Tax 2 Prefi Part 2 - Tariff-Transcripts

Taxation II - Atty.
Kim Aranas SMLP | SDB | KDA | AC | JT

A.Y. 2018-2019
Tariff and Customs Duties
Your primary reference for this topic should be the CMTA or the Customs Modernization and Tariff Act which was passed last May 30, 2016 and
signed by President Pnoy. If you have the codal provision, much better.
But prior to the CMTA what was the law dealing with importation and exportation – it is the so called Tariff and Customs Code or TCC but at that
time, the TCC was more than 30 years old. So ang mga exemption ubos kaayo. They thought it was propert to amend the TCC.
So what are the salient features of the CMTA?
• It now contains a provision on tax exemption of personal and household effects brought by Filipinos who stayed in foreign countries when they
return in the Philippines. So the amount exempted is increased because before P10,000 and it became an issue especially katong sa Balikbayan
Boxes. Basically, BOC tried to use its power to inspect these boxes because the amount exempted then was very low so dutiable na unta ang excess
of that amount. Because of that issue, in the CMTA they increased from P10,000 to P150,000 and that is not only one time ang sending sa
Balikbayan boxes – that is P150,000 up to a maximum of 3x na sending/padala. Padala ka ig pasko, one P150,000 exemption, inig ka birthday
another P150,000 na pud.
With a condition that whatever is the content of that Balikbayan Box must not be in commercial quantity or must not be for purposes of
selling it in the country, nor for barter or exchange.
• Going back to personal and household effects, they are also exempted if the Filipino who stayed abroad returns to the country to resettle. Ang
amount of exemption would depend on the amount of time that the Filipino stayed abroad. If you recall this is also exempted from VAT in Sec.109
but there is a provision there that it is only exempted from VAT if the personal and or household effects is also exempted from customs duties and
tariff rates. [ Sec 109C ].
Under the CMTA the amount of the exemption is P350,000 if the Filipino stayed abroad for at least 10 years
If the Filipino stayed for at least 5 years, the exemption is up to a maximum of P250,000
If the stay is less than 5 years, then same sa OFW and balikbayan boxes na P150,000.
• The CMTA also has a provision on full electronic processing on shipments, streamlining of export and import processes, simplified process for
seizure and disposition of illegal goods.
• CMTA also increased the exemption of small items of minor or lacking of importance from P10 to P10,000. (Small items of minor or lacking
importance – these are items na dalhon nimo when you go abroad, magdala kag tasa sa restaurant sa Japan)
Under the CMTA, of course we need to understand what is the distinction between customs duties and tariff. Well, under the law they are being
used synonymously but technical customs duties is the umbrella term which covers the tariff.
Definitions
1. Customs duties – taxes on the importation and exportation of commodities, the tariff or tax assessed upon merchandise imported from, or
exported to a foreign country.
So this covers the tariff rates which is being covered by the BOC and also the taxes being collected by the BIR. Unsa ang tax nga ginacollect if you
import? It’s the VAT which follows the cross border doctrine. So if you have the importations whether or not in the course of trade or business, it is
subject to VAT.
2. Tariff – custom duties, toll or tribute payable upon merchandise to the government
Ingon ka sir generic ang custom duties nganong naa man ni under sa tariff? The tariff basically, this is the “taripa” (in Bisaya) or this is the list of
applicable rates for a particular weight or item enumerated in the administrative order of the BOC.
Naapil ang customs duties nganha kay when we say ‘customs duties’ we divide this into two. One is the general customs duties and the specific
customs duties. Now under these classifications naa diha ang tariff rates which is applicable based on the value of the property which comes in or
the weight of the property. Which is why tariff is also described as:
– a list of schedule of articles on which a duty is imposed upon importation into the country with the rates which they are severally taxed.
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Taxation II - Atty. Kim Aranas SMLP | SDB | KDA | AC | JT
A.Y. 2018-2019
We have two kinds of tariff. The import tariff and the export tariff. No need to explain kung kanus.a iimpose but if it is an import tariff then it is
higher as compared to an export tariff especially if it is a protective tariff (usually this is imposed in an imported item).
