TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

TARIFF AND CUSTOMS CODE OF THE NOTE: The CMTA has both saving and repealing clauses. Laws,
PHILIPPINES rules and regulations previously issued pertaining to the
importation of goods that are consistent with the CMTA will
remain valid unless the same be repealed or amended. While those
Meaning and Scope which are inconsistent are expressly repealed, amended or
Section 3514, TCC modified accordingly.
Provides that Tariff and Customs Laws include not only the
provisions of the code itself and regulations pursuant thereto but all Nature of Customs Duties and Tariff
other laws and regulations pursuant thereto but all other laws and Customs Duties
regulations which are subject to enforcement by Bureau of Tax assessed upon merchandise from or exported to, a foreign
Customs (BOC) or otherwise within its jurisdiction. country. (Garcia v. Executive Sec., GR No. 101273, July3, 1992)
NOTE: It extends not only to the provisions of the Tariff and Tariff
Customs Code but to all other laws as well; like Central Bank Means a book of rates, a table or catalogue drawn usually in
Circulars, the enforcement of which is entrusted to the BOC. alphabetical order containing the names of several kinds of
merchandise with the duties to be paid for the same as settled or
Overview of the History of Tariff and Customs Laws agreed upon between several states that hold commerce together.
United States
Philippine Tariff Act of 1909 which
Congress for the Customs duties, toll or tribute payable upon merchandise to the
gave birth to the imposition of tariff on
Philippines during Government.
goods coming from foreign countries
the American
and entering the Philippines.
regime NOTE: Customs and tariffs are synonymous with one another.
RA No. 1937 They both refer to the taxes imposed on imported or exported
crafted and passed by the Philippine It took effect on 1 wares, articles, or merchandise.
Congress as the first TCCP that July 1957.
codified customs laws for the country Other Types of Fees Charged by the Bureau of Customs
President Marcos, • Arrastre charge
Presidential Decree (PD) No. 34
as Chief Executive
consolidated into one Code all • Wharfage due – counterpart of license, charged not for
during the Martial
amendments made therein the use of any wharf but for a special fund known as the
Law regime
Port Works Fund.
RA No. 1464 was signed into law
• Berthing fee
(revising PD No. 34), which, in
general, strengthened the punitive force 11 June 1978 • Harbor fee
of the TCCP against smuggling and • Tonnage due
other forms of customs fraud.
Concept of Goods for Customs Duty Purposes
Customs Modernization and Tariff Act (CMTA) As to Imported Articles
All article when imported from any foreign country into the
On 30 May 2016, President Benigno S. C. Aquino III signed RA
No. 10863, otherwise known as the Customs Modernization and Philippines shall be subject to duty upon each importation even
Tariff Act (CMTA), which amends the TCC/TCCP. It became though previously exported from the Philippines EXCEPT as
effective on 16 June 2016. otherwise specifically provided for in the code or other laws.

Aim of the CMTA As to Exported Articles

To modernize customs laws, rules and procedures to take into
consideration the mandatory standards of the Revised Kyoto
Convention (the blueprint for modern and efficient customs
procedures of the World Customs Organization [WCO] to which
the Philippines is a signatory), international agreements,
recommendations from the business sectors and industry groups as
well as some of the best practices in customs administration,
among others.
It seeks to transform the BOC into a modern and efficient
organization that is at par with global standards.
Certain articles like specific types of wood, mineral plant,
vegetable and animal products are subject to tariff and premium
duties.
QUESTION: What goods are subject to the export tariff and
duty?
ANSWER: Certain wood products, mineral products (metallic
and non-metallic), plants and vegetable products, and animal
products, are subject to Export Duty on the gross F.O.B. value
at the time of shipment based on the prevailing rate of exchange.
(Sec. 514, 1st par)

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

NOTES: Articles, when used with reference to importation or
exportations include goods, wares and merchandise and, in general
anything that maybe made the subject of exportation and
importation.
Four (4) US dollars, having ceased to be legal tender in the
Philippines, fall within the meaning of the term merchandise
(Bastida v. Acting Commissioner of Customs, et al., G.R. No. L-
24011, October 24, 1970)
Articles/ Goods Covered under the Tariff and Customs
Code (Classification of Imported Goods)
Articles subject to duty/ Taxable importations
All articles when imported from a foreign
country including those previously from the
GENERAL
Philippines are subject to duty unless otherwise
RULE
specifically provided for in the Tariff and
Customs Code or other laws. (Section 100)
Examples:
(a) Live animals and animal products;
(b) Vegetable products;
(c) Animal or vegetable fats; oils and their cleavage
products; prepared edible fats; animal or vegetable
waxes;
(d) Prepared foodstuffs; beverages, spirits and vinegar;
tobacco and manufactured tobacco substitutes;
(e) Mineral products;
(f) Products of chemical or allied industries;
(g) Plastics and articles thereof; rubber and articles thereof;
(h) Raw hides and skins; leather, etc.;
(i) Wood and articles of wood, etc.;
(j) Pulp of wood, etc.;
(k) Textiles and textile articles;
(l) Articles of stone; plaster, cement, etc.;
(m) Footwear, headgear, etc.;
(n) Natural or cultured pearls precious/semi-precious stones;
(o) Base metals and articles of base metals;
(p) Machinery and mechanical appliances; electric
equipment; sound recorders, etc;
(q) Vehicles, aircraft, vessels and associated transport
equipment;
(r) Optical, photographic, medical, surgical instruments,
etc.;
(s) Arms, ammunition, parts and accessories;
(t) Miscellaneous manufactured articles; and
(u) Works of art, collector's pieces arid antiques (Sec. 104,
Title 1, TCC)
(4) Immoral, obscene or insidious articles
(5) Those prohibited under special laws
B. Articles qualifiedly prohibited:
Refers to those which may be imported but subject to, and
after compliance with, certain conditions.
Where such conditions as to warrant lawful importation neither
do not exist, the legal effects of the importation of qualifiedly
prohibited articles are the same as those of absolutely prohibited
articles. (UTE PATEROR v. BOC, 193 SCRA 132)
Conditionally-free importations
These are articles which are exempt from import duties upon
compliance with the formalities prescribed with regulations
promulgated by the Commission of Customs with the approval of
the Secretary of Finance. (Section 105, TCC)
Amendment by the CMTA: The CMTA introduces modifications
to Section 105 of the TCCP, as amended, on conditionally-free
importations (now named conditionally-free and duty-free
importations under Section 800).
This article includes:
(1) Those prohibited for in Section 105 of the TCC;
(2) Those granted to government agencies, GOCCs with
agreement with foreign countries;
(3) Those given to international institutions, entitled to
exemption by agreement or special laws; and
(4) Those that may be granted by the President upon
NEDA’s recommendation
Free from Tariff and Customs Duties (Duty-free)
Imported goods must be entered in a customhouse at their port of
entry otherwise they shall be considered as contraband and the
importer is liable for smuggling (See Sec. 101, TCC).
All articles when imported from any 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 the TCC or other laws.
Amendment by the CMTA: See conditionally-free and duty-free
importations under Section 800
Duty and Tax-Free Importation of Personal and
Household Effects by “Returning Residents”
“Returning residents” has been defined as nationals who have
stayed in a foreign country for a period of at least six months.

