Tariff and Customs Law
10863, in
Tariff and Customs Laws Include:
Provisions of the Customs Modernization and Tariff Act/ CMTA (RA No. 10863) and
regulations issued pursuant thereto;
Other laws and regulations subject to enforcement by Bureau of Customs (BOC) or
otherwise within its jurisdiction (R.A. No. 10863, Sec. 204)
Meaning of Tariff
List or schedule of articles on which a duty is imposed upon importation into the country,
with the rates at which they are severally taxed.
Derivatively, it refers to the system of imposing duties or taxes on importation of foreign
merchandise (Black's Law Dictionary)
Purpose of Imposition
Customs duties are imposed for both revenue-raising and for regulatory purposes (Ingles,
supra at 519)
Levying of customs duties on imported goods may have in some measure the effect of
protecting local industries where such local industries actually exist and are producing
comparable goods (Garcia vs. Executive Secretary, G.R. 101273, July 3,1992)
Chief Officials of Bureau of Customs
Customs Commissioner
At least 4 but not more than 6 Deputy Commissioners
17 District Collectors (R.A. No. 10863, Secs. 200 & 206)
Functions of Bureau of Customs
Assessment and collection of customs revenues from imported goods and other duties,
fees, charges, fines and penalties accruing under CMTA
Simplification and harmonization of customs procedures to facilitate movement of goods in
international trade
Border control to prevent entry of smuggled goods
Prevention and suppression of smuggling and other customs fraud
Exclusive and original jurisdiction to interpret the provisions of R.A. No.
collaboration with other relevant gov't. agencies, subject to review by the Sec. of Finance
Exercise any customs power, duties and functions, directly or indirectly
Review any action or decision of any customs officer performed pursuant to the provisions
of A. No. 10863 Review and decide disputed assessments and other matters related
thereto, subject to review by the Sec. of Finance and exclusive appellate jurisdiction of
CTA
Duties of District Collector
Ensure entry of all imported goods at the customs office
Prevent importation and exportation of prohibited goods
Ensure legal compliance of regulated goods and facilitate the flow of legitimate trade
Examine, classify and value imported goods
Assess and collect duties, taxes and other changes on imported goods
Assessment process of determining amount of D&T and other damages due on imported
and exported goods
Hold and dispose imported goods
Prevent smuggling and other customs fraud
Perform other necessary duties that may be assigned by the Commissioner (R.A. No.
10863, Sec.210)
Persons Exercising Police Authority
Officials of the BOC, District Collectors, Deputy District Collectors, police officers, agents,
inspectors and guards of the BOC
Officers and members of the AFP, when authorized by the Commissioner
Officials of the BIR on all cases falling within the regular performance of their duties, when
payment of internal revenue taxes is involved (R.A. No. 10863, Sec. 214)
Place where Authority may be Exercised
All persons exercising police authority shall only exercise powers within customs premises
and within the limits of the authority granted by the Commissioner (R.A. No. 10863, Sec.
215)
Note: BOC shall for customs purposes have exclusive control, direction and management
of customs offices, facilities, warehouses, ports, airports, wharves, infrastructure and other
premises in the Customs Districts (R.A. No. 10863, Sec. 303)

