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TARIFF AND CUSTOMS CODE

IN GENERAL

CUSTOMS LAW does not refer only to the provisions of Tariff and Customs Code. It
also includes other laws and regulations subject to enforcement by the Bureau of
Customs.
Other laws subject to enforcement by the Bureau of Customs:
1. NIRC Sec. 107. Importation of goods or articles subject to VAT. The VAT must be
paid before these goods are released from Customs Custody.
2. NIRC Sec. 131. Importation of Articles subject to excise taxes. The payment of
excise tax must be made before the goods are released from Customs custody.
3. Regulations that may be issued by the CB, the implementation of such regulation is
vested in the Bureau of Customs.

1.

2.

Section 401, Tariff and Customs Code: In the interest of national


economy, general welfare and/or national security, the President upon
recommendation of the National Economic and Development Authority, is
empowered:
1. To increase, reduce, or remove existing protective rates of import duty,
provided that the increase should not be higher that 100% ad valorem;
2. To establish import quota or to ban imports or any commodity; and
3. To impose additional duty on all imports not exceeding 10% ad valorem
Additional notes:
An order issued by the President pursuant to the flexible tariff clause shall
take effect thirty (30) days after promulgation, except in the imposition of
additional duty not exceeding ten percent (10%) ad valorem which shall take
effect at the discretion of the President.
In the case of imposition of additional duty, the investigation of the Tariff
Commission and recommendation of NEDA are needed.

CUSTOMS DUTIES are duties which are charged upon commodities on their being
imported in or exported out of a country.
ARTICLES SUBJECT TO CUSTOMS DUTIES
TARIFF means a book of rates; a table or catalogue drawn usually in alphabetical Goods for customs duty purposes
order containing the names of several states that hold commerce together.

All articles, when imported from any foreign country into the Philippines,
shall be subject to duty upon each importation, even though previously
Scope of tariff and customs laws
exported from the Philippines, except as otherwise specifically provided for

Section 3514 of the Tariff and Customs Code provides that tariff and
in this Code or in other laws [Section 100, Tariff and Customs Code]
customs laws include not only the provisions of the Code itself and

The Code also imposes export tariff and premium duty or certain articles.
regulations pursuant thereto but all other laws and regulations which are

Whether subject to duty or not, all imported articles shall be entered through
subject to enforcement by the Bureau of Customs or otherwise within its
a custom house at the port of entry.
jurisdiction.

Extend not only to the provisions of the Tariff and Customs Code but to all
Articles, goods or merchandise
other laws as well as Central Bank Circulars, the enforcement of which is

Articles when used with reference to importation or exportation includes


entrusted to the Bureau of Customs.
goods, wares, and merchandise and in general anything that may be made
the subject of importation or exportation.
Division of the Tariff and Customs Code

Bastida v. Customs Collector: The Revised Administrative Code defines

Book I Tariff laws


merchandise, when used with reference to importation or exportation, to

Book II Customs laws


include goods, wares and, in general, anything that may be made the
subject of importation or exportation. Checks, money orders and dollar bills
Customs duties
properly fall within the concept of merchandise as used in the Revised

Customs duties are duties which are charged upon commodities on their
Administrative Code. The U.S. dollar are merchandise. Checks, as bills of
being imported in or exported out of a country
exchange, are negotiable instruments and may be bought and sold like a

Garcia v. Executive Secretary: Customs duties, which are assessed at the


commodity. Money orders, also considered as bills of exchange of limited
prescribed tariff rates, are very much like taxes, which are frequently
negotiability, possess the same attributes as other negotiable instruments.
imposed for both revenue raising and for regulatory purposes. This, it has
Thus, they may also be bought and sold like checks.
been held that Customs duties is the name given to taxes on the
importation and exportation of commodities, the tariff or tax assessed upon Kinds of goods/merchandise
merchandise imported from, or exported to, a foreign country.
1. articles subject to duty
2. prohibited importations
Flexible tariff clause (Flexible Power of the President)
3. conditionally-free importations

Section 28(2), Article VI, Constitution: The Congress may, by law,


authorize the President to fix within specified limits, and subject to such Articles subject to duty
limitations and restrictions as it may impose, tariff rates, import and export

As a general rule, all articles when imported from a foreign country including
quotas, tonnage and wharfage dues, and other duties or imposts within the
those previously exported from the Philippines are subject to duty unless
framework of the national development program of the Government.
otherwise specifically provided in the Code.