Prohibited importations
Classifications:
A. Articles which are absolutely prohibited:
(1) Weapons of war
(2) Gambling devices
(3) Narcotics or prohibited drugs

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

Conditions for Exemption (aside from the requirements that the GENERAL Goods declarations for consumption are cleared
same should neither be of commercial quantity nor intended for RULE though a “formal entry” process
barter, sale or hire)
EXCEPTIONS: In the following instances where goods may be
the Free on Board (FoB) or Free Carrier cleared through “informal entry”:
For those who
Arrangement (FCA) value shall not (1) goods of a commercial nature with Free on Board or Free
have stayed in a
exceed P350,000 and that the privilege is Carrier Arrangement (FCA) value of less than Php
foreign country
not availed of within 10 years prior to the 50,000;
for a period of
returning resident’s arrival NOTE: This is an increase from the previous thresholds of Php
at least 10 years
2,000 per TCCP, as amended, and USD 500 under Customs
the FCA or FOB value shall not exceed Memorandum Order No. 13-2010); or
P250,000 and that the privilege is not
If the stay is at
availed of within five years prior to the (2) personal or household effects or goods, not in commercial
least five years
returning resident’s arrival quantity, imported in passenger’s baggage or mail.

the FCA or FoB value shall not exceed Lodgment of goods

P150,000 and that the privilege is not A goods declaration must now be lodged within 15 days from a
If the stay is less
availed of within six months prior to the BoC notice (sent through electronic or personal service) informing
than five years
returning resident’s arrival the importers of the date of discharge of the last package from the
vessel or aircraft.

Privilege afforded to Overseas Filipino Workers (OFWs)
Returning OFWs shall have the privilege to bring in tax and duty-
free home appliances and other durables (limited to one of every
kind) once in a given calendar year accompanying them on their
return or arriving within a reasonable time (not exceeding 60 days
after every returning OFWs return).
NOTE: the period is extendible for another 15 days upon request
by the importer based on valid grounds.
Notice of Assessment of Duties and Taxes
Once lodged, the BoC, after its examination, shall issue a notice of
assessment (of duties and taxes payable).

Balikbayan Boxes Importer to pay the corresponding duties

period of 15 days
Residents of the Philippines, OFWs or other Filipinos, while and taxes
from receipt of
residing abroad or upon their return to the Philippines, are also importer may contest the assessment
said notice
allowed to bring in or send to their families or relatives in the issued by the BoC at the border
Philippines “balikbayan boxes” (containing personal and
household effects only) duty and tax-free. NOTE: If not contested, the assessment will be deemed final after
the lapse of the 15-day period.
NOTE: The FCA value shall not exceed P150,000 and the items
are not in commercial quantities or intended for barter, sale or for NOTE FURTHER: The failure to pay duties and taxes within the
hire. 15-day period shall result in the imposition of a 10% surcharge
(increased to 25% if delinquency lasts for more than one year)
NOTE FURTHER: This can be availed up to three times in a based on the total assessed amount or balance thereon as well as to
calendar year. Any amount in excess of the above threshold values a 20% interest per annum computed from the date of final
shall, however, be subject to duties and taxes. assessment.

Goods Declaration for Consumption Period to claim goods from customs custody
All imported goods will be subject to the lodgment of a goods After payment of duties and taxes, the importer will then have a
declaration (commonly known as entry declaration), which may non-extendible period of 30 days to claim the goods from customs
be custody.
(a) for consumption,
(b) for warehousing, Provisional Goods Declaration (PGD); now allowed
(c) for admission, If, at the time of importation, an importer does not have all the
(d) for conditional importation or information or supporting documents required to complete a goods
(e) for customs transit, depending on the purpose. declaration, the CMTA now allows the lodging of a provisional
goods declaration (PGD).

Instances when PGD can be used by the importers

Where additional information and/or collateral documents are
required to be submitted at the border.