Authority to Enter Properties
The authority, at any time, to enter, pass through and search any land, enclosure,
warehouse, store, building or structure not principally used as a dwelling house (R.A. No.
10863, Sec. 219)
Authority to Search
Dwelling House - may be entered and searched only upon warrant issued by a Judge of a
competent court, the sworn application showing probable cause and particularly describing
the place to be searched and goods to be seized
Vessels or aircrafts and persons or goods conveyed therein - any person exercising police
authority may board, inspect, - search and examine a vessel or aircraft and any
container,... trunk, package, box or envelope found on board, and physically search and
examine any person (R.A. No. 10863, Sec. 221)
Visitorial Power
The power of the BOC to demand evidence of payments of duties and taxes on imported
products openly for sale or kept in storage.
In case of failure to present evidence within 15 days, the goods may be seized and
subjected to forfeiture proceedings (R.A. No. 10863, Sec. 224)
Jurisdiction of Bureau of Customs
BOC shall have right of supervision and police authority over:
All seas within jurisdiction of the Philippines:
a. Territorial waters-12 nautical miles from the baseline
b. Contiguous zone additional 12 nautical miles beyond the aforesaid 12 nautical mile limit
Exclusive Economic Zone (EEZ) 200 nautical miles from baseline
All coasts, ports, airports, harbors, bays, rivers and inland waters whether navigable or not
from the sea (R.A. No. 10863, Sec. 300)
The exclusive jurisdiction of the Collector of Customs cannot be interfered with by the
regular courts even upon the allegation of ownership (Commissioner of Customs vs. Court
of Appeals, G.R. Nos. 111202-05, Jan. 31, 2006)
Doctrine of Hot Pursuit in Customs Administration
The Bureau shall pursue imported goods subject to seizure during its transport by land,
water and air and shall exercise jurisdiction as may be necessary for the effective
enforcement of CMTA
Note: When a vessel or aircraft becomes subject to seizure, a pursuit of such vessel or
aircraft which began within the territorial waters or air space may continue beyond the
same, and the vessel or aircraft may be seized in the high seas or international air space.
(R.A. Np. 10863, Sec. 300)
Kinds of Goods or Articles
Goods subject to Duty or Dutiable Importations (R.A. No. 10863, Sec. 104)
All goods, when imported into the PH, shall be subject to duty upon importation, including
goods previously exported from the PH, except as otherwise specifically provided for in
R.A. No. 10863 or in other laws
They become dutiable from the entry of the vessel or aircraft into the Philippine jurisdiction
Restricted Importations/ Exportations (R.A. No. 10863, Sec. 119)
Goods whose importation and exportation are prohibited except when authorized by law or
regulation
Note: There is presumption that all goods may be imported into or exported from the PH
without need for import or export permits, clearances or licenses unless otherwise provided
for in laws and regulations (R.A. 10863, Sec. 116)
De Minimis Importations
This pertains to an importation the dutiable value of which does not exceed Php10,000
There will be no duties and taxes that will be collectible by the BOC for de minimis
importations
This threshold value is subject to review by the Finance Secretary every 3 years (Customs
A.O. 02-2016)
Conditionally-Free and Duty-Exempt Importations
Goods which are exempt from payment of import duties upon compliance with the
formalities prescribed in the regulations (R.A. No. 10863, Sec. 800)
Prohibited Importations and Exportations (R.A. No. 10863, Sec. 118)
Written or printed goods in any form including treason, rebellion, sedition or threat to take
life or inflict bodily injury upon any person
Obscene or immoral articles
Any goods manufactured in whole or in part of gold, silver or other precious metals or Certificate of identification
alloys thereof, the stamps, brands or marks of which do not indicate the actual fineness of
quality of said metals or alloys Luxury items are excluded such as watercrafts, animals, aircrafts, etc.

Restricted Importations (R.A. No. 10863, Sec. 119) Balikbayan boxes of OFWs

Except when authorized by law or regulation, the importation and exportation of the ff. OFW Holders of valid passports issued by the DFA and certified by the DOLE or the POEA
restricted goods are prohibited: for overseas employment purposes.

Gambling devices They cover all Filipinos, working in a foreign country under employment contracts,
regardless of their professions, skills or employment status in a foreign country.
Firearms and weapons of war or parts except when authorized by law.
Conditions:
Lottery and sweepstakes tickets, advertisements and lists of by PH Gov't. drawings except
when authorized Shall contain personal and household effects only

Opium pipes and parts of whatever material Not in commercial quantities

Not intended for barter, sale or for hire

Conditionally-Free Importations (R.A. No. 10863, Sec. 800) Limited to FCA value not exceeding 150k

Those granted to gov't. agencies, GOCCS with agreements with foreign countries Can only be availed up to 3 times in a calendar year

Those given to international institutions entitled to exemption by agreement of special laws Excess shall be subject to appropriate duties and taxes

Those that may be granted by the President upon NEDA's recommendation

Those provided in the CMTA in favor of returning residents with respect to their personal Customs Duties
and household effects a. Personal and household effects including luxury items brought
Classification of Customs Duties
out of the PH and returned
I. Regular Duties: Ad Valorem, Specific

