the imposition of the fine by
the Collector of Customs on the operator of the ship is correct or not, but
whether he acted properly in imposing said fine without first giving the
operator an opportunity to be heard, it is held that the Court of First Instance
(now Regional Trial Court) acted correctly in assuming jurisdiction over the
case.
Formal Proceedings (SEIZURE/FORFEITURE)
Hearing for Unknown Parties
If within fifteen 915) days after the notification prescribed in Sec. 2304
above, no owner or agent can be found or appear before the Collector, the latter
shall declare the property forfeited to the Government to be sold at auction in
accordance with law. Sec. 2306, TCCP.
a.
1.
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Ans: Pending hearing, in the absence of fraud and subject to the approval of
the Commissioner, the seizure case maybe settled by payment of fine or
redemption of forfeited property.
In case of settlement, depending upon the gravity of the offense, the fine
to be imposed shall be in an amount not less than 20% nor more than 80% of
the landed cost of the seized imported article or the F.O.B. value of the seized
article for export.
In case of redemption, by payment of the domestic market value of the
seized article.
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The party aggrieved by the decision or action of the Collector may within
fifteen (15) days after receipt of the notice of the decision of the Collector, file a
motion for reconsideration (MR) to the Collector or a written notice to the
Collector with a copy furnished to the Commissioner of his intention to appeal
the decision or action of the Collector to the Commissioner.
Note: If the claimant did not appeal or file an MR, the decision becomes final.
1.2 If the Commissioner decides in favor of the claimant or reverses the
appealed decision of the Collector, his decision becomes final and
executory.
1.3 If the Commissioner affirms the appealed decision of the Collector,
the claimant has 30 days from receipt of the decision within which to file
an MR to the Commissioner or a petition for review to the Court of Tax
Appeals (CTA).
Note: If no decision from the Commissioner, the decision of the Collector is
deemed affirmed. So that the claimant should file a petition for review to the
CTA.
Mandatory Service of Notices of Orders, Decision and other Proceedings
In all adversarial proceedings, to comply with the mandate and
requirements of due process of law, particularly in seizure cases, which required
submission of controverting evidence by the parties therein and pending
resolution and decision by the Collector of Customs, it shall be the mandatory
duty of the District Collector or the concerned Law Division to furnish/notify
all parties affected by such proceedings, including but not limited to, the
government prosecutors, claimants/importers, or intervenors, with copies of all
Decisions, Orders, interlocutory or otherwise, and other proceedings take in
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the case. Such notices shall preferably be by personal service or, if not
practibable by registered mail.
Is the Commissioner required to conduct a formal hearing before
rendering his decision?
Ans: Sec. 2313 of the Tariff and Customs Code does not require the
Commissioner of Customs to hold a formal hearing. His duty is to approve,
modify or reverse the decision of the Collector of Customs on the basis of the
records, papers and evidence presented before the latter.
What is a motion for reconsideration?
Ans: A request that the decision or ruling of the Collector or Commissioner of
Customs be reconsidered and set aside by himself on that basis of error or
some justifiable grounds in favor of the claimant.
What are some of the grounds for filing a motion for reconsideration?
Ans: 1. The decision of the Collector or of the Commissioner of Customs is
manifestly against the weight of evidence or contrary to law; and
2. Newly discovered evidence, not cumulative or corroborative but
material to the party making the request, which he could not, with
the exercise of reasonable diligence, have discovered or produced at
the original hearing and which if presented will have the effect of
altering the original decision.
What is the effect of filing a motion for reconsideration?
Ans: the filing of the motion for reconsideration interrupts the running of the
period for appeal. A second motion for reconsideration shall not be entertained
and shall not interrupt the period of appeal if it is a reiteration of the first, or is
founded on ground that was available at the time of the filing of the first
motion.
2.0
2.1
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him are locally produced, hence not dutiable, or of foreign origin, and therefore
subject to payment of customs duties and taxes. A decision that is favorable to
the taxpayer would correspondingly be unfavorable to the government, but who
will appeal the collectors decision in that case? Certainly not the collector.
Evidently, it was to cure this anomalous situation (which may have
already defrauded our government of huge amounts of uncollected taxes), that
the provision for automatic review by the Commissioner of Customs and the
Secretary of Finance of unappealed seizure and protest cases was conceived to
protect the government against corrupt and conniving customs collectors.
B.
PROTEST PROCEEDINGS
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Statutes requiring protest were not designed for men learned in the law
and trained to the niceties in pleading, but for men engaged in commercial
pursuits. Protests are commercial rather than legal documents, and the trend of
decision with respect to them is that they are not required to conform to the
technical precision of legal documents as to either phraseology or formality of
execution. No special form is required.
Protests are liberally construed and strict rules of construction are
inapplicable.
Parties who may initiate customs protest cases
1. Owner/Importer/Consignee of the subject imported articles;
2. Customhouse Broker; and
3. Lawyer of the protestant
Procedure
A.
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Decision, defined
A decision must be in writing, personally and directly prepared by the
judge (or person or body lawfully authorized to issue the same) signed by him,
stating clearly and distinctly the facts and the law on which it is based.
Three Parts of Decision
1. Opinion is that portion of the decision containing the findings of
facts and conclusions of law;
2. Disposition is that part containing the final and actual disposition
and adjudication of the rights litigated; and
3. Signature.
May the Collector of Customs be held liable for any decision or ruling in
customs cases?
Ans: No Collector or other official of customs shall be in any way personally
liable for on account of any official ruling or decision as to which the person
claiming to be aggrieved has the right to obtain either an administrative or
judicial review, and except for misdelivery or articles, a Collector shall not, in
the absence of abuse of authority, be liable to any person for a loss occasioned
either by his own act or the acts of his subordinates.