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES
Procedure
→ An importer would have to execute an undertaking to
complete the necessary information or submit the
supporting documents within 45 days (extendible for
another 45 days) from the lodging of the PGD.
→ Goods under PGD may be released upon posting of a
security equivalent to the amount ascertained to be the
applicable duties and taxes.
NOTE: An assessment by the BoC at the border of a PGD shall be
deemed tentative and shall be completed upon final readjustment
and submission of the additional information or documentation
required to complete the declaration.
Amended Goods Declaration
If an importer needs to amend a goods declaration already filed, the
CTMA, for valid reasons and with the approval of the BoC, also
permits the filing of an amended goods declaration.
NOTE HOWEVER: The amendment must be done prior to final
assessment or examination of the goods by the BoC.
Liability for Custom Duties
GENERAL All importations/ exportation of articles/
RULE goods are subject to customs duties
(1) Exempt under the TCC;
(2) Exempt granted to government
agencies, instrumentalities with
existing contracts, commitment,
agreements or obligations with
EXCEPTIONS foreign countries;
(3) Exempt international
organizations pursuant to
agreements or special laws; and
(4) Exempt by the President upon
recommendation of NEDA
QUESTION: Are importations made by the Government
taxable?
ANSWER: YES. Except those provided for Sec. 105 of the
TCC, all importations by the Government for its own use, or that
of its subordinate branches or 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 the TCC. (Sec. 1205)
QUESTION: Is this not taking money from one pocket and
putting it another?
ANSWER: Yes, that is why 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 is
refunded to the entity which paid it.
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Purpose of the Imposition
Customs duties are imposed for any one and, sometimes, for all of
the following purposes:
(1) Raise revenue – BoC second only to BIR
(2) Support foreign policy – Flexible Tariff Clause
(3) Protect domestic economy – Prohibited importations
(4) Implement commitment to other nations – ASEAN
Integration
Kinds of Custom Duties
A. Regular/ Ordinary Duties
Tariff duties are levied on imported goods either as:
(a) a revenue generating measure or
(b) a protective scheme to artificially or temporarily inflate
prices to support the local industries of a particular
country and protect its domestic output from their foreign
counterparts.
In the Philippines, import duties are imposed, generally in ad
valorem form, on articles entering the country in accordance with
their corresponding schedules and classifications as provided under
Section 104 of the TCC of the Philippines of 1978, as amended.
NOTE: Goods are levied import duties depending on the trade
agreements, regional groupings, among others.
Classification:
(1) Ad valorem Duty. Duty based on the value of the
imported article
(2) Specific Duty. Duty based on the dutiable weight of
goods number or measurement
Rate of Duty Classification as per the TCC
As per the TCCP, the rate of duty classification can either be:
(a) “Most Favoured Nation” or MFN or
(b) ASEAN Trade in Goods Agreement (ATIGA).
Most Favoured Nation (MFN) Treatment
Rate of Duty ranges from Free/Zero to 30%
Exception: In cases of accorded a certain degree of
sensitive agricultural protection via higher tariff rates
products reaching to as high as 65%
ASEAN Trade in Goods Agreement (ATIGA)
Member States agreed to place 99% of all the products in their
Inclusion List (IL) at zero-duty.
In compliance with ATIGA, the Philippines implemented its tariff
commitments, the last tranche of which was made via Executive
Order (EO) No. 850 (implemented on January 1, 2010). Thus,
most goods from the ASEAN are levied ordinary import duties
of 0%.
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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES
B. Specific Duties
Imposed in addition to regular or ordinary duties principally in
order to protect local industries against unfair competition from
foreign manufacturers or producers; consumer against possible
deceptions; and national interest.
Classifications
(1) Anti-dumping duty
The anti-dumping duty is a trade remedy measure
adopted by the government to protect a domestic industry
against the unfair trade practice of dumping.
NOTE: Imposed by the Secretary of Finance upon the
recommendation of the Tariff Commission when
(a) The price of the imported article is deliberately
or continually fixed at less than the fair market
value or cost of production; and
(b) Importation would cause or likely cause an
injury to local industries engaged in the
manufacture or production of the same or
similar articles or prevent their establishment
NOTE: The amount of special duty is to the extent of the
underpricing. The duty is equal to the margin of dumping on such
product, commodity or article and on like product, commodity or
article thereafter imported into the Philippines under similar
circumstances.
NOTE HOWEVER: The duty may be charged less than the
margin of dumping if the said lesser duty is adequate to remove the
injury to the local industry.
Decision as to whether or not to impose Anti-dumping Duty
The decision even when the requirements for the imposition are
met/fulfilled will remain the prerogative of the Tariff Commission.
It may take into consideration, among others, the effect of imposing
an anti-dumping duty on the welfare of consumers and/or the
general public, and other related local industries.
(2) Countervailing Duty
Special duty imposed on imported articles which are
granted any kind or form of subsidy by the government
in the country or origin or exportation, the importation of
which has caused or threatens to cause material injury to
a domestic industry or has materially retarded the growth
or, prevents the establishment of a domestic industry.
Requisites:
(a) The levy of an excise tax or inland tax for local goods of
the same or similar class as the article imported or the
grant of subsidy to the foreign exporter by his
government; and
(b) The importation is likely to insure materially established
local industries or prevent their establishments.
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NOTE: The amount of special duty is equal to the bounty or
subsidy or subvention.
(3) Marking Duty
Special duty of 5% ad valorem imposed on articles
properly marked, collected by the commissioner, EXCPT
when such article is exported or destroyed under the
customs supervision and prior to final liquidation of the
corresponding entry.
Purpose: To prevent possible deception of the consumers
(4) Discriminatory/Retaliatory Duty
Imposed on imported goods whenever it is found as a fact
that the country of origin discriminates against the
commerce of the Philippines at a disadvantage compared
with the commerce of any foreign country.
(5) Safeguard Duty (RA No. 8800)
(a) General safeguard duty – duty imposed by
the Secretary of Trade after positively
determining that a product is being imported in
increased quantities, whether absolute or
relative to domestic production, as to be a
substantial cause of injury or threat thereof to
the domestic industry;
Recommendation of the Tariff Commission
Upon positive determination, the Tariff Commission shall
recommend to the concerned Secretary an appropriate definitive
measure, in the form of:
(1) An increase in, or imposition of, any duty on the imported
product;
(2) A decrease in or the imposition of a tariff-rate quota
(Minimum Access Volume) on the product;
(3) A modification or imposition of any quantitative
restriction on the importation of the product into the
Philippines;
(4) One or more appropriate adjustment measures, including
the provision of trade adjustment assistance; and
(5) Any combination of actions described in subparagraphs
(1) to (4).
When quantitative import restrictions are used
When quantitative import restrictions are used, such measures shall
not reduce the quantity of imports below the average imports for
the three (3) preceding representative years, unless clear
justification is given that a different level is necessary to prevent or
remedy a serious injury.
When General Safeguard Measure cannot be applied
A general safeguard measure shall not be applied to a product
originating from a developing country, if that country’s share of
total imports of the product is less than three percent (3%),
provided that developing countries with less than three percent
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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

(3%) share collectively account for not more than nine percent if the price difference is at
(9%) of total imports. i 0 most 10% of the trigger
price
(b) Special safeguard duty for agriculture – 30 % of the amount by if the said difference
imposed by the Commissioner of Customs, which the price difference exceeds 10% but is at
ii
upon request of the Secretary of Agriculture exceeds 10% of the trigger most 40% of the trigger
through the Secretary of Finance, on an price price
agricultural product, consistent with our 50% of the
international obligations, either: amount by which the price if the said difference
difference exceeds 40% of exceeds 40% but is at
iii
(i) when its cumulative import volume the trigger most 60% of the trigger
exceeds the trigger volume, or price, plus the additional price
(ii) even if trigger volume is not duty imposed under (ii)
exceeded, it fails the price test. 70% of the amount by
if the said difference
which the price difference
exceeds 60% and is at
Special Safeguard Duty Based on the Volume Test iv exceeds 60% of the trigger
most 75% of the trigger
The special safeguard duty to be imposed under the volume test price, plus additional
price
shall be equivalent to not exceeding one-third (1/3) of the duties under (ii) and (iii),
applicable out-quota customs duty on the agricultural product 90% of the amount by
under consideration in the year when it is imposed. which the price difference
if the said difference
exceeds 75% of the trigger
v exceeds 75% of the trigger
NOTE: The said duty may only be maintained until the end of the price; plus the additional
price
year in which it is imposed and may be reduced or terminated in duties imposed under (ii),
special cases such as when a shortage of a particular agricultural (iii), and (iv),
product exists, as determined by the Secretary of Agriculture.
NOTE: The said special safeguard measure shall not be resorted
Determination of the special safeguard duty based on volume test to when the volume of the imported agricultural product under
The trigger volume is the amount obtained, after adding the consideration is declining.
change in the annual domestic consumption of the agricultural
product under consideration, for the two (2) preceding years, to: Special Duties Compared
Anti-
(i) 125% of the average annual volume of imports of the Countervailin Marking Discriminator
dumping
agricultural product under consideration in the three (3) g Duty Duty y Duty
duty
immediately preceding years for which data are available, Nature
if the market access opportunity is at most 10; OR Imposed Imposed upon
upon foreign goods
(ii) 110% of the average annual import volume, if the Imposed upon
foreign enjoying Imposed
market access opportunity exceeds 10% but not more goods coming
products subsidy thus upon those
than 30%; OR from countries
with value allowing them not properly
that
lower to sell at lower marked as to
(iii) 105% of the average annual import volume, if the discriminate
than their prices to the place of
market access opportunity exceeds 30% against
FMV to detriment of origin of the
Philippine
the local products goods.
NOTE: If the change in the volume of domestic consumption is products.
detriment similarly
not taken into consideration in computing the trigger volume, the of local situated.
trigger volume shall be equal to 125% of the average import products.
volume for the immediate three (3) preceding years, unless it is Amount/
justified that a different level is necessary to prevent or remedy the Rate
serious injury. Differenc
Any amount
e between Equivalent to
Special Safeguard Duty based on the Price Test 5% ad not exceeding
the actual the bounty,
The Secretary of Agriculture shall publish the list of trigger prices valorem of 100% ad
price and subsidy, or
corresponding to each of the agricultural products after the conduct articles valorem of the
the subvention
of public hearings on the subject. The special safeguard duty to be subject articles
normal
imposed based on the price test shall computed as follows: value of
the article

