CUSTOMS OUTLINE

g. The admeasurement, registration, documenting and

licensing of vessels built or owned in the Philippines, the
TARIFF AND CUSTOMS CODE OF THE PHILIPPINES recording of sales, transfers and encumbrances of such
vessels, and the performance of all the duties pertaining to
marine registry.
1. POWERS AND JURISDICTION OF CUSTOMS
h. The inspection of Philippine vessels, and supervision over
the safety and sanitation of such vessels.
Section 601. Chief Officials of Bureau of Customs. The Bureau
of Customs shall have one chief and one assistant chief, to be
i. The enforcement of the lawful quarantine regulations for
known respectively at the Commissioner (hereinafter known as the
vessels entering Philippine ports.
"Commissioner") and Assistant Commissioner of Customs, who
shall each receive an annual compensation in accordance with the rates
j. The enforcement of the tariff and customs laws and all
prescribed by existing laws. The Assistant Commissioner of
other laws, rules and regulations relating to the tariff and
Customs shall be appointed by the proper department head.
customs administration.
Sec. 602. Functions of the Bureau. The general duties, powers
k. The licensing of marine officers who have qualified in the
and jurisdiction of the bureau shall include:
examination required by law to be carried on Philippine
vessels, the determination of the qualifications of pilots,
a. The assessment and collection of the lawful revenues
the regulation of this service, and the fixing of the fees which
from imported articles and all other dues, fees, charges,
they may charge.
fines and penalties accruing under the tariff and customs
laws.
l. The supervision and control over the handling of foreign
mails arriving in the Philippines, for the purpose of the
b. The prevention and suppression of smuggling and other
collection of the lawful duty on dutiable articles thus imported
frauds upon the customs.
and the prevention of smuggling through the medium of such
mails.
c. The supervision and control over the entrance and
clearance of vessels and aircraft engaged in foreign
Sec. 603. Territorial Jurisdiction. For the due and effective
commerce.
exercise of the powers conferred by law and to the extent requisite
therefor, said bureau shall have the right of supervision and
d. The general supervision, control and regulation of vessels
police authority over all seas within the jurisdiction of the
engaged in the carrying of passengers and freight or in
Philippines and over all coasts, ports, airports, harbors, bays,
towage in coastwise trade and in the bays and rivers of the
rivers and inland waters navigable from the sea.
Philippines.
When a vessel becomes subject to seizure by reason of an act
e. The prohibition and suppression of unnecessary noises,
done in Philippine waters in violation of the tariff and customs
such as explosion of gasoline engines, the excessive
laws, a pursuit of such vessel begun within the jurisdictional waters
blowing of whistles or sirens, and other needless and
may continue beyond the maritime zone, and the vessel may be
disturbing sounds made by water craft in the ports of the
seized on the high sea. Imported articles which may be subject to
Philippines or in parts of rivers included in such ports.
seizure for violation of the tariff and customs laws may be pursued in
their transportation in the Philippines by land, water or air and such
f. The exclusion, if the conditions of traffic should at any
jurisdiction exerted over it at any place therein as may be necessary for
time so require, of vessels of more than one hundred and
the due enforcement of the law.
fifty tons from entering, berthing or mooring in the Pasig
River.
Sec. 604. Jurisdiction over Premises Used for Customs
Purposes. The Bureau of Customs shall, for customs purposes,
have exclusive control, direction and management of custom-
houses, warehouses, offices, wharves, and other premises in
the respective ports of entry, in all cases without prejudice to
the general police powers of the city or municipality wherein
such premises are situated.
Sec. 605. Enforcement of Port Regulation of Bureau of
Quarantine. Customs officials and employees shall cooperate with
the quarantine authorities in the enforcement of the port quarantine
regulations promulgated by the Bureau of Quarantine and shall give
effect to the same in so far as they are connected with matters of
shipping and navigation.
Sec. 606. Power of the President to Subject Premises to
Jurisdiction of Bureau of Customs. When any public wharf,
landing place, street or land, not previously under the jurisdiction of the
Bureau of Customs, in any port of entry, is necessary or desirable for
any proper customs purpose, the President of the Philippines may, by
executive order, declare such premises to be under the jurisdiction of
the Bureau of Customs, and thereafter the authority of such Bureau in
respect thereto shall be fully effective.
Sec. 607. Annual Report of Commissioner. The annual report of
the Commissioner shall, among other things, contain a compilation
of the (a) volume and value of articles imported into the
Philippines and the corresponding customs duties assessed and
collected thereon itemized in accordance with the tariff classification
provided in this Code and (b) volume and value of articles
exported from the Philippines for the preceding year.
Sec. 608. Commissioner to Make Rules and Regulations. The
Commissioner shall, subject to the approval of the department
head, make all rules and regulations necessary to enforce the
provisions of this Code.
Sec. 2208. Right of Police Officer to Enter Inclosure. For the
more effective discharge of his official duties, any person exercising the
powers herein conferred, may at anytime enter, pass through, or
search any land or inclosure or any warehouse, store or other
building, not being a dwelling house.
A warehouse, store or other building or inclosure used for the keeping
of storage of articles does not become a dwelling house within the
meaning hereof merely by reason of the fact that a person employed
as watchman lives in the place, nor will the fact that his family stays
there with him alter the case.
Sec. 2209. Search of Dwelling House. A dwelling house may
be entered and searched only upon warrant issued by a judge or
justice of the peace, upon sworn application showing probable case
and particularly describing the place to be searched and person
or thing to be seized.
Sec. 2210. Right to Search Vessels or Aircrafts and Persons or
Articles Conveyed Therein. It shall be lawful for any official or
person exercising police authority under the provisions of this Code to
go abroad any vessel or aircraft within the limits of any collection to go
aboard any vessel or aircraft within the limits of any collection district,
and to inspect, search and examine said vessel or aircraft and any
trunk, package, box or envelope on board, and to search any person
on board the said vessel or aircraft and to this end to hail and stop
such vessel or aircraft if under way, to use all necessary force to
compel compliance; and if it shall appear that any breach or
violation of the customs and tariff laws of the Philippines has been
committed, whereby or in consequence of which such vessels or
aircrafts, or the article, or any part thereof, on board of or imported by
such vessel or aircraft, is liable to forfeiture, to make seizure of
the same or any part thereof.
The power of search hereinabove given shall extend to the
removal of any false bottom, partition, bulkhead or other
obstruction, so far as may be necessary to enable the officer to
discover whether any dutiable or forfeitable articles may be
concealed therein.
No proceeding herein shall give rise to any claim for the damage
thereby caused to article or vessel or aircraft.
Sec. 2211. Right to Search Vehicles, Beasts and Persons. It
shall also be lawful for a person exercising authority as aforesaid
to open and examine any box, trunk, envelope or other
container, wherever found where he has reasonable cause to
suspect the presence therein of dutiable or prohibited article or
articles introduced into the Philippines contrary to law, and likewise to
stop, search and examine any vehicle, beast or person reasonably
suspected of holding or conveying such article as aforesaid.
Sec. 2212. Search of Persons Arriving From Foreign Countries.
All persons coming into the Philippines from foreign countries shall
be liable to detention and search by the customs authorities
under such regulations as may be prescribed relative thereto.

Female inspectors may be employed for the examination and search of
persons of their own sex.
CASES:
JAO VS. CA
FACTS:
The Office of the Director, Enforcement and Security Services (ESS),
Bureau of Customs, received information regarding the presence of
untaxed vehicles and parts in the premises owned by Pat Hao located
along Quirino Avenue, Paranaque and Honduras St., Makati.
After conducting a surveillance of the two places, respondent Major
Jaime Maglipon, Chief of Operations and Intelligence of the ESS,
recommended the issuance of warrants of seizure and detention.
District Collector of Customs Titus Villanueva issued the warrants of
seizure and detention.
Maglipon coordinated with the local police to assist in the execution of
the respective warrants of seizure and detention. The team searched
the two premises.
They were barred from entering the place, but some members of the
team were able to force themselves inside and were able to inspect the
premises and noted that some articles were present which were not
included in the list contained in the warrant.
Amended warrants of seizure and detention were subsequently issued
by Villanueva.
Consequently customs personnel started hauling the articles pursuant
to the amended warrants.
Narciso Jao and Bernardo Empeynado filed a case for Injunction and
Damages with prayer for Restraining Order and Preliminary Injunction
before RTC Makati Branch 56on August 27, 1990 against respondents.
On the same date, the trial court issued a Temporary Restraining
Order. Respondents filed a Motion to Dismiss on the ground that RTC
has no jurisdiction over the subject matter, claiming that it was the
Bureau of Customs that had exclusive jurisdiction over it. RTC denied
motion to dismiss. Respondents filed MFR . MFR was denied.CA set
aside the questioned orders of the trial court and enjoined it from
further proceeding with the Case. The appellate court also dismissed
the said civil case.
ISSUE:
WON the RTC has jurisdiction over cases questioning the
validity of seizure and forfeiture proceedings conducted by the
Bureau of Customs
HELD: NO.
The RTC is devoid of any competence to pass upon the validity
or regularity of seizure and forfeiture proceedings conducted by
the Bureau of Customs and to enjoin or otherwise interfere with
these proceedings .