7. Professional instruments and implements, tools of trade, occupation or


Prohibited importations
employment, wearing apparel, domestic animals, and personal and
1. Dynamite, ammunitions and other explosives, firearms and weapons, except
household effects belonging to persons coming to settle in the Philippines or
when authorized by law.
Filipinos and/or their families and descendants who are now residents or
2. Written or printed articles containing any matter advocating of inciting
citizens of other countries, such parties hereinafter referred to as overseas
treason, rebellion or subversion against the Philippine Government, or
Filipinos, in quantities and of the class suitable to the profession, rank or
forcible resistance to any law of the Philippines.
position of the person importing them, for their own use and not for barter or
3. Written or printed articles, paintings, or other representations of an obscene
sale, accompanying such persons, or arriving after within a reasonable time.
or immoral character.
8. Importation for the use of foreign embassies, legations, and other agencies
4. Articles, instruments, drugs and substances designed and intended to
of foreign governments which accord the same privilege to the
produce unlawful abortion and printed materials promoting unlawful abortion.
corresponding agencies of the Philippines in their countries.
5. Machines, apparatus or mechanical devices used in gambling
9. Imported articles donated to, or for the account of, any duly registered relief
6. Lottery and sweepstakes tickets except those authorized by the Philippine
organization, not operated for profit, for free distribution among the needy,
Government
upon certification by the DSWD or DECS as the case may be.
7. Articles made of precious metals but actual fineness of quality not indicated.
10. Animals (except race horses) and plants for scientific, experimental,
8. Any adulterated or misbranded drug in violation of the Food and Drugs Act.
propagation, botanical, breeding, zoological and national defense purposes.
9. Marijuana, opium poppies, or any other narcotic or synthetic drugs declared
habit-forming, or preparation thereof, except when authorized by the KINDS OF DUTIES
Philippine Government, and opium pipes and parts thereof.
10. All other articles and parts thereof, the importation of which is prohibited by Classification of custom duties
the law or rules and regulations issued by competent authority.
1. Ordinary or regular customs duties
> Imposed and collected merely as a source of revenue.
Conditionally-free importations
2. Special customs duties
> Imposed and collected in addition to ordinary customs duties usually

Conditionally-free importations are articles which are exempt from import


protect local industries against foreign competition.
duties upon compliance with the formalities prescribed in or with regulations
promulgated by the Commissioner of Customs with the approval of the
Kinds of ordinary or regular customs duties
Secretary of Finance.
1. Ad valorem
> The duty is based on the market value of the price of the imported article.
Enumerate several conditionally-free importations
2. Specific
1. Aquatic products caught or gathered by fishing vessels of Philippine registry
> The duty is based on the weight or volume of the imported article.
2. Equipment for use in the salvage of vessels or aircraft, not available locally,
and cost of repairs excluding the value of the article used, made in foreign
countries upon vessels or aircraft documented, registered or licensed in the Basis of dutiable value

The dutiable value of an imported article subject to an Ad Valorem rate of


Philippines.
3. Articles brought into the Philippines for repair, processing or reconditioning
duty shall be the transaction value.
to be re-exported upon completion of the repair, processing or

Republic Act No. 8181 mandated the change of basis of the dutiable value
reconditioning.
from the home consumption value to the transaction value by January 1,
4. Medals, badges, cups, and other small articles bestowed as trophies or
2000. Before such date, export value was used as the basis for the
prizes or those received or accepted as honorary distinction.
determination of the dutiable value as a transitional device.
5. Personal and household effects belonging to residents of the Philippines
returning from abroad, including jewelry, precious stones and other articles TRANSACTION VALUE
of luxury, which were formally declared and listed before departure.

Transaction value is the price actually paid or payable for the goods when

Returning residents should have stayed out of the country for at


sold for export to the Philippines.
least 6 months.

It is adjusted by adding certain expenses to the extent that they are incurred

OCWs may bring in used home appliances, limited to one of every


by the buyer but are not included in the price actually paid or payable for the
kinds, once a year, within 60 days from their return. However, when
imported goods, i.e. commissions and brokerage fees; the value of the
the amount of the articles have exceeded P10, 000 the excess
materials, components, parts and items incorporated in the imported goods;
shall be subject to tax.
amount of royalties and license fees; cost of transport; loading, unloading
6. Personal and household effects and vehicles belonging to foreign
and handling charges; and cost of insurance.
consultants and experts hired by, and/or rendering service to, the
government and their staff or personal and families.

EXPORT VALUE
SIMILAR GOODS

Export value is that which, at the time of exportation, the same or identical,

Similar goods mean goods which, although not alike in all respects, have
like or similar article is freely offered for sale in the principal export markets
like characteristics and like component materials which enable them to
of the exporting country for exportation to the Philippines, in the usual
perform the same functions and to be commercially interchangeable.
wholesale quantities and in the ordinary course of trade (excluding internal
excise taxes to be remitted or rebated).
Reasonable doubt

Wholesale price in principal export markets of the exporting country.

Reasonable doubt refers to any condition that creates a probable cause to


make the Commissioner of Customs believe in the inaccuracy of the invoice
HOME CONSUMPTION VALUE
value of the imported goods, as reflected by the importer in his customs
declaration, for valuation purposes.

Wholesale price of goods in market of exporting country.