II. Special Duties: Anti-dumping duties, Countervailing duties, Marking duties,

Importations
Discriminatory duties, Safeguard measures
Goods brought into the Philippines for repair, processing or reconditioning

Condition:
I. Regular Duties
To be re-exported upon completion of the repair, processing or reconditioning
Taxes imposed or assessed upon merchandise from, or exported to a foreign country for
Re-export bond the purpose of raising revenue

Re-exportation Period (Upon posting of re-export bond)
6 months from acceptance of goods declaration, non-extendible
Personal and household effects belonging to returning residents
They may also be imposed to serve as protective barrier which would prevent entry of
merchandise that would compete with locally manufactured items
They are also referred to as TARIFF BARRIERS

"Returning residents" shall refer to nationals who have stayed in a foreign country for a
period of at least 6 months Ad Valorem Duty

Conditions: Ad Valorem Duty computed based on the value of imported article

Criteria for the Determination of Dutiable Value
Imported goods shall be valued according to the provisions of Sec. 701 of R.A. No. 10863
(i.e. Transaction Value) whenever the conditions prescribed therein are fulfilled
Where customs value cannot be determined under the provisions of Sec. 701, it is to be
determined by proceeding sequentially through the ff. methods under which customs value
can be determined
Methods to Determine Customs Value
Method 1: Transaction Value
Method 2: Transaction Value of Identical Goods
Method 3: Transaction Value of Similar Goods
Method 4: Deductive Value
Method 5: Computed Value
Method 6: Fallback Value
II. Special Duties
Additional import duties imposed on specific kinds of imported articles under certain
conditions
Purpose: For protection of consumers and manufacturers, as well as PH products from
undue competition imposed by foreign made products
Anti-Dumping Duties
R.A. No. 8752 and R.A. No. 10863, Sec. 711
Anti-Dumping Duty - trade remedy measure adopted by gov't. to protect a domestic
industry against unfair trade practice of dumping
Dumping occurs when foreign producers sell products to an importer in the domestic
market at prices lower than in their own national markets, or at prices below cost of
production the sale or importation of which injures or threatens to injure domestic industry
producing like or comparable products or retards establishment of a potential industry
Countervailing Duty
R.A, No. 8751: Primer; R.A. No. 10863, Sec. 713
Countervailing Duty - special duty is imposed whenever any article of commerce is granted
directly or indirectly by the gov't. in the country of origin or exportation, any kind or form of
specific subsidy upon the production, manufacture or exportation of such product,
commodity or article and importation of such subsidized product or article has caused or
threatens to cause material injury to a domestic industry or has materially retarded the
growth or prevents the establishment of a domestic industry
Marking Duty
R.A. No. 10863, Sec. 710
Definition: Additional customs duties imposed on foreign. articles (or its container if the
article itself cannot be marked) not marked in any official language of the Philippines and in
a conspicuous place as legibly, indelibly and permanently in such manner as to indicate to
an ultimate purchaser in the Philippines the name of country of origin of the article
Purpose: To prevent deception of the consumers
Amount of Duty: 5% ad valorem of the articles which shall be deemed to have accrued at
the time of importation (R.A. No. 10863, Sec. 710 (c))
Failure or refusal of the owner or importer to mark the articles as herein required within a
period of 30 days after due notice shall constitute as an act of abandonment of said articles
(R.A. No. 10863, Sec. 710 (e))
Imposing Authority – Commissioner of Customs
Discriminatory Duty R.A. No. 10863, Sec. 714
Definition: Duty imposed upon articles of a foreign country which discriminates against PH
commerce in such a manner to place it at a disadvantage compared with the commerce of
another foreign country
Discriminatory duty is imposed whenever the President shall find as a fact that such
country:
Imposes directly or indirectly, upon any PH product unreasonable charge, exaction,
regulation or limitation which is not equally enforced upon like articles of other foreign
countries
Safeguard Duty
R.A. No. 8800, R.A. No. 8800 Primer and 10863, Sec. 712)
Safeguard measures - trade remedy measures adopted by the gov't. to provide affected
domestic industries relief against imports
General safeguard measures imposed against importations of agricultural products whose c. The report of the Commission shall be submitted to NEDA within 30 days after the
quantitative import restrictions were converted (tariffied) into ordinary customs duties and... termination of the public hearing (R.A. No. 10863, Sec. 1608 (b))

agricultural products designated with the symbol "SSG" in the GATT Schedule of Exception: Recommendation of NEDA is not required in the imposition of additional duty
Concessions not exceeding 10% ad valorem

