Pre-Bar Review

Tariff and Customs Code

Bar Exams for 2016

Atty. Reynaldo G. Geronimo

Partner
Romulo Mabanta Buenventura
Sayoc & De Los Angeles
 TARIFF AND CUSTOMS CODE
The first TCC (R.A. 1937) was
enacted on June 22,1957
effective on July 1, 1957
The code now in force is the ASEAN
HARMONIZED TARIFF
NOMENCLATURE established by
the members of the Asean in Aug
7, 2003, as amended.
 A.FundamentalPrinciples
A. Whatismeantbytariff?Byduties?
Tariffmeansthebookofrates.
Moreprecisely,itmeansabook,(BookOneof
theTCC),whichcontainstheparticularratesof
taximposedupon(a)importationofspecific
kindsorclassesofgoodsinto(TitleI)or(b)
exportation(TitleIII)outofthePhilippines.

Dutiesorcustomsdutiesreferstothetax
thatissupposedtobecollectedwhengoodare
importedorexported.
Example of a Page in
Book I Tariff Law Schedule I
LIVE ANIMALS; ANIMAL PRODUCTS.
Title I Import Tariff CHAPTER 1
(to show Tariff & LIVE ANIMALS.
Duty) NOTES:
1. ThisChaptercoversallliveanimalsexceptfish,crustaceans,mollusks
(Chapter3)andmicrobiccultures(headingNo.30.02).
2. AnyreferenceinthisChaptertoaparticulargenusorspecies,exceptwhere
thecontextotherwiserequires,includesareferencetotheyoungofthat
genusorspecies.
III
Itemforimport
01.01Livehorses,asses,mulesandhinnies
A.Suckingfoals-Free
B.Other------------hd.P100.000 Tax
TT
01.02Livebovineanimals(includingbuffaloandcarabao)
:A.SuckingcalvesFree
B.Other---------------hd.P20.000
01.03Livepigs......
0.1.04Livesheepandgoats.....
:CHAPTER 2
MEAT AND EDIBLE MEAT OFFALS.
B.WhatistheGeneralRuleonthe
liabilityofimportedgoodstoduty?
Allarticles,whenimportedfromany
foreigncountryintothePhilippines,
shallbesubjecttoduty
uponeachimportation,
eventhoughpreviouslyexportedfrom
thePhilippines,
exceptasotherwisespecificallyprovided
forinthisCodeorinotherlaws.

(TCC,Sec. 101.Imported Articles Subject to

Duty)
B.1Areimportationsmadeby
theGovernmenttaxable?
Yes.ExceptthoseprovidedforSec.105
oftheTCC,allimportationsbythe
Governmentforitsownuse,orthatofits
subordinatebranchesorinstrumentalities,
orcorporations,agencies,or
instrumentalitiesownedorcontrolledby
thegovernmentshallbesubjecttothe
duties,taxes,fees,andothercharges
providedforintheTCC.(Sec.1205)
 Isthisnottakingmoneyfrom
onepocketandputtingitin
another?

Yes,thatiswhyuponcertificationofthe
headofthedepartmentorpolitical
subdivisionconcerned,withtheapproval
oftheAuditorGeneral,thattheimported
articleisactuallybeingusedbythe
Governmentoranyofitspolitical
subdivisionconcerned,theamountofduty,
tax,feeorchargeisrefundedtotheentity
whichpaidit.
C.Whatisthepurposeof
imposingcustomsduties?
Customsdutiesareimposedforanyoneand,
sometimes,forallofthefollowingpurposes:
1.RaiserevenueBoCsecondonlytoBIR
2.SupportforeignpolicyFlexibleTariffClause
3.ProtectdomesticeconomyProhibited
importations
4.Implementcommitmenttoothernations
AseanIntegration
D.Whatismeantbytheflexible
tariffclause(FTC)inthe
Constitution?(Askedatleast
once)
TheFTCintheConstitutionisthatprovisionthat
empowersCongress,bylaw,toauthorizethe
President,tofixwithinspecifiedlimitsandsubjectto
suchlimitationsandrestrictionsasitmayimpose,tariff
rates,importandexportquotas,tonnageand
wharfagedues,andotherdutiesorimpostswithinthe
frameworkofthenationaldevelopmentprogramofthe
Government.(Section28(2),ArticleVI,Constitution)
D.1HasCongressexercisedthatpowerto
delegatetaxingpowertothePresident?
Yes.Intheinterestofnationaleconomy,general
welfare,and/ornationalsecurity,andsubjecttothe
limitationsprescribedintheTCC,thePresident
uponrecommendationoftheNEDA,isempowered
to(a)increase(bynohigherthan100%adval),
reduce,orremoveexistingratesofprotectiveduty
(b)establishimportquotasorbanimportsofany
commodity;and(c)imposeanadditionaldutyonall
importsnotexceeding10%advalwhenever
necessary.(Sec401a)
D.2IsthePresidentalsoauthorizedto
modifytariffratestopromoteforeigntrade?
Yes.Forthepurposeofexpandingforeign
marketsforPhilippineproductsasameans
ofassistanceintheeconomicdevelopment
ofthecountry,inovercomingdomestic
unemployment,inincreasingthepurchasing
powerofthePhilippinepeso,andin
establishingandmaintainingbetter
relationshipbetweenthePhilippinesand
othercountries,thePresidentmaymodify
tariffrates

