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TARIFFSANDCUSTOMSLAWS Overview * The 1978 TCC is a hodgepodge of old and new laws, continually being amended to adopt to changing

ng political and economic conditions. ** The 1978TCCisdividedintotwoparts: (1)TheTariffLaw[Sections100519,1978TCC];and (2)TheCustomsLaw[Sections6013705,1978TCC]. ***Ingeneral,theTariffCommissionisthegoverningbodyinrelationto theTariffLaw,whiletheBureauofCustomsimplementstheCustomsLaw. TarriffLaw WhatarethemoresignificantprovisionsoftheTarriffLaw? Allarticles,whenimportedfromanyforeigncountryintothe Philippines, shall be subject to duty upon each importation, eventhoughpreviouslyexportedfromthePhilippines,exceptas otherwise specifically provided for in this Code or in other laws. [Section 100, 1978 TCC] See Section 102 for a list of prohibitedimportationsandSection105,bothofthe1978TCC, forconditionallyfreeimportations. Whataretheprohibitedimportations?(Basicallyanythingagainstthelaw, morals,publicpolicy,etc.) Sec.102.ProhibitedImportations.TheimportationintothePhilippines ofthefollowingarticlesisprohibited: a. Dynamite, gunpowder, ammunitions and other explosives, firearm and weapons of war, and detached parts thereof, except when authorized by law. b.Writtenorprintedarticleinanyformcontaininganymatteradvocating or inciting treason, rebellion, insurrection or sedition against the Government of the Philippines, of forcible resistance to any law of the Philippines,orcontaininganythreattotakethelifeoforinflictbodilyharm uponanypersoninthePhilippines. c. Written or printed articles, photographs, engravings, lithographs, objects, paintings, drawings or other representation of an obscene or immoralcharacter. d. Articles, instruments, drugs and substances designed, intended or adaptedforpreventinghumanconceptionorproducingunlawfulabortion, or any printed matter which advertises or describes or gives directly or indirectly information where, how or by whom human conception is preventedorunlawfulabortionproduced. e.Roulettewheels,gamblingoutfits,loadeddice,markedcards,machines, apparatusormechanicaldevicesusedingambling,orinthedistributionof money, cigars, cigarettes or other articles when such distribution is dependentuponchance,includingjackpotandpinballmachinesorsimilar contrivances. f. Lottery and sweepstakes tickets except those authorized by the Philippine Government, advertisements thereof and lists of drawings therein. g. Any article manufactured in whole or in part of gold silver or other preciousmetal,oralloysthereof,thestampsbrandsormarksofwhichdo notindicatetheactualfinenessorqualityofsaidmetalsoralloys. h. Any adulterated or misbranded article of food or any adulterated or misbrandeddruginviolationoftheprovisionsofthe"FoodandDrugsAct." i. Marihuana, opium poppies, coca leaves, or any other narcotics or synthetic drugs which are or may hereafter be declared habit forming by the President of the Philippines, any compound, manufactured salt, derivative, or preparation thereof, except when imported by the

-1Government of the Philippines or any person duly authorized by the CollectorofInternalRevenue,formedicinalpurposesonly. j.Opiumpipesandpartsthereof,ofwhatevermaterial. k.Allotherarticlestheimportationofwhichisprohibitedbylaw. Whataretheconditionallyfreeimportations? Sec. 105. Conditionally Free Importations. The following articles shall be exempt from the payment of import duties upon compliance with the formalities prescribed in, or with the regulations which shall be promulgated by the Commissioner of Customs with the approval of the departmenthead: a.Animalsandplantsforscientific,experimental,propagation,botanical, breeding,zoologicalandnationaldefensepurposes:Provided,Thatnolive trees, shoots, plants and moss, and bulbs, tubers and seeds for propagationpurposesmaybeimportedunderthissection,exceptbyorder oftheGovernmentofthePhilippinesorotherdulyauthorizedinstitutions: Provided, further, That the free entry of animals for breeding purposes shallberestrictedtoanimalsofarecognizedbreed,dulyregisteredinthe book of record established for that breed: And Provided, finally, That certificateofsuchrecord,andpedigreeofsuchanimaldulyauthenticated by the proper custodian of such book of record, shall be produced and submittedtotheCollectorofCustoms,togetherwithaffidavitoftheowner or importer, that such animal is the identical animal described in said certificateofrecordandpedigree. b. Aquatic products (e.g., fish, crustaceans, mollusks, marine animals, seaweed, fish oil, roe), including preparations or manufactures thereof, caught or gathered by vessels of Philippine registry: Provided, That they are imported in such vessels or in crafts attached thereto: And Provided, further, That they have not been landed in any foreign territory or, if so landed, they have been landed solely for transshipment without having beenadvancedincondition. c. Samples of the kind, in such quantity and of such dimensions or construction as to render them unsalable or of no appreciable commercial value, models not adapted for practical use and samples of medicineproperlymarked"physicians'samplesnotforsale". Commercial samples, except those that are not readily and easily identifiable (e.g., precious and semiprecious stones, cut or uncut, and jewelrysetwithpreciousorsemipreciousstones),thevalueofanysingle importationofwhichdoesnotexceedtenthousandpesos,uponthegiving of a bond in an amount equal to one and onehalf times the ascertained duties,taxesandotherchargesthereon,conditionedfortheexportationof said samples within six months from the date of the acceptance of the import entry, or in default thereof, the payment of the corresponding duties,taxesandothercharges.Ifthevalueofanysingleconsignmentof such commercial samples exceeds ten thousand pesos, the importer thereof may select any portion of same not exceeding in value ten thousandpesosforentryundertheprovisionsofthissubsection,andthe excessoftheconsignmentmaybeenteredinbond,orforconsumption,as theimportermayelect. d. Articles, including binnacles, propellers, and the like, the character of which, as imported, prevents their use for other purposes than the construction, equipment, or repair of vessels and aircraft, and life preservers and life buoys, related equipment and parts and accessories thereof,whicharenecessaryforthetakeoffandlandingandforthesafe navigationofvesselsandaircraft. e. Equipment for use in the salvage of vessels or aircraft, upon identificationandthegivingofabondinanamountequaltooneandone half times the ascertained duties, taxes and other charges thereon, conditioned for the exportation thereof or payment of the corresponding duties, taxes and other charges within six months from the date of acceptance of the import entry: Provided, That the Collector of Customs

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mayextendthetimeforexportationorpaymentofduties,taxesandother charges for a term not exceeding six months from the expiration of the originalperiod. f . Cost of repairs made in foreign countries upon vessels or aircraft documented, registered or licensed in the Philippines, upon proof satisfactorytotheCollectorofCustoms(1)thatadequatefacilitiesforsuch repairs are not afforded in the Philippines, or (2) that such vessels or aircraft,whileintheregularcourseofhervoyageorflightwascompelled by stress of weather or other casualty to put into a foreign port to make suchrepairsinordertosecurethesafetyseaworthinessorairworthinessof thevesseloraircrafttoenablehertoreachherportofdestination. g. Articles brought into the Philippines for repair, processing or reconditioning to be reexported upon completion of the repair, processing or reconditioning: Provided, That the Collector of Customs may,inhisdiscretion,requirethegivingofabondinanamountequalto one and onehalf times the ascertained duties, taxes and other charges thereon, conditioned for the exportation thereof or payment of the correspondingduties,taxesandotherchargeswithinsixmonthsfromthe dateofacceptanceoftheimportentry. h.Medals,badges,cupsandothersmallarticlesbestowedastrophiesor prizes,orthosereceivedoracceptedashonorarydistinctions. i. Wearing apparel and household effects, including those articles providedforundersubsections"j"and"k",andbelongingtoresidentsof the Philippines returning from abroad, which were exported from the Philippines by such returning residents upon their departure therefrom or during their absence abroad, upon the identity of such articles being established to the satisfaction of the Collector of Customs; personal and householdeffectsbroughtintothePhilippinesbyreturningresidents,the export value of which does not exceed five hundred pesos, solely for personalorhouseholdusebutnotimportedfortheaccountofanyother personnorintendedforbarter,saleorhire:Provided,Thatsuchreturning residentshavenotreceivedthebenefitofanyexemptionhereunderwithin onehundredandeightydaysfromandafterthedateofthelastexemption granted:AndProvided,further,Thatintheeventthetotalexportvalueof theimportedarticleorarticlesexceedstheamountoffivehundredpesos, sucharticleorarticlesshallbesubjecttodutyonlyontheamountinexcess of five hundred pesos; articles of the same kind and class purchased in foreign countries by residents of the Philippines during their absence abroad and accompanying them upon their return to the Philippines, or arrivingwithinareasonabletimewhichinnocaseshallexceedninety(90) days before or after the owner's return, upon proof satisfactory to the Collector of Customs that same have been in their use abroad for more than one year; articles in any single shipment consigned to any single personwhenthetotalexportvalueofsuchshipmentdoesnotexceedone hundredpesos:Provided,finally,Thatwhentheexportvalueexceedsthe amountofonehundredpesos,onlytheamountinexcessofonehundred pesosshallbesubjecttoduty. j. Wearing apparel, articles of personal adornment, toilet articles, portabletollsandinstruments,theatricalcostumes,andsimilarpersonal effects, accompanying travelers or tourists in their baggage or arriving within a reasonable time, in the discretion of the Collector of Customs, beforeoraftertheowners,inuseofandnecessaryandappropriateforthe wear or use of such persons according to their profession or position for the immediate purposes of their journey and their present comfort and convenience: Provided, That this exemption shall not be held to apply to articles intended for other persons or for barter, sale or hire: Provided, further, That the Collector of Customs may, in his discretion, require a bondinanamountequaltooneandonehalftimestheascertainedduties, taxes and other charges upon articles classified under this subsection, conditioned for the exportation thereof or payment of the corresponding duties, taxes and other charges, within six months from the date of

-2acceptanceoftheimportentry:AndProvided,finally,ThattheCollectorof Customsmayextendthetimeforexportationorpaymentofduties,taxes andotherchargesforatermnotexceedingsixmonthsfromtheexpiration oftheoriginalperiod. k.Vehicles,horses,harness,bedandtablelinen,tableservice,furniture, musical instruments and personal effects of like character, owned and importedbytravelersortouristsfortheirconvenienceandcomfort,upon identification and the giving of a bond in an amount equal to one and onehalf times the ascertained duties, taxes and other charges thereon, conditionedfortheexportationthereoforpaymentofthecorresponding duties, taxes and other charges within six months from the date of acceptance of the import entry: Provided, That the Collector of Customs mayextendthetimeforexportationorpaymentofduties,taxesandother charges for a term not exceeding six months from the expiration of the originalperiod. l.Professionalinstrumentsandimplements,toolsoftrade,occupationor employment, wearing apparel, domestic animals, and personal and householdeffects,includingthoseofthekindandclassprovidedforunder subsections "j" and "k" and belonging to persons coming to settle in the Philippines,inquantitiesandoftheclasssuitabletotheprofession,rankor positionofthepersonimportingthem,fortheirownuseandnotforbarter orsale,accompanyingsuchpersons,orarrivingwithinareasonabletime, inthediscretionoftheCollectorofCustoms,beforeorafterthearrivalof theirowners,upontheproductionofevidencesatisfactorytotheCollector of Customs that such persons are actually coming to settle in the Philippines,thatthearticlesarebroughtfromtheirformerplaceofabode, thatchangeofresidenceisbonafide,andthattheprivilegeoffreeentry under this subsection has never been previously granted to them: Provided, That neither merchandise of any kind, nor machinery or other articlesforuseinmanufacture,shallbeclassifiedunderthissubsection. m.Animals,vehicles,portabletheaters,circusandtheatricalequipment, including musical instruments, sceneries, panoramas, properties, saddlery, wax figures and similar objects for public entertainment, and other articles for display in public expositions, or for exhibition or competitionforprizes,anddevicesforprojectingpicturesandpartsand appurtenancestherefor,uponidentificationandthegivingofabondinan amountequaltooneandonehalftimestheascertainedduties,taxesand otherchargesthereon,conditionedforexportationthereoforpaymentof thecorrespondingduties,taxesandotherchargeswithinsixmonthsfrom thedateofacceptanceoftheimportentry:Provided,ThattheCollectorof Customsmayextendthetimeforexportationorpaymentofduties,taxes andotherchargesforatermnotexceedingsixmonthsfromtheexpiration oftheoriginalperiod;andtechnicalandscientificfilmswhenimportedby technical, cultural and scientific institutions, and not to be exhibited for profit: Provided, That if any of the said films is exhibited for profit, the proceeds therefrom shall be subject to confiscation, in addition to the penaltyprovidedundersectionthreethousandsixhundredandtenofthis Code. n. Articles (e.g., photographic, sound recording, electrical and other equipment, vehicles, animals, costumes, apparel, properties, supplies, unexposedmotionpicturefilms)broughtbyforeignproducersformaking or recording motion pictures on location in the Philippines, upon identificationandthegivingofabondinanamountequaltooneandone half times the ascertained duties, taxes and other charges thereon, conditioned for exportation thereof or payment of the corresponding duties,taxesandchargeswithinsixmonthsfromthedateofacceptanceof theimportentry.Unexposedmotionpicturefilmsallowedfreeentryunder bond for exportation falling within this subsection and subsequently exposed, whether or not developed, may be reexported free of import duties,taxesandothercharges. Negative films, undeveloped, exposed outside the Philippines by resident FilipinocitizensorbyproducingcompaniesofPhilippineregistrywherethe