Merchandise - the Revised Administrative Code defines merchandise when used with reference to importation or exportation, to include goods,
wares and in general, anything that may be the subject of exportation. Checks, money orders and dollar bills are properly within the concept of
merchandise as used in Revised Administrative Code are merchandise
One thing that you need to remember na included sa definition of merchandise are ‘checks, money orders and dollar bills’ if ang storyahan nato is
ang jurisdiction of the BOC because kung civil law lahi ang definition didto sa merchandise. But the point lang is can BOC regulate the foreign currency,
pwede nimo ipasulod or ipagawas sa country? YES which is why if you go on a foreign travel, you will notice na naay mga announcement na you can
only bring up to $10,000. Now pwede ba na if you are bringing more than that amount, pwede ba na icease ni BOC? Yes because it is considered as
merchandise within the jurisdiction of the BOC.
Purposes of tariffs:
Purposes sa tariffs, parehas ra sa tax. Diba sa tax, primary purpose niya under the NIRC is revenue raising and then we also have police regulation.
Same things for tariffs. The following are basic tariff rates that can be imposed on an item:
1. Revenue tariffs - those whose rates are relatively low so that goods may be readily imported and duties may easily be collected.
2. Protective tariffs/special tariffs- those whose rates are relatively high to keep certain imports out of the domestic market or to raise domestic
price on certain imports so that they may be manufactured profitably at domestically
Examples of this kind of tariff are the duties for anti-dumping. To protect the local industry sa rice especially since victim ang rice through that Filipino
First policy. There was a list before of products determined to be protected by the government. So if naay similar product coming abroad, they do
not just impose the regular tariff but also special tariffs. Ang ending dako kaayo ug bayad sa customs and in effect mas mahal ig palit sa market. They
do this to protect the local industry para didto mupalit sa locally produced rice and not sa mga imported rice since cheaper ang local. On the negative
side, it could also cause lack of supply and ang trade kay ma monopolize. That’s what happened in the rice.
3. Bargaining tariffs - those whose schedules include rates designed primarily for bargaining purposes or which contain some general provision for
the imposition of higher duties upon products of countries whose tariff policies are considered unsatisfactory or unfair.
This is more for promoting the goods of the country so if a foreign country imposes higher tariff rate for Philippine products then mubalos pud ta sa
foreign country so when they sell their products here in the Philippines, we also impose a higher tariff rate. That is bargaining tariff so we can have a
leverage to negotiate with that foreign country to lower their tariff rate for Philippine products in that country kay of course we want to export in
their place.
And that was a problem before Asean kay isig pasaka ug tariff rates ang mga neighbouring countries and they saw it as not really promoting free
trade among these countries. Because of the Asean, they tried to lower the imposition of tariff rates.
So another concept introduced in the CMTA, is that now it is expressedly required under the law that if you are going to deal with the BOC, you must
be registered or accredited with the Bureau, mao na naa silay gitawag ron na Authorized Economic Operator –
Authorized Economic Operator (AEO) refers to the importer, exporter, customs broker, forwarder, freight forwarder, transport provider and any
other entity duly accredited by the Bureau to promote trade facilitation and to provide a seamless movement of goods across borders through secure
international trade supply chains with the use of risk management and modern technology
Bottomline: because of the usual criticism against the Bureau and one thing na nanotice nila is bisan kinsa na lang ang mudeal na broker before the
BOC. So now they enforce accreditation. So dili na ka basta basta makaimport if you are not an accredited importer. Dili sad ka basta basta makaexport
if you are not a registered exporter and dili ka kadeal with the BOC if you are not an accredited customs broker.
Mao na ang nahitabo sa katong shabu shipment issue. If you noticed nagSenate hearing pa to sila just to determine kung kinsa gyud ang nagpaship
sa shabu. But wala nakabalo kung kinsa since there is this concept na if ako ganahan ko magimport and I am not accredited, I will just tap an accredited
importer to import on my behalf. That was the defense man of the named importer of the shabu shipment na dili to iyaha kay somebody else paid
him to sign as an importer.
Incentives for AEO