InwhatwaysmaythePresidentmodify
tariffratesintopromoteforeigntrade?

thePresidentmayfromtimetotime

enterintotradeagreementswithforeign
governmentsorinstrumentalities,and

modifyimportduties(includinganynecessary
changeinclassification)andotherimport
restrictionsasmayberequiredorappropriateto
carryoutandpromoteforeigntradewithother
countries(Sec.402a)
Whatgoodsaresubjecttothe
exporttariffandduty?
Certainwoodproducts,mineralproducts
(metallicandnon-metallic),plantsand
vegetableproducts,andanimalproducts,
are.subjecttoExportDutyonthegross
F.O.B.valueatthetimeofshipmentbased
ontheprevailingrateofexchange.(Sec.
514,1stpar)
Whatismeantbypremiumduty?
Premiumdutyisthedutyimposed,in
additiontoexportduties,onthedifference
betweenthecurrentpriceasestablished
bytheBureauofCustomsandthebase
priceoftheproducts,inaccordancewith
theschedulespecifiedunderthelaw(Sec.
514,2ndpar)
IstherealsoaFlexibleTariff
Clauseforexportproducts?

Yes.ThePresident,uponthe
recommendationoftheNEDA,may(a)
subjectanyoftheproductssubjectto
ExportandPremiumdutiestohigheror
lowerrates,(b)includeadditionalproducts,
(c)excludeorexemptanyproducts,or(d)
additionallysubjectanyproducttoexport
quota.(Sec.515)
E.RequirementsofImportation
(Askedatleast4times)
1.Whendoesimportationbeginandwhendoes
importationend?

Importationbeginswhenthecarryingvesselor
aircraftentersthejurisdictionofthePhilippines
withintentiontounladetherein.
Importationisdeemedterminateduponpayment
oftheduties,taxesandotherchargesdueupon
thearticles,orsecuredtobepaid,ataportof
entryANDthelegalpermitforwithdrawalshall
havebeengranted,orinthecaseoftaxfree
importations,untiltheyhavelegallyleftthe
jurisdictionofthecustoms.(Sec.1202)
2. Wheremayimportationbeeffected?
AllarticlesimportedintothePhilippines,
whethersubjecttodutyornot,shallbeentered
throughacustomhouseataportofentry.(Sec.
1201)

3.Whoisdeemedtheownerofimportedgoods?
Theownerofanimportedarticleistheperson
towhomthesameisconsigned.Theholderof
abillofladingdulyindorsedbytheconsignee
thereinnamed,or,ifconsignedtoorder,bythe
consignor,shallbedeemedtheconsignee
thereof.(Sec.1203)
4.ObligationsofImporter
a. Ensurehisgoodsarelistedinthe
vesselsCargoManifest
b. Fileormakeaformalorinformal(less
thanPhp2,000orpersonalluggage)
importentry
c. Declarecorrectweightorvalue
d. Paytheduties
e. Keeprecords
F.Importationsinviolationof
taxcreditsundertheTCCP(Asked
atleast4times)
Whatarethecommonkindsof
importationsthatviolatethetaxcredit
provisionsoftheTariffandCustoms
Code?