Such condition may include, but is not limited to, any of the following
Procedure for determination of dutiable value
conditions:
1. Determined by the declared value of the imported goods by the importer.
1. If the sale or price is subject to some consideration for which a value cannot
2. If Commissioner of Customs has reason to doubt the truth or accuracy of the
be determined with respect to the goods being valued; or
declaration or documents provided in support of the declared value of
2. If part of the proceeds of any subsequent resale, disposal or use of the
importation, he may require the importer to give further explanation and
goods by the buyer will accrue directly or indirectly to the seller, unless an
submit additional documents.
appropriate adjustment can be made; or
3. If Commissioner still has reasonable doubt as to the accuracy of the
3. If the buyer and the seller are related to one another, and such relationship
declared value after the explanation and additional documents are given, he
influenced the price of the goods.
may apply two alternative methods, to wit:
a.
The dutiable value shall be the transaction value of RELATED SELLERS AND BUYERS
identical goods sold for export to the Philippines at or about the
1. Officers or directors of one anothers businesses.
date of the exportation of the goods being valued; or
2. Legally recognized partners in business.
b.
If the dutiable value cannot be determined under the
3. Employer and employee.
preceding method, it shall be the transaction value of similar goods
4. Any person who directly or indirectly owns, controls or holds 5 % or more of
sold for export to the Philippines at or about the date of exportation
the outstanding voting stock or shares of both seller and buyer.
of the goods being valued.
5. One of them directly or indirectly controls the other.
4. If still not able to determine the dutiable value:
6. Both of them are directly or indirectly controlled by a third person.
a. The unit price at which the imported goods or identical or similar
7. Together, they directly control a third person.
goods are sold domestically, in the same condition as when imported, in
8. Members of the same family including brothers and sisters (whether full or
the greatest aggregate quantity, to persons not related to the seller, at
half-blood), spouse, ancestors, and lineal descendants.
or about the time of the importation of the goods being valued;
b. The computed value; or
Basis for dutiable weight for specific customs duties
c. Any other reasonable means consistent with GATT.
1. Gross weight
2. Legal weight
Reiteration of the sequence in determination of value
3. Net weight
1st - Transaction value
2nd - Transaction value of identical goods
KINDS OF SPECIAL CUSTOMS DUTIES
3rd - Transaction value of similar goods
1. Dumping duty
4th - Deductive value
2. Countervailing duty
5th - Computed value
3. Marking duty
6th - Other reasonable means or fallback value
4. Retaliatory duty or discriminatory duty
5. Duties imposed under the Flexible Tariff Clause
IDENTICAL GOODS

Identical goods mean goods which are the same in all respects, including DUMPING DUTY

Duty imposed on a specific kind or class of foreign article which is being


physical characteristic, quality and reputation.
imported into, or sold, or is likely to be sold for export to or in the Philippines

Minor differences in appearances shall not preclude goods otherwise


at a price less than the fair value, the importation or sale of which might
conforming to the definition from being regarded as identical.
injure or retard the establishment of an industry producing like goods in the

Should be from the same country, and the same producer.


Philippines, [Sec. 301, Tariff and Customs Cods]

Dumping duty duty levied on imported goods where it appears that a specific kind
or class of foreign article being imported into or sold is likely to be sold in the Phils. at
a price less than its fair value.

Imposed on specific kind or class of foreign article which is being


imported into, or sold or is likely to be sold for exportation to or in the Phils.
at a price less than its fair value, the importation or sale of which is likely to
injure an industry imposing like goods in the Philippines.

The duty is equal to the difference between the actual purchase


price and the fair value of the articles in question in the country or
exportation as determined by the Sec. of Finance.

This represents the inland excise tax on locally manufactured articles of the same
kind to off-set this advantage.
As regards dumping duties, the extent of the special duty is the amount that
represents under-pricing.
As regards countervailing duties, the extent is the excise inland tax or the amount of
advantage enjoyed by that imported article.

COUNTERVAILING DUTY

Duty imposed on articles, upon the production, manufacture or export of


which any bounty or subsidy is directly or indirectly granted in the country of
origin and/or exportation, and the exportation of which into the Philippines
will likely injure an industry in the Philippines or retard or considerably retard
the establishment of such industry, [Sec. 302, Tariff and Customs Code].

Bounty is the cash award paid to an exporter or manufacturer while subsidy


refers to fiscal incentives, not in the form of direct cash award, to encourage
manufacturers; or

The duty is equal to the ascertained or estimated amount to the bounty or


subsidy

RETALIATORY DUTY

Duty imposed upon articles of a foreign country which discriminates against


Philippine commerce in such a manner as to place it at a disadvantage
compared with the commerce of another foreign country, [Sec. 304, Tariff
and Customs Code].

MARKING DUTY

Duty imposed on imported articles or containers which have not been


property marked in any official language of the Philippines as to indicate the
name of the country or origin of the article. The purpose is to prevent the
deception of consumers. [Sec. 303, Tariff and Customs Code].
These are special duties imposed on imported articles. This may be imposed subject
to the ff. requisites:

The rate is 5% ad valorem.


1. There must be a deliberate and continuous sale of imported article in the

The articles shall be deemed abandoned upon failure to mark them within 30
Philippines as price lower than the prices in the exporting country.
days from notice.
2. This must prejudice or cause or likely to cause injury to our local industry.
Marking duty duty on ad valorem basis imposed for improperly marked articles. The
Situation:
There are articles of foreign origin the prevailing price of which in requirement that foreign importation must be marked in any official language of the
the US is equivalent to P100. These articles are sold or dumped in the Phils. at lower Phils., the name of the country of origin of the article.
than the prevailing price in the US because they are saleable in the U.S.
So, this will prejudice our local industries. In order to protect our local product or to
The purpose is to prevent deception of consumers.
discourage people from buying this imported product, we should be impose special
The articles must be properly marked, otherwise a special duty of
duties in addition to the regular duties. Dumping duties should be imposed.
5% of the value shall be imposed.

Countervailing duty duty equal to the ascertained or estimated amount of the


subdsidy or bounty or subvention granted by the foreign country on the production,
manufacture, or exportation into the Phils. of any article likely to injure an industry in
the Phils. or retard or considerably retard the establishment of such industry.

Retaliatory or Discriminatory duty duty imposed on imported goods whenever it is


found as a fact that the country of origin discriminates against the commerce of the
Philippines in such manner as to place it at a disadvantage compared with the
commerce of any foreign country.