a. Release of goods upon provision of the minimum information necessary to identify the goods and permit the subsequent completion of the final
goods declaration;
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b. Grant of clearance of the goods at the declarant’s premises or another place authorized by the bureau;
c. Other special procedures as provided under RA 10863
If you are accredited with the Bureau, naa nay gitawag nga mga lane ang BOC (yellow lane, green lane, red lane). If accredited broker or importer ka
and you have a very good track record with the BOC meaning marelease ang goods nimo, proper payment, walay issues of underdeclaration, usually
your goods will be under the green lane processing where there is no need of physical inspection, documentary requirements lang ang ipass. They
will only do the physical inspection if there are discrepancies in the documents that you submitted. Sa akong dealings before with the BOC, not now,
ang muhimo sa legwork, processing sa documents and clearance (nalahi ang topic huhu ) Basta the last process is clearance from the legal, before it
will be signed by the collector so final si district collector. Why do you need to get that clearance? Kung sa BIR ang pinakafinal nimo diba is a certificate
authorizing registration, sa BOC ang pinakafinal is the clearance which is the permit to withdraw the goods or the items from the BOC and in which
case you can now take the item with you.
Scope of Tariff and Custom Laws

- the provisions of the Tariff and Custom Code (TCC) RA 10863 or the “Customs Modernization and Tariff Act” (CMTA);
a. Provisions of the Tariff and Customs Code
This is composed of several *** before but recently 2016, si RA 10863 or the CMTA supersedes and amended the Tariff and Customs Code.
b. RA 10863 or the Customs Modernization and Tariff Act (CMTA)
c. Regulations pursuant thereto
d. Regulations subject to BOC, or otherwise within its jurisdiction
* No IRR of RA 10863 yet.
Kung sa BIR they call it the revenue regulations sa BOC they call it the CAO (Customs Administrative Order) or they have the CMO (Customs
Memorandum Order), mao ni na regulations which basically interprets the CMTA.
Who are the chief officials of the Bureau of Customs?

By the way, the Bureau of Customs is under the Department of Finance so in short si Sec. of Finance ang primary responsible
1. Customs Commissioner– head of BOC. The Commissioner is under the supervision of the Secretary of Finance.
Take note that the old name of the Customs Commissioner is the Collector of Customs but they had to change it since there was a negative
image attached to the word ‘collector’.
2. Deputy Commissioner – at least 4 but not more than 6.

3. District Collectors – their office is at the port of collection. For Cebu, the port of collection is at Pier 5. Cebu Customs District Collector is Atty. Elvira
Cruz.
Under sa BIR, the country is divided into what we call as revenue regions diba? The revenue region headed by the Regional Director. Si BOC, gidivide
ang country to what we call as districts and there are 17 districts and each of them are headed by the so called the District Collector or Port Collector.
Kani na districts class are further subdivided into main port and the sub port. So for Cebu, ang main port nato is in the POC premises in Pier 5. But
the subports in Cebu kay daghan, we have on in Mepz area and in Naga and Balamban. In each of these subports naay examining BOC official na
muassess sa declaration nimo.
POWERS, DUTIES AND JURISDICTION OF THE BOC