The Collector of Customs sitting in seizure and forfeiture
proceedings has exclusive jurisdiction to hear and determine all
questions touching on the seizure and forfeiture of dutiable
goods. The Regional Trial Courts are precluded from assuming
cognizance over such matters even through petitions of
certiorari, prohibition or mandamus.
It is likewise well-settled that the provisions of the Tariff and Customs
Code and RA1125 "An Act Creating the Court of Tax Appeals," specify
the proper for a and procedure for the ventilation of any legal
objections or issues raised concerning these proceedings.
Actions of the Collector of Customs are appealable to the
Commissioner of Customs, whose decision, in turn, is subject to
the exclusive appellate jurisdiction of the Court of Tax Appeals
and from there to the Court of Appeals.
The rule that Regional Trial Courts have no review powers over such
proceedings is anchored upon the policy of placing no unnecessary
hindrance on the government's drive, not only to prevent smuggling
and other frauds upon Customs, but more importantly, to render
effective and efficient the collection of import and export duties due the
State, which enables the government to carry out the functions it has
been instituted to perform.
The illegality of a seizure by the Collector of Customs does not deprive
the Bureau of Customs of jurisdiction thereon. The allegations of
petitioners regarding the propriety of the seizure should properly be
ventilated before the Collector of Customs. We have had occasion to
declare:
The Collector of Customs when sitting in forfeiture proceedings
constitutes a tribunal expressly vested by law with jurisdiction to hear
and determine the subject matter of such proceedings without any
interference from the Court of First Instance.
(AuyongHian v. Court of Tax Appeals, et al., 19 SCRA 10
REPUBLIC VS. BOCAR
FACTS:
VIERNEZA VS. COMMISSIONER OF CUSTOMS
FACTS:
ENRILE VS. VINUYA
FACTS:
- The then Collector of Customs of the Port of Manila issued a warrant
of seizure and detention against the Cadillac car involved in this case,
the owner-claimant being a certain Rodolfo Ceza, as the taxes and
duties had not been paid.
lh /CITE> The warr
- It was moreover shown in the petition that the owner, Rodolfo Ceza,
had sold such car to one Francisco Dee from whom respondent Vinuya
acquired the same.
- Vinuya filed a complaint for replevin in the sala of respondent Judge
on the ground of alleged illegality of the seizure which, in the opinion of
respondents, did not confer jurisdiction on the Collector of Customs.
- Petitioners filed a motion to dismiss on the ground that forfeiture
proceedings had already been instituted before the Collector of
Customs who has the sole jurisdiction to determine questions affecting
the disposition of property under seizure as well as the absence of a
cause of action. This was denied for lack of merit. Thus this petition.
ISSUE
WON the court of first instance is vested with jurisdiction to
entertain a complaint for replevin for the recovery of a Cadillac
car, subject of a seizure and forfeiture proceeding in the Bureau
of Customs
HELD NO.
The prevailing doctrine is that the exclusive jurisdiction in seizure and
forfeiture cases vested in the Collector of Customs precludes a court of
first instance from assuming cognizance over such a matter. This
has been so, as noted, since Pacis v. Averia.
Reasoning
a. The existence of the power and the regularity of the proceeding
taken under it are distinct from each other.
The governmental agency concerned, the Bureau of Customs, is vested
with exclusive authority. Even if it be assumed that in the exercise of
such exclusive competence a taint of illegality may be correctly
imputed, the most that can be said is that under certain circumstances
the grave abuse of discretion conferred may oust it of such jurisdiction.
It does not mean however that correspondingly a court of first instance
is vested with competence when clearly in the light of the above
decisions the law has not seen fit to do so.
b. "the Court of First Instance should yield to the jurisdiction of the
Collector of Customs. The jurisdiction of the Collector of Customs is
provided for in Republic Act 1937i which took effect on July 1, 1957,
much later than the Judiciary Act of 1948ii. It is axiomatic that a later
law prevails over a prior statute.
c. Moreover, on grounds of public policy, it is more reasonable to
conclude that the legislators intended to divest the Court of First
Instance of the prerogative to replevin a property which is a subject of
a seizure and forfeiture proceedings for violation of the Tariff and
Customs Code. Otherwise, actions for forfeiture of property for violation
of Customs laws could easily be undermined by the simple devise of
replevin."
d. Section 2303 of the Tariff and Customs Code requires the Collector
of Customs to give to the owner of the property sought to be forfeited
written notice of the seizure and to give him the opportunity to be
heard in his defense. This provision clearly indicates the intention of the
law to confine in the Bureau of Customs the determination of all
questions affecting the disposal of property proceeded against in a
seizure and forfeiture case. The judicial recourse of the property owner
is not in the Court of First Instance but in the Court of Tax Appeals, and
only after exhausting administrative remedies in the Bureau of
Customs."
e Collector of Customs is not final. An appeal lies to the
DISPOSITION
The writ of certiorari prayed for is granted, respondent Judge being
clearly without jurisdiction.
PAPA VS. MAGO
FACTS:
In a recent decision of this Court, Papa v. Mago, where the seizure of
alleged smuggled goods was effected by a police officer without a
search warrant, this Court, through Justice Zaldivar, stated: "Petitioner
Martin Alagao and his companion policemen had authority to effect the
seizure without any search warrant issued by a component court. The
Tariff and Customs Code does not require said warrant in the instant
case. The Code authorizes persons having police authority under
Section 2203 of the Tariff and Customs Code to enter, pass through or
search any land, inclosure, warehouse, store or building, not being a
dwelling house and also to inspect, search and examine any vessel or
aircraft and any trunk, package, box or envelope or any person on
board, or stop and search and examine any vehicle, beast or person
suspected of holding or conveying any dutiable or prohibited article
introduced into the Philippines contrary to law, without mentioning the
need of a search warrant in said cases. But in the search of a dwelling
house, the Code provides that said "dwelling house may be entered and
searched only upon warrant issued by a judge or justice of the peace ...
." It is our considered view, therefore, that except in the case of the
search of a dwelling house, persons exercising police authority under
the customs law may effect search and seizure without a search
warrant in the enforcement of customs laws."
COMCUS VS. CA
FACTS:
2. ADMINISTRATIVE PROCEEDINGS
Sec. 2301. Warrant for Detention of Property Bond. Upon
making any seizure, the Collector shall issue a warrant for the
detention of the property; and if the owner or importer desires to
secure the release of the property for legitimate use, the Collector may
surrender it upon the filing of a sufficient bond, in an amount to be
fixed by him, conditioned for the payment of the appraised value of the
article and/or any fine, expenses and costs which may be adjudged in
the case: Provided, That articles the importation of which is
prohibited by law shall not be released under bond.
Sec. 2302. Report of Seizure To Commissioner and Auditor.
When a seizure is made for any cause, the Collector of the district
wherein the seizure is effected shall immediately make report thereof
to the Commissioner and to the Auditor General.
Sec. 2303. Notification to Owner or Importer. The Collector
shall give the owner or importer of the property or his agent a written
notice of the seizure and shall give him an opportunity to be heard in
reference to the delinquency which was the occasion of such seizure.
For the purpose of giving such notice and of all other proceedings in the
matter of such seizure, the importer, consignee or person holding the
bill of lading shall be deemed to be the "owner" of the article included
in the bill.
For the same purpose, "agent" shall be deemed to include not only any
agent in fact of the owner of the seized property but also any person
having responsible possession of the property at the (missing) of the
seizure, if the owner or his agent in fact is unknown or cannot be
reached.
Sec. 2304. Notification to Unknown Owner. Notice to an
unknown owner shall be effected by posting a notice for fifteen days in
the public corridor of the customhouse of the district in which the
seizure was made, and, in the discretion of the Commissioner, by
publication in a newspaper or by such other means as he shall consider
desirable.
Sec. 2305. Description and Appraisal and Classification of Seized
Property. The Collector shall also cause a list and particular
description of the property seized to be prepared and an appraisement
or classification of the same at its wholesale value in the local market in
the usual wholesale quantities to be made by at least two appraising
officials, if there are such officials at or near the place of seizure; in the
absence of such officials, then by two competent and disinterested
citizens of the Philippines, to be selected by him for that purpose,
residing at or near the place of seizure, which list and appraisement
shall be properly attested to by such Collector and the persons making
the appraisal.
Sec. 2306. Proceedings in Case of Property Belonging to
Unknown Parties. If, within fifteen days after the notification
prescribed in section twenty-three hundred and four of this Code, no
owner or agent can be found or appears before the Collector, the latter
shall declare the property forfeited to the government to be sold at
auction in accordance with law.
Sec. 2307. Settlement of Case by Payment of Fine or
Redemption of Forfeited Property. If, in any seizure case, the
owner or agent shall, while the case is yet before the Collector of the
district of seizure, pay to such Collector the fine imposed by him or, in
case of forfeiture, shall pay the appraised value of the property, or, if
after appeal of the case, he shall pay to the Commissioner the amount
of the fine as finally determined by him, or, in case of forfeiture, shall
pay the appraised value of the property, such property shall be
forthwith surrendered, and all liability which may or might attach to the
property by virtue of the offense which was the occasion of the seizure
and all liability which might have been incurred under any bond given
by the owner or agent in respect to such property shall thereupon be
deemed to be discharged.
Redemption of forfeited property shall not be allowed in any case where
the importation is absolutely prohibited or where the surrender of the
property to the person offering to redeem the same would be contrary
to law.