Purpose of Imposition - the purpose for the application of safeguard measures is to give
the affected domestic industry time to prepare itself for and adjust to increased import
competition resulting from the reduction of tariffs or the lifting of quantitative restrictions Effectivity of Order Issued by the President
agreed upon in multilateral trade negotiations
1. For an increase, reduction or removal of existing protective rates and the imposition of
Imposing Authority: import quotas or ban days after promulgation; and

a Secretary of Trade and Industry-non-agricultural product 2. Imposition of additional duty not exceeding 10% ad valorem - at the discretion of the
President (R.A. No. 10863, Sec. 1608 (c))
b. Secretary of Agriculture-agricultural product
Preferential Tariff

Definition: The practice of imposing lower tariffs on certain goods or products usually by
Flexible Clause means if regional, bilateral or multilateral trade agreements

Basis-the Congress may, by law, authorize the President to fix within specified limits, and Rationale: To address the problem of inefficiency in the local manufacturing sector and the
subject to such limitations and restrictions as it may impose, tariff rates, import and export impediment of the free flow of goods, which are caused by the imposition of tariff barriers
quotas, tonnage and wharfage dues, and other duties or imposts within the framework of to imported articles
the national dev't. program of the gov't. (CONST. Art. VI, Sec. 28, Par (2))

Under the Flexible Clause, the President is empowered to:

Tariff Barrier
1. Increase, reduce or remove existing protective rates of import duties including the
necessary changes in the classification Definition: Imposition of high customs duties which results in making foreign goods more
expensive than local goods
Condition: The increased rate shall not exceed 10% ad valorem
Rationale: To protect the Philippine manufacturers from competition posed by foreign
2. Establish import quota or ban import of any commodity whenever necessary; and manufacturers
Impose

3. Impose additional duty on all imports, whenever necessary (R.A. No. 10863, Sec. 1608
(a)) Dutiable Value

Condition: Additional duty shall not exceed 10% ad valorem The proper valuation of imported goods upon which the appropriate customs duty is
imposed

Transaction Value System (R.A. No. 10863, Sec. 701)

Requisites for the Exercise of the Power
Transaction value uses the price actually paid or payable for the goods when sold for
In the interest of general welfare and national security export to the Philippines at arm's length transaction including the ff.:

Recommendations of NEDA 1. To the extent incurred by the buyer but not included in price actually paid:

a. Before submission of the recommendation of NEDA, the Tariff Commission shall a. Commission and brokerage fees
conduct an investigation
b. Cost of container
b. Public hearing by the Tariff Commission shall be held, wherein interested parties shall
be afforded reasonable opportunity to be present, produce evidence and be heard c. Cost of packing

d. Assists
e. Royalties and License fees 4. Person duly empowered to act as agent or attorney-in-fact for each holder

2. Value of the proceeds of any subsequent resale, disposal or use of the imported goods
that accrues directly or indirectly to the seller
Owner of Imported Articles
3. Transportation cost
1. Consignee
4. Loading, unloading and handling changes; and
2. Holder of the bill of lading duly endorsed by the consignee named therein
5. Cost of insurance
3. Holder of the bill of lading, if consigned to order, endorsed by the consignor

4. Underwriters of abandoned articles

Importation in General
5. Salvors (R.A. No. 10863, Sec. 404)
Importation
Requirement to Issue Proof of Payment upon payment of duties, taxes and other charges,
Refers to the act of bringing in goods from foreign territory into Philippine territory, whether the Bureau shall issue the necessary receipt or document as proof of such payment (R.A.
for consumption, warehousing or admission (R.A. No. 10863, Sec. 102 (z)) No. 10863, Sec. 104)

It begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with
the intention to unload therein (R.A. No. 10863, Sec. 103)
Entry at Customhouse
"Intent" being a state of mind can be inferred from facts and therefore can only be proved
by unguarded, expressions, conduct and circumstances generally (Feeder Int'l Line vs. All articles imported into the PH, whether subject to duty or not, shall be entered through a
Court of Appeals, G.R. No. 94262, May 31, 1991) customhouse at a port of entry (R.A. No. 10863, Sec. 400)

When Importation is Deemed Terminated: "Entry at Customhouse" means:

1. In case of dutiable goods upon payment of duties, taxes, and other charges due upon 1. The documents filed at the customhouse
articles or secured to be paid at a port of entry, and legal permit for withdrawal shall have
2. The submission and acceptance of the documents
been granted or
3. The procedure of passing goods through the customhouse (Chevron PHL Inc. vs.
2. In case of duty free goods until they have legally left the jurisdiction of the BOC (R.A.
Commissioner of Customs, G.R. No. 178759, Aug. 11, 2008)
No. 10863, Sec. 103)

Note: Tariff and Customs laws are applied only after importation has begun before it is
terminated.
As long as importation has not been terminated, imported goods remain under the
jurisdiction of BOC (Papa vs. Mago, G.R. No. L-27360, Feb. 28, 1968)
Persons Who May Act as Declarant
Declarant may be a consignee or a person who has the right to dispose of the goods
The declarant shall lodge a goods declaration with the Bureau and may be:
1. Importer, being the holder of the bill of lading
2. Exporter, being the owner of the goods to be shipped out;
3. Customs broker acting under the authority of the importer or from a holder of the bill; or
Port of Entry
Domestic port open to foreign and coastwise trade. The term includes:
1. Principal Port of Entry-chief port of entry or collection district wherein it is situated and is
the permanent station of the Collector of such port
2. Sub-ports of Entry- under the administrative jurisdiction of the Collector of the principal
port of entry of the district (R.A. No. 10863, Sec. 210)
Note: Whenever the term "port of entry" is used, it shall include "airport of entry" (R.A. No.
10863, Sec. 102 (hh))
Important Clearance and Formalities
Obligations of the Importer
a. Preparation of the cargo manifest
b. Preparation of import entry Informal Entry - the ff. goods shall be cleared through an informal entry process:

c. Declaration of correct weight or value 1. Goods of a commercial nature with Free on Board (FOB) or Free Carrier At (FCA) less
than Php50,000
d. Payment of duties
2. Personal and household effects or goods, not in commercial quantity, imported in
e. Keeping of records passenger's baggage, or mail (R.A. No. 10863, Sec. 402)

a. Cargo Manifest d. Liability for Payment of Duties

Document used in shipping, containing a list of contents, value, origin, carrier and
destination of goods to be shipped
Refers to a written document required to be carried by merchant vessels, containing an
account of the cargo, with other particulars for the facility of the customs officers Black's
Law Dictionary)
It constitutes as a personal debt due from the importer to the gov't, which can be
discharged only by payment in full of all duties, taxes, fees and other charges legally
accruing
It constitutes as a lien upon the articles imported which may be enforced while such
articles are in custody subject to the control of the gov't. (R.A. No. 10863, Sec. 405)

b. Import Entry Assessment and Payment of Duties and Taxes

Declaration to the BOC showing particulars of the imported articles that will enable Assessment refers to the process of determining the amount of duties and taxes and other
customs authorities to determine correct duties and internal revenue taxes due on charges due on imported and exported goods (R.A. No. 10863, Sec. 102 (f))
importation

Known as Import Entry and Internal Revenue Declaration (IERD)

When Assessment Deemed Tentative

c. Goods Declaration
Statement made in the manner prescribed by the Bureau and other appropriate agencies,
by which persons concerned indicate the procedure to be observed in the application for
the entry or admission of imported goods and the particulars of which the customs
administration shall require (R.A. No. 10863, Sec. 102(y))
Assessment shall be deemed tentative if the duties and taxes initially assessed are
disputed by the importer
Note: Assessment shall be completed upon final readjustment based on the tariff ruling in
case of classification dispute, or the final resolution of the protest case involving valuation,
rules of origin, and other customs issues (R.A. No. 10863, Sec. 425)