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

Imposing Related Party Transactions

Authorit The CMTA upholds the hierarchical application of the six methods
y Secretary of Commissione President of of valuation of imported goods, with Method 1 or the Transaction
Committe Finance r of Customs the Philippines Value (TV) of the imported goods being the primary method.
e on Anti-
Dumping The TV is basically the “price paid or payable” for the goods when
sold for export to the Philippines, subject to certain adjustments
Determination of the amount of the tax base of regular such as selling commissions and brokerage fees, cost of containers,
duties cost of packing, assists, royalties and license fees, cost of transport
and insurance, among others.
Ad valorem or dutiable value
Basis is
Application of TV of the imported goods
(a) Transaction value of the actual importation itself;
Under the rules, one of the limitations on the application of the TV
(b) Transaction value of identical goods;
method is that, in cases of a related party transaction, the price
(c) Transaction value of similar goods;
between the importer and its related foreign supplier should not be
(d) Deductive value;
influenced by such a relationship.
(e) Computed value; OR
(f) Fallback value
In order to prove the absence of such influence, the importer must
be able to demonstrate that the declared value closely approximates
Specific one of the following “test values” occurring at or about the same
Basis is specification, e.g., weight time:
Order of the methods used in determining dutiable value • The Transaction Value (TV) in sales to unrelated buyers
transaction value of the goods imported – of identical or similar goods for export to the same
the price actually paid or payable when sold country of importation;
Method One
for export to the Philippines, with • The customs value of identical or similar goods as
adjustments determined using the Deductive Value Method; and
transaction of identical goods – • The customs value of identical or similar goods as
transaction value of identical (same in all determined using the Computed Value Method
Method Two respects) goods sold for export to the
Philippines and exported at or about the Aside from the application of test values, the WTO agreement
same time also recognizes the “circumstances of sale analysis” as a remedy
Transaction value of similar goods – in proving the absence of such influence.
“similar”, i.e. although not alike in all
respects, have characteristics and like Circumstances of Sale Analysis
Method Three
component materials which enable them to This remedy, which is likewise embodied under Customs
perform the same functions and to be Administrative Order (CAO) No. 4-2004 and Customs
commercially interchangeable. Memorandum Order (CMO) No. 16-2010, involves showing the
Deductive value – arm’s length nature of the transaction by proving that the price was:
based on the unit price at which the
imported goods, or identical or similar • Settled in accordance with normal pricing practices of
Method Four goods, are sold in the Philippines, in the the industry;
same condition as when imported in the • Settled in a manner consistent with sales to unrelated
greatest aggregate quantity at or about time buyers;
of importation • Adequate to ensure recovery of all costs plus a profit
Computed value – equivalent to the firm’s overall profit realized over a
the sum of cost or value of materials in representative period of time in sales of goods of the same
processing the imported goods, amount of class or kind.
Method Five profit and general expenses usually reflected
in the sale of goods by producers in the Effect of Failure of Establish Proof
country of export, freight and insurance, Failure to establish either of the above proofs may result in the
cost of packaging, etc. declared TV to be rejected for purposes of customs appraisement
Fallback value – and the price will be determined using other methods of valuation
value determined by using other reasonable in their sequential order.
Method Six
means and on the basis of data available in
the Philippines

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES
Process of Paying the Regular Customs Duties
STEP ONE
Making of the import entry (formal or
informal)
Imported articles must be "entered" in the
customhouse at the port of entry within 30
days from date of discharge of the last
package from the vessel by the importer, or
authorized person
(Section 1301 & ff)
STEP TWO
Examination, classification and appraisal of
the imported articles (Section 1401 & ff)
STEP THREE
Liquidation (payment) of duties and
withdrawal of the articles from customs
(Section 1601 & ff)
Duties imposed under the Flexible Tariff Clause
(Section 401, TCC)
Import duties which are modified by the President upon
investigations of the Tariff Commissions and recommendation of
the NEDA in the interest of national economy, general welfare and
national security.
President is empowered to adjust tariff rates
The President is given by the TCC ample powers to adjust tariff
rates under Section 401 of the TCC. This empowers the President
to:
(1) Increase, reduce, or remove existing protective rates of
import duty;
(2) Establish import quota or to ban imports of any
commodity; and
(3) Impose an additional duty on all imports not exceeding
10% ad valorem whenever necessary.
Limitations imposed regarding the Flexible Tariff Clause
(1) Conduct by Tariff Commission of an investigation in
which a public hearing shall be held wherein interested
parties shall be afforded reasonable opportunity to be
present, produce evidence and to be heard;
(2) The commission shall also hear the views and
recommendation of any government office, agency or
instrumentality concerned;
(3) The commission shall submit their findings and
recommendations to the NEDA within 30 days after the
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termination of the public hearings. The NEDA thereafter,
submits its recommendation to the President.
Premium Duty
“Premium duty” is the duty imposed, in addition to export duties,
on the difference between the current price as established by the
BOC and the base price of the products, in accordance with the
schedule specified under the law (Sec. 514, 2nd par)
QUESTION: Is there also a Flexible Tariff Clause for export
products?
ANSWER: YES. The President, upon the recommendation of
the NEDA, may
(a) subject any of the products subject to Export and
Premium duties to higher or lower rates,
(b) include additional products,
(c) exclude or exempt any products, or
(d) additionally subject any product to export quota. (Sec.
515)
Customs Duties
When Tariff and Customs Applied
Only after importation has begun but before importation is
terminated.
Import Entry
It is a declaration in the BOC showing particulars of the imported
article that will enable the customs authorities to determine the
correct duties.
Beginning of Importation
Importation begins
(1) when the carrying vessel or aircraft
(2) enters the jurisdiction of the Philippines
(3) with the intention to unlade therein.
Termination or end of Importations
Importation is deemed termination
(a) upon payment of duties, taxes and other charges due upon
the articles or secured to be paid at a port of entry and
(b) 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. (Section 1202, TCC)
NOTE: All imported articles into the Philippines, whether subject
to duty or not shall be entered through a customs house at a port of
entry.
Intention to Unload
Even if not yet unloaded, and there is unmanifested cargo,
forfeiture may take place because importation has already begun.
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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

Liability of Importer for Custom Duties Intentional misdeclaration, misclassification or undervaluation

• A personal debt which can be discharged only be A 500% surcharge (of the duty and tax due) will be imposed on the
payment in full thereof; importer and to those who willfully participated in the fraudulent
• A lien upon the imported article while they are in custody act. The imported goods will be subject to seizure regardless of the
or subject to the control of the government amount of the discrepancy.