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principalactorsandartistsemployedfortheproductionareFilipinos,upon affidavit by the importer that such exposed films are the same films previously exported from the Philippines. As used in this paragraph, the terms"actors"and"artists"includethepersonsworkingthephotographic cameraorotherphotographicandsoundrecordingapparatusbymeansof whichthefilmismade. o. Costumes, regalia and other articles, including office supplies and equipment, imported for the official use of members and attaches of foreignembassies,legations,consularofficersandotherrepresentatives offoreigngovernment:Provided,Thatthecountrywhichanysuchperson represents accords like privileges to corresponding officials of the Philippines. Articles imported for the personal or family use of the members and attaches of foreign embassies, legations, consular officers and other representativesofforeigngovernments:Provided,Thatsuchprivilegeshall be accorded under special agreements between the Philippines and the countries which they represent: And Provided, further, That the privilege may be granted only upon specific instructions of the Department of Finance in each instance which will be issued only upon request of the DepartmentofForeignAffairs. p.Regalia,gems,statuary,specimensorcastsofsculpturesimportedfor the bona fide use and by the order of any society incorporated or established solely for religious, philosophical, educational, scientific or literary purposes, or for the encouragement of the fine arts, or for the use and by the order of any institution of learning, public library, museum, orphan asylum or hospital, and not for barter, sale or hire: Provided, That the term "regalia" shall be held to embrace only such insigniaofrankorofficeoremblemsasmaybewornuponthepersonor borneinthehandduringpublicexercisesorceremoniesofthesocietyor institution,andshallnotincludearticlesoffurnitureorfixtures,orordinary wearingapparel,norpersonalpropertyofindividuals. q.Musicalorgansimportedforthebonafideuseandbytheownerofany societyincorporatedorestablishedforreligiousoreducationalpurposes, or,expresslyforpresentationthereto. r.Scientificapparatus,instrumentsandutensilsspeciallyimportedforthe bonafideuseandbytheorderofanysocietyorinstitutionincorporated orestablishedsolelyforeducational,scientific,orcharitablepurposes,or fortheencouragementofthefinearts,orforthebonafideuseandbythe order of any institution of learning in the Philippines, and not for barter, saleorhire. s. Philosophical, historical, economic, scientific, technical and vocational books specially imported for the bona fide use and by the order of any societyorinstitution,incorporatedorestablishedsolelyforphilosophical, educational, scientific, charitable or literary purposes, or for the encouragement of the fine arts, or for the bona fide use of and by the order of any institution of learning in the Philippines: Provided, That the provisionsofthissubsectionshallapplytobooksnotexceedingtwocopies ofanyoneworkwhenimportedbyanyindividualforhisownuse,andnot forbarter,saleorhire. Bibles, missals, prayerbooks, koran, ahadith and other religious books of similar nature and extracts therefrom, hymnal and hymns for religious uses, specially prepared books, musicandotherinstrumentalaidsforthe deaf,muteorblind,andtextbooksprescribedforuseinanyschoolinthe Philippines:Provided,Thatcompletebookspublishedinpartsinperiodical formshallnotbeclassifiedherein. t. Newsprint, whenever imported by or for publishers for the exclusive useinthepublicationofnewspapers. u.Articlesdonatedtopublicorprivateinstitutionsestablishedsolelyfor educational,scientific,cultural,charitable,health,relief,philanthropicor

-3religious purposes, for free distribution among, or exclusive use of, the needy. v.Food,clothing,housebuildingandsanitaryconstructionmaterials,and medical, surgical and other supplies for use in emergency relief work, when imported by or directly for the account of any victim, sufferer, refugee, survivor or any other person affected thereby, or by or for the accountofanyrelieforganization,notoperatedforprofit,fordistribution among the distressed individuals, whenever the President shall, by proclamation, declare an emergency to exist by reason of a state of war, pestilence, cholera, plague, famine, drought, typhoon, earthquake, fire, floodandsimilarconditions:Provided,Thattheimportationfreeofdutyof articles described in this herein subsection shall continue only during the existence of such emergency, or within such limits and subject to such conditions as the President may, by his proclamation, deem necessary to meettheemergency. w. Philippine articles previously exported from the Philippines and returned without having been advanced in value or improved in conditionbyanyprocessofmanufactureorothermeans,anduponwhich no drawback or bounty has been allowed, and foreign articles when returned after having been loaned and exported for use temporarily abroad solely for exhibition, examination or experimentation, for scientific or educational purposes, and foreign containers packed with exportedPhilippinearticlesandreturnedemptyifimportedbyorforthe account of the person or institution who exported them from the Philippines and not for sale, subject to identification: Provided, That any Philippine article falling under this subsection upon which drawback or bountyhasbeenallowedshall,uponreimportationthereof,besubjectto a duty under this subsection equal to the amount of such drawback or bounty. x. Large containers (e.g., demijohns, cylinders, drums, casks and other similar receptacles of metal, glass or other material) which are, in the opinion of the Collector of Customs, of such a character as to be readily identifiable may be delivered to the importer thereof upon identification andthegivingofabondinanamountequaltooneandonehalftimesthe ascertained duties, taxes and other charges thereon, conditioned for the exportation thereof on payment of the corresponding duties, taxes and otherchargeswithinoneyearfromthedateofacceptanceoftheimport entry. y.Suppliesorshipstoreslistedassuchfortheuseofthevessel;supplies whichareintendedforthereasonablerequirementsofthevesselinher voyageoutsidethePhilippines,includingsucharticlestransferredfroma bonded warehouse in any collection district to any vessel engaged in foreign trade, for use or consumption of the passengers or its crew on boardsuchvesselasseastores;orarticlespurchasedabroadforsaleon boardavesselassaloonstoresorsupplies:Provided,Thatanysurplusor excessofsuchship,seaorsaloonstoresarrivingfromforeignportsshallbe dutiableaccordingtothecorrespondingheadingorsubheading. z. Articles and salvage from vessels recovered after the period of two years from the date of filing the marine protest or the time when the vessel was wrecked or abandoned as determined by the Collector of Customs, or such part of Philippine vessel or her equipment, wrecked or abandoned in Philippine waters or elsewhere: Provided, That articles and salvage recovered within the said period of two years shall be dutiable accordingtothecorrespondingheadingorsubheading. aa. Articles of easy identification exported from the Philippines for repairs abroad and subsequently reimported: Provided, That the cost of therepairsmadetoanysucharticleshallpayarateofdutyoftwentyfive percentadvalorem. bb. Coffins or urns containing human remains, bones or ashes, and all

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articles for ornamenting said coffins or urns and accompanying same; used personal and household effects, not merchandise, of deceased persons, upon identification as such, satisfactory to the Collector of Customs. ** Upon compliance with certain conditions, drawbacks may be allowed. Section 106(e) of the 1978 TCC reads: e. Payment of the Drawbacks. Claims for refund or tax credit eligible for such benefits shall be paid or grantedbytheBureauofCustomstoclaimantswithinsixty(60)daysafter receipt of properly accomplished claims: xxx; Provided further, That as a result of the refund or tax credit by way of drawback of customs duties, therewouldnecessarilyresultacorrespondingrefundorcreditofinternal revenue taxes on the same importation, the Collector of Customs shall likewisecertifythesametotheCommissionerofCustomswhoshallcause thesaidrefundortaxcreditofinternalrevenuetaxestobepaid,refunded or credited in favor of the importer, with advice to the Commissioner of InternalRevenue. ***Section201ofthe1978TCCidentifiesthebasesofdutiablevalue.The methods of determining the dutiable value are as follows (by order of preference): (1)Transactionvalueanadvaloremrateofdutyequivalenttotheprice actually paid or payable for the goods when sold for export to the Philippines,asadjusted; (2)Transactionvalueofidenticalgoodsthetransactionvalueofidentical goodssoldforexporttothePhilippinesandexportedatoraboutthesame timeasthegoodsbeingvalued;identicalgoodsshallmeangoodswhich arethesameinallrespects,includingphysicalcharacteristics,qualityand reputation,discountingminordifferencesinappearances; (3) Transaction value of similar goods the transaction value of similar goodssoldforexporttothePhilippinesandexportedatoraboutthesame time as the goods being valued; similar goods shall mean goods which, although not alike in all respects, have like characteristics and like component materials which enable them to perform the same functions andtobecommerciallyinterchangeable; (4) Deductive value an amount based on the unit price at which the imported gods or identical or similar imported goods are sold in the Philippines, in the same condition as when imported, in the greatest aggregatequantity,atoraboutthetimeofimportationofthegoodsbeing valued, to persons not related to the persons from whom they buy such goods,asadjusted; (5)Computedvaluetheaggregatevalueofthecostorvalueofmaterials and fabrication or other processing employed in producing the imported goods,amountforprofitandgeneralexpenses,freight,insurancefeesand other transportation expenses for the importation of the goods, among others;and (6) Fallback value an amount determined by using other reasonable meansandonthebasisofdataavailableinthePhilippines. ****Importedarticlesshallbedeemed"entered"inthePhilippinesfor consumptionwhenthespecifiedentryformisproperlyfiledandaccepted, together with any related documents required by the provisions of this Codeand/orregulationstobefiledwithsuchformatthetimeofentry,at theportorstationbythecustomsofficialdesignatedtoreceivesuchentry papersandanyduties,taxes,feesand/orotherlawfulchargesrequiredto bepaidatthetimeofmakingsuchentryhavebeenpaidorsecuredtobe paidwiththecustomsofficialdesignatedtoreceivesuchmonies,provided thatthearticlehaspreviouslyarrivedwithinthelimitsoftheportofentry. Imported articles shall be deemed "withdrawn" from warehouse in the