1. Assessment and collection of customs revenues from imported goods and other dues, fees, charges, fines and penalties accruing under this Act;
2. Simplification and harmonization of customs procedures to facilitate movement of goods in international trade;
3. Border control to prevent entry of smuggled goods;
But of course you don’t expect the BOC official na magtindog2 diha sa pier and sa airport. Ang primary responsible jud when it comes to the
prevention, kung sa dagat you have the Philippine Navy, kung sa airport naa man ta diha mga BOC personnel.
4. Prevention and suppression of smuggling and other customs fraud;
Two types of smuggling:
Actual smuggling – backdoor nimo gipaagi, no proper declaration, or no declaration at all.
Can you commit smuggling even it went through the BOC?YES especially if there is misdeclaration or underdeclaration. Mao to ang nahitabo sa
shabu shipment kay nakit.an through the BOC but was not declared as shabu. There was smuggling but not actual smuggling.
Technical smuggling –
5. Facilitation and security of international trade and commerce through an informed compliance program;
6. Supervision and control over the entrance and clearance of vessels and aircraft engaged in foreign commerce;
When it comes to the entrance and clearance of vessels and aircrafts engaged in foreign commerce, naa bay right si BOC to inspect these vessels?
YES BOC personnel can inspect.
7. Supervision and control over the handling of foreign mails arriving the Philippines for the purpose of collecting revenues and preventing the entry
of contraband;
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8. Supervision and control on all import and export cargoes landed or stored in piers, airports, terminals facilities, including container yards and
freight stations for the protection of government revenue and prevention of entry of contraband;
9. Conduct a compensation study with the end view of developing and recommending to the President a competitive compensation and
remuneration system
This is to attract more BOC personnel.So unsa ang common palusot sa mga corrupt sa BOC?Gamay among sweldo.
10. Exercise of exclusive original jurisdiction over forfeiture cases under this Act;
* Favorite daw sa bar
When we say forfeiture cases, this is a case when the BOC will seize and distrain your property especially if it is illegal or absolutely prohibited. Since
it has the exclusive original jurisdiction of these cases, can you go to the court and ask for TRO or file for replevin? NO because exclusive and original
jurisdiction man. Mao na mahadlok ka na ideclare na abandoned ang goods nimo kay once declared as such, it will be forfeited by the BOC in favor
of the State - so lahi na sad na proceedings ang ideal nimo once maforfeit.
• The exclusive jurisdiction of the Collector of Customs cannot be interfered with by regular courts even upon the allegation of ownership.
11. Enforcement of this Act and all other laws, rules and regulations related to customs administration.
POLICE AUTHORITY OF THE BOC

Does the BOC have the authority not just to forfeit but to arrest an erring person? YES basically the officials of the BOC, the district collectors
they have the police authority to search seize and arrest: But that presupposes na gacontinually commit ka ug violation for example
smuggler ka. There was a news before na warehouse in Mandaue giraid sa BOC, pwede ba na buhaton nila together with police officers?
YES kay ang presumption man gud is if nakagawas na ang items nimo sa BOC, they will issue clearance. So ang usual defense is naa nay
clearance so BOC don’t touch me na but on the side of the BOC they can pose as counter defense na you underdeclared or committed
smuggling pwede gihapon ka nila irun after even if supposedly outside the jurisdiction na ka. This is by virtue of the powers granted.
The following persons are authorized to effect search, seizure, and arrest:
1. Officials of the BOC - District Collectors, Deputy District Collectors;
2. Police officers within the BOC;

3. Agents, inspectors, and guards of the BOC;
4. Officers and members of the AFP, when authorized by the commissioner;
5. Officials of the BIR within their regular performance of duty and when payment of internal revenue taxes is involved.
POWERS OF THE BOC under R.A. 10863