Sec. 2308. Protest and Payment upon Protest in Civil Matters.
When a ruling or decision of the Collector is made whereby liability for
duties, fees, or other money 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 thirty days thereafter, a written protest setting
forth his objections to the ruling or decision in question, together with
the reasons therefor. No protest shall be considered unless payment of
the amount due after final liquidation has first been made.
Sec. 2309. Protest Exclusive Remedy in Protestable Case. In
all cases subject to protest, the interested party who desires to have
the action of the Collector reviewed, shall make a protest, otherwise,
the action of the Collector shall be final and conclusive against
him, except as to matters correctible for manifest error in the manner
prescribed in section one thousand seven hundred and seven hereof.
Sec. 2310. Form and Scope of Protest. Every protest shall be
filed in accordance with the prescribed rules and regulations
promulgated under this section and shall point out the particular
decision or ruling of the Collector to which exception is taken or
objection made, and shall indicate with reasonable precision the
particular ground or grounds upon which the protesting party bases his
claim for relief.
The scope of a protest shall be limited to the subject matter of a single
adjustment or other independent transaction; but any number of
issue may be raised in a protest with reference to the particular
item or items constituting the subject matter of the protest.
"Single adjustment", as hereinabove used, refers to the entire content
of one liquidation, including all duties, fees, surcharges or fines incident
thereto.
Sec. 2311. Samples to be Furnished by Protesting Parties. If
the nature of the articles permit, importers filing protests involving
questions of fact must, upon demand, supply the Collector with
samples of the articles which are the subject matter of the protests.
Such samples shall be verified by the custom official who made the
classification against which the protest are filed.
Sec. 2312. Decision or Action by Collector in Protest and Seizure
Cases. When a protest in proper form is presented in a case where
protest in required, the Collector shall reexamine the matter thus
presented, and if the protest is sustained, in whole or in part, he shall
enter the appropriate order, the entry reliquidated if necessary.
In seizure cases, the Collector, after a hearing, shall in writing make a
declaration of forfeiture or fix the amount of the fine or take such other
action as may be proper.
Sec. 2313. Review by Commissioner. 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 fifteen 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 the 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.
Sec. 2314. Notice of Decision of Commissioner. Notice of the
decision of the Commissioner shall be given to the party by whom the
case was brought before him for review, and in seizure cases such
notice shall be effected by personal service if practicable.
Sec. 2315. Supervisory Authority of Commissioner And of
Department Head in Certain Cases. If in any case involving the
assessment of duties the importer shall fail to protest the ruling of
the Collector, and the Commissioner shall be of the opinion that
the ruling was erroneous and unfavorable to the Government, the
latter may order a reliquidation; and if the ruling of the
Commissioner in any unprotested case should, in the opinion of
the department head, be erroneous and unfavorable to the
Government, the department head may require the
Commissioner to order a reliquidation.
Except as in the preceding paragraph provided, the supervisory
authority of the department head over the Bureau of Customs shall not
extend to the administrative review of the ruling of the Commissioner
in matters appealed to the Court of Tax Appeals.
3. WHEN IMPORTATION BEGINS AND TERMINATED
Section 1201. Articles to Be Imported Only Through
Customhouse. All articles imported into the Philippines, whether
subject to duty or not, shall be entered through a customhouse at a
port of entry.
Sec. 1202. When Importation Begins and Deemed Terminated.
Importation begins when the carrying vessel or aircraft enters
the jurisdiction of the Philippines with intention to unlade
therein. Importation is deemed terminated upon payment of the
duties, taxes and other charges due upon the articles, or secured
to be paid, at a port of entry and the legal permit for withdrawal shall
have been granted, or in case said articles are free of duties, taxes and
other charges, until they have legally left the jurisdiction of the
customs.
Sec. 1210. Disposition of Imported Articles Remaining on Vessel
After Time for Unlading. Imported articles remaining on board any
vessel after the expiration of the said period for discharge, and not
reported for transshipment to another port, may be unladen by the
customs authorities and stored at the vessel's expense.
Articles so stored may be claimed and entered at any time within
fifteen days after discharge or such longer period not beyond thirty
days as the Collector shall approve. If not entered it shall be sold at
public auction at the next ensuing regular sale, though at any time
prior to sale it may be entered for consumption or warehouse, and be
withdrawn upon payment of duties, taxes and other charges, and
expenses.
EFFECT OF FAILURE TO FILE ENTRY
ABANDONMENT OF IMPORTED ARTICLES
Sec. 1801. Abandonment, Kinds and Effect of Abandonment is
express when it is made direct to the Collector by the interested party
in writing, and it is implied when, from the action or omission of the
interested party, an intention to abandon can be clearly inferred. The
failure of any interested party to file the import entry within
fifteen days or any extension thereof from the discharge of the
vessel or aircraft, shall be implied abandonment. An implied
abandonment shall not be effective until the article is declared
by the Collector to have been abandoned after notice thereof is
given to the interested party as in seizure cases.
Any person who abandons an imported article renounces all his
interests and property rights therein.
Sec. 1802. Abandonment of Imported Articles. The owner or
importer of any articles may, within ten days after filing of the
import entry, abandon to the Government all or a part of the
articles included in an invoice, and, thereupon, he shall be relieved
from the payment of duties, taxes and all other charges and
expenses due thereon: Provided, That the portion so abandoned is
not less than ten per cent of the total invoice and is not less than one
package, except in cases of articles imported for personal or
family use. The article so abandoned shall be delivered by the owner
or importer at such place within the port of arrival as the Collector shall
designate, and upon his failure to so comply, the owner or importer
shall be liable for all expenses that may be incurred in connection with
the disposition of the articles.
Nothing in this section shall be construed as relieving such owner or
importer from any criminal liability which may arise from any violation
of law committed in connection with the importation of the abandoned
article.
CHEVRON PHILIPPINES VS. COMMISSIOER OF CUSTOMS
Effective date of reduction of tariff rate from 10% to 3% per RA 8180
(Apr 16, 1996) while importations arrived in the Phils prior to Apr 16,
1996; Import Entry Declarations [IED] were filed prior to said later date
but the Import Entry Internal Revenue Declarations [IEIRD] were filed
after said date. Chevron paid customs duties at3%. Three years later,
an informer reported the transactions and investigation conducted. The
CBOC declared the importations abandoned for failure to enter them
within 30 days from unloading and issued assessments for more than
P1 Billion. Hence the appeal to CTA division which ruled that 10%
applied per Sec 204, 205 and 1408; there was fraud but no
abandonment. Both parties went to CTA en banc, which ruled that
there was abandonment because IEIRD was not filed within 30 days per
Sec 1301 in relation to Sec 205, thus abandonment ensued per Sec
1801 and 1802; notice of abandonment per CMO 15-94was not
necessary because Chevron had knowledge; and agreed there was
fraud for failure file entry that was intended to avoid higher rate of
duties.
Issues:
1. whether entry under Section 1301 in relation to Section
1801 of the TCC refers to the IED or the IEIRD?
\ The filing of the IEIRDs has several important purposes: to ascertain
the value of the imported articles, collect the correct and final amount
of customs duties and avoid smuggling of goods into the country. Entry
refers to both. They must be filed within 30 days.
2. whether fraud was perpetrated by petitioner? yes
There was fraud. Fraud, in its general sense, is deemed to comprise
anything calculated to deceive, including all acts, omissions, and
concealment involving a breach of legal or equitable duty, trust or
confidence justly reposed, resulting in the damage to another, or by
which an undue and unconscionable advantage is taken of another. It is
a question of fact and the circumstances constituting it must be alleged
and proved in the court below. The finding of the lower court as to the
existence or non-existence of fraud is final and cannot be reviewed
here unless clearly shown to be erroneous. In this case, fraud was
established by the IPD-CIIS of the BOC. Both the CTA First Division and
en banc agreed completely with this finding. Chevron bid edits time to
avail of lower rate. Hence, due to the presence of fraud, the one year
prescriptive period of the finality of liquidation under Section 1603 was
inapplicable and
3. whether the importations can be considered abandoned
under Section 1801. Yes.
Per Sec 1801 as amended by RA 7651. Notice was not necessary
because BOC learned of fraud after 3 years and importations had been
released. Abandoned article ipso facto deemed the property of the
government per Sec 1802. This section cannot be questioned as
unconstitutional collaterally. Besides, there is clear intent to do away
with seizure proceedings in abandonment. Ordered to pay P893Million
plus 6% legal interest per annum accruing from the date of
promulgation of this decision until its finality. Upon finality of this
decision, the sum so awarded shall bear interest at the rate of twelve
percent (12%) per annum until its full satisfaction.
4. ARTICLES SUBJECT TO DUTY
Section 101. Imported Articles Subject to Duty. 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.
Sec. 1205. Importations by the Government. Except as
otherwise specifically provided, all importations by the government for
its own use or that of its subordinate branches on instrumentalities, or
corporations, agencies or instrumentalities owned or controlled by the
government, shall be subject to the duties, taxes, fees and other
charges provided for in this Code: Provided, however, That upon
certification of the head of the department or political subdivision
concerned, with the approval of the Auditor General, that the
imported article is actually being used by the government or
any of its political subdivision concerned, the amount of duty, tax,
fee or charge shall be refunded to the government or the political
subdivision which paid it.