-4Philippinesforconsumptionwhenthespecifiedformisproperlyfiledand accepted,togetherwithanyrelateddocumentsrequiredbyanyprovisions of this Code and/or regulations to be filed with such form at the time of withdrawal, by the customs official designated to receive the withdrawal entry and any duties, taxes, fees and/or other lawful charges required to bepaidatthetimeofwithdrawalhavebeendepositedwiththecustoms officialdesignatedtoreceivesuchpayment.[Section205,1978TCC] Whatarethespecialdutiesimposableunderthe1978TCC?Theseare: (1) Antidumping duty a special duty imposed on the importation of a product, commodity or article of commerce into the Philippines at less than its normal value when destined for domestic consumption in the exportingcountrywhichisthedifferencebetweentheexportpriceandthe normal value of such product, commodity or article [Section 301, 1978 TCC]; (2) Countervailing duty a special duty imposed on the importation of a product,commodityorarticleofcommerceintothePhilippineswhenthe sameisgranteddirectlyorindirectlybythegovernmentinthecountryof originorexportationanykindorformofspecific subsidyupontheproduction,manufactureorexportationofsuchproduct, commodity or article, and the importation of such subsidized product, commodityorarticlehascausedorthreatenstocausematerialinjurytoa domestic industry or has materially retarded the growth or prevents the establishment of a domestic industry as determined by the Tariff Commission[Section302,1978TCC]; (3) Marking duty every article of foreign origin imported into the Philippines, as a general rule, must be marked in any official language of the Philippines and in a conspicuous place as legibly, indelibly and permanently as the nature of the article or container will permit in such mannerastoindicatetoanultimatepurchaserinthePhilippinesthename of the country of origin of such article; failure to comply with the requirements by law shall subject to relevant article to a marking duty [Section303,1978TCC];and (4) Discriminatory duty a special duty that may be imposed by the PresidentofthePhilippineswhenhefindsthatthepublicinterestwillbe served thereby, in case a product, commodity or article of commerce is importedinavesselofanyofaforeigncountryandthePresidentfindsasa fact that such country discriminates against the commerce of the PhilippinesinsuchmannerastoplacethecommerceofthePhilippinesata disadvantagecomparedwiththecommerceofanyforeigncountry. Whatisaflexibleclause? Section 401(a) of the 1978 TCC provides that in the interest of national economy, general welfare and/or national security and subject to certain prescribed limitations, the President, upon the recommendation of the National Economic and Development Authority, is empowered to: (1) increase,reduceorremoveexistingprotectiveratesofimportduty;(2)to establish import quota or to ban imports of any commodity, as may be necessary; and (3) to impose an additional duty on all imports not exceeding10%advaloremwhenevernecessary. Executive Secretary v. Southwing Heavy Industries, Inc. challenged the constitutionality of a proviso in EO No. 156 issued by former President Arroyo which prohibited importation into the country, inclusive of the SubicBayFreeport,ofalltypesofusedmotorvehicles,subjecttocertain exceptions. The Supreme Court found that EO No. 156 both had constitutional and statutory bases, i.e., there was explicit constitutional and statutory permission authorizing the President to ban or regulate importation of articles and commodities into the country. The High Court cited Article VI, Section 28(2) of the Constitution which says that, [t]he Congressmay,bylaw,authorizethePresidenttofixwithinspecifiedlimits, and subject to such limitations and restrictions as it may impose, tariff

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rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government. The relevant statutes to execute this constitutionalprovisionare:(1)Section401,1978TCC;(2)Articles4and7, 1987 Omnibus Investment Code; and (3) Section 2, 2000 Safeguard MeasuresAct. The subject proviso was declared valid insofar as it applied to the Philippine territory outside the presently fencedin former Subic Naval Base and void with respect to its application to the secured fencedin former Subic Naval Base area. In other words, used motor vehicles that come into the Philippine territory via the secured fencedin former Subic NavalBaseareamaybestored,usedortradedtherein,orexportedoutof the Philippine territory, but they cannot be imported into the Philippine territoryoutsideofthesecuredfencedinformerSubicNavalbasearea. [ExecutiveSecretaryv.SouthwingHeavyIndustries,Inc.,GRNos.164171, 164172and168741,20February2006.] CustomsLaw SEC. 1204. Liability of Importer for Duties. Unless relieved by laws or regulations,theliabilityforduties,taxes,feesandotherchargesattaching on importation constitutes a personal debt due from the importer to the governmentwhichcanbedischargedonlybypaymentinfullofallduties, taxes, fees and other charges legally accruing. It also constitutes a lien uponthearticlesimportedwhishmaybeenforcedwhilesucharticlesare incustodyorsubjecttothecontrolofthegovernment. In Pilipinas Shell v Republic, Shell was assigned tax debit memos and the corresponding tax credit certificates, which were cancelled, when it was informedbytheSec.ofFinancethattheyhadbeenfraudulentlyissuedand transferred.HeaskedShelltoimmediatelypaytheBoCandtheBureauof Internal Revenue the value of the canceled TCCs as well as the related penalties,surchargesandinterests.TheBoClaterondemandedpayment, which was assailed by Shell. The Court held that An assessment or liquidationbytheBoCattainsfinalityandconclusivenessoneyearfromthe dateofthefinalpaymentofdutiesexceptwhen: (a) therewasfraud; (b) thereisapendingprotestor (c) theliquidationofimportentrywasmerelytentative. None of the foregoing exceptions is present in this case. There was no fraud as petitioner claimed (and was presumed) to be in good faith. Respondentdoesnotdisputethis.Moreover,recordsshowthatpetitioner paidthosedutieswithoutprotestusingitsTCCs.Finally,theliquidationwas not a tentative one as the assessment had long become final and incontestable.UnderArt.1204,importdutiesconstituteapersonaldebtof the importer that must be paid in full. The importers liability therefore constitutes a lien on the article which the government may choose to enforce while the imported articles are either in its custody or under its control. When respondent released petitioner's goods, its (respondents) lienovertheimportedgoodswasextinguished.Consequently,respondent couldonlyenforcethepaymentofpetitioner'simportdutiesinfullbyfiling acaseforcollectionagainstpetitioner.NoneoftheletterssentbytheBoC, however, can be considered as a liquidation or an assessment of Shells importtaxliabilitiesthatcanbethesubjectofanadministrativetaxprotest proceeding before the respondent whose decision is appealable to the CTA.Shellsimporttaxliabilitieshadlongbeencomputedandascertained in the original assessments, and Shell paid these liabilities using the TCCs transferredtoitaspayment. [PilipinasShellPetroleumCorporationv.RepublicofthePhilipines,GRNo. 161953,6March2008.] InIntraStrataAssurancevRepublic,GrandTextilesimportedvariousitems for its manufacturing business. Without payment of the taxes, customs duties,andchargesdueandforpurposesofdomesticconsumption,Grand

-5Textilewithdrewtheimportedgoodsfromstorage.TheBureauofCustoms demanded payment of the amounts due from Grand Textile as importer, andfromIntraStrataandPhilHomeassureties.Allthreefailedtopay.The government responded on January 14, 1983 by filing a collection suit againstthepartieswiththeRTCofManila.ThelowerscourtsupheldGrand textilesliability.Inthiscase,theliabilityforpaymentwassharedbetween the importer and the surety. With IntraStrata as surety, the government mayproceedagainstitfortheunpaidtaxesanddutiesofGrandTextile. [IntraStrata Assurance Corporation v. Republic of the Philippines, GR No. 156571,9July2008.] Sec.1301,Importedarticlesmustbeenteredinthecustomhouseatthe portofentrywithinthirty(30)days,whichshallnotbeextendible,from thedateofdischargeofthelastpackagefromthevesseloraircrafteither (a)bytheimporter,beingholderofthebilloflading,(b)byadulylicensed customsbrokeractingunderauthorityfromaholderofthebillor(c)bya person duly empowered to act as agent or attorney in fact for each holder: Provided, That where the entry is filed by a party other than the importer,saidimportershallhimselfberequiredtodeclareunderoathand under the penalties of falsification or perjury that the declarations and statementscontainedintheentryaretrueandcorrect:Provided,further, That such statements under oath shall constitute prima facie evidence of knowledge and consent of the importer of violation against applicable provisionsofthisCodewhentheimportationisfoundtobeunlawful(R.A. 7651,June04,1993 Sec.1801, Abandonment, Kinds and Effects of. An imported article is deemedabandonedunderanyofthefollowingcircumstances: a.Whentheowner,importer,consigneeoftheimportedarticleexpressly signifiesinwritingtotheCollectorofCustomshisintentiontoabandon;or b. When the owner, importer, consignee or interested party after due notice, fails to file an entry within thirty (30) days, which shall not be extendible,fromthedateofdischargeofthelastpackagefromthevessel oraircraft,orhavingfiledsuchentry,failstoclaimhisimportationwithin fifteen(15)days,whichshallnotlikewisebeextendible,fromthedateof postingofthenoticetoclaimsuchimportation.Anypersonwhoabandons an article or who fails to claim his importation as provided for in the preceding paragraph shall be deemed to have renounced all his interests andpropertyrightstherein(R.A.7651,June04,1993). In Chevron Philippines v Commissioner of Customs, due to information alleging deliberate concealment, manipulation and scheme employed by petitioner and Pilipinas Shell in the importation of crude oil, thereby resulting in huge losses of revenue for the government, an investigation wasconductedbytheBoC.Lateron,ademandwasreceivedbypetitioner for payment of the difference between 10% and 3% tariff rates, on its previousshipment,asitpaidusingthe3%rateinsteadofthe10%.TheBoC later on demanded the amount of P1,180,170,769.21 representing the total dutiable value of the importations. A petition for review was filed with the CTA, which sided with the BoC. Under Section 1301 of the TCC, imported articles must be entered within a nonextendible period of 30 days from the date of discharge of the last package from a vessel. Otherwise, the BOC will deem the imported goods impliedly abandoned underSection1801.Theterm"entry"incustomslawhasatriplemeaning. Itmeans(1)thedocumentsfiledatthecustomshouse;(2)thesubmission andacceptanceofthedocumentsand(3)theprocedureofpassinggoods through the customs house. The operative act that constitutes "entry" of theimportedarticlesattheportofentryisthefilingandacceptanceofthe "specifiedentryform"togetherwiththeotherdocumentsrequiredbylaw andregulations.Thus,undertheTCCboththeIEDandIEIRDshouldbefiled within 30 days from the date of discharge of the last package from the vessel or aircraft. As a result, the position of petitioner, that the import entry to be filed within the 30day period refers to the IED and not the IEIRD, has no legal basis. It was the law itself which considered the

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importationabandonedwhenitfailedtofiletheIEIRDswithintheallotted time.Itisenoughthattheimporterfailstofiletherequiredimportentries withinthereglementaryperiod.Thelawmakerscouldhaveeasilyretained the words used in the old law (with respect to the intention to abandon) butoptedtoomitthem. [ChevronPhilippines,Inc.v.CommissionerofCustoms,GRNo.178759,11 August2008.] Sec.1603,FinalityofLiquidation.Whenarticleshavebeenenteredand passedfreeofdutyorfinaladjustmentsofdutiesmade,withsubsequent delivery,suchentryandpassagefreeofdutyorsettlementsofdutieswill, aftertheexpirationofthree(3)yearsfromthedateofthefinalpaymentof duties,intheabsenceof,fraudorprotestorcomplianceauditpursuantto theprovisionsofthisCode,befinalandconclusiveuponallparties,unless theliquidationoftheimportentrywasmerelytentative."(R.A.9135,April 27,2001) In Commissioner of Customs v Philippine Phosphate, respondent, a PEZA registeredentity,boughtfuelandpetroleumfromPetron,andreimburses thecorrespondingcustomsdutiesandtaxespaidbyPetrontotheBureau ofCustoms.Lateron,Philpohosfiledaclaimforrefundwhichwasdenied. The Court held that the termination of the importation does not necessarilybaraclaimforrefundunderSection1603. [Commissioner of Customs v. Philippine Phosphate Fertilizer Corporation, GRNo.144440,1September2004.] Sec.1708,ClaimforRefundandModeofPayment.Allclaimsforrefund ofdutiesshallbemadeinwritingandforwardedtotheCollectortowhom suchdutiesarepaid,whouponreceiptofsuchclaim,shallverifythesame bytherecordsofhisOffice,andiffoundtobecorrectandinaccordance with law, shall certify the same to the Commissioner with his recommendationtogetherwithallnecessarypapersanddocuments.Upon receiptbytheCommissionerofsuchcertifiedclaimheshallcausethesame tobepaidiffoundcorrect.Ifaresultoftherefundofcustomsdutiesthere wouldnecessarilyresultacorrespondingrefundofinternalrevenuetaxes on the same importation, the Collector shall likewise certify the same to theCommissionerwhoshallcausethesaidtaxestobepaid,refunded,or taxcredited infavoroftheimporter,withadvicetotheCommissionerof InternalRevenue. In Nestle Phil. v CA, petitioner imported milk and milk products form various countries, and was assessed customs duties and advance sales taxes. Such was paid but a protest was filed, alleging that higher values wereusedindeterminingtheamountstobepaidtotheBoC.TheSCheld thatitisclearfromtheforegoingprovisionoftheTariffandCustomsCode thatinallclaimsforrefundofcustomsduties,theCollectortowhomsuch customs duties are paid and upon receipt of such claim is mandated to verifythesamebytherecordsofhisOffice.Ifsuchclaimisfoundcorrect and in accordance with law, the Collector shall certify the same to the Commissioner with his recommendation together with all the necessary papersanddocuments.ThisispreciselyoneofthereasonswhytheCourt ofAppealsupheldthedismissalofthecaseonthegroundthattheCTAs jurisdictionundertheTariffandCustomsCodeisnotconcurrentwiththat of the respondent Commissioner of Customs due to the absence of any certification from the Collector of Customs of Manila. Accordingly, petitionerscontentionthatitsclaimsforrefundofallegedoverpaymentof customs duties may be deemed established from the findings of the tax courtintheC.T.A.CaseontheAdvanceSalesTaxisnotnecessarilycorrect in the light of the abovecited provision of the Tariff and Customs Code. Anyoutrightawardfortherefundofallegedlyoverpaidcustomsdutiesin favor of petitioner on its subject importations is not favored in this jurisdictionunlessthereisadirectandclearfindingthereon. [NestlePhilippines,Inc.v.CourtofAppeals,GRNo.134114,6July2001.] Sec. 1802, Abandonment of Imported Articles. An abandoned article shall ipso facto be deemed the property of the Government and shall be