Transaction Value under RA No. 8181 Prima facie evidence of fraud

If the discrepancy (in duty and tax to be paid) amounts to more than
(Valuation of Goods)
30%.
Invoice value of the goods plus
(1) Freight
(2) Insurance
Who is deemed the owner of imported goods
(3) Cost The owner of an imported article is the person to whom the same
(4) Expenses; and is consigned. The holder of a bill of lading duly indorsed by the
(5) Other necessary expenses consignee therein named, or, if consigned to order, by the
consignor, shall be deemed the consignee thereof. (Sec. 1203)
NOTE: Imported goods must be entered into a custom house at
their port of entry otherwise they shall be considered as contraband Obligations of Importer
and the importer is liable for smuggling. (a) Ensure his goods are listed in the vessel’s Cargo Manifest
(b) File or make a formal or informal import entry
Misdeclaration, Misclassification, Undervaluation in (c) Declare correct weight or value
(d) Pay the duties
Goods Declaration (e) Keep records
the discrepancy pertains to
quantity, quality, description,
MISDECLARATION
weight, or measurement of the De Minimis Importation
imported goods The CMTA acknowledges the e-commerce trend of increasing
insufficient or wrong description number of small value consignments and thus, retained the
of the goods or use of wrong provision on de minimis values (small value importations) below
MISCLASSIFICATION which no duties and taxes will be collected and with minimal
tariff heading was declared
resulting in a discrepancy clearance procedures, including data requirements.
• The declared value fails to
De minimis threshold value
disclose in full the price
Has now been increased to Php10,000 (previously, Php10) in
actually paid or payable or
response to the clamor of foreign business groups.
any dutiable adjustment to the
UNDERVALUATION price; or
If the value of an importation does not exceed Ph10,000, there
• When an incorrect valuation
will be no duties and taxes that will be collectible by the BoC.
method is used; or
• The valuation rules are not
NOTE: This threshold value is subject to review by the Finance
properly observed.
Secretary every three years
Any misdeclaration, misclassification or undervaluation of
imported goods resulting in a discrepancy between what is legally
Self-certification System for Origin Purposes
determined upon assessment and what is declared will be subject The CMTA, in preparation for the ASEAN-wide implementation
to a fixed surcharge rate of 250% of the duty and tax due of the self-certification system, allows exporters (producers or
(previously, 100% to 200% of the duty due). manufacturers of goods) duly accredited by the BoC to perform a
“self-certification” procedure as an alternative means of proving
When Surcharge will not be imposed the Philippine origin of goods for export.
(1) The discrepancy in duty is less than 10%; or
Aim
(2) The importer’s declared value and/or tariff heading/ Achieve a free flow of goods within the ASEAN single market as
classification: it is aimed at facilitating the utilization of Free Trade Agreements
(a) Relied on an official government ruling; or (FTAs).
(b) Is rejected in a formal customs dispute
settlement process involving difficult or highly This new system seeks to reduce compliances of exporters and
technical questions relating to the application of administrative cost associated with CO application. It likewise
customs valuation rules and/or tariff facilitates the release of shipments availing of preferential tariff
classifications. under FTAs.

