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GUIDE NOTES ON TARIFF AND CUSTOMS LAWS OVERVIEW * The 1978 TCC is a hodgepodge of old and new laws,

continually being amended to adopt to changing political and economic conditions. ** The 1978 TCC is divided into two parts: (1) the Tariff Law [Sections 100-519, 1978 TCC]; and (2) the Customs Law [Sections 601-3705, 1978 TCC]. *** In general, the Tariff Commission is the governing body in relation to the Tariff Law, while the Bureau of Customs implements the Customs Law. TARIFF LAW Q: Discuss the more significant provisions of the Tariff Law. * All articles, when imported from any foreign country into the Philippines, shall be subject to duty upon each importation, even though previously exported from the Philippines, except as otherwise specifically provided for in this Code or in other laws. [Section 100, 1978 TCC] See Section 101 for a list of prohibited importations and Section 105, both of the 1978 TCC, for conditionally-free importations. ** 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 granted by the Bureau of Customs to claimants within sixty (60) days after 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, there would necessarily result a corresponding refund or credit of internal revenue taxes on the same importation, the Collector of Customs shall likewise certify the same to the Commissioner of Customs who shall cause the said refund or tax credit of internal revenue taxes to be paid, refunded or credited in favor of the importer, with advice to the Commissioner of Internal Revenue. *** Section 201 of the 1978 TCC identifies the bases of dutiable value. The methods of determining the dutiable value are as follows (by order of preference): (1) transaction value an ad valorem rate of duty equivalent to the price actually paid or payable for the goods when sold for export to the Philippines, as adjusted; (2) transaction value of identical goods the transaction value of identical goods sold for export to the Philippines and exported at or about the same time as the goods being valued; identical goods shall mean goods which are the same in all respects, including physical characteristics, quality and reputation, discounting minor differences in appearances; (3) transaction value of similar goods the transaction value of similar goods sold for export to the Philippines and exported at or about the same 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 and to be commercially interchangeable; (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 aggregate quantity, at or about the time of importation of the goods being valued, to persons not related to the persons from whom they buy such goods, as adjusted; (5) computed value the aggregate value of the cost or value of materials and fabrication or other processing employed in producing the imported goods, amount for profit and
TAX 2 SYLLABUS DEAN LILY K. GRUBA S/Y 2011-2012

general expenses, freight, insurance fees and other transportation expenses for the importation of the goods, among others; and (6) fallback value an amount determined by using other reasonable means and on the basis of data available in the Philippines. **** Imported articles shall be deemed "entered" in the Philippines for consumption when the specified entry form is properly filed and accepted, together with any related documents required by the provisions of this Code and/or regulations to be filed with such form at the time of entry, at the port or station by the customs official designated to receive such entry papers and any duties, taxes, fees and/or other lawful charges required to be paid at the time of making such entry have been paid or secured to be paid with the customs official designated to receive such monies, provided that the article has previously arrived within the limits of the port of entry. Imported articles shall be deemed "withdrawn" from warehouse in the Philippines for consumption when the specified form is properly filed and accepted, together with any related documents required by any provisions 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 be paid at the time of withdrawal have been deposited with the customs official designated to receive such payment. [Section 205, 1978 TCC] ***** What are the special duties imposable under the 1978 TCC? These are: (1) anti-dumping 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 exporting country which is the difference between the export price and the 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, commodity or article of commerce into the Philippines when the same is granted directly or indirectly by the government 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 the importation of such subsidized product, commodity 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 as determined by the Tariff Commission [Section 302, 1978 TCC]; (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 manner as to indicate to an ultimate purchaser in the Philippines the name 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 [Section 303, 1978 TCC]; and (4) discriminatory duty a special duty that may be imposed by the President of the Philippines when he finds that the public interest will be served thereby, in case a product, commodity or article of commerce is imported in a vessel of any of a foreign country and the President finds as a fact that such country discriminates against the commerce of the Philippines in such manner as to place the commerce of the Philippines at a disadvantage compared with the commerce of any foreign country. Q: What is the flexible clause? * 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, reduce or remove existing protective rates of import duty; (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 exceeding 10% ad valorem whenever necessary.
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** 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 Subic Bay Freeport, of all types of used motor vehicles, subject to certain 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 Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff 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 constitutional provision are: (1) Section 401, 1978 TCC; (2) Articles 4 and 7, 1987 Omnibus Investment Code; and (3) Section 2, 2000 Safeguard Measures Act. The subject proviso was declared valid insofar as it applied to the Philippine territory outside the presently fenced-in former Subic Naval Base and void with respect to its application to the secured fenced-in former Subic Naval Base area. In other words, used motor vehicles that come into the Philippine territory via the secured fenced-in former Subic Naval Base area may be stored, used or traded therein, or exported out of the Philippine territory, but they cannot be imported into the Philippine territory outside of the secured fenced-in former Subic Naval base area. [Executive Secretary v. Southwing Heavy Industries, Inc., GR Nos. 164171, 164172 and 168741, 20 February 2006.] CUSTOMS LAW Cases discussing Customs Law: Sec. 1204, Liability of Importer for Duties. [Pilipinas Shell Petroleum Corporation v. Republic of the Philipines, GR No. 161953, 6 March 2008.] [Intra-Strata Assurance Corporation v. Republic of the Philippines, GR No. 156571, 9 July 2008.] Sec. 1301, Persons Authorized to Make Import Entry. in relation to Sec. 1801, Abandonment, Kinds and Effects of. [Chevron Philippines, Inc. v. Commissioner of Customs, GR No. 178759, 11 August 2008.] Sec. 1603, Finality of Liquidation. [Commissioner of Customs v. Philippine Phosphate Fertilizer Corporation, GR No. 144440, 1 September 2004.] Sec. 1708, Claim for Refund and Mode of Payment. [Nestle Philippines, Inc. v. Court of Appeals, GR No. 134114, 6 July 2001.] Sec. 1801, Abandonment, Kinds and Effects of. in relation to Sec. 1802, Abandonment of Imported Articles. [R.V. Marzan Freight, Inc. v. Court of Appeals, GR No. 128064, 4 March 2004.] Sec. 2301, Warrant for Detention of Property-Cash Bond. [Asian Terminals, Inc. v. Bautista-Ricafort, GR No. 166901, 27 October 2006.] [Commissioner of Customs v. Court of Tax Appeals, GR Nos. 171516-17, 13 February 2009.] Sec. 2308, Protest and Payment under Protest in Civil Matters. in relation to Sec. 2309, Protest Exclusive Remedy in Protestable Case. [Nestle Philippines, Inc. v. Court of Appeals, GR No. 134114, 6 July 2001.] [CJH Development Corporation v. CIR, GR No. 172457, 24 December 2008.]
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Sec. 2402, Review by Court of Tax Appeals. [Pilipinas Shell Petroleum Corporation v. Commissioner of Customs, GR No. 176380, 18 June 2009.] Sec. 2503, Undervaluation, Misclassification and Misdeclaration in Entry. [Secretary of Finance v. Oro Maura Shipping Lines, GR No. 156946, 15 July 2009.] Sec. 2530, Property Subject to Forfeiture under Tariff and Customs Laws. [Republic of the Philippines v. Court of Tax Appeals, GR No. 139050, 2 October 2001.] [El Greco Ship Manning and Management Corporation v. Commissioner of Customs, GR No. 177188, 4 December 2008.] Sec. 3601, Unlawful Importation. [Remigio v. Sandiganbayan, GR Nos. 145422-23, 18 January 2002.] [Rimorin v. People of the Philippines, GR No. 146481, 30 April 2003.] [Salvador v. People of the Philippines, GR No. 146706, 15 July 2005.] [Francisco v. People of the Philippines, GR Nos. 177430 and 178935, 14 July 2009.] Administrative and judicial proceedings in customs seizures and forfeitures A. If owner or importer is aggrieved by decision of Collector of Customs Collector issues warrant for detention of property (if owner or importer desires to secure release of property for legitimate use, Collector may surrender subject property upon filing of sufficient bond)
1