-6disposedofinaccordancewiththeprovisionsofthisCode.Nothinginthis section shall be construed as relieving the owner or importer from any criminal liability which may arise from any violation of law committed in connection with the importation of the abandoned article. Any official or employeeoftheBureauofCustomsorofothergovernmentknowledgeof theexistenceofanabandonedarticleorhavingcontrolorcustodyofsuch abandonedarticle,failstoreporttotheCollectorwithintwentyfour(24) hours from the time the article is shall be punished with the penalties prescribed in Paragraph 1, Section 3604 of this Code (R.A. 7651, June 04, 1993). InRVMarzanvCA,thecargo,placedinthewarehouseofpetitioner,ofthe respondent manufacturing company was deemed abandoned and thus, were sought to be sold at public auction. But he warehouse burned. 2 years thereafter, complaint for damages filed by the owner of the cargo. Such action was denied by the court. The owner insisted that it did not abandonthegoodsbecauseitdidnotreceivethenoticeofabandonment of the cargo from the Bureau of Customs. The SC held that District Collector of Customs did not lose jurisdiction over the abandonment proceedings. The loss of the cargo did not extinguish his incipient jurisdiction in the said proceedings, nor render functus officio her declaration that the subject shipment had been abandoned. It also held that the trial court had no jurisdiction to resolve the issue of whether or not the private respondent was the owner of the cargo before it was guttedbyfire. [R.V. Marzan Freight, Inc. v. Court of Appeals, GR No. 128064, 4 March 2004.] Sec.2301,WarrantforDetentionofPropertyCashBond.Uponmaking any, seizure, the Collector shall issue a warrant for the detention of the property;andiftheownerorimporterdesirestosecurethereleaseofthe property for legitimate use, the Collector shall, with the approval of the CommissionerofCustoms,surrenderituponthefilingofacashbond,inan amount to be fixed by him, conditioned upon the payment of the appraised value of the article and/or any fine, expenses and costs which maybeadjudgedinthecase:Provided,Thatsuchimportationshallnotbe releasedunderanybondwhenthereisprimafacieevidenceoffraudinthe importationofthearticle:Provided,further,Thatarticlestheimportation ofwhichisprohibitedbylawshallnotbereleasedunderanycircumstance whomsoever, Provided, finally, That nothing in this section shall be construed as relieving the owner or importer from any criminal liability which may arise from any violation of law committed in connection with theimportationofthearticle(R.A.7651,June04,1993). In Asian Terminals v BautistaRicafort, importers questioned the impoundingmadebytheBoCofrighthandvehiclesintheATIwarehouse, allegingthatsuchimportationwasnotillegaloragainstthelaw.Thelower courtallowedthereleaseofthevehiclesuponthepostingofabondequal totwicethevalueoftheimpoundedvehicles.TheSCheldthattheorderof thelowercourtwasinvalid,asithadnojurisdictionoverthecase.RTCsare devoidofanycompetencetopassuponthevalidityorregularityofseizure and forfeiture proceedings conducted by the Bureau of Customs and to enjoinorotherwiseinterferewiththeseproceedings.ItistheCollectorof Customs, sitting in seizure and forfeiture proceedings, who has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts are precluded from assuming cognizance over such matters even through petitions of certiorari,prohibitionormandamus. [Asian Terminals, Inc. v. BautistaRicafort, GR No. 166901, 27 October 2006.] InCommissionervCTA,ashipmentofrefinedsugarwasmadesubjectofa decree of abandonment and later on a notice of seizure. The warehouse and the owner of the shipment moved to quash the same, alleging that they had no notice thereof. the CoC upheld the validity thereof, thus the Republic instituted proceedings for the seizure and forfeiture of the

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importation. The Collectors held that because LIFFC did not secure an importallocationfromtheSRA,theshipmentwasanillegalimportationof refined sugar. They ordered its forfeiture in favor of the government. Respondentsfiledamotiontoreleasecargoforexportationuponfilingofa suretybond.ThiswasgrantedbytheCTA.Section2301oftheTCCPstates thatseizedarticlesmaynotbereleasedunderbondifthereisprimafacie evidenceoffraudintheirimportation.Fraudisa"generictermembracing all multifarious means which human ingenuity can devise and which are resorted to by one individual to secure an advantage and includes all surprise,trick,cunning,dissemblingandanyunfairwaybywhichanotheris cheated." Since fraud is a state of mind, its presence can only be determined by examining the attendant circumstances. Under Section 1202 of the TCCP, importation takes place when merchandise is brought intothecustomsterritoryofthePhilippineswiththeintentionofunloading the same at port. An exception to this rule is transit cargo entered for immediate exportation. For an entry for immediate exportation to be allowedunderthisprovision,thefollowingmustconcur: (a)thereisaclearintenttoexportthearticleasshowninthebilloflading, invoice,cargomanifestorothersatisfactoryevidence; (b)theCollectormustdesignatethevesseloraircraftwhereinthearticles are laden as a constructive warehouse to facilitate the direct transfer of thearticlestotheexportingvesseloraircraft; (c)theimportedarticlesaredirectlytransferredfromthevesseloraircraft designatedasaconstructivewarehousetotheexportingvesseloraircraft and (d) an irrevocable domestic letter of credit, bank guaranty or bond in an amount equal to the ascertained duties, taxes and other charges is submitted to the Collector (unless it appears in the bill of lading, invoice, manifest or satisfactory evidence that the articles are destined for transshipment). Noneoftherequisitesabovewaspresentinthiscase.Itclearlyappearsin the Bill of Lading that the sugar was to be discharged at Manila, South Harbor. [CommissionerofCustomsv.CourtofTaxAppeals,GRNos.17151617,13 February2009.] Sec.2308,ProtestandPaymentunderProtestinCivilMatters.Whena ruling or decision of the Collector is made whereby liability for duties, taxes, fees or other charges are determined, except the fixing of fines in seizure cases, the partly adversely affected may protest such ruling or decision by present Collector at the time when payment of the amount claimedtobeduethegovernmentismade,orwit,(15)daysthereafter,a written protest setting forth his objection to the ruling or decision in questionwiththereason'stherefore.Noprotestshallbeconsideredunless payment of the amount due liquidation has first been made and the correspondingdocketfee,asprovidedforinSection3301. Sec.2402,ReviewbyCourtofTaxAppeals.ThepartyaggrievedbytherulingoftheCommissionerinanymatterbroughtbeforehimuponprotestorbyhis actionorrulinginanycaseofseizuremayappealtotheCourtofTaxAppeals,inthemannerandwithintheperiodprescribedbylawandregulations.Unlessan appealismadetotheCourtofTaxAppealsinthemannerandwithintheperiodprescribebylawsandregulations,theactionorrulingoftheCommissionershall befinalandconclusive. InPilipinasShellvCommissionerofCustoms,theTCCsofShellsgiventoitbyBOIregisteredentiteswerecancelled,andsincetheywereusedtopayforitstax liabilities,theSec.ofDOFrequiredShelltopaythesaidtaxliabilities.3collectioncaseswerefiledbytheCoCagainstShell.ShelllateronfiledwiththeCTAa PetitionforReviewquestioningtheBOCcollectioneffortsforlackoflegalandfactualbasis,whichruledinitsfavor.ThiswasreversedbytheCA.TheSCheldthat thepresentcasedoesnotinvolveataxprotestcasewithinthejurisdictionoftheCTAtoresolve.Thesedecisionsoftherespondentinvolvingcustomsduties specificallyrefertohisdecisionsonadministrativetaxprotestcases,asstatedinSection2402oftheTariffandCustomsCodeofthePhilippines(TCCP).Atax protestcase,undertheTCCP,involvesaprotestoftheliquidationofimportentries.Aliquidationisthefinalcomputationandascertainmentbythecollectorof thedutiesonimportedmerchandise,basedonofficialreportsastothequantity,character,andvaluethereof,andthecollectorsownfindingastotheapplicable rateofduty;itisakintoanassessmentofinternalrevenuetaxesundertheNationalInternalRevenueCodewherethetaxliabilityofthetaxpayerisdefinitely

-7Sec. 2309, Protest Exclusive Remedy in Protestable Case. In all cases subjecttoprotest,theinterestedpartywhodesirestohavetheactionof the Collector reviewed, shall make a protest, otherwise the action of the Collector shall be final and conclusive against him, except as to matters collectible for error in the manner prescribed in section one thousand sevenhundredandsevenhereof. InNestlePhils.vCA,theCourtsaidthatundertheseprovisions,itappears thatinallcasessubjecttoprotest,theclaimforrefundofcustomsduties maybeforeclosedonlywhentheinterestedpartyclaimingrefundfailsto fileawrittenprotestbeforetheCollectorofCustoms.Thiswrittenprotest which must set forth the claimants objection to the ruling or decision in question together with the reasons therefor must be made either at the time when payment of the amount claimed to be due the government is madeorwithinfifteen(15)daysthereafter.Inconjunctionwiththisrightof the claimant is the duty of the Collector of Customs to hear and decide suchprotestinaccordanceandwithintheperiodoftimeprescribedbythe law. Accordingly,onceawrittenprotestisseasonablyfiledwiththeCollectorof Customs the failure or inaction of the latter to promptly perform his mandateddutyundertheTariffandCustomsCodeshouldnotbeallowed to prejudice the right of the party adversely affected thereby. Technicalities and legalisms, however exalted, should not be misused by the government to keep money not belonging to it, if any is proven, and therebyenrichitselfattheexpenseofthetaxpayers.IftheStateexpectsits taxpayerstoobservefairnessandhonestyinpayingtheirtaxes,somustit applythesamestandardagainstitselfinrefundingexcesspayments,ifany, of such taxes. Indeed the State must lead by its own example of honor, dignityanduprightness. [NestlePhilippines,Inc.v.CourtofAppeals,GRNo.134114,6July2001.] InCJHDevelopmentvCIR,Pres.Ramosissuedaproclamationcreatingan SEZ in Camp John Hay, for which both the BIR and the BoC issued the correspondingrulesandregulations.Whentheproclamationwasdeclared null and void by the Court, the BIR demanded payment of taxes from petitioner.LaterontheBoCalsodemandedpaymentofdutiesandtaxesof petitioner for importations during the period when the proclamation was still in effect. Petitioner questioned the retroactive applicability of the previouscourtruling.TheSCheldthattheTariffandCustomsCode(TCC) provides for the administrative and judicial remedies available to a taxpayer who is minded to contest an assessment, subject of course to certain reglementary periods. The TCC provides that a protest can be raised provided that payment first be made of the amount due.30 The decisionoftheCollectorcanbereviewedbytheCommissionerofCustoms whocanapprove,modifyorreversethedecisionoractionoftheCollector. IfthepartyisnotsatisfiedwiththerulingoftheCommissioner,hemayfile thenecessaryappealtotheCourtofTaxAppeals.Afterwards,thedecision oftheCourtofTaxAppealscanbeappealedtothisCourt.TheCourtsaid thatpetitionerfiledthewrongremedybyfilingapetitionerfordeclaratory reliefintheRTC. [CJHDevelopmentCorporationv.CIR,GRNo.172457,24December2008.]