The amount may be increased in an amount not exceeding 100%


ad valorem when the President finds the public interest may be
served thereby.
This may be imposed by the President of the Philippines when our
goods are discriminated against.
As regards dumping, countervailing and marking duties, it is the
Sec of Finance, upon recommendation of the Tariff Commission,
who may impose these duties.

Imposed on articles, upon the production, manufacture or export of which


any bounty or subsidy is directly or indirectly, granted in the country of origin
and/exportation. No need to show proof that the imports cause injuries to
domestic industries producing the same products. The duty is equal to the Question: What is the extent of the flexible power of the President of the Phils. under
ascertained or estimated amount of the bounty or subsidy given.
the TCC?
Answer: That includes the power to impose discriminatory duties. The President upon
Situation:
Sometimes imported products enjoys certain subsidy from their recommendation of the Tariff Commission may increase the tariff rates by not more
government. So, they have an advantage. Our local products for example, does not than 5x or meaning 500x of the tariff rates. He may also decrease the tariff rates by
enjoy similar subsidy. We should counter that advantage by imposing countervailing not less than 50%. He can only exercise these powers in the interest of the national
duties. The purpose there is to protect our local products against unfair competition.
economy, national security and general welfare of the people.


Tonnage dues are paid by the owner, agent, operator or master of a vessel
DRAWBACKS
engaged in foreign trade based on the net tonnage of the vessel or weight of

A drawback is a device resorted to for enabling a commodity affected by


the articles discharged or laden.
taxes to be exported and sold in foreign markets upon the same terms as if it Other fees and charges
had not been taxed at all. It may be full or partial.

Charged and collected for services rendered and documents issued by the

The return of 99% of customs paid on imported articles when they are reBureau of Customs.
exported forming part of domestically produced articles.

The refund of 99% duty on imported fund when used for propulsion vessels REQUIREMENTS OF IMPORTATION UNDER THE TARIFF AND CUSTOMS CODE
engaged in the foreign or coastwise trade.
Liability of importer of duties

The Code provides that all articles imported into the Philippines shall be held
When drawbacks allowed
to be the property of the person to whom the same are consigned; and the

Drawbacks are allowed on the following commodities:


holder of a boll of lading duly endorsed by the consignee therein named, or if
1. Fuel used on propulsion vessels;
consigned to order by the consignor, shall be deemed the consignee thereof.
2. Petroleum oils and oils obtained from bituminous minerals, etc.,
The underwriters of abandoned articles and the salvors of articles saved
eventually used for generation of electric power and manufacture of
from a wreck at sea, along a coast, or in any area of the Philippines, may be
city gas; and
regarded as the consignees, [Sec. 1203, Tariff and Customs Code].
3. Articles made of imported materials upon the exportation of articles

Unless otherwise relieved by laws or regulations, the liability for duties,


manufactured or produced in the Philippines subject to certain
conditions.
taxes, fees and other charges attaching on importation constitutes a
personal debt due from the importer to the government which can be
Other customs fees, dues, or charges payable
discharged only by payment in full of said duties and charges.
1. Harbor fees

It also constitutes a lien upon the articles imported which may be enforced
2. Wharfage dues
which such articles are in custody or subject to the control of the
3. Berthing fees
government.
4. Storage charges
5. Arrastre charges
GOVERNMENT IMPORTATIONS
6. Tonnage dues

All importations by the government for its own use or that of its subordinate
7. Other fees and charges
branches or instrumentalities, or corporations, agencies or instrumentalities
Harbor fees
owned or controlled by the government shall be subject to the duties, taxes,

Harbor fees are imposed on vessels entering into or departing from a port of
and other charges provided in the Tariff and Customs Code, [Sec. 1205
entry of the Philippines.
Tariff and Customs Code].
Wharfage dues
When importation begins and when deemed terminated

Wharfage dues are assessed against the cargo of a vessel engaged in

Importation begins when carrying vessel or aircraft enters the jurisdiction of


foreign or coastwise trade, based in the quantity weight or measure received
the Philippines with an intent to unload.
and/or discharged by such vessel.

Importation terminates upon payment of the duties and other charges due
upon the articles, or secured to be paid, at the port of entry and the legal
Berthing fees
permit for withdrawal shall have been granted.

Berthing fees are assessed against a vessel for mooring or berthing at a

In the case of articles that are free of duties, taxes and other charges,
pier, wharf, or river at any port in the Philippines.
importation is deemed terminated from the time they have legally left the
jurisdiction of the customs.
Storage charges

Storage charges are assessed on articles for storage in customs premises, Entry through customhouse
cargo sheds and warehouses.

All articles imported into the Philippines, whether subject to duty or note,
shall be entered through a customhouse at a port of entry. [Section 1201,
Arrastre charges
Tariff and Customs Code]

Arrastre charges are imposed on all imported and exported articles and

A port of entry means a domestic port open to both foreign and coastwise
baggage of passengers for their handling, receiving and custody.
trade, including airport of entry. [Section 3514, Tariff and Customs Code]
Tonnage dues

Cargo manifest

1. When the owner, importer, consignee or interested party, after due notice,
All cargo, exported or imported, shall be included in the cargo manifest,
fails to file an entry within thirty (30) days, which shall not be extendible,
except the ships stores.
from the date of discharge of the last package from the vessel or aircraft; OR