1.Smuggling
2.Otherfraudulentpractices
 Whatissmuggling?
Smugglingisanactofanypersonwho
shallfraudulentlyimportorbringintothe
Philippines,orassistindoingso,any
article,contrarytolawortoreceive,
conceal,buy,sellorinanymanner
facilitatethetransportation,concealment,
orsaleofsucharticleafterimportation,
knowingthesametohavebeenimported
contrarytolaw.Itincludestheexportation
ofarticlesinamannercontrarytolaw.
(Sec.3519)
 Whatarecontrabands?

Contrabandsarearticlesofprohibited
importationorexportation.(Sec.3519)
Whataretheotherfraudulent
practices?
Otherfraudulentpracticesinclude:
a) Unlawfulimportation
b) EntryorExitofarticlesbymeansoffalse
orfraudulentpractices,invoices,
declarations,affidavitsorother
documents
c) Entryofgoodsatlessthantheirtrue
weightoruponafalseclassificationasto
qualityorvalue
d.Paymentoflessthantheamountdue
e.Filingofanyfalseorfraudulentclaimfor
thepaymentofdrawbackorrefundof
dutiesuponexportationofthe
merchandise
f.Filinganyaffidavit,certificateorother
documenttosecuretohimorothersthe
paymentofanydrawback,allowance,or
refundofdutiesontheexportationof
mechandisegreaterthanthatlegallydue
G.ClassificationofImportedGoods
(Askedatleast5times)
Importedgoodsareclassifiedinto:
a. Taxableimportationthosepermittedtobe
imported.Ex:flourwheat
b. ProhibitedimportationthoseNOTpermitted
tobeimported.Ex:pornographicmaterials
c. Conditionallyfreeimportation(akaregulated
[SecofFinancev.Kutangbato,Aug7,2013)
those exemptfromthepaymentofimport
dutiesuponcompliancewiththeformalities
prescribedinaccordancewithlaw,orwiththe
regulationswhichshallbepromulgatedbythe
CommissionerofCustomswiththeapprovalof
theSecretaryofFinance.Ex:Returning
residents
 H.ClassificationofDuties
(Askedatleast4times)
Dutiesareclassifiedinto:
a.RegularorOrdinaryDuties-those
dutiesimposedbyreasonofthemerefact
ofimportationandareusuallybasedon
dutiablevalueordutiableweight
b.SpecialDutiesthoseimposedwhen
certainconditionsarepresent,suchas,
whentheimportation,becauseoffactors
otherthanitsintrinsicworth,isconsidered
eitherharmfultotheeconomy,or
incompatiblewithournationalinterest.

H1.Howistheamountofthetax
baseofregulardutiesdetermined?
Iftaxbaseis:
a. Advaloremordutiablevalue-basisis
(a)transactionvalueoftheactual
importationitself;
(b)transactionvalueofidenticalgoods;
(c)transactionvalueofsimilargood;
(d)deductivevalue;
(e)computedvalue;or
(f)fallbackvalue
b.Specificbasisisspecification,egweight
Whatistheorderofthemethods
usedindeterminingdutiablevalue?
MethodOne:transactionvalueofthe
goodsimportedthepriceactuallypaidor
payablewhensoldforexporttothe
Philippines,withadjustments
MethodTwo:transactionofidenticalgoods
transactionvalueofidentical(sameinall
respects)goodssoldforexporttothe
Philippinesandexportedatoraboutthe
sametime
 MethodThree:Transactionvalueofsimilar
goodssimilar,i.e.althoughnotalikein
allrespects,havecharacteristicsandlike
componentmaterialswhichenablethemto
performthesamefunctionsandtobe
commerciallyinterchangeable.
MethodFour:Deductivevaluebasedon
theunitpriceatwhichtheimportedgoods,
oridenticalorsimilargoods,aresoldinthe
Philippines,inthesameconditionaswhen
importedinthegreatestaggregatequantity
atorabouttimeofimportation
 MethodFive:Computedvaluethesum
ofcostorvalueofmaterialsinprocessing
theimportedgoods,amountofprofitand
generalexpensesusuallyreflectedinthe
saleofgoodsbyproducersinthecountry
ofexport,freightandinsurance,costof
packaging,etc.
MethodSix:Fallbackvaluevalue
determinedbyusingotherreasonable
meansandonthebasisofdataavailable
inthePhilippines(Sec201)
Describetheprocessof
payingtheregularcustomsduties.
StepOne:Makingoftheimportentry
(formalorinformal)-Importedarticlesmustbe
enteredinthecustomhouseattheportofentry
withinthirtydaysfromdateofdischargeofthe
lastpackagefromthevesselbytheimporter,or
authorizedperson(Sec.1301&ff)
StepTwo:Examination,classificationand
appraisaloftheimportedarticles.(Sec1401&ff)
StepThree:Liquidation(payment)ofduties
andwithdrawalofthearticlesfrom
customs.(Sec.1601&ff)
H2.KindsofSpecialDuties
1.Anti-dumpingduty-imposedbythe
SecretaryofTradeandIndustryorthe
SecretaryofAgricultureFinancewhenthe
importedarticlesare,afterinvestigation,
aretobebeingsoldorlikelytobesoldin
thePhilippines,atapricelessthanitsfair
valueANDtheimportationorsaleofwhich
mightinjure,orpreventtheestablishment
of,orislikelytoinjureanindustryinthe
Philippines;
2.CountervailingdutyImposedbythe
SecretaryofTradeandIndustryorthe
SecretaryofAgricuture,afterinvestigation,
onarticlesupontheproduction,
manufactureorexportofwhichany
bounty,subsidyorsubventionisdirectlyor
indirectlygrantedinthecountryoforigin
and/orexportation,ANDtheimportationis
likelytomateriallyinjureanestablished
industry,orpreventorconsiderablyretard
theestablishmentofanindustryinthe
Philippines;