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-8determined.Noneoftheseletters,however,canbeconsideredasaliquidationoranassessmentofShellsimporttaxliabilitiesthatcanbethesubjectofan administrativetaxprotestproceedingbeforetherespondentwhosedecisionisappealabletotheCTA.Shellsimporttaxliabilitieshadlongbeencomputedand ascertainedintheoriginalassessments,andShellpaidtheseliabilitiesusingtheTCCstransferredtoitaspayment.Itisevenanerrortoconsiderthelettersasa reassessment because they refer to the same tax liabilities on the same importations covered by the original assessments. The letters merely reissued the originalassessmentsthatwerepreviouslysettledbyShellwiththeuseoftheTCCs.However,onaccountofthecancellationoftheTCCs,thetaxliabilitiesofShell undertheoriginalassessmentswereconsideredunpaid;hence,thelettersandtheactionsforcollection.WhenShellwenttotheCTA,theissuesitraisedinits petitionwereallrelatedtothefactandefficacyofthepaymentsmade,specificallythegenuinenessoftheTCCs;theabsenceofdueprocessintheenforcement of the decision to cancel the TCCs; the facts surrounding the fraud in originally securing the TCCs; and the application of estoppel. These are payment and collectionissues,nottaxprotestissueswithintheCTAsjurisdictiontoruleupon. [PilipinasShellPetroleumCorporationv.CommissionerofCustoms,GRNo.176380,18June2009.] Sec.2503,Undervaluation,MisclassificationandMisdeclarationinEntry.Whenthedutiablevalueoftheimportedarticlesshallbesodeclaredandentered thattheduties,basedonthedeclarationoftheimporteronthefaceoftheentrywouldbelessbytenpercent(10%)thanimportersdescriptiononthefaceof the entry would less by ten percent (10%) than should be legally collected based on the tariff classification of when (the dutiable weight, measurement or quantityofimportedarticlesisfounduponexaminationtoexceedbytenpercent(10%)ormorethantheenteredweight,measurementorquantity,asurcharge shallbecollectedfromtheimporterinanamountofnotlessthanthedifferencebetweenthefulldutyandtheestimateddutybaseduponthedeclarationofthe importer, nor more than twice of such difference: Provided, That an undervaluation, misdeclaration in weight, measurement or quantity of more than thirty percent (30%) between the value, weight, measurement or quantity declared in the entry, and the actual value, weight, quantity, or measurement shall constitute a prima facie evidence of fraud penalized under Section 2530 of this Code: Provide, further, That any misdeclaration or undeclared imported article/tems ound ponexaminationshallipsofactobeforfeitednfavoroftheGovernmenttobedisposedfpursuanttothe provisionsofthisCode.Whenthe undervaluation, misdescription, misclassification or misdeclaration in the import entry is intentional, the importer shall be subject to penal provision under Section3602ofthisCode(R.A.7651,June04,1993). InSecretaryofFinancevOromauraShipping,theimportationofavesselwasallowedbytheDOFtstaxanddutyfreereleasetoGloryShippingLines,subjectto theconditionsimposedbyMARINA.TheBureauofCustoms(BOC)alsorequiredGloryShippingLinestopostabondintheamountequalto150%oftheduties, taxesandotherchargesdueontheimportation,conditionedonthereexportationofthevesseluponterminationofthecharterperiod,butinnocasetoextend beyondtheyear1999.Suchbondwaspostedandthevesselarrived.But,thebondexpired,andwasnotrenewed.TheCollectorofMActanassessedthevessels dutiesandothercharges,andsentdemandletterstotherespondent.Lateron,CollectorofthePortofMactanorderedtheforfeitureofthevesselinfavorofthe Government,afterfindingthatbothGloryShippingLinesandtherespondentactedfraudulentlyinthetransaction.TheSCheldthatthepetitionercanorderthe reassessmentofthevessel.Whentheundervaluation,misdescription,misclassificationormisdeclarationintheimportentryisintentional,theimportershallbe subject to the penal provision under Section 3602 of this Code. The 80% drop in valuation existing in this case renders the consideration and application of Section2503unavoidable.RespondentneverexplainedtheconsiderabledisparitybetweenthedutiablevaluedeclaredbyGloryShippingLinesandthedutiable valueitdeclareddifferenceofP5,000,000.00soastooverturnorcontradictthisprimafaciefindingoffraud.Wenotethattheexerciseofduediligencealone wouldhavealertedittoGloryShippingLinesacquisitioncostandthevesselsdeclaredvalueatitsfirstentry.Therespondent,beingintheshippingbusiness, should have known the standard prices of vessels and that the value it proposed to MARINA, as described in the second phase above, is extraordinarily low comparedtothevesselsoriginallydeclaredvaluation.Allthesestrengthen,ratherthanweaken,theprimafacieevidenceoffraudthatthelawdictateswhenan unconscionabledisparityofvaluationsexists. [SecretaryofFinancev.OroMauraShippingLines,GRNo.156946,15July2009.] Sec. 2530, Property Subject to Forfeiture under Tariff and Customs Laws. Any vehicle, vessel or aircraft, cargo, article and other objects shall, under the followingconditionsbesubjectedtoforfeiture: a. Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully in the importation or exportation of articles or in conveying and/or transportingcontrabandorsmuggledarticlesincommercialquantitiesintoorfromanyPhilippineportorplace.Themerecarryingorholdingonboard ofcontrabandorsmuggledarticlesincommercialquantitiesshallsubjectsuchvessel,vehicle,aircraft,oranyothercrafttoforfeiture:Provided,That thevessel,oraircraftoranyothercraftisnotusedasdulyauthorizedcommoncarrierandassuchacarrieritisnotcharteredorleased; b. Any vessel engaging in the coastwise which shall have on board any article of foreign growth, produce, or manufacture in excess of the amount necessaryforseastores,withoutsucharticlehavingbeenproperlyenteredorlegallyimported;c.Anyvesseloraircraftintowhichshallbetransferred cargo unladen contrary to law prior to the arrival of the importing vessel or aircraft at her port of destination; d. Any part of the cargo, stores or suppliesofavesseloraircraftarrivingfromaforeignportwhichisunladenbeforearrivalatthevessel'soraircraft'sportofdestinationandwithout authorityfromthecustomsofficials;butsuchcargo,shiporaircraftstoresandsuppliesshallnotbeforfeitedifsuchunladingwasduetoaccident, stress of weather or other necessity and is subsequently approved by the Collector; e. Any article which is fraudulently concealed in or removed contrary to law from any public or private warehouse, container yard or container freight station under customs supervision; f. Any article the importationorexportationofwhichiseffectedorattemptedcontrarytolaw,oranyarticleofprohibitedimportationorexportation,andallother articleswhich,intheopinionoftheCollector,havebeenused,areorwereenteredtobeusedasinstrumentsintheimportationortheexportationof theformer;g.Unmanifestedarticlefoundonanyvesseloraircraftifmanifestthereforeisrequired;h.Seastoresoraircraftstoresadjudgedbythe Collectortobeexcessive,whenthedutiesassessedbytheCollectorthereonarenotpaidorsecuredforthwithuponassessmentofthesame,i.Any package of imported article which is found by the examining official to contain any article not specified in the invoice or entry, including all other packagespurportedlycontainingimportedarticlessimilartothosedeclaredintheinvoiceorentrytobe.thecontentsofthemisdeclaredpackage; Provided,ThattheCollectorisoftheopinionthatthemisdeclarationwascontrarytolaw;j.Boxes,cases,trunks,envelopesandothercontainersof whatevercharacterusedasreceptacleorasdevicetoconcealarticlewhichisitselfsubjecttoforfeitureunderthetariffandcustomslawsorwhichis sodesignedastoconcealthecharacterofsucharticles; c. k. Any conveyance actually being used for the transport of articles subject to forfeiture under the tariff and customs laws, with its equipage or trappings,andanyvehiclesimilarlyused,togetherwithitsequipageandappurtenancesincludingthebeaststeamorothermotivepowerdrawingor propellingthesame.Themereconveyanceofcontrabandorsmuggledarticlesbysuchbeastorvehicleshallbesufficientcausefortheoutrightseizure andconfiscationofsuchbeastorvehiclebuttheforfeitureshallnotbeeffectedifitisestablishedthattheownerofthemeansofconveyanceusedas aforesaid,isengagedascommoncarrierandnotcharteredorleased,orhisagentinchargethereofatthetime,hasnoknowledgeoftheunlawfulact;

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1.Anyarticlesoughttobeimportedorexported (1)Withoutgoingthroughacustomhouse,whethertheactwasconsummated,frustratedorattempted; (2)Byfailuretomentiontoacustomsofficial,articlesfoundinthebaggageofapersonarrivingfromabroad; (3)Onthestrengthofafalsedeclarationoraffidavitexecutedbytheowner,importer,exporterorconsigneeconcerningtheimportationofsucharticle; (4)Onthestrengthofafalseinvoiceorotherdocumentexecutedbytheowner,importer,exporterorconsigneeconcerningtheimportationorexportation ofsucharticle;and (5) Through any other practice or device contrary to law by means of which such articles was entered hrough a customhouse to the prejudice of the government. InRepublicvCTA,theSCprovidedtherequisitesfortheforfeitureofgoodsunderSection2530(f),inrelationto(1)(35),oftheTariffandCustomsCode,which are:(a)thewrongfulmakingbytheowner,importer,exporterorconsigneeofanydeclarationoraffidavit,orthewrongfulmakingordeliverybythesameperson ofanyinvoice,letterorpaperalltouchingontheimportationorexportationofmerchandise;(b)thefalsityofsuchdeclaration,affidavit,invoice,letterorpaper; and(c)anintentiononthepartoftheimporter/consigneetoevadethepaymentofthedutiesdue.Fraudmustbeprovedtojustifyforfeiture.Itmustbeactual, amountingtointentionalwrongdoingwiththeclearpurposeofavoidingthetax.Forfeitureisnotfavoredinlawnorinequity.Merenegligenceisnotequivalent tothefraudcontemplatedbylaw.Whatishereinvolvedisanhonestmistake,notevendirectlyattributabletoprivaterespondent,whichwillnotdeprivethe governmentofitsrighttocollectthepropertax.Here,forfeitureproceedingswereinstituted,onthegroundthattheconsigneeintheshipsmanifestcouldnot belocatedattheaddressthereinprovidedandwassuspectedofbeingafictitiousfirm. [RepublicofthePhilippinesv.CourtofTaxAppeals,GRNo.139050,2October2001.] InElGrecoShipManagementvCommissioner,AshipmentofricefromManilatoAlbaywasmadethesubjectofawarrantofseizureandidentification,asitwas saidthatitlefttheportwithoutclearancefromtheCoastGuard.Lateron,thewholeshipwasmadesubjecttoseizure.Theconsignees,toprotecttheirrights, filedwiththeRTCandactionassailingtheseizure.Pendingtheaction,thevesselwhichwasatportunderthecustodyoftheBoC,washitbyatyphoon,andwas lost.Petitioner,authorizedagentoftheownerofthevessel,intervenedandsoughttoquashthewarrantofseizure,asthevesselwhichwasseizedwasnotthe samevesselthatwasthesubjectthereof,whichwasgranted.TheSCruledotherwise,astherewasevidenceonrecordtothecontrary.Theforeignregistration ofM/VNeptuneBreezeprovesonlythatitwasregisteredinaforeigncountry;butitdoesnotrenderimpossibletheconclusionsconsistentlyreachedbythe LegaspiDistrictCollector,theCTASecondDivisionandtheCTAenbanc,andpresentlybythisCourt,thatM/VNeptuneBreezewastheverysamevesselusedin theconductofsmugglingactivitiesinthenameM/VCriston.TheCourtcouldnotpermitElGrecotoevadetheforfeitureofitsvessel,asaconsequenceofits beingusedinsmugglingactivities,bydecryingdenialofdueprocess.Inadministrativeproceedings,suchasthosebeforetheBOC,technicalrulesofprocedure and evidence are not strictly applied and administrative due process cannot be fully equated with due process in its strict judicial sense. The essence of due process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek reconsideration of the action or ruling complained of. The penalty of forfeiture is imposed on any vessel engaged in smuggling, provided that the following conditionsarepresent: (1)ThevesselisusedunlawfullyintheimportationorexportationofarticlesintoorfromthePhilippines; (2)ThearticlesareimportedtoorexportedfromanyPhilippineportorplace,exceptaportofentry;or (3)Ifthevesselhasacapacityoflessthan30tonsandisusedintheimportationofarticlesintoanyPhilippineportorplaceotherthanaportoftheSuluSea, whereimportationinsuchvesselmaybeauthorizedbytheCommissioner,withtheapprovalofthedepartmenthead."ThereisnoquestionthatM/VNeptune Breeze,thenknownasM/VCriston,wascarrying35,000bagsofimportedricewithoutthenecessarypapersshowingthattheywereenteredlawfullythrougha Philippineportafterthepaymentofappropriatetaxesanddutiesthereon.Thisgivesrisetothepresumptionthatsuchimportationwasillegal.Consequently, thericesubjectoftheimportation,aswellasthevesselM/VNeptuneBreezeusedinimportationaresubjecttoforfeiture. [ElGrecoShipManningandManagementCorporationv.CommissionerofCustoms,GRNo.177188,4December2008.] Sec.3601,UnlawfulImportation.AnypersonwhoshallfraudulentlyimportorbringintothePhilippines,orassistinsodoing,anyarticle,contrarytolaw,or shallreceive,conceal,buy,sell,orinanymannerfacilitatethetransportation,concealment,orsaleofsucharticleafterimportation,knowingthesametohave beenimportedcontrarytolaw,shallbeguiltyofsmugglingandshallbepunishedwith: 1.Afineofnotlessthanfiftypesosnormorethantwohundredpesosandimprisonmentofnotlessthanfivedaysnormorethantwentydays;iftheappraised value,tobedeterminedinthemannerprescribedunderthisCode,includingdutiesandtaxes,ofthearticleunlawfullyimporteddoesnotexceedtwentyfive pesos; 2.Afineofnotlessthaneighthundredpesosnormorethanfivethousandpesosandimprisonmentofnotlessthansixmonthsandonedaynormorethanfour years,iftheappraisedvalue,tobedeterminedinthemannerprescribedunderthisCode,includingdutiesandtaxes,ofthearticleunlawfullyimportedexceeds twentyfivepesosbutdoesnotexceedfiftythousandpesos; 3.Afineofnotlessthansixthousandpesosnormorethaneightthousandpesosandimprisonmentofnotlessthanfiveyearsandonedaynormorethaneight years,iftheappraisedvalue,tobedeterminedinthemannerprescribedunderthisCode,includingdutiesandtaxes,oftheart,,:unlawfullyimportedismore thanfiftythousandpesosbutdoesnotexceedonehundredthousandpesos; 4.Afineofnotlessthaneightthousandpesosnormorethantenthousandpesosandimprisonmentofnotlessthaneightyearsandonedaynormorethan twelve years, if the appraised value to be determined in the manner prescribed under this Code, including duties and taxes, of the artic unlawfully imported exceedsonehundredfiftythousandpesos; 5.Thepenaltyofprisonmayorshallbeimposedwhenthecrimeofseriousphysicalinjuriesshallhavebeencommittedandthepenaltyofreclusionperpetuato