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES
Relief Consignment
Goods such as food, medicine, equipment and materials for shelter,
donated or lease to government institutions and accredited private
entities for free distribution to or use of victims of calamities shall
be treated as relief consignment. Relief goods are exempt from
duties and taxes.
Matter of Priority
Upon declaration of a state of calamity, the clearance of such goods
will be a matter of priority.
Special Procedures
Towards this end, restrictions on customs policies are now relaxed
under the CMTA. Special procedures are now provided to facilitate
their unimpeded entry. Among these procedures are:
(a) lodging of a simplified or provisional goods declaration;
(b) pre-arrival clearance;
(c) clearance beyond business hours without corresponding
charges; and
(d) examination shall be in exceptional cases only.
NOTE: The Department of Finance (DoF) and the DSWD shall
jointly issue implementing rules on this.
Importations in violation of tax credits under the Tariff
and Customs Code of the Philippines
Common kinds of importations that violate the tax credit
provisions of the TCC
(1) Smuggling
(2) Other fraudulent practices
Smuggling
Smuggling is an act of any person who shall fraudulently import
or bring into the Philippines, or assist in doing so, any article,
contrary to law or to 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. It includes the exportation of articles in a manner
contrary to law. (Sec. 3519)
NOTE: Contrabands are articles of prohibited importation or
exportation. (Section 3519)
Other Fraudulent Practices
These include:
(a) Unlawful importation
(b) Entry or Exit of articles by means of false or fraudulent
practices, invoices, declarations, affidavits or other
documents
(c) Entry of goods at less than their true weight or upon a
false classification as to quality or value
(d) Payment of less than the amount due
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(e) Filing of any false or fraudulent claim for the payment of
drawback or refund of duties upon exportation of the
merchandise
(f) Filing any affidavit, certificate or other document to
secure to him or others the payment of any drawback,
allowance, or refund of duties on the exportation of
mechandise greater than that legally due
Unlawful Importation or Exportation
The CMTA provides stiffer penalties for smuggling (which can
either be outright or technical)
Outright Smuggling
Outright smuggling refers to the act of importing goods into the
country without complete customs-prescribed importation
documents, or without being cleared by customs or other regulatory
government agencies.
In this case, imported goods are not registered at all with the BoC
or other government agencies.
Technical Smuggling
Technical smuggling refers to the act of importing goods into the
country by means of a fraudulent, falsified or erroneous declaration
of the goods as to its nature, kind, quality, quantity or weight.
In other words, technical smuggling takes place through
undervaluation, misclassification or underdeclaration of the
goods shipped.
OUTRIGHT TECHNICAL
bypasses the usual and
involves fraudulent acts
normal procedure and process
during the processing and
of clearing the cargo at the
releasing of the goods
BoC
the ultimate objective is to evade the payment of the prescribed
taxes, duties and other charges
Penalty
The penalty is imprisonment or a fine which ranges from Php
25,000 to Php 50,0000,000 depending on the value (up to Php
200,000,000) of the goods unlawfully imported, including duties
and taxes.
If the value (or aggregate value) exceeds Php 200,000,000, the
same shall be deemed as a heinous crime punishable with a penalty
of reclusion perpetua (imprisonment of 20 years and 1 day to 40
years) and a fine of not less than Php 50,000,000.
NOTE: Each act of unlawful importation or exportation shall be
deemed a separate offense.
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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES
Period of Storage in a Customs Bonded Warehouse
(CBW)
goods entered for warehousing may remain
GENERAL
in a CBW for a fixed period of one year
RULE
from the time of their arrival
perishable goods where the storage period is
three months from the date of arrival,
EXCEPTION
extendible (for valid reasons and upon
written request) for another three months.
NOTE: Goods not withdrawn after the expiration of the prescribed
period shall be deemed abandoned.
Storage period for Bonded Goods
The BoC Commissioner, in consultation with the Secretary of
Trade and Industry, shall also establish reasonable storage period
limits beyond the general one-year period for bonded goods, the
processing into finished goods of which require a longer period
based on industry standards and practice, subject to the approval of
the Secretary of Finance.
Unauthorized withdrawal of imported goods
Shall be subject to a surcharge of 50% of duties, taxes, customs
fees and charges, found to be due and unpaid.
NOTE: If the delinquency lasts for more than one year, the
surcharge shall be increased by 25% of the unpaid duties and
taxes annually.
Advance Customs Rulings
In order to promote higher certainty, predictability and reliability,
the CMTA now adopts the Revised Kyoto Convention (RKC)
provision on advance (binding) rulings and recognizes the right of
importers and exporters, upon written application, to seek advance
rulings on classification from the Tariff Commission, and
valuation as well as rules of origin from the BoC Commissioner.
Purpose: These rulings, once obtained, should provide applicants
with more certainty on the customs treatment of their specific
transaction or product.
Issuance of rulings
Rulings are required to be issued within 30 days from receipt of the
application and supporting documents as may be required by
regulation.
Post-Clearance Audit
The CMTA states that the BoC may conduct a “post-clearance
audit” within three years from the date of final payment of duties
and taxes or customs clearance, as the case may be.
The penalties for failure to pay correct duties and taxes on imported
goods, as may be found during post-clearance audit, are now
categorized into two degrees of culpability, as follows:
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This is a departure from the previous degrees of penalties;
(a) negligence (50% to 200% of the revenue loss);
(b) gross negligence (250% to 400% of the revenue loss);
and
(c) 500% to 800% of the revenue loss and/or criminal
prosecution.
Inadvertent errors amounting to simple negligence
Under the CMTA, no substantial penalty shall be imposed on
inadvertent errors amounting to simple negligence as will be
defined by the implementing rules.
This rule was lifted from Standard 3.39 of the Revised Kyoto
Convention (RKC) as well as from Article VIII of the World
Trade Organization/General Agreement on Tariffs and Trade
(WTO/GATT), providing for the non-imposition of penalties for
errors when such errors are inadvertent and where there has been
no fraudulent intent or gross negligence.
NOTE HOWEVER: A penalty, which should not be excessive,
may however be imposed in order to discourage a repetition of such
errors.
Record-Keeping Requirement
The CMTA states that all importers are required to keep relevant
importation documents, at their principal place of business, for a
period of three years from the date of final payment of duties and
taxes or customs clearance, as the case may be.
Economic Zone Locators
Economic zone locators are likewise required to keep records of
imported goods withdrawn from the zones and brought into the
customs territory.
Imposition of 20% Surcharge
If an importer who, after receiving a lawful demand in writing, fails
or refuses to produce relevant records, accounts or invoices
necessary to determine and assess the correct value and
classification of the imported goods at the border, the CMTA
empowers a District Collector to impose a 20% surcharge based on
the dutiable value of such goods.
Remedies
Remedies of the Government
(1) Administrative (extrajudicial)
(a) Attachment of tax lien (Section 1204)
(b) Imposition of fines & Forfeiture and Seizure
proceedings
NOTE: Notice to importer is required by due
process (Commissioner of Customs v. New Frontier
Sugar [June 11, 2014])
(c) Sale of property in customs custody
(d) Reduction of customs duties/ compromise
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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES
Tax Lien
• attaches on the goods, regardless of ownership, while still
in the custody or control of the Government
• availed of when the importation is neither prohibited nor
improperly made
Administrative Fines and Forfeitures
• applied when the importation is unlawful
• It may be exercised even where the articles are not or no
longer in Custom‘s custody UNLESS the importation is
merely attempted in which case it may be effected only
while the goods are still within the Customs jurisdiction
or in the hands of a person who is aware thereof (Sec.
2531 & 2530, TCC)
• under Sec. 2530(a) of the TCC, in order to warrant
forfeiture, it is not necessary that the vessel or aircraft
must itself carry the contraband. The complementary if
collateral use of the Cessna plane for smuggling
operation is sufficient for it to be deemed to have been
used in smuggling. (Llamado vs. Commissioner of
Customs, GR No. L-28809, May 16, 1983)
Reduction of customs duties/compromise
• subject to approval of Sec. of Finance (Sec. 709, 2316
TCC)
(2) Judicial
(a) Action for declaratory relief – to determine
legality of its issuances, like a Customs
Memorandum Order classifying certain articles
(Commissioner of Customs v. Hypermix Feeds
Corp [February 1, 2012])
(b) Action for collection of duties – usually when
a lien is lost because goods have been released;
liability attaches to the goods
(c) Criminal Action
Remedies of the Taxpayer
NOTE: A taxpayer must first take his ADMINISTRATIVE
Remedies and only after exhaustion of administrative remedies,
resort to JUDICIAL REMEDIES
(1) Administrative
(a) Protest
(b) Abandonment
(c) Abatement and Refund
(2) Judicial
Administrative Remedies of Taxpayer
Protest
he disagrees with the ruling or
When taxpayer may
decision of the Collector of Customs.
protest
Payment under protest essential.
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within 15 days from payment or
Within what period
from occurrence of event that
rendered payment illegal or
may protest be filed
erroneous; taxpayer may ask for
release pending protest
NOTE: Effect of failure to protest on time: Action of Collector
becomes final, except for manifest errors
How a protest case is resolved administratively
→ The Collector must conduct a hearing de parte.
NOTE: Notice is part of due process in protest cases.
→ If the Collector decides against the taxpayer, the taxpayer
has 15 days to appeal to the Commissioner.
→ The Commissioner, in deciding the appeal, need not
conduct a hearing.
→ If the taxpayer is unsatisfied with the ruling of the
Commissioner, appeal must be made to the CTA within
the 30-day reglementary period.
NOTE: Taxpayer need not ask for reconsideration where
such is futile, as when Commissioner says his decision is
final. (Com’r v. Oilink International [July 2, 2014])
Abandonment
When taxpayer may
When taxpayer want to relieve
resort to
himself of the duty of paying duties
abandonment
How Express or implied
Express Abandonment
An express abandonment occurs when an importer expressly
signifies in writing to the District Collector of his intention to
abandon the imported goods. In such case, the goods shall ipso
facto be deemed property of the Government and may be sold or
disposed of generally at the port where the goods are located.
Instances of implied abandonment
(1) When an importer fails to file the goods declaration
within 15 days (previously, a 30-day non-extendible
period) or within the approved extended period of
another 15 days from notice of the date of discharge of
the last package from the vessel or aircraft;
(2) Having filed such a declaration, the importer fails to pay
the assessed duties and taxes within 15 days from receipt
of notice of final assessment;
(3) Failure to claim the goods within 30 days (previously,
15 days) from payment of duties and taxes.
When implied abandonment is deemed effected
When so declared by Collector
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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

NOTE: If the BoC has not disposed of the goods implied to be From decisions of Commissioner
abandoned, the owner or importer of goods may, within 30 days In cases involving disregard or denial of due process
after the lapse of the prescribed period to file the declaration (15
days, extendible for another 15 days), still reclaim the goods by Where: Regular courts
complying with all legal requirements and paying the
corresponding duties, taxes, and other charges. From decisions of Secretary of Finance
(1) In cases imposing
When BoC has already sold the goods implied to be abandoned (a) dumping duty;
If the BoC has already sold the goods, the proceeds of the sale, after (b) countervailing duty;
deduction of any duty and tax and all other charges and expenses
(such as, government storage charges; expenses for the appraisal, (2) In cases of automatic review by Commissioner of the
advertisement, and sale of auctioned goods; arrastre and private Collector’s decision
storage charges and demurrage charges; and freight, lighterage or
general average, on the voyage of importation) shall be turned over Where: CTA
to those persons entitled to receive them.

NOTE: The balance will then be deposited to a “forfeiture fund”

Two Kinds of Proceedings in the Bureau of Customs
to be managed by the BoC which shall be used to, among others, (BOC)
support its modernization program and other operational efficiency Customs Protest Cases
and trade facilitation initiatives. These are cases which deal solely with liability for customs duties,
fees, and other charges.
Remedy of owner against implied abandonment
Owner may reclaim the articles at anytime before the goods are NOTE: Before filing a protest, there must first be a payment under
sold or otherwise disposed of by paying the duties protest.