EFFECTIVITY DATE OF RATE OF DUTY
Sec. 205. Effective Date of Rates of Import Duty. Imported
articles shall be subject to the rate or rates of import duty existing at
the time of entry, or withdrawal from warehouse in the Philippines, for
consumption.
On and after the day when this Code shall go into effect all articles
previously imported, for which no entry has been made, and all articles
previously entered without payment of duty and under bond for
warehousing, transportation, or any other purpose, for which no permit
of delivery to the importer or his agent has been issued, shall be
subject to the rates of duty imposed by this Code and to no other duty,
upon the entry, or withdrawal thereof from warehouse, for
consumption.
On articles abandoned or forfeited to, or seized by, the government,
and then sold at public auction, the rate of duty and the tariff in force
on the date of the auction shall apply: Provided, That duty based on
the weight, volume and quantity of articles shall be levied and
collected on the weight, volume and quantity at the time of their
entry into the warehouse or the date of abandonment, forfeiture
and/or seizure.
TYPES OF DUTIES
kinds of tariffs or customs duties
1. Regular tariff or customs duties - these are taxes imposed
or assessed upon merchandise from, or exported to, a foreign
country for the purpose of raising revenues.
2. Special tariffs or custom duties - these are additional import
duties imposed on specific kinds of imported articles under
certain conditions. They are imposed for the protection of
consumers and manufacturers, as well as Philippine products
from undue competition posed by foreign made products,
specifically:
a. Safeguard duties
b. Dumping duties
c. Countervailing duties
d. Marking duties
e. Retaliatory duties
a. SAFEGUARD DUTIES
Safeguard measures are defined as emergency"
actions with respect to increased imports of particular
products, where such imports have caused or threaten
to cause serious injury to the importing Member's
domestic industry.
It is a measure provided by the State to protect
domestic industries and producers from increased
imports which cause or threaten to cause serious injury
to those domestic industries and producers.
Authorized person to impose safeguard measures
1. Secretary of Agriculture If the article in question is
an agricultural product;
2. Secretary of Trade and Industry If the article is
non-agricultural product.
The factual findings of the Tariff Commission on
the existence or non-existence of conditions
warranting the imposition of general safeguard
measures binding upon the DTI Secretary
The positive final determination by the Tariff
Commission operates as an indispensable requisite to
 the imposition of the safeguard measure. Congress in
enacting the SMA and prescribing the roles to be played
therein by the Tariff Commission and the DTI Secretary
did not envision that the President, or his/her alter ego,
could exercise supervisory powers over the Tariff
Commission- the Tariff Commission does not fall under
the administrative supervision of the DTI.
B. DUMPING DUTIES
Sec. 301. Dumping Duty.
a. Whenever the Secretary of Finance (hereinafter called the
Secretary") has reason to believe, from invoices or other papers or
from information made available to him by any government agency or
interested party, that a specific kind or class of foreign article, whether
dutiable or duty-free, is being sold or is likely to be sold for exportation
to, or in, the Philippines, at a price less than its fair value, as
hereinafter defined, the importation or sale of which might injure,
or prevent the establishment of, or is likely to injure an industry in
the Philippines, he shall so advise the Tariff Commission>
b. The Commission, upon receipt of such advice from the Secretary,
shall conduct an investigation to
1. Verify if the kind or class of articles in question is being sold or
is likely to be sold for exportation to, or in, the Philippines at a
price less than its fair value;
2. Determine if, as a result thereof, an industry in the Philippines
is being injured or is likely to be injured or is prevented from
being established by reason of the importation or sale of such
kind or class of article into the Philippines; and
3. Ascertain the difference, if any, between the purchase price or,
in the absence thereof, the exporter's sales price, and the fair
value of the article. The Commission shall submit its
findings to the Secretary within one month after receipt
of the aforesaid advice.
c. The Secretary shall, within fifteen days from the report of the
Commission, decide whether the article in question is being imported in
violation of this section and shall give due notice of such finding and
shall direct the Commissioner of Customs to cause the dumping duty,
to be levied, collected and paid, as prescribed in this section, in
addition to any other duties, taxes and charges imposed by law on such
article.
d. The "dumping duty" as provided for in subsection "e" hereof shall
be equal to the difference between the purchase price or, in the
absence thereof, the exporter's sales price, and the fair value of
the article.
e. For the purpose of this section
1. The "fair value" of an article shall be its foreign market
value, or, in the absence of such value, its cost of
production.
2. The "purchase price" of an imported article shall be the price
at which such article has been purchased or agreed to be
purchased, prior to the time of exportation, by the person
by whom or for whose account the article is imported, plus,
when not included in such price
(a) The cost of all containers and coverings and all other
costs, charges and expenses incident to placing the
article in condition, packed ready for shipment to the
Philippines;
(b) The amount of any export tax paid in the country of
exportation on the exportation of the article to the
Philippines;
(c) The amount of any import duties imposed by the
country of exportation which have been rebated, or
which have not been collected, by reason of the
exportation of the article to the Philippines; and
(d) The amount of any taxes imposed in the country of
exportation upon the manufacturer, producer or seller,
in respect to the manufacture, production or sale of the
article, which have been rebated, or which have not
been collected, be reason of the exportation of the
article of the Philippines.
Any additional costs, charges and expenses incident to bringing
the article from the place of shipment in the country of
exportation to the place of delivery in the Philippines and
Philippine customs duties imposed thereon shall not be
included.
3. The "exporter's sale price" of an imported article shall be the
price at which such article is sold or agreed to be sold in the
Philippines, before or after the time of exportation, by or for the
account of the exporter, including
(a) The cost of all containers and coverings and all other
costs, charges and expenses incident to placing the
article in condition, packed ready for shipment to the
Philippines;
(b) The amount of any import duties imposed by the
country of exportation which have been rebated, or
which have not been collected, by reason of the
exportation of the article to the Philippines; and
(c) The amount of any taxes imposed in the country of
exportation upon the manufacturer, producer or seller
in respect to the manufacture, production or sale of the
article, which have been rebated, or which have not
been collected, by reason of its exportation to the
Philippines. The following amount, if included, shall
be deducted
(1) The amount of costs, charges and expenses,
and Philippine customs duties, incident to
bringing the article from the place of
shipment in the country of exportation to the
place of delivery in the Philippines;
(2) The amount of commissions, if any, for selling
in the Philippines the particular article under
consideration;
(3) An amount equal to the expenses, if any,
generally incurred by or for the account of the
exporter in the Philippines in selling identical
or substantially identical article; and
(4) The amount of any export tax paid in the
country of exportation on the exportation of
the article to the Philippines.
4. The "foreign market value" of an imported article shall be the
price, at the time of exportation of such article to the
Philippines, at which such or similar article is sold or freely offered for
sale to all purchasers in the principal markets of the country from which
exported, in the usual wholesale quantities and in the ordinary course
of trade for home consumption (or, if not sold or offered for sale for
home consumption, then for exportation to countries other than the
Philippines), including the cost of all containers and coverings and
all other costs, charges and expenses incident to placing the article
in condition packed ready for shipment to the Philippines,
except that in the case of articles purchased or agreed to be
purchased by the person by whom or for whose account the
article is imported, prior to the time of exportation, the foreign
market value shall be ascertained as of the date of such
purchase or agreement to purchase. In the ascertainment of
foreign market value for the purpose of this section, no pretended sale
or offer for sale, and no sale or offer for sale intended to establish a
fictitious market, shall be taken into account.
5. The "cost of production" of an imported article shall be the
sum of
(a) The cost of materials of, and of fabrication, manipulation or other
process employed in manufacturing or producing, identical or
substantially identical article, at a time preceding the date of shipment
of the particular article under consideration which would ordinarily
permit the manufacture or production of the particular article under
consideration in the usual course of business;
(b) The usual general expenses not less than 10 per cent of such cost,
in the case of identical or substantially identical articles;
(c) The cost of all containers and coverings, and all other costs, charges
and expenses incident to placing the particular article under
consideration in condition, packed ready for shipment to the
Philippines; and
(d) An addition for profit not less than 8 per cent of the sum of the
amounts determined under subparagraphs (a) and (b) hereof, equal to
the profit which is originally added, in the case of articles of the same
general character as the particular article under consideration, by
manufacturers or producers in the country of manufacture or
production who are engaged in the same general trade as the
manufacturer or producer of the particular article under consideration.
f. For the purposes of this section the "exporter" of an imported
article shall be the person by whom or for whose account the article
is imported into the Philippines
1. If such person is the agent or principal of the exporter,
manufacturer or producer; or
2. If such person owns or controls, directly or indirectly, through
stock ownership or control or otherwise, any interest in the
business of the exporter, manufacturer or producer; or
3. If the exporter, manufacturer or producer owns or controls,
directly or indirectly, through stock ownership or control or
otherwise, any interest in any business conducted by such
persons; or
4. If any person or persons, jointly or severally, directly or
indirectly, through stock ownership or control or otherwise, own
or control in the aggregate 20 per cent or more of the voting
power or control in the business carried on by the person by
 whom or for whose account the article is imported into the
Philippines, and also 20 per cent or more of such power or
control in the business of the exporter, manufacturer or
producer.
g. Pending investigation and final decision of the case, the article in
question, and articles of the same specific kind or class subsequently
imported under similar circumstances, shall be released to the owner,
importer, consignee or agent upon the giving of a bond in an amount
equal to the double the estimated value thereof. Articles which may
have been delivered under the provision of section fifteen hundred and
three of this Code prior to the institution of the investigation provided
in this section shall, pending final decision, be ordered returned to the
custody of the collectors of customs unless released under bond in
accordance with this section.
h. Any aggrieved party may only appeal the amount of dumping
duty that is levied and collected by the Commissioner of
Customs to the Court of Tax Appeals in the same manner and
within the same period provided for by law in the case of appeals from
decisions of the Commissioner of Customs.
i.