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- 10 deathshallbeimposedwhenthecrimeofhomicideshallhavebeencommittedbyreasonorontheoccasionoftheunlawfulimportation.Inapplyingtheabove scaleofpenalties,iftheoffenderisanalienandtheprescribedpenaltyisnotdeath,heshallbedeportedafterservingthesentencewithoutfurtherproceedings fordeportation.Iftheoffenderisagovernmentofficialoremployee,thepenaltyshallbethemaximumashereinaboveprescribeandtheoffendershallsuffer and additional penalty of perpetual disqualification from public office, to vote and to participate in any public election. When, upon trial for violation of this section,thedefendantisshowntohavehadpossessionofthearticleinquestion,possessionshallbedeemedsufficientevidencetoauthorizeconvictionunless the defendant shall explain the possession to the satisfaction of the court: Provided, however, That payment of the tax due after apprehension shall not constituteavaliddefenseinanyprosecutionunderthissection. InRemigiovSandiganbayan,acontainervan,allegedlycontainingimported25,000kg.ofsodiumbicarbonatewasinterceptedbytheSpecialOperationsGroup, Economic Intelligence and Investigation Bureau (EIIB), and was found to contain the following: only 185 bags of sodium bicarbonate, tires, laser printers, Mercedes benz, dried fish, buckles, clothes, etc. The customs examiner determined that the correct duties and taxes that may be assessed on the shipment amounted to P1,643,057.00. Criminal cases were filed against the customs examiners who allowed the withdrawal and release of the subject goods from the port, and only one of them was held guilty by the lower court. The SC held that accused Remigio did not fraudulently assist in the importation of any article contrarytolawnorfacilitateditstransportation,knowingthesametohavebeenimportedcontrarytolaw.AllaccusedRemigiodidwastopreparetheimport entrybasedontheshippingandotherdocumentsrequiredbytheBureauofCustomsandfilethesame.Thus,hewasacquitted.Itisindeedironicalthattheco accused,thecustomsexaminerwhofailedtodohisdutyofconductinga100%examinationoftheshipmentinviolationofSections3604and3602inrelationto Section3601,TariffandCustomsCodeofthePhilippineswasacquitted,yetpetitionerwasconvictedofactswhichdidnotconstituteastatutoryoffenseatthe timetheeventtookplace. [Remigiov.Sandiganbayan,GRNos.14542223,18January2002.] InRimorinvPeople,acargotruckwasinterceptedbythegroupofCol.Lacson,whichwasfoundtobecarrying05casesofbluesealoruntaxedcigaretteswere foundinsidesaidtruck.ThecargotruckdriverknownonlyasBoywasabletoescapewhiletheotherpassengersorridersofsaidtruckwereapprehended, namely:PoliceSgt.ArturoRimorinofPasayCityPoliceForce,Pat.FelicisimoRietaofKawitPoliceForce,andGonzaloVargas,acivilian.Rimorinwasfoundguilty ofsmuggling.TheSCheldthatInorderthatapersonmaybedeemedguiltyofsmugglingorillegalimportationundertheforegoingstatutethreerequisitesmust concur:(1)thatthemerchandisemusthavebeenfraudulentlyorknowinglyimportedcontrarytolaw;(2)thatthedefendant,ifheisnottheimporterhimself, musthavereceived,concealed,bought,soldorinanymannerfacilitatedthetransportation,concealmentorsaleofthemerchandise;and(3)thatthedefendant mustbeshowntohaveknowledgethatthemerchandisehadbeenillegallyimported.Ifthedefendant,however,isshowntohavehadpossessionoftheillegally importedmerchandise,withoutsatisfactoryexplanation,suchpossessionshallbedeemedsufficienttoauthorizeconviction. Theprosecutioncompetentlyestablishedthat(1)the305casesofuntaxedbluesealcigarettesdiscoveredinsidethecargotruckwerefraudulentlyimported; and(2)petitionerwasincontrolofthetruckwhenittransportedthecargoonOctober15,1979.Petitionerwasunabletosatisfactorilyexplainhispossessionof theuntaxedcigarettes,whichtheMISGagentsseizedfromhimandhiscoaccused.Rather,hefeignsignoranceofthetruenatureofthecargo,whichwasfound bytheCourttobeincredible. [Rimorinv.PeopleofthePhilippines,GRNo.146481,30April2003.] InSalvadorvPeople,theaccusedalongwith2otherpersons,werefounddisembarkingaparkedminibusintheairport,withtheirabdominalareasbulging.When searched,itwasfoundthattheyhadpackageswrappedinpackagingtape,whichlateronwerefoundtocontainjewelry,andseveralwatches.Allthreewere chargedwithviolatingSection3601oftheTariffandCustomsCode.Smugglingisthuscommittedbyanypersonwho(1)fraudulentlyimportsorbringsintothe PhilippinesorassistsinimportingorbringingintothePhilippinesanyarticle,contrarytolaw,or(2)receives,conceals,buys,sellsorinanymannerfacilitatesthe transportation,concealment,orsaleofsucharticleafterimportation,knowingthesametohavebeenimportedcontrarytolaw.Importationcommenceswhen thecarryingvesseloraircraftentersthejurisdictionofthePhilippineswithintentiontounloadandisdeemedterminateduponpaymentoftheduties,taxesand other charges due upon the articles and the legal permit for withdrawal has been issued, or where the articles are dutyfree, once the articles have left the jurisdictionofthecustoms. In the instant case, the prosecution established by positive, strong, and convincing evidence that petitioner and his coaccused were caught redhanded by a teamfromthePAFSpecialOperationsSquadron,whileinthepossessionofhighlydutiablearticlesinsidethepremisesoftheairport.Thecontrabanditemswere takenbypetitionerandhiscoaccusedfromaPALplanewhicharrivedfromHongKongonthenightofJune3,1994.Petitionerandhiscolleaguesthenattempted tobringouttheseitemsinthecoverofdarknessbyconcealingtheminsidetheiruniforms.WhenconfrontedbythePAFteam,theywereunabletosatisfactorily explainwhythequestionedarticleswereintheirpossession.Theycouldnotpresentanydocumenttoprovelawfulimportation.Thus,theirconvictionmust necessarilybeupheld.Clearly,theCourtofAppealscommittednoreversibleerrorinaffirmingthetrialcourtsDecisionconvictingpetitionerandhiscoaccused. [Salvadorv.PeopleofthePhilippines,GRNo.146706,15July2005.] InFranciscovPeople,aninformationwasfiledagainstpetitioner,andothers,forviolationofSection3601oftheTariffandCustomsCodeofthePhilippines.The importeditems,consistingofdutiableelectronicequipmentandaccessories,wereallasassortedmensandladiesaccessories.TheSCupheldthelowercourts conviction.Smugglingiscommittedbyanypersonwho(1)fraudulentlyimportsorbringsintothePhilippinesanyarticlecontrarytolaw;(2)assistsinsodoingany articlecontrarytolaw;or(3)receives,conceals,buys,sellsorinanymannerfacilitatesthetransportation,concealmentorsaleofsuchgoodsafterimportation, knowingthesametohavebeenimportedcontrarytolaw.InapplyingthescaleofpenaltiesinSec.3601,iftheoffenderisanalienandtheprescribedpenaltyis notdeath,heshallbedeportedafterservingthesentencewithoutfurtherproceedingsfordeportation;iftheoffenderisagovernmentofficialoremployee,the penaltyshallbethemaximumashereinaboveprescribedandtheoffendershallsufferanadditionalpenaltyofperpetualdisqualificationfrompublicoffice,to voteandtoparticipateinanypublicelection. When,upontrialforviolationofthissection,thedefendantisshowntohavehadpossessionofthearticleinquestion,possessionshallbedeemedsufficient evidencetoauthorizeconvictionunlessthedefendantshallexplainthepossessiontothesatisfactionofthecourt:Provided,however,Thatpaymentofthetax dueafterapprehensionshallnotconstituteavaliddefenseinanyprosecutionunderthissection.Thereisnodoubtthatsmugglingwascommittedinthiscase. Accusedhelpedconcealthetruenatureofthecargo.UnderNumber4ofArticle3601oftheTCCP,iftheappraisedvalue,includingthedutiesandtaxes,ofthe articleillegallyimportedexceedsonehundredfiftythousandpesos,thepersonliableshallbepunishedwithafineofnotlessthaneightthousandpesosnormore thantenthousandpesosandimprisonmentofnotlessthaneight(8)yearsandone(1)daynormorethantwelve(12)years.Intheinstantcase,thedomestic valueofthesubjectimportationisP20,000,000.00.TheSCmodifiedthepenaltyimposed,whichwasincreasedtoeight(8)yearsandone(1)day,asminimum,to