3.DiscriminatoryDutyImposedbythe
President,intheamountnotexceeding100per
centoftheexistingratesuponarticlesfromany
foreigncountrythat
(1)Imposesanyunreasonablecharge,exaction,
regulationorlimitationonPhilippinegoodswhich
isnotequallyenforceduponthelikearticlesof
everyforeigncountry;or.
(2)Discriminatesinfactagainstthecommerceof
thePhilippinesinrespecttoanycustoms,
tonnage,orportduty,fee,charge,exaction,
classification,regulation,condition,restrictionor
prohibition,insuchmannerastoplacethe
commerceofthePhilippinesatadisadvantage
comparedwiththecommerceofanyforeign
country.
4.MarkingDutyImposedbythe
CommissionerofCustoms,withapproval
oftheSecretaryofFinance,onevery
articleofforeignoriginimportedintothe
Philippinesrequiringtheirbeingmarkedin
anyofficiallanguageofthePhilippinesand
inaconspicuousplaceaslegibly,indelibly
andpermanentlyasthenatureofthe
article(orcontainer)willpermitinsuch
mannerastoindicatetoanultimate
purchaserinthePhilippinesthenameof
thecountryoforiginofthearticle.
5. Safeguardduty-(R.A.No.8800)

a.Generalsafeguarddutyduty
imposedbytheSecretaryofTradeafter
positivelydeterminingthataproductis
beingimportedinincreasedquantities,
whetherabsoluteorrelativetodomestic
production,astobeasubstantialcause
ofinjuryorthreatthereoftothedomestic
industry;

b.Specialsafeguarddutyforagriculture-
imposedbytheCommissionerofCustoms,
uponrequestoftheSecretaryof
AgriculturethroughtheSecretaryof
Finance,onanagriculturalproduct,
consistentwithourinternational
obligations,either(a)whenitscumulative
importvolumeexceedsthetriggervolume,
or(b),eveniftriggervolumeisnot
exceeded,itfailsthepricetest.
 I.Remedies
I.1RemediesoftheGovernment(Askedat
least7times)
a.Administrative(extrajudicial)
a.1Search,Seizure,forfeiture,arrest
b.Judicial
b.1Rulesonappealincluding
jurisdiction
 RemediesoftheGovt

1.Administrative
AttachmentofTaxLien(Sec.1204)
ImpositionofFines&Forfeituresand
Seizureproceedings(Noticetoimporter
isrequiredbydueprocess)(Comrof
CustomsvNewFrontierSugar,June11,
2014)
Saleofpropertyincustomscustody
 RemediesoftheGovt
2.Judicial
Actionfordeclaratoryreliefto
determinelegalityofitsissuances,like
aCustomsMemorandumOrder
classifyingcertainarticles(ComrofCustoms
v.HypermixFeedsCorp,Feb1,2012)
Actionforcollectionofduties,usually
whenlienislostbecausegoodshave
beenreleased;liabilityattachestothe
goods
I.2RemediesoftheTaxpayer(Askedat
least3times)
I.2 a.Ataxpayermustfirsttakehis
ADMINSTRATIVEREMEDIESandonly
afterexhaustionofadministrative
remedies,resorttoJUDICIALREMEDIES.