(1) The article, if it has not been previously released under bond as
provided in subsection "g" hereof, shall be released after
payment by the party concerned of the corresponding dumping
duty in addition to any other duties, taxes and charges, if any,
or re-exported by the owner, importer, consignee or agent, at
his option and expense, upon the filing of a bond in an amount
equal to double the estimated value of the article, conditioned
upon the presentation of a landing certificate issued by a
consular officer of the Philippines at the country of destination;
or
(2) If the article has been previously released under bond, as
provided in subsection "g" hereof, the party concerned shall be
required to pay the corresponding dumping done in addition to
any other duties, taxes and charges, if any.
j. Any investigation to be conducted by the Commission under
this section shall include a hearing or hearings where the
owner, importer, consignee or agent of the imported article, the local
producers of a like article, other parties directly affected, and such
other parties as in the judgment of the Commission are entitled to
appear, shall be given an opportunity to be heard and to present
evidence bearing on the subject matter.
k. It shall be the duty of collectors of customs at all ports of entry
to levy and collect the dumping duty in accordance with subsection
"d" hereof on the specific kind or class of article as to which the
Secretary has made a decision of dumping.
It shall also be their duty to bring to the attention of the Secretary,
thru the Commissioner of Customs, any case coming within their notice
which may, in their opinion, require action as provided in this section.
l. The Secretary shall promulgate all rules and regulations necessary to
carry out the provisions of this section.
f. COUNTERVAILING DUTIES
Sec. 302. Countervailing Duty. a. On articles dutiable under this
Code, upon the production, manufacture or export of which any bounty,
subsidy or subvention is directly or indirectly granted in the country of
origin and/or exportation, and the importation of which has been
determined by the Secretary, after investigation and report of the
Commission, as likely to materially injure an established industry, or
prevent or considerably retard the establishment of an industry in the
Philippines, there shall be levied a countervailing duty equal to the
ascertained or estimated amount of such bounty, subsidy or
subvention: Provided, That the exception of any exported article from
a duty or tax imposed on like articles when destined for consumption in
the country of origin and/or exportation or the refunding of such duty
or tax, shall not be deemed to constitute a grant of a bounty, subsidy
or subvention within the meaning of this section; however, should an
article be allowed drawback by the country of origin and/or exportation,
only the ascertained or estimated excess of the amount of the
drawback over the total amount of the duties and/or internal taxes, if
any, shall constitute a bounty, subsidy or subvention.
b. The Commission, on its own motion or upon application of any
interested party, when in its judgment there is good and sufficient
reason therefor, shall ascertain, determine or estimate the net amount
of such bounty, subsidy or subvention and shall transmit to the
Secretary the amounts so ascertained, determined or estimated, if any.
Wherever it is ascertained that the conditions which
necessitated the imposition of the countervailing duty have
ceased to exist, and the Commission shall so certify to the Secretary,
the latter shall take the necessary steps to suspend or discontinue
the imposition of such duty.
c. The Secretary shall make all rules and regulations necessary to carry
out the provisions of this section.
g. Marking duties
Sec. 303. Marking of Imported Articles and Containers.
a. Marking of Articles. Except as hereinafter provided, every article
of foreign origin (or its container, as provided in subsection "b" hereof)
imported into the Philippines shall 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 the article. The Commissioner of
Customs shall, with the approval of the department head, issue rules
and regulations to
(1) Determine the character of words and phrases or abbreviations
thereof which shall be acceptable as indicating the country of origin and
prescribe any reasonable method of marking, whether by printing,
stenciling, stamping, branding, labeling or by any other reasonable
method, and a conspicuous place on the article or container where the
marking shall appear;
(2) Require the addition of any other words or symbols which may be
appropriate to prevent deception or mistake as to the origin of the
article or as to the origin of any other article with which such imported
article is usually combined subsequent to importation but before
delivery to an ultimate purchaser; and
(3) Authorize the exception of any article from the requirements of
marking if
(a) Such article is incapable of being marked;
(b) Such article cannot be marked prior to shipment to the
Philippines without injury;
(c) Such article cannot be marked prior to shipment to the
Philippines, except at an expense economically prohibitive of its
importation;
(d) The marking of a container of such article will reasonably
indicate the origin of such article;
(e) Such article is a crude substance;
(f) Such article is imported for use by the importer and not
intended for sale in its imported or any other form;
(g) Such article is to be processed in the Philippines by the
importer or for his account otherwise than for the purpose of
concealing the origin of such article and in such manner that
any mark contemplated by this section would necessarily be
obliterated, destroyed or permanently concealed;
(h) An ultimate purchaser, by reason of the character of such
article or by reason of the circumstance of its importation, must
necessarily know the country of origin of such article even
though it is not marked to indicate its origin;
(i) Such article was produced more than twenty years prior to its
importation into the Philippines; or
(j) Such article cannot be marked after importation except at an
expense which is economically prohibitive, and the failure to
mark the article before importation was not due to any purpose
of the importer, producer, seller or shipper to avoid compliance
with this section.
b. Marking of Containers. Whenever an article is excepted under
subdivision (3) of subsection "a" of this section from the requirements
of marking, the immediate container, if any, of such article, or such
other container or containers of such article as may be prescribed by
the Commissioner of Customs with the approval of the department
head, shall be marked in such manner as to indicate to an ultimate
purchaser in the Philippines the name of the country of origin of such
article in any official language of the Philippines, subject to all
provisions of this section, including the same exceptions as are
applicable to articles under subdivision (3) of subsection "a".
c. Marking Duty for Failure to Mark. If at the time of importation
any article (or its container, as provided in subsection "b" hereof), is
not marked in accordance with the requirements of this section, there
shall be levied, collected and paid upon such article a marking duty of 5
per cent ad valorem, which shall be deemed to have accrued at the
time of importation, except when such article is exported or
destroyed under customs supervision and prior to the final
liquidation of the corresponding entry.
d. Delivery Withheld until Marked. No imported article held in
customs custody for inspection, examination or appraisement shall be
delivered until such articles and/or their containers, whether released
or not from customs custody, shall have been marked in accordance
with the requirements of this section and until the amount of duty
estimated to be payable under subsection "c" of this section shall have
been deposited. Nothing in this section shall be construed as excepting
any article or its container from the particular requirements of marking
provided for in any provisions of law.
e. The failure or refusal of the owner or importer to mark the articles as
herein required within a period of thirty days after due notice shall
constitute as an act of abandonment of said articles and their
disposition shall be governed by the provisions of this Code relative to
abandonment of imported articles.
h. Retaliatory duties
Sec. 304. Discrimination by Foreign Countries.
a. The President, when he finds that the public interest will be served
thereby, shall by proclamation specify and declare new or additional
duties in an amount not exceeding 50 per cent of the existing rates as
hereinafter provided upon articles wholly or in part the growth or
product of, or imported in a vessel of, any foreign country whenever he
shall find as a fact that such country
(1) Imposes, directly or indirectly, upon the disposition in, or
transportation in transit through or re-exportation from such country of
any article wholly or in part the growth or product of the Philippines any
unreasonable charge, exaction, regulation or limitation which is not
equally enforced upon the like articles of every foreign country; or
(2) Discriminates in fact against the commerce of the Philippines,
directly or indirectly, by law or administrative regulation or practice, by
or in respect to any customs, tonnage, or port duty, fee, charge,
exaction, classification, regulation, condition, restriction or prohibition,
in such manner as to place the commerce of the Philippines at a
disadvantage compared with the commerce of any foreign country.
b. If at any time the President shall find it to be a fact that any foreign
country has not only discriminated against the commerce of the
Philippines, as aforesaid but has, after the issuance of a proclamation
as authorized in subsection "a" of this section, maintained or increased
its said discriminations against the commerce of the Philippines, the
President is hereby authorized, if he deems it consistent with the
interests of the Philippines, to issue a further proclamation directing
that such product of said country or such articles imported in its vessels
as he shall deem consistent with the public interests, shall be excluded
from importation into the Philippines.
c. Any proclamation issued by the President under the authority of this
section shall, if he deems it consistent with the interests of the
Philippines, extend to the whole of any foreign country or may be
confined to any subdivision or subdivisions thereof; and the President
shall, whenever he deems the public interests require, suspend,
revoke, supplement or amend any such proclamation.
d. All articles imported contrary to the provisions of this section shall be
forfeited to the Government of the Philippines and shall be liable to be
seized, prosecuted and condemned in like manner and under the same
regulations, restrictions and provisions as may from time to time be
established for the recovery, collection, distribution and remission of
forfeiture to the government by the tariff and customs laws. Whenever
the provision of this section shall be applicable to importations into the
Philippines of articles wholly or in part the growth or product of any
foreign country, they shall be applicable thereto whether such articles
are imported directly or indirectly.
e. It shall be the duty of the Commission to ascertain and at all times
to be informed whether any of the discriminations against the
commerce of the Philippines enumerated in subsections "a" and "b" of
this section are practiced by any country; and if and when such
discriminatory acts are disclosed, it shall be the duty of the Commission
to bring the matter to the attention of the President, together with
recommendation.
f. The Secretary shall make such rules and regulations as are necessary
for the execution of such proclamation as the President may issue in
accordance with the provisions of this section.
g. The authority granted herein to the President shall be exercised only
when Congress is not in session.