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twelve(12)years,asmaximum. [Franciscov.PeopleofthePhilippines,GRNos.177430and178935,14July2009.] Administrativeandjudicialproceedingsincustomsseizuresandforfeitures TitleVIAdministrativeandJudicialProceedings Part1Search,SeizureandArrest[Sections22012212] NopersonwhoisunauthorizedisallowedtoentertheportortheBoCpremises.Nopersonmayalsoobstructacustomshouse,warehouse,office, wharf,streetorotherpremisesunderthecontroloftheBureauofCustoms. Specialsurveillanceoverthecoastistobeprovidedbythecustomsservice,inadditiontothesurveillanceprovidedbythePhil.CoastGuard. Personshavingauthoritytoenforcetariffandcustomslaws:officialsoftheBoC,Phil.Navy,BIR,andothergenerallyempoweredbylaw.Andallthese personsmayexercisesuchpowerswithinthejurisdictionoftheBoC. Theseauthorizedpersonshavethepowertoeffectseizuresandarrests,butarerequiredtodisclosetheirofficialcharacterwhenquestioned. Theymayseekforassistancefromanypoliceofficertocarryoutthesearch,seizureorarrest. Theymayatanytimeenter,passthrough,orsearchanylandorinclosureoranywarehouse,storeorotherbuilding,notbeingadwellinghouse.But theymayonlysearchadwellinghouseuponawarrantissuedbyaJudgeoftheCourt. Theyhavepowertogoaboardanyvesseloraircraftandinspect,searchandexamineoraircraftandanytrunk,package,boxorenvelopeonboard, andtosearchanypersonthereon. Theymayalsoopenandexamineanybox,trunk,envelopeorothercontainer,foundwhenhehasreasonablecausetosuspectthepresencethereinof dutiableorprohibitedarticle. Theymayalsodothesametoaforeignnational,butfemaleinspectorsaretobedeployedforsearchesofotherfemales. Part2AdministrativeProceedings[Sections23012317] Whenaseizureismade,itshallbereportedtotheCoCandtheChairmanoftheCOA. Noticeofsuchseizureistobegiventotheownerofthethingseizedorhisagent.Opportunitytobeheardmustbegiven. Whentheownerisunknown,noticeistobemadebypostingforfifteendaysinthepubliccorridorofthecustomhouseofthedistrictinwhichthe seizurewasmade.Inaddition,theCoCmayhavethesamepublished.Ifwithin15daysfromnotice,noowneroragentthereofisfound,theproperty isdeemedforfeitedinfavorofthegovernment. Collectorshallcausealistandparticulardescriptionand/orclassificationofthepropertyseizedtobepreparedandanappraisementofthesame. Settlementofthecasemaybemadebythepaymentofthefineorredemptionoftheforfeitedproperty. ProtestsfromrulingordecisionoftheCollectorwhereliabilityforduties,taxes,feesorothercharges,exceptthefixingoffinesinseizurecases,filed within 15 days from payment. Collector to conduct hearing within 15 days from receipt of protest. And decide within 30 days from termination of hearing. Reviewbythecommissioner:maybefiledbytheaggrievedownerorthegovernment.TheCommissionerisauthorizedtomakeacompromise. Forundervalutation,theCoCmayacquireimportedgoodsunderquestionforapriceequaltotheirdeclaredcustomsvalueplusanydutiesalready paidonthegoods,paymentforwhichshallbemadewithinten(10)workingdaysfromissuanceofawarrantforacquisitionofthegoods. AnimporterwhoisdissatisfiedwithadecisionoftheCommissionerofCustomspertainingtothissectionmay,withintwenty(20)workingdaysafter thedateonwhichnoticeofthedecisionisgiven,appealtotheSecretaryofFinance.Ifstillunsatisfied,appealtoCTA. Part3JudicialProceedings[Sections24012402] SEC.2401.SupervisionandControlOverCriminalandCivilProceedings.Civilandcriminalactionsandproceedingsinstitutedinbehalfofthegovernmentunder theauthorityofthisCodeorotherlawenforcedbytheBureaushallbebroughtinthenameofthegovernmentofthePhilippinesandshallbeconductedby customsofficersbutnocivilorcriminalactionfortherecoveryofdutiesortheenforcementofanyfine,penaltyorforfeitureunderthisCodeshallbefiledin courtwithouttheapprovaloftheCommissioner."(R.A.9135,April27,2001) SEC.2402.ReviewbyCourtofTaxAppeals.ThepartyaggrievedbytherulingoftheCommissionerinanymatterbroughtbeforehimuponprotestorbyhis actionorrulinginanycaseofseizuremayappealtotheCourtofTaxAppeals,inthemannerandwithintheperiodprescribedbylawandregulations.Unlessan appealismadetotheCourtofTaxAppealsinthemannerandwithintheperiodprescribebylawsandregulations,theactionorrulingoftheCommissionershall befinalandconclusive. Part4Surcharges,FinesandForfeitures[Sections25012533] FailuretoPayLiquidatedChargeswithin10daysfromnotice:publiclypostedinthecustomhouse,surchargeoftenpercent(10%)ofthetotalamount orbalancefounduponliquidationshallbeaddedtheretoandcollectedtherewith,whichsurchargeshallbeincreasedtotwentyfivepercent(25%)if thedelinquencylastsformorethanoneyear. Unauthorizedwithdrawalfromwarehouse:surchargeoffiftypercent(50%)ofamountdue.surchargeshallbeincreasedbytwentyfivepercent(25%) annuallytaxesifthedelinquencylastsformorethanoneyear. Undervaluation,MisclassificationandMisdeclarationinEntry FailureorRefusalofPartytoGiveEvidenceorSubmitDocumentsforExamination:Collectorshallassessasurchargeoftwentypercentumadvalorem onthearticlewhichisthesubjectoftheimportation. Failuretodeclarebaggage:seizedandthepersoninwhosebaggageitisfoundmayobtainreleaseofsucharticle,ifnotimportedcontrarytoanylaw uponpaymentoftrebleandappraisedvalueofsucharticleplusallduties,taxesandotherchargesdue. Breach of bond: Collector subject to the approval of ft Commissioner may accept in satisfaction thereof a smaller sum than that mentioned in the penaltyclauseofthebond,butinnocaselessthantheamountnecessarytoindemnifytheGovernmentforthedamage. VesselorAircraftDepartingBeforeEntryMade:finedinthesumnotexceedingfivethousandpesos.

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ObstructiontoBoardingOfficial:finedinasumnotexceedingfivethousandpesos. UnlawfulBoardingorLeavingofVesselorAircraft:finedinasumnotexceedingfivethousandpesos. Failure to Deliver or Receive Mail: fined in a sum not exceeding five thousand pesos. If vessel departs, from a port or place where mail should be receivedwithoutdeliverytothevesselofthemail:finedinasumnotexceedingonethousandpesos. UnladingofCargoBeforeArrivalatPortofDestination:finedasumnotlessthanthirtythousandpesos(P30,000.00)butnotexceedingonehundred thousandpesos(P100,000.00),unlessduetoweather,accidentorothernecessity. UnladingofCargoatImproperTimeorPlaceAfterArrival:finedinasumnotlessthanthirtythousandpesos(P30,000.00)andnotexceedingone hundredthousandpesos(P100,000.00),unlessduetoweather,accidentorothernecessity. FailuretoExhibitorDepositDocuments:finedinasumnotexceedingfivethousandpesos. BringingofUnmanifestedArms,ExplosivesorWarEquipment:finedasumofnotlessthanthirtythousandpesos(P30,000.00)butnotexceedingone hundredthousandpesos(P100,000.00). Failure to Supply Requisite Manifests: fined in a sum not less than ten thousand pesos (P 10,000.00) but not exceeding thirty thousand pesos (P 30,000.00). DiscrepancyBetweenActualandDeclaredWeightofManifestedArticle:grossweightofanyarticleorpackagedescribedinthemanifestexceedsby morethantwenty(20)percentumthegrossweightasdeclaredinthemanifestorbilloflading,duetothecarelessnessorincompetencyofthemaster orpilotincommand,owneroremployeeofthevesseloraircraft,afineofnotmorethanfifteen(15)percentumofhevalueofthepackageorarticle. DeliveryofCargoNotAgreeingwiththeMastersorPilotsinCommandReport:finedinasumnotexceedingfivethousandpesos. BreakingofSealPlacedbyCustomsOfficials:finedasumnotexceedingtenthousandpesos(P10,000.00)foreachsealsobrokenordestroyed. BreakingofLockorFasteningPlacedbyCustomsOfficials:finedinasumnotexceedingtenthousand(P10,000.00)pesos. DisappearanceofTrunkorPackageSpeciallyNotedbyCustomsOfficial:finedinasumnotexceedingtenthousandpesos(P10,000.00)foreverysuch packagewhichmaysubsequentlybemissingandunaccountedforuponthearrivalofthevesseloraircraftattheportofentry. FalseStatementofVessel'sorAircraftsDestination:finedinasumnotexceedingtenthousandpesos(P10,000.00) OtherOffenses: SEC.2529.OtherOffences.Avesselshallbefinedinanamounthereafterfixedfor: 1.Anchoringatanydock,pier,wharf,quay,orbulkheadwithoutratguards,twohundredpesos(P200.00)forcoastwisevessels,andonethousandpesos (P1,000.00)foroverseasvessels; 2.Dumpinggarbageorslopsoverthesideswithinthreemilesfromthenearestcoastline,onethousandpesos(P1,000.00); 3.Dumpingorcausingtospreadcrudeoil,keroseneorgasolineinthebayoratthepierswithinthreemilesfromthenearestcoastline,onethousandpesos (P1,000.00)foreachoffence; 4.Loadinggasolineataplaceotherthanthatdesignatedbytheregulations,onethousandpesos(P1,000.00)foreachoffence; 5.Causingtheemissionandspreadofharmfulgas,fumesandchemicals,fivethousandpesos(P5,000.00)foreachoffence. PropertySubjecttoForfeitureUnderTariffandCustomsLaws PropertiesNotSubjecttoForfeitureintheAbsenceofPrimaFacieEvidence: SEC.2531.PropertiesNotSubjecttoForfeitureintheAbsenceofPrimaFacieEvidence.Theforfeitureofthevehicle,vessel,oraircraftshallhotbe effected if it is established that the owner thereof or his agent in charge of the means of conveyance used as aforesaid has no knowledge of or participationintheunlawfulact:Provided,however,Thataprimafaciepresumptionshallexistagainstthevessel,vehicleoraircraftunderanyof thefollowingcircumstances:1.Iftheconveyancehasbeenusedforsmugglingatleasttwicebefore;2.Iftheownerisnotinthebusinessforwhich theconveyanceisgenerallyused;and3.Iftheownerisnotfinanciallyinapositiontoownsuchconveyance. ConditionsAffectingForfeitureofArticle:importationorexportationismerelyattempted,theforfeitureshallbeeffectedonlywhenandwhilethe articleisinthecustodyorwithinthejurisdictionofthecustomsauthoritiesorinthehandsorsubjecttothecontroloftheimporter,exporter,original owner,consignee,agentofotherpersoneffectingtheimportation,entryorexportationinquestion,orinthehandsorsubjecttothecontrolofsome personswhoshallreceive,conceal,buy,sellortransportthesameoraidinanysuchacts,withknowledgethatthearticlewasimported,orwasthe subjectofanattemptatimportationorexportation,contrarytolaw. EnforcementofLien,AdministrativeFines,andForfeitures:shallbeenforcedbytheseizureofthevehicle,vesseloraircraftorotherpropertysubject to the fine or forfeiture and by subsequent proceedings in conformity with the provisions of Parts 2 and 3, Title VI, Book 11, of this Code. For the purposeofenforcingthelienforcustomsduties,feesandotherchargesonanyseizedorconfiscatedarticleinthecustodyoftheBureauofInternal Revenue.TheBureauofInternalRevenueisauthorizedtoimposeandenforcethesaidlien. Part5DispositionofPropertyinCustomsCustody[Sections26012611] SEC.2601.PropertySubjecttoSale.Propertyiiicustomscustodyshallbesubjecttosaleundertheconditionshereinafterprovided:a.Abandonedarticles;b. ArticlesenteredunderwarehousingentrynotwithdrawnnorthedutiesandtaxespaidthereonwithintheperioddescribedunderSection1908ofthisCode;c. Seizedproperty,otherthancontraband,afterliabilitytosaleshallhavebeenestablishedbyproperadministrativeorjudicialproceedingsinconformitywiththe provisions of this code; and d. Any article subject to a valid lien for customs duties, taxes or other charges collectible by the Bureau of Customs, after the expirationoftheperiodallowedforthesatisfactionofthesame(R.A.7651,June04,1993). SEC.2602.PlaceofSaleorOtherDispositionofProperty.PropertywithinthepurviewofthisPartofthisCodeshallbesold,orotherwisedisposedof,uponthe orderoftheCollectoroftheportwherethepropertyinquestionisfound,unlesstheCommissionershalldirectitsconveyanceforsuchpurposetosomeother port. SEC.2603.ModeofSale.Intheabsenceofanyspecialprovision,subjecttotheprovisionsofon2601aboveprovided,propertysubjecttosalebythecustoms authoritiesshallbesoldatpubliconwithinthirty(30)daysafterten(10)daysnoticeofsuchsaleshallhavebeenconspicuouslypostedatportandsuchother advertisementasmayappeartotheCollectortobeadvisableintheparticularcase.