Surcharge for Failure to Pay

Kinds of Import Entry
For failure to pay duties and taxes of an assessment within 15 days from the date of final
Formal and Informal Entry assessment, a surcharge of 10% of the total assessment amount or balance thereof shall
be added and collected, which surcharge shall increase to 25% if the delinquency shall
Formal Entry - all goods declaration for consumption shall be cleared through a formal
lasts for more than 1 year (R.A. No. 10863, Sec. 1425)
entry process (R.A. No. 10863, Sec. 402)

Note: All importations entered through a formal entry process shall be covered:
Surcharge for Failure to Pay
1. When there is sale - a letter of credit or any verifiable commercial document evidencing
payment For failure to pay duties and taxes of an assessment within 15 days from the date of final
assessment, a surcharge of 10% of the total assessment amount or balance thereof shall
2. When there is no sale for export any commercial document indicating the commercial
be added and collected, which surcharge shall increase to 25% if the delinquency shall
value of the goods (R.A. No. 10863, Sec. 402)
lasts for more than 1 year (R.A. No. 10863, Sec. 1425)
e. Keeping of Records
All importers are required to keep relevant importation documents, at their principal place
of business for a period of 3 years from the date of final payment of duties and taxes or
customs clearance, as the case may be.
Technical Smuggling act of importing goods into the country by means of fraudulent,
falsified or erroneous declaration of goods to its nature, kind, quality, quantity or weight to
reduce or avoid payment of prescribed taxes, duties and other charges (R.A. No. 10863,
Sec. 102 (nn))

Economic zone locators are likewise required to keep records of imported goods
withdrawn from the zones and brought into the customs territory (R.A. No. 10863, Sec.
1003)
Types of Technical Smuggling (R.A. No. 10863, Sec. 1400)
1. Misdeclaration is committed when the discrepancy pertains to quantity, quality,
description, weight or measurement of imported goods

Crimes and Other Offenses 2. Misclassification exists when insufficient or wrong description of the goods or use of
wrong tariff heading was declared resulting in a discrepancy
Smuggling
3. Undervaluation is committed when:
Act of any person who shall:
Declared value fails to close full the price actually paid or payable or any dutiable
1. Fraudulently import or export or bring into or outside of the Philippines any goods adjustment to the price
contrary to law
Incorrect valuation method is used
2. Assists in so doing
Valuation rules are not properly observed
3. Receive, conceal, buy, sell or in any manner facilitate the transportation, concealment or
sale of such goods after importation

4. Commit technical smuggling (R.A. No. 10863, Sec. 1401) Contraband

Goods of prohibited importations or exportations (R.A. No. 10863, Sec. 1401)

Elements of Smuggling It may also refer to articles imported or exported in violation of tariff and customs laws

Merchandise must have been fraudulently of knowingly imported contrary to law Contraband is also known as "smuggled goods"

The Defendant, if, if he is not the importer himself, must have received, concealed, bought Evidence for Conviction in Smuggling Cases
sold or in any manner facilitated the transportation, concealment or sale of the
merchandise Mere possession of the article in question, unless defendant could explain that his
possession is lawful to the satisfaction of the court. (R.A. No. 10863, Sec. 3601)
The Defendant must be shown to have knowledge that the merchandise had been illegally
imported

Outright Smuggling Things Subject to Confiscation in Smuggling Cases:

Act of any person who shall import goods into the country: Any article which is removed contrary to law from any public or private warehouse under
customs supervision or released irregularly from customs custody (Carrara Marble PHL,
1 Without complete customs prescribed importation documents Inc. vs. Commissioner of Customs, G.R. No. 129680, Sept. 01, 1999)

2. Without being cleared by customs or other regulatory gov't. agencies (R.A. No. 10863, Anything that was used for smuggling is subject to confiscation, like the vessel, plane, etc.
Sec. 102 (ff)) (Llamado vs. Commissioner of Customs, G.R. No. L-28809, May 16, 1983)

Purpose of Outright Smuggling to evade payment of prescribed taxes, duties and other Common carriers that are not privately chartered cannot be confiscated (R.A. No. 10863,
gov't. charges (R.A. No. 10863, Sec. 102 (ff)) Sec. 1113(k)

Technical Smuggling