Effect on the owner of abandonment When customs protest applicable

Relief from payment of duties, taxes and other charges, BUT NOT The customs protest is required to be filed only in case the liability
criminal liability of the taxpayer for duties, taxes, fees and other charges is
determined and the taxpayer disputes said liability.
Abatement and Refund
Instances when refund may be made When customs protest not required
(1) Abatement cases – e.g., missing packages, deficiencies in Where there is no dispute, but the claim for refund arises by reason
contents before arrival, losses after arrival, dead or of the happening of supervening events such as when the raw
injured animals. material imported is utilized in the production of finished products
subsequently exported and a duty drawback is claimed.
(2) Drawback cases – e.g., refund or tax credit granted on
duties that had been paid on products that Requirements for making a protest
(a) are subsequently exported, e.g., fuel on vessels (1) Must be in writing
in international trade (2) Must point out the particular decision or ruling of the
(b) articles used as raw materials for items Collector of Customs to which exception is taken or
subsequently exported objection made;
(3) Must state the grounds relied upon for relief;
Judicial Remedies of Taxpayer (4) Must be limited to the subject matter of a single
adjustment;
From decisions of Commissioner (5) Must be filed when the amount claimed is paid or within
In cases involving
15 days after the payment;
(a) liability for customs duties, fees, and other money
(6) Protestant must furnish samples of goods under protest
charges;
when required.
(b) seizure, detention and release of property affected;
(c) fines, forfeitures and penalties imposed in relation
thereto: and
(d) other matters arising under Customs law and other laws
administered by Bureau of Customs

Procedure: To CTA within 30 days

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES
Procedure in Customs Protest Cases
The Collector acting within his jurisdiction shall
cause the imported goods to be entered at the
customhouse
The Collector shall assess, liquidate, and collect the
duties thereon, or detain the said goods if the party
liable does not pay the same
The party adversely affected (the protestant) may file
a written protest on his foregoing liability with the
Collector within 15 days after paying the liquidated
amount (the payment under protest rule applies)
Hearing within 15 days from receipt of the duly
presented protest. Upon termination of the hearing,
the Collector shall decide on the same within 30 days
If the Decision is adverse to the protestant
Appeal with the Commissioner
within 15 days from notice
Appeal with the Court of Tax
Appeals Division within 30 days
from notice
Appeal with the CTA en banc
Appeal by certiorari with the
Supreme Court within 15 days
from notice
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If the Decision is adverse to the government
ComAutomatic Review by the
Commissioner
Automatic review by the Secretary of
Finance
If decision of Commissioner or Secretary
of Finance is adverse to the protestant,
he may appeal to the CTA and SC under
the same procedure on the left
Reasons for the automatic review of decisions adverse to the
government
(1) To protect the interest of the Government
(2) A favorable decision will not be appealed by the taxpayer
and certainly a Collector will not appeal his own decision.
(3) Lifeblood Theory
Seizure and Forfeiture Cases
These refer to matters involving smuggling. It is administrative and
civil in nature and is directed against the res or imported articles
and entails a determination of the legality of their importation.
These are actions in rem.
NOTE: It is of 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. (Commissioner
of Customs vs. Manila Star Ferry, Inc., GR Nos. 31776-78, October
21, 1993)
Smuggling
An act of any person who shall:
(a) Fraudulently import any article contrary to law, or
(b) Assist in so doing, or
(c) Receive, conceal, buy, sell, facilitate, transport, conceal
or sell such article knowing its illegal importation (Sec.
3601, TCC)
(d) Export contrary to law. (Sec. 3514, TCC)
NOTE: The Philippines is divided into various ports of entry –
entry other than port of entry, will be SMUGGLING.
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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

Doctrine of Hot Pursuit

Evidence for Conviction in Smuggling Cases
Mere possession of the article in question unless defendant could
explain that his possession is lawful to the satisfaction of the court
(Sec. 3601, TCC).
NOTE: Payment of the tax due after apprehension is not a valid
defense (Rodriguez vs. Court of Appeals, GR No. 115218,
September 18, 1995)
Things subject to confiscation in smuggling cases
Anything that was used for smuggling is subject to confiscation,
like the vessel, plane, etc. (Llamado vs. Commissioner of Customs,
GR No. L28809, May 16, 1983).
EXCEPTION: Common carriers that are not privately chartered
cannot be confiscated.
Right of Customs Officers to Effect Seizure and Arrest (Section
2205)
(1) May seize any vessel, aircraft, cargo, article, animal or
other movable property when the same is subject to
forfeiture or liable for any time as imposed under tariff
and customs laws, rules & regulations
(2) May exercise such powers only in conformity with the
laws and provisions of the TCC
Requisites:
(1) Over Vessels
(a) An act is done in Philippine Waters which
constitutes a violation of the tariff and customs
laws
(b) a pursuit of such vessel began within the
jurisdictional waters which
(c) may continue beyond the maritime zone, and
(d) the vessel may be seized on the high seas.
(2) Over Imported Articles
(a) There is a violation of the tariff and customs
laws
(b) As a consequence they may be pursued in the
Philippines
(c) With jurisdiction over them at any place therein
for the enforcement of the law. (2nd par. Sec.
603, TCC)
Goods in Custom’s custody beyond reach of attachment
Goods in the custom‘s custody pending payment of customs duties
are beyond the reach of attachment. As long as the importation has
not been terminated, the imported goods remain under the
jurisdiction of the Bureau of Customs. (Viduya vs. Berdiago, GR
No. L-29218, October 29, 1976)

Common Carriers; Forfeiture

(1) Common carriers are generally not subject to forfeiture
although if the owner has knowledge of its use in
smuggling and was a consenting party, it may also be
forfeited.

(2) If a motor vehicle is hired to carry smuggled goods but it

has no Certificate of Public Convenience (CPC), it is
not a common carrier. It is thus subject to forfeiture, and
lack of personal knowledge of the owner or the carrier is
not a defense to forfeiture.

Forfeiture not subject to Forfeiture in the absence of Prima

Facie Evidence
The forfeiture of the vehicle, vessel or aircraft shall not be effected
if it is established that the owner thereof or his agent in charge of
the means of conveyance used as aforesaid has no knowledge of
or participation in the unlawful act:

Provided, however, that a prima facie presumption shall exist

against the vessel, vehicle or aircraft under any of the following
circumstances:
(1) If the conveyance has been used for smuggling at least
twice before;
(2) If the owner is not in the business for which the
conveyance is generally used; and
(3) If the owner is financially not in a position to own such
conveyance.

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

Administrative and Judicial Procedures Relative to Customs (4) officers generally empowered by law to effect arrests and
Seizures and Forfeitures execute processes of courts, when acting under the
direction of the Collector
Determination of probable cause
Requirements for Customs Forfeiture
and issuance of warrant
(1) The wrongful making by the owner, importer, exporter
or consignee of any declaration or affidavit, or the
wrongful making or delivery by the same persons of any
invoice, letter or paper – all touching on the importation
Actual seizure of the articles or exportation of merchandise.; and

(2) That such declaration, affidavit, invoice, letter or paper is

Listing of description, appraisal false. (Farolan, Jr. vs. Court of Tax Appeals, GR No.
and classification of seized 42204, January 21, 1993)
property
Places where searches and seizures may be conducted
(1) enclosures
Report of seizure to the Comm. (2) dwelling house (there must be search warrant issued by
of Customs and the Chairman, a judge)
Comm. on Audit (3) vessels or aircrafts and persons or articles conveyed
therein
(4) vehicles, beasts and persons
Issuance by the Collector of a (5) persons arriving from foreign countries
warrant of detention
NOTE: Burden of proof in seizure or forfeiture is on the claimant.
(Section 2535, TCC)
Notification to owner or
importer Requirements for Manifest
A manifest in coastwise trade for cargo and passengers transported
from one place or port in the Philippines to another is required
when one or both of such places is a port of entry (Sec. 906, TCC).
Formal hearing
NOTE: Manifests are also required of vessel from a foreign port
(Sec. 1005, TCC).