Commissioner v. Delgado: The evident purpose of the provision requiring


2. Having filed an entry for his shipment, the owner, importer or consignee, or
vessels to declare the correct weight of their cargo is to curb smuggling due
other interested party fails to claim his importation within fifteen (15) days,
to underdeclarations. Hence, imposing the maximum fine on vessels which
which shall not be extendible, from the date of posting of the notice to claim
grossly fail to comply with the obligation to declare the correct weight of their
such importation.
cargo truly promotes the spirit and purpose of the law, since imposing a
minimum fine would only embolden would be smugglers and foster
negligence on the part of the master of the vessel in checking the true Effects of abandonment
1. Owner, importer, consignee or other interested party deemed to have
weight of the cargo.
renounced all of his interests and property rights over the articles.
2. Abandoned article shall be ipso facto deemed the property of the
Import entry
government and shall be disposed of in accordance with the provisions of

A declaration to the Bureau of Customs showing the description, value, tariff


the Code.
classification and other particulars of the imported article to enable the
3.
It does not relieve owner or importer from any criminal liability which may
customs authorities to determine the correct customs duties and internal
arise from any violation of law committed in connection with the importation
revenue taxes due on the importation.
of the abandoned article.
Person authorized to make an import entry
Smuggling or unlawful importation
1. Importer, being the holder of the bill of lading

Any person who shall fraudulently import or bring into the Philippines, or
2. A duly licensed customs broker, acting under authority from the holder
assist in doing so, any article, contrary to law, or shall receive, conceal, buy,
of a bill of lading
sell, or in any manner facilitate the transportation, concealment, or sale of
3. A duly empowered agent or attorney in fact for each holder of a bill of
such article after importation, knowing the same to have been imported
lading
contrary to law, shall be guilty of smuggling.

After importation, the act of facilitating the transportation, concealment or


Import entry filed by person other than importer
sale of the unlawfully imported article must be with the knowledge that the

If filed by a party other than the importer, the importer himself is required to
article was smuggled. However, upon trial, if the defendant is found to have
declare under oath and under penalties of falsification or perjury that the
been in possession of such article, this shall be sufficient to authorize the
declarations and statements contained in the entry are true and correct.
conviction unless the defendant explains his possession to the satisfaction
Such statements constitute prima facie evidence of knowledge and consent
of the court.
of the importer.
Fraudulent practices against customs revenue under Section 3602
Period for filing of import entry
1. Entry of imported or exported articles by means of any false or fraudulent

Within thirty (30) days from the date of discharge of the last package from
invoice
the vessel.
2. Entry of goods at less than the true weight or measure.
3. Filing of any false or fraudulent entry for the payment of drawbacks or refund
ABANDONMENT
of duties.

Abandonment is the renunciation by an importer of all his interests and


property rights in the imported article.
Three meanings of term entry

It may be express or implied.


1. Documents filed at the Customs House
2. Submission and acceptance of the documents
Express abandonment
3. Procedure of passing the goods through the Customs House

When the owner, importer or consignee of the imported article expressly


signifies in writing and under oath to the Collector of Customs his intention to ADMINISTRATION
abandon his shipment in favor of the government, within ten days after filing Who is in charge?
of the import entry, he shall be relieved from payment of duties, taxes and

The offices charged with the administration and enforcement of the law are
other charges and expenses.
the Tariff Commission and the Bureau of Customs.

Article shall be delivered by the owner, importer or consignee at such place


which the Collector designates; failure to comply shall make him liable for Functions of the Tariff Commission
expenses that may be incurred in connection with the disposition thereof.

The Commission shall investigate:


a.1. The administration of and the fiscal and industrial effects of the
Implied abandonment
countrys tariff and customs laws;

a.2.
a.3.
a.4.

The relations between the rates of duty on raw materials and finished
or partly finished goods;
The effects of ad valorem and specific duties and of compound
specific and ad valorem duties;

All questions relative to the arrangement of schedules and Tax Remedies under the Tariff and Customs Code:
classifications of articles under the tariff law;
a.5. The tariff relations between the Philippines and foreign countries,
Remedies
Government
Importer
commercial treaties, etc.
a.6. The volume of importations compared with domestic production and (1) Administrative or
(a) Enforcement of tax lien
(a) Tax refund
consumption;
extra-judicial
(b) Seizure
(b) Abandonement
a.7. Conditions, causes and effects relating to competition of foreign
(c) Protest
industries with those of the Philippines;
a.8. In general, to investigate the operation of customs and tariff laws and (2) Judicial
(a) Filing of civil action
(a) Appeal to CTA, CA,
to submit report of its investigations; and
(b) Filing of criminal action
SC
a.9. The nature, composition, and classification of articles for customs
if there is fraud and it
(b) Filing of criminal
revenue and other related purposes which shall be furnished no
must be serious
action against erring
NEDA, Board of Investments, Central Bank and the Secretary of
Customs
officials
Finance.
Cases arising under the tariff and customs code
Duties, powers and jurisdiction of the Bureau of Customs
1. Customs protest cases or those where the importer questions the legality of
1. The assessment and collection of the lawful revenues from imported articles
the assessment and collection of customs duties and other fees or charges.
and all other dues, fees, charges, fines and penalties accruing under the
The issue involved in these cases generally relates to the correctness of the
tariff and customs laws.
appraisal and/or classification of imported goods.
2. The prevention and suppression of smuggling and other frauds upon the
2. Seizure and forfeiture cases or those where goods or merchandise are
customs.
ordered seized by customs authorities and made subject to the penalty of
3. The supervision and control over the entrance and clearance of vessels and
forfeiture or fine for violation of the customs laws. Here, the issue involved
aircraft engaged in foreign commerce.
is the legality of the importation of goods either because the goods are in
4. The enforcement of tariff and customs laws and all other laws, rules and
themselves prohibited importations or their importation of effected contrary
regulations relating to tariff and customs administration.
to law.
5. The supervision and control over the handling of foreign mails arriving in the
Philippines, for the purpose of the collection of the lawful duty on the CUSTOMS PROTEST CASES
dutiable articles thus imported and the prevention of smuggling through the
medium of such mails.
Procedure on customs protest cases
6. Supervision and control over all import and export cargoes, landed or stored
1. Firs of all, the Collector shall cause all articles entering the jurisdiction of his
in piers, airports, terminal facilities, including container yards and freight
district and destined for importation through his port to be entered at the
stations, for the protection of government revenue.
customhouse. He shall cause all such articles to be appraised and
7. Exclusive original jurisdiction over seizure and forfeiture cases under the
classified, and shall assess and collect the duties, taxes, and other charges
tariff and customs laws.
thereon, and shall hold possession of all imported articles, upon which
duties, taxes, and other charges have not been paid or secured to be paid,
TAX REMEDIES
disposing of the same according to law. [Section 1206, Tariff and Customs
Code]
IN GENERAL
2. The party adversely affected by the ruling or decision of the Collector
Remedies available to the government
whereby liability for duties, taxes, fees or other charges are determined,
1. Seizure and forfeiture of goods and commodities
may protest such ruling or decision. [Section 2308, Tariff and Customs
2. Judicial action against the taxpayer
Code]
3. The protest, which must be in writing, is filed with the Collector within fifteen
(15) days. No protest shall be considered unless payment of the amount
due after final liquidation (i.e. computation of the liability) has first been
made and the corresponding docket fee actually paid.
4. Every protest shall be filed in accordance with rules and regulations
promulgated for the purpose, and shall point out the particular decision or