Other types of fees charged by the Bureau of Customs
1. Arrastre charge is the amount due for the handling, receiving
and custody of the imported or exported article or the baggage
of the passenger.
2. Wharfage dues counterpart of license, charged not for the use
of any wharf but for a special fund known as the Port Works
Fund
3. Berthing fee are levied on a vessel coming or mooring within
specified places or waters of a port. No berthing charges may
be collected from vessels moored at municipal/private ports.
 4. Harbor fee collected port charges on the different activities of
a vessel engaged in foreign trade for entrance into or departure
from a port of entry.
5. Tonnage duescollected port charges on the different activities
of a vessel engaged in foreign trade for coming to the
Philippines from a foreign port or for going to a foreign port
from the Philippines.
PROHIBITED IMPORTATIONS
Sec. 102. Prohibited Importations. The importation into the
Philippines of the following articles is prohibited:
a. Dynamite, gunpowder, ammunitions and other explosives,
firearm and weapons of war, and detached parts thereof,
except when authorized by law.
b. Written or printed article in any form containing any matter
advocating or inciting treason, rebellion, insurrection or sedition
against the Government of the Philippines, of forcible resistance
to any law of the Philippines, or containing any threat to take
the life of or inflict bodily harm upon any person in the
Philippines.
c. Written or printed articles, photographs, engravings,
lithographs, objects, paintings, drawings or other
representation of an obscene or immoral character.
d. Articles, instruments, drugs and substances designed, intended
or adapted for preventing human conception or producing
unlawful abortion, or any printed matter which advertises or
describes or gives directly or indirectly information where, how
or by whom human conception is prevented or unlawful
abortion produced.
e. Roulette wheels, gambling outfits, loaded dice, marked cards,
machines, apparatus or mechanical devices used in gambling,
or in the distribution of money, cigars, cigarettes or other
articles when such distribution is dependent upon chance,
including jackpot and pinball machines or similar contrivances.
f. Lottery and sweepstakes tickets except those authorized by the
Philippine Government, advertisements thereof and lists of
drawings therein.
g. Any article manufactured in whole or in part of gold silver or
other precious metal, or alloys thereof, the stamps brands or
marks of which do not indicate the actual fineness or quality of
said metals or alloys.
h. Any adulterated or misbranded article of food or any
adulterated or misbranded drug in violation of the provisions of
the "Food and Drugs Act."
i. Marihuana, opium poppies, coca leaves, or any other narcotics
or synthetic drugs which are or may hereafter be declared habit
forming by the President of the Philippines, any compound,
manufactured salt, derivative, or preparation thereof, except
when imported by the Government of the Philippines or any
person duly authorized by the Collector of Internal Revenue, for
medicinal purposes only.
j. Opium pipes and parts thereof, of whatever material.
k. All other articles the importation of which is prohibited by law.
CUSTOMS VALUATION
R.A. 9135
(a) TRANSACTION VALUE SYSTEM
"SEC. 201. Basis of Dutiable Value.
(A) Method One. Transaction Value. - The dutiable value of an
imported article subject to an ad valorem rate of duty shall be the
transaction value, which shall be the price actually paid or
payable for the goods when sold for export to the Philippines,
adjusted by adding:
(1) The following to the extent that they are incurred by the buyer
but are not included in the price actually paid or payable for the
imported goods:
(a) Commissions and brokerage fees (except buying commissions);
(b) Cost of containers;
(c) The cost of packing, whether for labour or materials;
(d) The value, apportioned as appropriate, of the following goods and
services: materials, components, parts and similar items incorporated
in the imported goods; tools; dies; moulds and similar items used in
the production of imported goods; materials consumed in the
production of the imported goods; and engineering, development,
artwork, design work and plans and sketches undertaken elsewhere
than in the Philippines and necessary for the production of imported
goods, where such goods and services are supplied directly or indirectly
by the buyer free of charge or at a reduced cost for use in connection
with the production and sale for export of the imported goods;
(e) The amount of royalties and license fees related to the goods being
valued that the buyer must pay, either directly or indirectly, as a
condition of sale of the goods to the buyer;
(2) The value of any part of the proceeds of any subsequent
resale, disposal or use of the imported goods that accrues directly or
indirectly to the seller;
(3) The cost of transport of the imported goods from the port of
exportation to the port of entry in the Philippines;
(4) Loading, unloading and handling charges associated with the
transport of the imported goods from the country of exportation to the
port of entry in the Philippines; and
(5) The cost of insurance.
All additions to the price actually paid or payable shall be made
only on the basis of objective and quantifiable data.
No additions shall be made to the price actually paid or payable
in determining the customs value except as provided in this Section:
Provided, That Method One shall not be used in determining the
dutiable value of imported goods if:
(a) There are restrictions as to the disposition or use of the
goods by the buyer other than restrictions which:
(i) Are imposed or required by law or by Philippine authorities;
(ii) Limit the geographical area in which the goods may be resold; or
(iii) Do not substantially affect the value of the goods.
(b) The sale or price is subject to some condition or
consideration for which a value cannot be determined with respect to
the goods being valued;
(c) Part of the proceeds of any subsequent resale, disposal or
use of the goods by the buyer will accrue directly or indirectly to the
seller, unless an appropriate adjustment can be made in accordance
with the provisions hereof; or
(d) The buyer and the seller are related to one another, and
such relationship influenced the price of the goods. Such persons shall
be deemed related if:
(i) They are officers or directors of one anothers businesses;
(ii) They are legally recognized partners in business;
(iii) There exists an employer-employee relationship between them;
(iv) Any person directly or indirectly owns, controls or holds five
percent (5%) or more of the outstanding voting stock or shares of both
seller and buyer;
(v) One of them directly or indirectly controls the other;
(vi) Both of them are directly or indirectly controlled by a third person;
(vii) Together they directly or indirectly control a third person; or
(viii) They are members of the same family, including those related by
affinity or consanguinity up to the fourth civil degree.
Persons who are associated in business with one another in that
one is the sole agent, sole distributor or sole concessionaire, however
described, of the other shall be deemed to be related for the purposes
of this Act if they fall within any of the eight (8) cases above.
(B) Method Two. Transaction Value of Identical Goods.
Where the dutiable value cannot be determined under method
one, the dutiable value shall be 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. Minor differences in appearances shall not
preclude goods otherwise conforming to the definition from being
regarded as identical.
 (C) Method Three. Transaction Value of Similar Goods.
Where the dutiable value cannot be determined under the preceding
method, the dutiable value shall be 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. The quality of the
goods, their reputation and the existence of a trademark shall be
among the factors to be considered in determining whether goods are
similar.
If the dutiable value still cannot be determined through the
successive application of the two immediately preceding methods, the
dutiable value shall be determined under method four or, when the
dutiable value still cannot be determined under that method, under
method five, except that, at the request of the importer, the order of
application of methods four and five shall be reversed: Provided,
however, That if the Commissioner of Customs deems that he will
experience real difficulties in determining the dutiable value using
method five, the Commissioner of Customs may refuse such a request
in which event the dutiable value shall be determined under method
four, if it can be so determined.
(D) Method Four. Deductive Value. The dutiable value of
the imported goods under this method shall be the deductive value
which shall be based on the unit price at which the imported goods 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 the importation of the goods being valued, to
persons not related to the persons from whom they buy such goods,
subject to deductions for the following:
(1) Either the commissions usually paid or agreed to be paid or
the additions usually made for profit and general expenses in
connection with sales in such country of imported goods of the same
class or kind;
(2) The usual costs of transport and insurance and associated
costs incurred within the Philippines; and
(3) Where appropriate, the costs and charges referred to in
subsection (A) (3), (4) and (5); and
(4) The customs duties and other national taxes payable in the
Philippines by reason of the importation or sale of the goods.
If neither the imported goods nor identical nor similar imported
goods are sold at or about the time of importation of the goods being
valued in the Philippines in the conditions as imported, the customs
value shall, subject to the conditions set forth in the preceding
paragraph hereof, be based on the unit price at which the imported
goods or identical or similar imported goods sold in the Philippines in
the condition as imported at the earliest date after the importation of
the goods being valued but before the expiration of ninety (90) days
after such importation.
If neither the imported goods nor identical nor similar imported
goods are sold in the Philippines in the condition as imported, then, if
the importer so requests, the dutiable value shall be based on the unit
price at which the imported goods, after further processing, are sold in
the greatest aggregate quantity to persons in the Philippines who are
not related to the persons from whom they buy such goods, subject to
allowance for the value added by such processing and deductions
provided under Subsections (D)(1), (2), (3) and (4) hereof.