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SEC.2604.DisqualificationtoParticipateinAuctionSale.Nocustomsofficialoremployeeshallbeedtobiddirectlyorindirectly,inanycustomsaction. SEC.2605.DispositionofProceeds.Thefollowingchargesshallbepaidfromtheproceedsoftheintheordernamed:a.Expensesofappraisal,advertisementof sale.b.Dutiesexceptinthecaseofabandonedandforfeitedarticles.c.TaxesandotherchargesduetheGovernment.d.Governmentstoragecharges.e.Arrastre andprivatestoragecharges.f.Freight,lighterageorgeneralaverage,onthevoyageofimportation,ofwhichduenoticeshallhavebeengiventotheCollector. SEC. 2606. Disposition of Surplus from the Proceeds of Sale of Abandoned or Forfeited or Acquired Articles. Except in the case of the sale of abandoned or forfeitedarticles,andarticleswhicharenotclaimedbypaymentofduties,taxesandotherchargesandcompliancewithalllegalrequirementswithinprescribed period,anysurplusremainingafterthesatisfactionofallunlawfulchargesasaforesaidshallretainedbytheCollectorforten(10)dayssubjecttothecallofthe owner.Uponfailureoftheownertoclaimsuchsurpluswithinthisperiod,theCollectorshalldepositsuchamountinaspecialtrustfundwhichshallbeused solely for the purpose of financing the compu1scacquisition of imported goods by the government as provided in Section 2317 hereof. In all such cases the Collectorshallreportfullyhisactioninthematter,togetherwithalltheparticularstheCommissionerandtotheChairmanonAuditAfteroneyear,theunused amountsinsuchspecialtrustfunds,exceptforanamountnecessarytofinanceforcedgovernmentacquisitionsbeforethefirstauction.thesucceedingyear, shallbeturnedovertotheBureauofTreasuryascustomsreceipts."(R.A.9135,April27,2001) SEC. 2607. Disposition of Articles Liable to Deterioration. Perishable articles shall be deposited any appropriate bonded warehouse; and, if not immediately enteredforexportortransportationfromthevesseloraircraftinwhichimportedorenteredforconsumptionandthedutiesandtaxespaidthereon,sucharticles maybesoldatauction,aftersuchpublicnotice,notexceedingthreedays,asthenecessitiesofthecasepermit. Whenseizureshallbemadeofpropertywhich,intheopinionoftheCollector,isliabletoperishorbewastedortodepreciategreatlyinvaluebykeepingor whichcannotbekeptwithoutgreatdisproportionateexpense,whethersuchpropertyconsistsofliveanimalsorofanyarticle,theappraisershallsocertifyinhis appraisal,thentheCollectormayproceedloadvertiseandsellthesameatauction,uponnoticeasheshalldeemtobereasonable.Thesamedispositionmaybe madeofanywarehousedarticleswhentheopinionoftheCollectoritislikelythatthecostofdepreciation,damage,leakage,orothercauses,maysoreduceits valueastobeinsufficienttopaytheduties,taxesandotherchargesduethereon,ifshouldbepermittedtobesokeptandbesubjectedtosaleintheusual course. SEC.2608.DispositionofArticlesUnfitforUseorSaleorInjurioustoPublicHealth.Whenanyarticle,whichintheopinionoftheCollector,isamenacetopublic health,isseizedorotherwisecomesintothecustodyoftheBureauofCustoms,theCollectoroftheportshall,ifthematterisnotdisposableundertheprovisions relating to food and drugs, appoint a board of three members to examine the article. Whenever possible, one member shall be a representative of the Department of Health or of local health officer, and the two others shall be responsible officials of the Bureau of Customs at loom one of whom shall be an appraiser.Suchboardshallexaminesaidarticle,andifthesameisfoundabeunfitoramenacetothepublichealth,theboardshallsoreportinwritingtothe Collector,whoshall!kn9nWhaideitsdestructioninsuchmannerasthecasemayrequire.Healthauthoritiesatportofentryshallcollaboratewiththecollectors insuchmatterswithreasonabledispatch. SEC.2609.DispositionofContraband.Articleofprohibitedimportationorexportation,knownascontraband,shall,intheabsenceofspecialprovision,bedealt withasfollows:a.Dynamite,gunpowder,ammunitionandotherexplosives,firearmsandweaponsofwarandpartsthereof,shallbeturnedovertotheArmed ForcesofthePhilippines;b.Ifthearticleinquestionishighlydangeroustobekeptorhandled,itshallforthwithbedestroyed;c.Contrabandcoinorbullion, foreign currencies and negotiable instruments shall accrue to the Stabilization Fund of the Central Bank subject to the payment of the expenses incident to seizure,includingtherewardtotheinformer,ifany;d.Othercontrabandofcommercialvalueandcapableoflegitimateusemaybesoldundersuchrestrictions aswillinsureitsuseforlegitimatepurposesonly;butifthethingisunfitforuseortheCollectorisoftheopinionthat,ifsold,itwouldbeusedforunlawful purposes,itshallbedestroyedinsuchmannerastheCollectorshalldirect. SEC.2610.DispositionofUnsoldArticlesforWantofBidders.ArticlessubjecttosaleatpublicauctionbyCustomsauthoritiesshallbesoldatapricenotless than the wholesale value or price in the domestic market of these or similar articles in the usual wholesale quantities and in the ordinary course of trade as determinedinaccordancewithsectiontwentythreehundredandfiveofthisCode. When any article remains unsold in at WW two public biddings for want of bidders or for the lack of an acceptable bid, and the article is perishable and/or suitableforofficialuse,thentheCollectorshallreportthematterimmediatelytotheCommissionerofCustomswhomay,subjecttotheapprovaloftheSecretary ofFinance,authorizetheofficialuseofthatarticlebytheBureauofCustomstopromotetheintensivecollectionoftaxesand/ortohelppreventorsuppress smugglingandotherfraudsupontheCustoms,andifthearticleisnotsuitableforsuchuse,thenitmaybechanneledtotheofficialuseofotherofficesofthe NationalGovernment.Ifthearticleissuitableforshelterorconsistsoffoodstuffs,clothingmaterialsormedicinesthenthatarticleshallbegiventogovernment charitableinstitutionsthroughtheDepartmentofSocialServicesandDevelopment.Ifthearticleofferedforsaleisnotsuitableeitherforofficialuseorcharity, thenthesamemaybereexportedasgovernmentpropertythroughtheDepartmentofTradeoranyothergovernmententitythroughbarterorsale.Ifthearticle cannot be disposed of as provided above, the Collector shall report the matter immediately to the Commissioner who may, subject to the approval of the SecretaryofFinance,disposeofthearticletothebestadvantageofthegovernmentinanegotiatedprivatesalewhichshallbeconsummatedinthepresenceofa representativeoftheCommissiononAudit,inthemannerprovidedforbythisCode. SEC. 2611. Treatment of Dangerous Explosives. Gunpowder or other dangerous or explosive substances, including firecrackers, shall not be deposited in a bondedwarehouse,andwhennotenteredforimmediateuse,transportationorexport,shallbesubjecttosuchdisposition,inthediscretionoftheCommissioner ofCustoms,consistentwithpublicsafety.Expensesincurredinsuchdispositionshallconstitutealienonthearticlesandachargeagainsttheowner. SEC. 2612. Disposition of Smuggled Articles. Smuggled articles, after liability to seizure or forfeiture shall have been established by proper administrative or judicialproceedingsinconformitywiththeprovisionsofthisCode,shallbedisposedofasprovidedforinsectiontwentysixhundredandten:Provided,That articleswhoseimportationisprohibitedunderSectionOneHundredTwosubparagraphsb,c,d,eandjshall,uponordertotheCollectorinwriting,beburned ordestroyed,insuchmannerasthecasemayrequireastorenderthemabsolutelyworthless,inthepresenceofarepresentativeeachfromtheCommissionon

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- 14 Audit,MinistryofJustice,BureauofCustoms,andifpossible,anyrepresentativeoftheprivatesector. A. IfownerorimporterisaggrievedbydecisionofCollectorofCustoms Collectorissueswarrantfordetentionofproperty (ifownerorimporterdesirestosecurereleaseofpropertyforlegitimateuse,Collectormaysurrendersubjectpropertyuponfilingofsufficientbond) CollectorimmediatelyreportsseizuretoCOCandChairmanofCOA Collectorgivesownerorimporterorhisagentwrittennoticeofseizureandopportunitytobeheard Collectorcausespreparationoflistandparticulardescriptionofpropertyseized,aswellasappraisalandclassificationofthesame Collector,afterhearingandinwriting,makesadeclarationofforfeitureorfixesamountoffineortakessuchactionasmaybeproper Ownerorimporterisaggrieved AppealtoCOC

AppealtoCTADivisionwithin30daysfromnotice AppealtoCTAEnBanc AppealtoSCbycertiorariwithin15days B.IfGovernmentisaggrievedbydecisionofCollectorofCustoms Collectorissueswarrantfordetentionofproperty(ifownerorimporterdesirestosecurereleaseofpropertyforlegitimateuse,Collectormaysurrendersubject propertyuponfilingofsufficientbond) CollectorimmediatelyreportsseizuretoCOCandChairmanofCOA


The person aggrieved by the decision or action of the Collector in any matter presented upon protest or by his action in any case of seizure may, within 15 days after notification in writing by the Collector of his action or decision, give Collectorgivesownerorimporterorhisagentwrittennoticeofseizureandopportunitytobeheard written notice to the Collector of his desire to have the matter reviewed by the Commissioner. Thereupon the Collector shall forthwith transmit all records of the proceedings to the Commissioner, who shall approve, modify or reverse the action or decision of the Collector and take such steps and make such Collectorcausespreparationoflistandparticulardescriptionofpropertyseized,aswellasappraisalandclassificationofthesame orders as may be necessary to give effect to his decision.

Collector,afterhearingandinwriting,makesadeclarationofforfeitureorfixesamountoffineortakessuchactionasmaybeproper

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Governmentisaggrieved AutomaticreviewbyCOC AutomaticreviewbyDOFSecretary IfownerorimporterisaggrievedbydecisionofCOCorDOFSecretary AppealtoCTADivisionwithin30daysfromnotice AppealtoCTAEnBanc AppealtoSCbycertiorariwithin15days Procedureforcustomsprotests Collectorshall(1)causeallarticlesenteringthejurisdictionofhisdistrictanddestinedforimportationthroughhisporttobeenteredatthecustomshouse,(2) causeallsucharticlestobeappraisedandclassified,and(3)assessandcollecttheduties,taxesandotherchargesthereon,andholdpossessionofallimported articlesuponwhichduties,taxesandotherchargeshavenotbeenpaidorsecuredtobepaid,disposingofthesameaccordingtolaw. WhenarulingordecisionoftheCollectorismadewherebyliabilityforduties,fees,orothermonetarychargeisdetermined,exceptthefixingoffinesinseizure cases,thepartyadverselyaffectedmayprotestsuchrulingordecisionbypresentingtotheCollector,atthetimewhenpaymentoftheamountclaimedtobedue the Government is made, or within 30 days thereafter, a written protest setting forth his objections to the ruling or decision in question, together with the reasonstherefor. EveryprotestshallbefiledinaccordancewiththeprescribedrulesandregulationsandshallpointouttheparticulardecisionorrulingoftheCollectortowhich exceptionistakenorobjectionmade,andshallindicatewithreasonableprecisiontheparticulargroundorgroundsuponwhichtheprotestingpartybaseshis claimforrelief.Thescopeofaprotestshallbelimitedtothesubjectmatterofasingleadjustmentorotherindependenttransaction,butanynumberofissues mayberaisedinaprotestwithreferencetotheparticularitemoritemsconstitutingthesubjectmatteroftheprotest.

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Tax II | Gruba