ruling of the Collector to which exception is taken or objection made, and


shall indicate with reasonable precision the particular ground or grounds
upon which the protesting party bases his claim for relief. [Section 2310,
Tariff and Customs Code]
5.

6.

7.

8.

The scope of a protest shall be limited to the subject matter of a single


adjustment or other independent transaction; but any number of issues may
be raised in a protest with reference to the particular item or items
constituting the subject matter of the protest. Single adjustment refers to the
entire content of one liquidation, including all duties, fees, surcharges or
fines incident thereto. [Section 2310, Tariff and Customs Code]
When a protest in form is presented, the Collector shall issue an order for
hearing within fifteen (15) days from receipt of the protest and hear the
matter thus presented. Upon the termination of the hearing, the Collector
shall render a decision within thirty (30) days, and if the protest is sustained
in whole or in part, he shall make the appropriate order, the entry reliquidated if necessary.
The person aggrieved by the decision or action of the Collector in any
matter presented upon protest may within fifteen (15) days after notification
in writing by the Collector of his action or decision, give written notice to the
Collector and one copy furnished to the Commissioner 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 orders as may be necessary to give effect
to his decision. [Section 2313, Tariff and Customs Code]
If in any case involving the assessment of duties, the Collector renders a
decision adverse to the Government, such decision shall automatically be
elevated to, and reviewed by the Commissioner; and if the Collectors
decision would be affirmed by the Commissioner, such decision shall
automatically be elevated to, and be finally reviewed by, the Secretary of
Finance. However, if within thirty (30) days form the receipt of the record of
the case by the Commissioner or by the Secretary of Finance, as the case
may be, no decision is rendered by either of them, the decision under review
shall become final and executory. Any party aggrieved by either the
decision of the Commissioner or the Secretary of Finance may appeal to the
Court of Tax Appeals within thirty (30) days from receipt of a copy of such
decision. [Section 2315, Tariff and Customs Code]

Incidentally, in case of appeals to the Court of Tax Appeals from the decisions of the
Secretary of Finance as a consequence of the automatic review by the Secretary of
Finance of decisions emanating form Customs, the thirty-day period of appeal under
Republic Act No. 1125 will necessarily be counted from the receipt of the decision of
the Secretary of Finance.

PROCEDURE IN PROTEST
Remedy
(1) File a protest

(2) If protest is
denied,
Appeal
collectors ruling
(3) If CC affirm
collectors
ruling,
Appeal
(4) If CTA affirm
collectors
ruling,
Appeal
(5) If CA affirm
CTA, Appeal

Where to
file
Collector
of
Customs

Customs
Commissi
oner (CC)
CTA

[Issues which may


be raised]
(a) Validity if the
assessment
or
collection
(b)
Validity
of
classification
of
articles
Questions of fact or
Question of law
Question of fact or
Question of law

CA

Question of fact or
Question of law

SC

Question of law

Prescriptive
Period
15 days from the
payment
of
Customs duties

Within 15 days
from receipt of the
Collectors ruling
Within 30 days
from receipt of the
decision of the
CC.
Within 15 days
from receipt of
CTA decision
Within 15 days
from receipt of CA
decision

Automatic review and supervisory authority of Commissioner and Customs


and Secretary of Finance

If in any case involving the assessment of duties, the Collector renders a


decision adverse to the government; such decision shall automatically be
elevated to, and reviewed, by the Commissioner.
If the Collectors decision would be affirmed by the Commissioner, such decision shall
be automatically elevated to, and finally reviewed, by the Secretary of Finance.
However, if within thirty (30) days form receipt of the record of the case by the
Commissioner or the Secretary of Finance, as the case may be, no decision is
rendered by either or them, the decision under review shall become final and
executory.
Any party aggrieved by either the decision of the Commissioner or the Secretary of
Finance may appeal to the Court of Tax Appeals within thirty (30) days from receipt of
a copy of such decision.
Except as provided above, the supervisory authority of the Secretary of Finance over
the Bureau of Customs does not extend to the administrative review of the ruling of
the Commissioner in matters appealed to the Court of Tax Appeals.