(E) Method Five. Computed Value. The dutiable value
under this method shall be the computed value which shall be the sum
of:
(1) The cost or the value of materials and fabrication or other
processing employed in producing the imported goods;
(2) The amount for profit and general expenses equal to that
usually reflected in the sale of goods of the same class or kind as the
goods being valued which are made by producers in the country of
exportation for export to the Philippines;
(3) The freight, insurance fees and other transportation
expenses for the importation of the goods;
(4) Any assist, if its value is not included under paragraph (1)
hereof; and
(5) The cost of containers and packing, if their values are not
included under paragraph (1) hereof.
The Bureau of Customs shall not require or compel any person
not residing in the Philippines to produce for examination, or to allow
access to, any account or other record for the purpose of determining a
computed value. However, information supplied by the producer of the
goods for the purposes of determining the customs value may be
verified in another country with the agreement of the producer and
provided they will give sufficient advance notice to the government of
the country in question and the latter does not object to the
investigation.
(F) Method Six. Fallback Value. If the dutiable value
cannot be determined under the preceding methods described above, it
shall be determined by using other reasonable means and on
the basis of data available in the Philippines.
If the importer so requests, the importer shall be informed in
writing of the dutiable value determined under Method Six and the
method used to determine such value.
No dutiable value shall be determined under Method Six on the
basis of:
(1) The selling price in the Philippines of goods produced in the
Philippines;
(2) A system that provides for the acceptance for customs
purposes of the higher of two alternative values;
(3) The price of goods in the domestic market of the country of
exportation;
(4) The cost of production, other than computed values, that
have been determined for identical or similar goods in accordance with
Method Five hereof;
(5) The price of goods for export to a country other than the
Philippines;
(6) Minimum customs values; or
(7) Arbitrary or fictitious values.
If in the course of determining the dutiable value of imported
goods, it becomes necessary to delay the final determination of such
dutiable value, the importer shall nevertheless be able to secure the
release of the imported goods upon the filing of a sufficient guarantee
in the form of a surety bond, a deposit, cash or some other appropriate
instrument in an amount equivalent to the imposable duties and taxes
on the imported goods in question conditioned upon the payment of
customs duties and taxes for which the imported goods may be liable:
Provided, however, That goods, the importation of which is prohibited
by law shall not be released under any circumstance whatsoever.
Nothing in this Section shall be construed as restricting or calling
into question the right of the Collector of Customs to satisfy himself as
to the truth or accuracy of any statement, document or declaration
presented for customs valuation purposes. When a declaration has
been presented and where the customs administration has reason to
doubt the truth or accuracy of the particulars or of documents produced
in support of this declaration, the customs administration may ask the
importer to provide further explanation, including documents or other
evidence, that the declared value represents the total amount actually
paid or payable for the imported goods, adjusted in accordance with
the provisions of Subsection (A) hereof.
If, after receiving further information, or in the absence of a
response, the customs administration still has reasonable doubts about
the truth or accuracy of the declared value, it may, without prejudice to
an importers right to appeal pursuant to Article 11 of the World Trade
Organization Agreement on customs valuation, be deemed that the
customs value of the imported goods cannot be determined under
Method One. Before taking a final decision, the Collector of Customs
shall communicate to the importer, in writing if requested, his grounds
for doubting the truth or accuracy of the particulars or documents
produced and give the importer a reasonable opportunity to respond.
When a final decision is made, the customs administration shall
communicate to the importer in writing its decision and the grounds
therefor."
(b) POST ENTRY AUDIT
"SEC. 3515. Compliance Audit or Examination of Records. - The
importers/customs brokers shall allow any customs officer authorized
by the Bureau of Customs to enter during office hours any premises or
place where the records referred to in the preceding section are kept to
conduct audit examination, inspection, verification and/or investigation
of those records either in relation to specific transactions or to the
adequacy and integrity of the manual or electronic system or systems
by which such records are created and stored. For this purpose. A duty
authorized customs officer shall be full and free access to all books,
records, and documents necessary or relevant for the purpose of
collecting the proper duties and taxes.
 In addition, the authorized customs officer may make copies of,
or take extracts from any such documents. The records or documents
must, as soon as practicable after copies of such have been taken, be
returned to the person in charge of such documents.
A copy of any such document certified by or on behalf of the
importer/broker is admissible in evidence in all courts as if it were the
original.
An authorized customs officer is not entitled to enter any
premises under this Section unless, before so doing, the officer
produces to the person occupying or apparently in charge of the
premises written evidence of the fact that he or she is an authorized
officer. The person occupying or apparently in charge of the premises
entered by an officer shall provide the officer with all reasonable
facilities and assistance for the effective exercise of powers under this
Section.
Unless otherwise provided herein or in other provisions of law, the
Bureau of Customs may, in case of disobedience, invoke the aid of the
proper regional trial court within whose jurisdiction the matter falls. The
court may punish contumacy or refusal as contempt. In addition, the
fact that the importer/broker denies the authorized customs officer full
and free access to importation records during the conduct of a post-
entry audit shall create a presumption of inaccuracy in the transaction
value declared for their imported goods and constitute grounds for the
Bureau of Customs to conduct a re-assessment of such goods.
This is without prejudice to the criminal sanctions imposed by
this Code and administrative sanctions that the Bureau of Customs may
impose against contumacious importers under existing laws and
regulations including the authority to hold delivery or release of their
imported articles."
"SEC. 3516. Scope of the Audit.
(a) The audit of importers shall be undertaken:
(1) When firms are selected by a computer-aided risk
management system, the parameters of which are to be based on
objective and quantifiable data and are to be approved by the
Secretary of Finance upon recommendation of the Commissioner of
Customs. The criteria for selecting firms to be audited shall include, but
not be limited to, the following:
(a) Relative magnitude of customs revenue from the firm;
(b) The rates of duties of the firms imports;
(c) The compliance tract records of the firm; and
(d) An assessment of the risk to revenue of the firms import activities.
(2) When errors in the import declaration are detected;
(3) When firms voluntarily request to be audited, subject to the
approval of the Commissioner of Customs.
(b) Brokers shall be audited to validate audits of their importer
clients and/or fill information gaps revealed during an audit of their
importers clients."
"SEC. 3517. Documents in Foreign Language. - Where a document in a
foreign language is presented to a customs officer in relation to the
carrying out of any duty or the exercise of any power of the Bureau of
Customs under this Code, said document in a foreign language must
be accompanied with a translation in the official language of
this country."
"Sec. 3518. Records to Be Kept by Customs. The Bureau of
Customs shall likewise keep a record of audit results in a database of
importer and broker profiles, to include but not be limited to:
(a) Articles of Incorporation;
(b) The company structure, which shall include but not be limited to:
(1) Incorporators and Board of Directors;
(2) Key officers; and
(3) Organizational structure;
(c) Key importations;
(d) Privileges enjoyed;
(e) Penalties; and
(f) Risk category (ies)."
6. IMPORTATION IN VIOLATION OF TCCP
PENAL PROVISION
Sec. 3601. Unlawful Importation. Any person who shall
fraudulently import or bring into the Philippines, or assist in so doing,
any article, contrary to law, or shall receive, conceal, buy, sell, or in
any manner facilitate the transportation, concealment, or sale of such
article after importation, knowing the same to have been imported
contrary to law
PUNISHABLE BY a fine of not less than P600 nor more than P5,000
and imprisonment for not less than 6 months nor more than 2years
and, if the offender is an alien, he shall be deported after serving the
sentence.
When, upon trial for a violation of this section, the defendant is shown
to have or to have had possession of the article in question, such
possession shall be deemed sufficient evidence to authorize conviction,
unless the defendant shall explain the possession to the satisfaction of
the court.
Sec. 3602. Various Fraudulent Practices Against Customs
Revenue. Any person who makes or attempts to make any entry of
imported or exported article by means of any false or fraudulent
invoice, declaration, affidavit, letter, paper, or by means of any false
statement, written or verbal, or by means of any false or fraudulent
practice whatsoever, or shall be guilty of any willful act or omission by
means of whereof the Government might be deprived of the lawful
duties, taxes and other charges, or any portion thereof, accruing from
the article or any portion thereof, embraced or referred to in such
invoice, declaration, affidavit, letter, paper, or statement, or affected
by such act or omission, shall, for each offense
PUNISHABLE BY a fine of not less than P600 nor more than P5,000
and by imprisonment for not less than 6months nor more than 2years
and if the offender is an alien, he shall be deported after serving the
sentence.