Collector immediately reports seizure to COC and Chairman of COA

Collector gives owner or importer or his agent written notice of seizure and opportunity to be heard

Collector causes preparation of list and particular description of property seized, as well as appraisal and classification of the same

Collector, after hearing and in writing, makes a declaration of forfeiture or fixes amount of fine or takes such action as may be proper

1 Title VI - Administrative and Judicial Proceedings


Part 1 - Search, Seizure and Arrest [Sections 2201-2212] Part 2 Administrative Proceedings [Sections 2301-2317] Part 3 Judicial Proceedings [Sections 2401-2402] Part 4 Surcharges, Fines and Forfeitures [Sections 2501-2533] Part 5 Disposition of Property in Customs Custody [Sections 2601-2611]

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Owner or importer is aggrieved

Appeal to COC

Appeal to CTA Division within 30 days from notice

Appeal to CTA En Banc

Appeal to SC by certiorari within 15 days B. If Government is aggrieved by decision of Collector of Customs Collector issues warrant for detention of property (if owner or importer desires to secure release of property for legitimate use, Collector may surrender subject property upon filing of sufficient bond)

Collector immediately reports seizure to COC and Chairman of COA

Collector gives owner or importer or his agent written notice of seizure and opportunity to be heard

Collector causes preparation of list and particular description of property seized, as well as appraisal and classification of the same

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 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 orders as may be necessary to give effect to his decision.

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Collector, after hearing and in writing, makes a declaration of forfeiture or fixes amount of fine or takes such action as may be proper

Government is aggrieved

Automatic review by COC

Automatic review by DOF Secretary

If owner or importer is aggrieved by decision of COC or DOF Secretary

Appeal to CTA Division within 30 days from notice

Appeal to CTA En Banc

Appeal to SC by certiorari within 15 days

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Procedure for customs protests Collector shall (1) cause all articles entering the jurisdiction of his district and destined for importation through his port to be entered at the customshouse, (2) cause all such articles to be appraised and classified, and (3) assess and collect the duties, taxes and other charges thereon, and hold possession of all imported articles upon which duties, taxes and other charges have not been paid or secured to be paid, disposing of the same according to law.

When a ruling or decision of the Collector is made whereby liability for duties, fees, or other monetary charge is determined, except the fixing of fines in seizure cases, the party adversely affected may protest such ruling or decision by presenting to the Collector, at the time when payment of the amount claimed to be due 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 reasons therefor.

Every protest shall be filed in accordance with the prescribed rules and regulations and shall point out the particular decision or ruling of the Collector to which exception is taken or objection made, and shall indicate with reasonable precision the particular ground or grounds upon which the protesting party bases his claim for relief. The scope of a protest shall be limited to the subject matter of a single adjustment or other independent transaction, but any number of issues may be raised in a protest with reference to the particular item or items constituting the subject matter of the protest.

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