Automatic review is intended to protect the interest of the government in the


collection of taxes and customs duties in seizure and protest cases which,
without such review, neither the Commissioner nor the Secretary of Finance
would probably know about.

Imported articles which may be subject to seizure for violation of tariff and
customs laws may be pursued in their transportation in the Philippines by
land, water, or air, and such jurisdiction exerted over them at any place
therein as may be necessary for the due enforcement of the law.

In Asaali v. Commissioner [27 SCRA 312], the Supreme Court held as


valid the interception and seizure of a vessel on the high seas, saying that
the authority of a nation within its territory is absolute and exclusive. The
Burden of proof in protest cases
power to secure itself form injury may certainly be exercised beyond the
limits of its territory.

In protest cases, the protestant has the burden of proving the correctness of
his contention for the issue is not whether the Collector was wrong but Places where searches and seizures may be conducted
1. Right of police officer to enter enclosure without a warrant, except a dwelling
whether the importer is right.
house
2. Search of dwelling house must be with proper warrant
SEIZURE AND FORFEITURE CASES
3. Right to search vehicles or aircrafts and persons or articles conveyed therein
Nature of seizure and forfeiture proceedings
4. Right to search vehicles, beasts and persons

Proceedings in seizure cases are actions in rem directed against the


5. Search of persons arriving from foreign countries
property seized, against the owner thereof.

Automatic review as a procedural rule applies to both customs cases and


seizure and forfeiture cases incident to smuggling or unlawful importation or
exportation.
Likewise, supervisory authority is exercised by the Commissioner on seizure
and forfeiture cases while the case is still pending in the Office of the
Collector of Customs and before the decision of the Collector becomes final.

Forfeiture proceedings are civil and are not criminal in nature.


Right of police officer to enter enclosure without a warrant
Proof beyond reasonable doubt is not required to warrant forfeiture.

Any person exercising the police powers conferred under said Code may at
A customs seizure and forfeiture case is administrative and civil in nature
any time enter, pass through, or search any land or enclosure or any
and is directed against the res or imported articles and entails a
warehouse, store or other building, not being a dwelling house.
determination of the legality of their importation. [Commissioner of

A warehouse, store or other building or enclosure used for the keeping or


Customs v. Makasiar, GR No. 79307, August 29, 1989]
storage of articles does not become a dwelling house within the meaning

Forfeiture is in the nature of proceedings in rem and is directed against the


hereof by reason of the fact that a person employed as watchman lives in
res. The fact that the owner of the vessel had no actual knowledge that the
the place, nor will the fact that his family stays therein with him alter the
vessel was illegally used does not render the vessel immune from forfeiture.
case.
This is so because forfeiture action is against the vessel itself. [Vierneza v.
Commissioner, 24 SCRA 294]
Search of dwelling house

A dwelling house may be entered and searched only upon warrant issued by
Doctrine of primary jurisdiction over seizure and forfeiture cases
a judge of the court, upon sworn application showing probably cause and
[Rallos v. Gako Doctrine 344 SCRA 178]
particularly describing the place to be searched and person or thing to be

The prevailing doctrine is that the exclusive jurisdiction in seizure and


seized.
forfeiture cases vested in the Collector of Customs precludes a regular court
from assuming cognizance of such matter.
Right to search vessels or aircraft and persons or articles conveyed therein

It is the settled rule that the Bureau of Customs acquires exclusive

It shall be lawful for any official or person exercising police authority under
jurisdiction over imported goods, for the purpose of enforcement of the
the Tariff and Customs Code to go aboard any vessel or aircraft within the
customs laws, from the moment the goods are actually in its possession or
limits of any collection district, and to inspect, search and examine said
control, even if no warrant of seizure or detention had previously been
vessel or aircraft and any trunk, package, box or envelope on board and to
issued by the Collector of Customs in connection with seizure and forfeiture
search any person on board the said vessel or aircraft if under way, to use
proceedings.
all necessary force to compel compliance.

If it shall appear that any breach or violation of the customs and tariff laws of
Jurisdiction of the Bureau of Customs
the Philippines has been committed, whereby or in consequence of which

The Bureau of Customs has the right of supervision and police authority
such vessels or aircraft, or the article, or any part thereof, on board of or
over all seas within the jurisdiction of the Philippines and over all coasts,
imported by such vessels or aircraft is liable to forfeiture to make seizure of
ports, airports, harbors, bays, rivers and inland waters whether navigable
the same or any part thereof.
from the sea or not. [Section 603, Tariff and Customs Code]

The power of search hereinabove given shall extend to the removal of any

When a vessel becomes subject to seizure by reason of an act done in


false bottom, partition, bulkhead or other obstruction, so far as may be
Philippine waters in violation of the tariff and customs laws, a pursuit of such
necessary to enable the officer to discover whether any dutiable of forfeiture
vessel begun within the jurisdictional waters may continue beyond the
articles may be concealed therein.
maritime zone, and the vessel may be seized on the high seas. [Section

No proceeding herein shall give rise to any claim for the damage thereby
603, Tariff and Customs Code]
caused to article or vessel or aircraft.