NOTE FURTHER: Articles subject to seizure do not have to be

District collector renders his imported goods. Manifests are also required for articles found on
decisions vessels or aircraft engaged in coastwise trade. (Rigor vs. Rosales,
GR No. L-33756, October 23, 1982)
If decision is not favorable to the aggrieved owner or importer:
Appeal by the aggrieved owner or importer Unmanifested Cargo is subject to Forfeiture
Unmanifested cargo is subject to forfeiture whether the act of
If decision is not favorable to the government: smuggling is established or not under the principle of res ipsa
Automatic Review by the Commissioner loquitur. It is enough that the cargo was unmanifested and that
there was no showing that payment of duties thereon had been
Persons having authority to enforce the Tariff and Customs made for it to be subject to forfeiture.
Laws and Effect Searches, Seizures and Arrests (Section 2203,
TCC) Settlement of Forfeiture Cases
(1) officials of the BOC, district collectors, police officers, Settlement of cases by payment of
agents, inspectors, and guests of the BOC; GENERAL RULE fine or redemption of forfeited
(2) officers of the Phil. Navy and other members of the AFP property is allowed.
and national law enforcement agencies when authorized (1) the importation is
by the Commissioner of Customs absolutely prohibited or
(3) officials of the BIR on all cases falling within the regular (2) the surrender of the
EXCEPTIONS
performances of their duties, when the payment of property to the person
internal taxes are involved; offering to redeem would
be contrary to law, or

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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES
(3) when there is fraud. (Sec.
2307, TCC)
Acquittal in Criminal Charge not Res Judicata in Seizure or
Forfeiture Proceedings
Criminal proceedings are actions in personam while seizure or
forfeiture proceedings are actions in rem. Customs compromise
does not extinguish criminal liability. (People vs. Desiderio, GR
No. L-208005, November 26, 1965)
NOTE: At any time prior to the sale, the delinquent importer may
settle his obligations with the Bureau of Customs, in which case
the aforesaid articles may be delivered upon payment of the
corresponding duties and taxes and compliance with all other legal
requirements (Sec. 1508, TCC)
Fraudulent Practices Considered as Criminal Offenses
against Customs Revenue Laws
(1) Unlawful importation;
(2) Entry of imported or exported article by means of any
false or fraudulent practices, invoice, declaration,
affidavit, or other documents;
(3) Entry of goods at less than their true weights or measures
or upon a classification as to quality or value;
(4) Payment of less than the amount due;
(5) Filing any false or fraudulent claim for the payment of
drawback or refund of duties upon the exportation of
merchandise; or
(6) Filing any affidavit, certificate or other document to
secure to himself or others the payment of any drawback,
allowance or refund of duties on the exportation of mdse.
greater than that legally due thereon. (Sec. 3602, TCC)
The Bureau of Customs
Functions of the Bureau of Customs
(1) Assessment and collection of revenues from imported s
laws;
(2) Control smuggling and related frauds;
(3) Supervision and control over the entrance and clearance
of vessels and aircraft engaged in foreign commerce;
(4) Enforcement of TCC and related laws;
(5) Supervision and control over the handling of foreign
mails arriving in the Philippines;
(6) Supervise and control all import and export cargoes for
the protection of government revenue;
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U.I.O.G.D.
(7) Exclusive original jurisdiction over seizure and
forfeiture cases under the tariff and customs laws.
Jurisdiction of Collector of Customs over Importation of
Articles
(1) Cause all articles for importation to be entered in the
customhouse
(2) Cause all such articles to be appraised and classified
(3) Assess and collect the duties, taxes and other charges
thereon, and
(4) Hold possession of all imported articles until the duties,
taxes and other charges are paid thereon. (Section 1206,
TCC)
Territorial Jurisdiction of the BOC
(1) All seas within the jurisdiction of the Philippines
(2) All coasts, ports, airports, harbors, bays, rivers and inland
waters whether navigable or not from the sea. (1st par,
Sec. 603, TCC)
The Tariff Commission
Functions of the Tariff Commission
Investigative Powers (Section 505, TCC)
(a) the administration of and the fiscal and industrial
effects of the tariff and customs laws of this country now
in force or which may hereafter be enacted;
(b) the relations between the rates of duty on raw materials
and the finished or partly finished products;
(c) the effects of ad valorem and specific duties and of
compound specific and ad valorem duties;
(d) all questions relative to the arrangement of schedules
and classification of articles in the several schedules of
the tariff law;
(e) the tariff relations between the Philippines and foreign
countries, commercial treaties, preferential provisions,
economic alliances, the effect of export bounties and
preferential transportation rates;
(f) the volume of importations, compared with domestic
production and consumption;
(g) conditions, causes, and effects relating to competition of
foreign industries with those of the Philippines, including
dumping and cost of production; and
(h) in general, to investigate the operation of customs and
tariff laws, including their relation to the national
revenues, their effect upon the industries and labor of the
country and to submit reports of its investigation as
provided.
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TARIFF AND CUSTOMS CODE OF THE PHILIPPINES

Administrative Assistance to the President and Congress

(Section 506, TCC)

Authority of the Commissioner to Make Compromise

Under the CMTA, the Commissioner may, subject to the further
approval of the Finance Secretary, compromise any
administrative case involving the imposition of fines and
surcharges, including those arising from the conduct of a post
clearance audit, unless otherwise specified by law.

The compromise powers of the Commissioner include fines and

surcharges arising from a post clearance audit.

Voluntary disclosure concept

This is a welcome reintroduction of a voluntary disclosure concept
for importers who would want to correct their mistakes by
voluntarily settling their deficiencies in duties and taxes.

NOTE HOWEVER: Cases involving forfeiture of goods shall not

be subject to any compromise.

Application of Information and Communications

Technology (ICT)
T he BoC, in accordance with international standards, is mandated
under the CMTA to utilize ICT in enhancing customs control and
efficiency in customs operations geared towards a paperless
customs environment.

Electronic documents, permits, licenses or certificates will now be

acceptable and will have the legal effect, validity or enforceability
as any other document or legal writing. The utility of full
automation will be felt once the “Single Window Policy” is fully
implemented.

REFERENCES
• Tariff and Customs Code Reviewer – CPALE Tax – Part
1 – Core Principles by Accountancy Philippines (2017)
• Pre-Bar Review on Tariff and Customs Code by
Attorney Reynaldo G. Geronimo (2016)
• Chapter VII [Tariff and Customs Duties] of Guide to
Philippine Taxes
• Memory Aid by San Beda College of Law Central Bar
Operations
• Changes under the Customs Modernization and Tariff
Act: An Overview by Mark Anthony P. Tamayo, SGV &
Co. (2016)

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jbsdeyoung.professional@gmail.com | @therainsantiago
U.I.O.G.D.
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