PROPERTIES SUBJECT TO FORFEITURE
Sec. 2530.Property Subject to Forfeiture Under Tariff and
Customs Laws. Any vessel or aircraft, cargo, articles and other
objects shall, under the following conditions, be subject to forfeiture:
a. Any vessel or aircraft, including cargo, which shall be used lawfully in
the importation or exportation of articles into or from any Philippine
port or place except a port of entry; and any vessel which, being of less
than thirty tons capacity shall be used in the importation of articles into
any Philippine port or place except into a port of the Sulu sea where
importation in such vessel may be authorized by the Commissioner,
with the approval of the department head.
b. Any vessel engaging in the coastwise trade which shall have on
board any article of foreign growth, product or manufacture in excess
of the amount necessary for sea stores, without such article having
been properly entered or legally imported.
c. Any vessel or aircraft into which shall be transferred cargo unladen
contrary to law prior to the arrival of the importing vessel or aircraft at
her port of destination.
d. Any part of the cargo of a vessel or aircraft arriving from a foreign
port which is unladen before arrival at the vessel's or aircraft's port of
destination and without authority from the proper customs official; but
such cargo shall not be forfeited if such unlading was due to accident,
stress of weather or other necessity and is subsequently approved by
the Collector.
e. Any article which is fraudulently concealed in or removed from any
public or private warehouse under customs supervision.
f. Any article of prohibited importation or exportation, the importation
or exportation of which is effected or attempted contrary to law, and all
other articles which, in the opinion of the Collector, have been used,
are or were intended to be used as instrument in the importation or
exportation of the former.
g. Unmanifested article found on any vessel or aircraft, if manifest
therefor is required.
h. Sea stores or stores for aircraft adjudged by the Collector to be
excessive, when the duties assessed by the Collector thereon are not
paid or secured forthwith upon assessment of the same.
i. Any package of imported article which is found by the examining
official to contain any article not specified in the invoice or entry,
including all other packages purportedly containing imported articles
similar to those declared in the invoice or entry to be the contents of
the misdeclared package, provided the Collector is of the opinion that
the misdeclaration was caused with fraudulent intent.
j. Boxes, cases, trunks, envelopes and other containers of whatever
character used as receptacles or as devices to conceal article which is
itself subject to forfeiture under the customs and tariff laws or which is
so designed as to conceal the character of such article.
k. Any beast actually being used for the conveyance of article subject
to forfeiture under the customs and tariff laws with its equipage or
trappings, and any vehicles similarly used, together with its equipage
and appurtenances, including the beast, team or other motive power
drawing or propelling the same; but the forfeiture shall not be effected
if it is established that the owner of the means of conveyance used as
aforesaid or his agent in charge thereof at the time, has no knowledge
of the unlawful act.
l. Any money or thing of value offered as a bribe or for the purpose of
exerting improper influence over a customs official or employee.
m. Any article sought to be imported or exported:
(1) Without going through a customhouse, whether the act was
consummated, frustrated or attempted;
(2) By failure to mention to a customs official, articles found in the
baggage of a person arriving from abroad.
(3) On the strength of a false declaration or affidavit executed by
the owner, importer, exporter or consignee concerning the
importation or exportation of such article.
(4) On the strength of a false invoice or other document executed
by the owner, importer, exporter or consignee concerning the
importation or exportation of such article.
(5) Through any other fraudulent practice or device by means of
which such articles was entered through a customhouse to the
prejudice of the government.
Sec. 2531. Conditions Affecting Forfeiture of Article. As
regards imported or exported article or articles whereof the importation
or exportation is merely attempted, the forfeiture shall be effected only
when and while the article is in the custody or within the jurisdiction of
the customs authorities or in the hands or subject to the control of the
importer, exporter, original owner, consignee, agent or other person
effecting the importation, entry or exportation in question, or in the
hands or subject to the control of some person who shall receive,
conceal, buy, sell or transport the same or aid in any such acts, with
knowledge that the article was imported, or was the subject of an
attempt at importation or exportation, contrary to law.
COMMISSIONER OF CUSTOM VS. MANILA STAR FERRY
Doctrine:
Section 2530(a) of the Tariff and Customs Code in
unmistakable terms provides that a vessel engaged in smuggling "in a
port of entry" cannot be forfeited. This is the clear and plain meaning of
the law. It is not within the province of the Court to inquire into the
wisdom of the law, for indeed, we are bound by the words of the
statute.
Forfeiture proceedings are proceedings in rem and are directed against
the res. It is no defense that the owner of the vessel sought to be
forfeited had no actual knowledge that his property was used illegally.
The absence or lack of actual knowledge of such use is a defense
personal to the owner himself which cannot in any way absolve the
vessel from the liability of forfeiture.
Facts:
Private respondents Manila Star Ferry, Inc. and the United
Navigation & Transport Corporation are domestic corporations engaged
in the lighterage business and are the owners and operators,
respectively, of the tugboat Orestes and the barge-lighter UN-L-106.
Private respondent Ceaba Shipping Agency, Inc. (Ceaba) is the local
shipping agent of the Chiat Lee Navigation Trading Co. of Hongkong,
the registered owner and operator of the S/S Argo, an ocean-going
vessel.
On June 12, 1966, the S/S Argo, the Orestes and the UN-L-106, as well
as two wooden bancas of unknown ownership, were apprehended for
smuggling by a patrol boat of the Philippine Navy along the Explosives
Anchorage Area of Manila Bay. The patrol boat caught the crew of the
S/S Argo in the act of unloading foreign-made goods onto the UN-L-
106, which was towed by the Orestes and escorted by the two wooden
bancas. All of the goods consisting of 330 cases of foreign-made
cigarettes, assorted ladies' wear, clothing material and plastic bags
were not manifested and declared by the vessel for discharge in Manila.
No proper notice of arrival of the S/S Argo was given to the local
customs authorities.
Consequently, seizure and forfeiture proceedings were separately
instituted before the Collector of Customs for the Port of Manila against
the S/S Argo and its cargo, the Orestes, the UN-L-106 and the two
bancas, charging them with violations of Section 2530 (a), (b) and (c)
of the Tariff and Customs Code. Criminal charges were likewise filed
against the officers and crew of said vessels and watercraft.
The Collector of Customs rendered a consolidated decision declaring the
forfeiture of said vessels and watercraft in favor of the Philippine
government by virtue of Section 2530 (a) and (b) of the Tariff and
Customs Code.
On separate appeals taken by all the respondents therein, except the
owner of the two wooden bancas, the Acting Commissioner of Customs
found the Collector's decision to be in order and affirmed the same
accordingly.
The same respondents separately elevated the matter to the Court of
Tax Appeals, which substantially modified the decision of the
Commissioner of Customs, ordering only the payment of a fine, in lieu
of the forfeiture of vessels. In its decision, the Court of Tax Appeals
held that while the S/S Argo was caught unloading smuggled goods in
Manila Bay, the said vessel and the goods cannot be forfeited in favor
of the government because the Port of Manila is a port of entry (R.A.
1937, Sec. 701).
The Commissioner of Customs argues that the phrase "except a port of
entry" should mean "except a port of destination," and inasmuch as
there is no showing that the Port of Manila was the port of destination
of the S/S Argo, its forfeiture was in order.
Hence, this petition for review under Rule 44 of the Revised Rules of
Court
Issues:
1. Whether or not the S/S Argo, a vessel engaged in smuggling
"in a port of entry", can be forfeited.
2. Are forfeiture proceedings in rem?
Held:
1. Section 2530(a) of the Tariff and Customs Code in
unmistakable terms provides that a vessel engaged in smuggling "in a
port of entry" cannot be forfeited. This is the clear and plain meaning of
the law. It is not within the province of the Court to inquire into the
wisdom of the law, for indeed, we are bound by the words of the
statute. Neither can we put words in the mouths of the lawmaker. A
verba legis non est recedendum.
It was only in 1972, after this case was instituted, when the questioned
exception ("except a port of entry") in Section 2530(a) of the Tariff and
Customs Code was deleted by P.D. No. 74.
Nevertheless, although the vessel cannot be forfeited, it is subject to a
fine of not more than P10,000.00 for failure to supply the requisite
manifest for the unloaded cargo under Section 2521 of the Tariff and
Customs Code.
The barge-lighter UN-L-106 and the tugboat Orestes, on the other
hand, are subject to forfeiture under paragraph (c) of Section 2530 of
the Tariff and Customs Code. The barge-lighter and tugboat fall under
the term "vessel" which includes every sort of boat, craft or other
artificial contrivance used, or capable of being used, as a means of
transportation on water (R.A. No. 1937, Section 3514). Said section
2530 (c) prescribes the forfeiture of any vessel or aircraft into which
shall be transferred cargo unladen contrary to law before the arrival of
the vessel or aircraft at her port of destination. Manila was not the port
of destination, much less a port of call of the S/S Argo, the importing
vessel. The S/S Argo left Hongkong and was bound for Jesselton, North
Borneo, Djakarta and Surabaja, Indonesia; and yet it stopped at the
Port of Manila to unload the smuggled goods onto the UN-L-106 and
the Orestes.
2. Forfeiture proceedings are proceedings in rem and are directed
against the res. It is no defense that the owner of the vessel sought to
be forfeited had no actual knowledge that his property was used
illegally. The absence or lack of actual knowledge of such use is a
defense personal to the owner himself which cannot in any way absolve
the vessel from the liability of forfeiture.
WHEREFORE, the consolidated Decision dated September 30, 1969 of
respondent Court of Tax Appeals in C.T.A. Cases Nos. 1836, I837 and
1839 is MODIFIED as follows: (1) that the S/S Argo through
respondent Ceaba Shipping Agency, Inc. is ordered to pay a fine of
P10,000.00, to be satisfied from the deposit of the same amount by
respondent Ceaba to the Cashier of this Court per Resolution of July 9,
1978; (2) that the Cashier of this Court is ordered to release the said
amount for payment to the Commissioner of Customs, within thirty
(30) days from the date this decision becomes final; and 3) the tugboat
Orestes and the barge-lighter UN-L-106 of respondents Manila Star
Ferry, Inc. and the United Navigation & Transport. Corporation
respectively, are ordered forfeited in favor of the Philippine
Government.