Decision of the Commissioner of Customs shall be appealed to the Court of


It is not necessary that the vessel or aircraft is actually carrying contraband.
It is not also essential that the vessel or aircraft come from a foreign country. Tax Appeals within thirty (30) days after receipt of the decision. In case of automatic
reviews, the decision of the Secretary of Finance shall be appealed within the same
period after receipt of the decision of the Secretary.
Right to search vehicles, beasts and persons
11. Supervisory authority of Commissioner and of Secretary of Finance in

It shall also be lawful for a person exercising authority as aforesaid to open


certain cases. Automatic review by the Commissioner and Secretary on
and examine any box, trunk, envelope or other container, wherever found
certain cases.
when he has reasonable cause to suspect the presence therein of dutiable
12.
Authority of Commissioner to make compromise
or prohibited article or article introduced in the Philippines contrary to law,
Subject
to
the approval of the Secretary of Finance, the Commissioner of Customs
and likewise to stop, search and examine any vehicle, beast of person
may compromise any case arising under the Code or other laws or part of laws
reasonably suspected of holding or conveying such articles as aforesaid.
enforced by the Bureau of Customs involving the imposition of fines, surcharges and
Search of persons arriving from foreign countries
forfeitures unless otherwise specified by law.

All persons coming into the Philippines from foreign countries shall be liable
to detention and search by the customs authorities under such regulations
Property not subject to forfeiture
as may be prescribed relative thereto.
The forfeiture of the vehicle, vessel, or aircraft shall not be effected if it is established
that the owner thereof or his agent in charge of the means of conveyance used as
Procedure governing seizure and forfeiture cases
aforesaid has no knowledge of or participation in the unlawful act.
1. Warrant for detention of property. Bond.
However, a prima facie presumption shall exist against the vessel, vehicle or aircraft
Upon making any seizure, the Collector shall issue a warrant for the
under any of the following circumstances:
detention of the property; and if the owner or importer desires to secure the release of
1. If the conveyance has been used for smuggling at least twice
the property for legitimate use, the Collector may surrender it upon the filing of a
before;
sufficient bond, in an amount to be fixed by him, conditioned for the payment of the
2. If the owner is not in the business for which the conveyance is
appraised value of the article and/or any fine, expenses and costs which may be
generally used; and
adjudged in the case: Provided that articles the importation of which is prohibited by
3. It the owner is not financially in a position to own such conveyance.
law shall not be released under bond.
Burden of proof in seizure and/or forfeiture
2. Report seizure to Commissioner and Chairman, Commission on Audit
In all proceedings taken for the seizure and/or forfeiture of any vessel, vehicle,
3. Notification to owner or importer
aircraft, beast or articles under the provisions of the tariff and customs laws, the
4. Notification to unknown owner
burden of proof shall lie upon the claimant. Provided that probable cause shall be
5. Description, appraisal and classification of seized property
first shown for the institution of such proceedings and that seizure and/or forfeiture
6. Proceedings in case of property belonging to unknown parties
was property made.
7. Settlement of case by payment of fine or redemption of forfeited property
Subject to approval of the Commissioner, the district collector may, while the
Commissioner of Customs v. Manila Star Ferry GR# L 31776-78
case is still pending, except when there is fraud, accept the settlement of any seizure
It is not a defense that the owner of the vessel sough to be forfeited had no actual
case provided that the owner, importer, exporter, or consignee or his agent shall offer
knowledge that his property was used illegaly
to pay to the collector a fine imposed by him upon the property, or in case of
forfeiture, the owner, exporter, importer or consignee or his agent shall offer to pay
Seizure of other articles
the domestic market value of the seized article. The Commissioner may accept the
The Commissioner of Customs and Collector of Customs and/or any other customs
settlement of any seizure case on appeal in the same manner.
office, with the prior authorization in writing by the Commissioner, may demand
Settlement of any seizure case by payment of the fine or redemption of
evidence of payment of duties and taxes on foreign articles openly offered for sale or
forfeited property shall not be allowed in any case where the importation is absolutely
kept in storage, an dif no such evidence can be produced, such articles may be
prohibited or where the release of the property would be contrary to law.
seized and subjected to forfeiture proceedings.
8. Decision or action by collector in protests and seizure cases
Provided that during such proceedings, the person or entity for whom such articles
9. Review by Commissioner
have been seized shall be given the opportunity to prove or show the source of such
The person aggrieved by the decision or action of the Collector in any matter
articles and the payment of duties and taxes thereon.
presented upon protest or by his action in any case of seizure may, within fifteen (15)
days after notification in writing by the Collector of his action or decision, give written
Redemption of forfeited property
notice to the Collector and one copy furnished to the Commissioner of his desire to

As a means of settlement, redemption of forfeited property is not available


have the matter reviewed by the Commissioner. Thereupon, the Collector shall
when:
forthwith transmit all the records of the proceedings to the Commissioner, who shall
a.
When there is fraud.
approve, modify or reverse the action or decision of the Collector and take such steps
b.
When the importation is absolutely prohibited
and make such orders as may be necessary to give effect to his decision.
c.
When the release of property would be contrary to law.
10. Notice of decision of Commissioner

Extent of Importers liability

The liability of an importer is limited to the value of the imported


merchandise

In case of forfeiture of the seized merchandise, the maximum civil penalty is


the forfeiture itself.