I.2a1.AdministrativeRemedies
a.Protest
b.Abandonment
c.AbatementandRefund
b.1.JudicialRemedies
 Protest
Whentaxpayermayprotest:hedisagrees
withtherulingordecisionoftheCollector
ofCustoms.Paymentunderprotestessential.
Withinwhatperiodmayprotestbefiled:
within15daysfrompaymentorfrom
occurrenceofeventthatrendered
paymentillegalorerroneous;taxpayer
mayaskforreleasependingprotest
Effectoffailuretoprotestontime:actionof
Collectorbecomesfinal,exceptformanifest
errors.
 Howaprotestcaseisresolved
administratively:
TheCollectormustconductahearingdeparte.Noticeis
partofdueprocessinprotestcases.
IftheCollectordecidesagainstthetaxpayer,thetaxpayer
has15daystoappealtotheCommissioner.
TheCommissioner,indecidingtheappeal,neednot
conductahearing.
Ifthetaxpayerisunsatisfiedwiththerulingofthe
Commissioner,appealmustbemadetotheCTAwithin
the30-dayreglementaryperiod.Taxpayerneednotask
forreconsiderationwheresuchisfutile,aswhenComr
sayshisdecisionisfinal.(Comrv.OilinkInternational,
July2,2014)
 Abandonment
Whentaxpayermayresortto
abandonment:Whentaxpayerwantsto
relievehimselfofthedutyofpayingduties.
How:expressorimplied
Instancesofimpliedabandoment:
(a)failuretofileanimportentrywithin30days
fromdischargeofgoods;or
(b)havingfiledanentry,failuretoclaimgoods
within15days
 Whenimpliedabandonmentisdeemed
effected:whensodeclaredbyCollector

Remedyofowneragainstimplied
abandonment:
Ownermayreclaimthearticlesatanytimebefore
thegoodsaresoldorotherwisedisposedofby
payingtheduties

Effectontheownerofabandonment:relief
frompaymentofduties,taxesandother
charges,BUTNOTcriminalliability
 AbatementandRefund
Instanceswhenrefundsmaybemade:
Abatementcases,--egmissingpackages,
deficienciesincontentsbeforearrival,losses
afterarrival,deadorinjuredanimals.
Drawbackcaseseg.refundortaxcredit
grantedondutiesthathadbeenpaidon
productsthat
(a)aresubsequentlyexported,egfuelonvessels
ininternationaltrade
(b)articlesusedasrawmaterialsforitems
subsequentlyexported
 I.2.bJudicialRemediesofTaxpayer
FromdecisionsofCommissioner:incases
involving(a)liabilityforcustomsduties,
fees,andothermoneycharges;(b)
seizure,detentionandreleaseofproperty
afffected;(c)fines,forfeituresand
penaltiesimposedinrelationthereto:and
(d)othermattersarisingunderCustoms
lawandotherlawsadministeredby
BureauofCustoms:ToCTAwithin30
days
 FromdecisionsofCommissioner:incases
involvingdisregardordenialofdue
process:regularcourts

FromdecisionsofSec.ofFinance:
(a)incasesimposing(1)dumpingduty;
(2)countervailingduty;
(b)incasesofautomaticreviewby
CommissioneroftheCollectorsdecision,
wheredecisionisadversetothe
Government:CTA
 FunctionsofTariffCommission
Studyimpactofcustomsandtarifflawson
thecountry
Relatetherateofdutiesonrawmaterials
tothefinishedproducts
Investigateeffectoftariffrelationsbetween
thePhilandothercountriesandeffectof
importationsontheeconomy
Ingeneral,investigatetheoperationof
tariffandcustomslawondomestic
industriesandlaborinthecountry
Thank You
and
Good Luck