Form and Scope of Protest
Every protest shall be filed in accordance with the prescribed rules and
regulations promulgated under this section and shall point out the particular
decision or ruling of the Collector to which exception is taken or objection
made, and shall indicate with reasonable precision the particular ground or
grounds upon which the protesting party bases his claim for relief. The scope of
a protest shall be limited to the subject matter of a single adjustment or other
independent transaction, but any number of issue may be raised in a protest
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with reference to the particular item or items constituting the subject matter of
the protest.
Multifariousness; Alternative Protest
It is well settled that a protest of a decision of the Collector of Customs
otherwise sufficient is void if multifarious, and therefore a protest alternative in
form is unobjectionable, and, where one of the claims is correct, the protestant
is entitled to have the erroneous classification corrected.
In the case of an alternative protest, the fact of the protest on one ground
does not estop the protestant to insist on the other ground of protest.
Nevertheless, so-called blanket protests, enumerating a long list of
paragraphs, many of which are entirely remote, with the purpose of veering
everything, do not comply with the law.
Assignment of Grounds or Reasons
It has been uniformly prescribed that the importers protest of the
collectors decision should set forth distinctly and specifically his objections to
the decision in question and his reasons for such objections.
Although there is lack of uniformity found in the expressions of the
courts with respect to the sufficiency of protests, it is agreed that no technical
precision in form or statement is necessary.
Issues not raised by the protest may not be considered or in other words,
since the protest is in the nature of a pleading, the protestant will be confined
to the claims made therein. If the protest is lacking specificness the decision
complained of must stand, even though incorrect, but without approval, and
the fact that another protest contained claims not made in the one under
consideration has no influence on the construction of the latter.
The rule provides that the importer shall state in his formal protest the
reasons therefore, and shall pay the corresponding docket fee.
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remittance is just a deposit. To be deemed paid the duties must have been
liquidated. Precisely, the law speaks of payment of the amount claimed to be
due the government. Such payment evidently refers to the amount of duty, tax
and other charges found upon liquidation to be due the government, for it is
through the mandatory legal process of liquidation that the extent of an
importers liability for such duty, tax and other charges is ascertained or
determined. This is why the law provides that no protest shall be considered
unless payment of the amount due after final liquidation has first been made
(Sec. 2308, TCC) Otherwise, a protest would be premature, since it is only
when the importers liability has been determined through final liquidation that
a cause of action available to him can rightly be said to have arisen.
What is the effect of filing a protest before final liquidation?
Ans: It is premature and may be dismissed on the ground of failure to state a
cause of action.
What are the requirements for a valid protest under the Customs Law?
Ans: Below are the requirements for a valid protest:
1. It must be in writing;
2. It must be filed at the time of payment or within 15 days thereafter;
3. It must point out the particular decision or ruling of the Collector to
which objection is made;
4. It must indicate with reasonable precision the basis, grounds or
reasons of the protest;
5. It must be limited to the subject matter of a single adjustment or
other independent transaction;
6. It must only be considered after payment of the amount due after final
liquidation has first been made; and
7. Payment of docket fee
8. Payment of Documentary Customs Stamps of P200 (CA0 2-2001)
Rules on the Computation of Time for Filing a Protest
1. The 15 day reglementary period for filing a protest includes Sundays
and holidays; and
2. If the last day of the period falls on Sunday or legal holiday, protest
may be filed on the next succeeding business day.
Is protest sent by mail allowed by the rules?
Ans: Yes. Provided the Collector of Customs receives it within the time specified
by law. However, in the case of registered mail, the date of deposit is the date of
filing of the protest.
May the protestant amend his protest?
Ans: Yes. If the amendment is received within the time allowed by law for the
filing of the original protest.
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The Collector shall form a panel of experts to hear the case. The panel
shall be composed of a hearing officer from the Law Division, a COV and a
COIII from the assessment unit. It shall hear the parties of the case, receive
evidence and authorized to issue the necessary notices, subpoenas and other
interlocutory orders. Within 30 days from the first hearing, the panel shall
terminate the proceedings and recommend through the Chief of the Law
Division a decision to the Collector of Customs for approval.
D.
Upon the termination of the hearing, the Collector shall render a decision
within 30 days (Sec. 2312, TCCP). However, Sec. 8 of the rule provides that the
Collector of Customs shall render a final decision on the Protest within 15 days
from receipt of the recommended decision (from the hearing officer).
1.0
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2.2.1
If within 30 days from receipt of the record of the case no
decision is rendered by the Secretary, or affirms decision of the
Commissioner, the adverse decision under review shall be final and
executory.
2.2.2
If the adverse decision of the Commissioner is reversed by the
Secretary, the appellant has within 30 days to file a MR to the Secretary
or petition for review with the Court of Tax Appeals, otherwise the
decision becomes of the Secretary becomes final and executory.
Secretary of Finance cannot review decisions of Commissioner in matters
appealable to CTA
Note: Limited only to decision of collector adverse to the government.
What is the extent of the supervisory authority of the Secretary Finance
over the Bureau of Customs?
Ans: Except as provided in Section 2315 of the Tariff and Customs Code, the
supervisory authority of the Secretary of Finance over the Bureau of Customs
shall not extend to the administrative review of the ruling or decision of the
Commissioner in matters appealed to the Court of Tax Appeals.
Commissioner to control Judicial proceedings; Supervision and Control by
the commissioner over Criminal and Civil Proceedings
Civil and criminal actions and proceeding instituted in behalf of the
government under the authority of this Code (TCCP) or other law enforced by
the Bureau shall be brought in the name of the government of the Philippines
and shall be conducted by customs officers but no civil or criminal action for
the recovery of duties or the enforcement of any fine, penalty or forfeiture
under the Tariff and Customs Code shall be filed in court without the approval
of the Commissioner.
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