Sec. 216. Power of Seizure - Any person exercising police authority under this Act has the power and duty to seize any vessel, aircraft, cargo, goods,
animal or any other movable property when the same is subject to forfeiture or when they are subject of a fine imposed under this Act.
Sec. 218. Authority to Require Assistance and Information - Any person exercising police authority may demand the assistance of and request
information from the Philippine National Police (PNP), the AFP and other national law enforcement agencies, when necessary, to effect any search,
seizure or arrest. It shall be the duty of any police officer and other national law enforcers to give such lawful assistance.
Section 219. Authority to Enter Premises. — Any person exercising police authority may, at any time, enter, pass through, and search any land,
enclosure, warehouse, store, building or structure not principally used as a dwelling house.
When a security personnel or any other employee lives in the warehouse, store, or any building, structure or enclosure that is used for storage of
goods, it shall not be considered as a dwelling house for purposes of this Act.
This is to ascertain if there are smuggled goods in the premises.
Section 220. Authority to Search Dwelling House. — A dwelling house may be entered and searched only upon warrant issued by a Judge of a
competent court, the sworn application thereon showing probable cause and particularly describing the place to be searched and the goods to be
seized.
However when it comes to entry in the premises, we still follow the basic rules as set forth in the Constitution that if it is a dwelling place, dili pwede
basta basta makasulod si BOC. There must be a search warrant duly issued by the judge after a sworn application filed by a BOC official. But of course
if it is not a dwelling house it is not an issue like in a display center or warehouse. But di sad na sila basta basta musulod lang, they would conduct
surveillance sad to ascertain the modus.
Now in the following provisions (Sec. 220, 221, 222, 223), nakadetalye unsa ang extent sa search sa BOC. This is not the usual search na naay
checkpoint, there must be a finding that there is a possible violation of the provisions of the CMTA.
Section 221. Authority to Search Vessels or Aircrafts and Persons or Goods Conveyed Therein. — Any person exercising police authority under this
Act may board, inspect, search and examine a vessel or aircraft and any container, trunk, package, box or envelope found on board, and physically
search and examine any person thereon. In case of any probable violation of this Act, the person exercising police authority may seize the goods,
vessel, aircraft, or any part thereof. Such power to search includes removal of any false bottom, partition, bulkhead, or any other obstruction for the
purpose of uncovering any concealed dutiable or forfeitable good The proceeding herein authorized shall not give rise to any claim for damage caused
to the goods, vessel or aircraft, unless there is gross negligence or abuse of authority in the exercise thereof.
SECTION 222. Authority to Search Vehicles, Other Carriers, Persons and Animals. — Upon reasonable cause, any person exercising police authority
may open and examine any box, trunk, envelope, or other container for purposes of determining the presence of dutiable or prohibited goods. This
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authority includes the search of receptacles used for the transport of human remains and dead animals. Such authority likewise includes the power
to stop, search, and examine any vehicle or carrier, person or animal suspected of holding or conveying dutiable or prohibited goods.
Section 223. Authority to Search Persons Arriving From Foreign Countries. — Upon reasonable cause, travelers arriving from foreign countries may
be subjected to search and detention by the customs officers. The dignity of the person under search and detention shall be respected at all times.
Female inspectors may be employed for the examination and search of persons of their own sex.
Visitorial Powers (Sec. 224) - Power to Inspect and Visit.— The Commissioner or any customs officer who is authorized in writing by the
Commissioner, may demand evidence of payment of duties and taxes on imported goods openly for sale or kept in storage. In the event that the
interested party fails to produce such evidence within fifteen (15) days, the goods may be seized and subjected to forfeiture proceedings: Provided,
That during the proceedings, the interested party shall be given the opportunity to prove or show the source of the goods and the payment of duties
and taxes thereon: Provided, Further, That when the warrant of seizure has been issued but subsequent documents presented evidencing proper
payment are found to be authentic and in order, the District Collector shall, within fifteen (15) days from the receipt of the motion to quash or recall
the warrant, cause the immediate release of the goods seized, subject to clearance by the Commissioner: Provided, Finally, That the release thereof
shall not be contrary to law.
Authority to Conduct Surveillance (Sec. 306) - Special Surveillance for the Protection of Customs Revenue and Prevention of Smuggling.— The Bureau
shall conduct surveillance on vessels or aircrafts entering Philippine territory and on imported goods entering the customs office: Provided, That the
function of the Philippine Coast Guard to prevent and suppress the illegal entry of these goods, smuggling and other forms of customs fraud and
violations of maritime law and its proper surveillance of vessels entering anchor leaving Philippine territory as provided in Republic Act No. 9993,
otherwise known as
Basically ang point lang ani is to implement the provisions under the Code which is to assess and collect the correct amount of duties and taxes of
imported or exported goods.
(wala na kaayo gadiscuss si Atty. ani na provisions, but read them lang daw)
JURISDICTION OF THE BOC
1. Over all seas within Philippine territory and all coasts, ports, airports, harbors, bays, rivers, and inland waters; and
2. Over imported goods subject to seizure during its transport by land, air, water.
No problem with land because we’ve distinguished this already with special economic zone. When we say land outside of the economic zone, we call
it na a customs territory because the BOC exercises jurisdiction over it. But when we say water, of course jurisdiction of the BOC covers only the
territorial waters
JURISDICTION OF THE BOC
1. Over all seas within Philippine territory and all coasts, ports, airports, harbors, bays, rivers, and inland waters; and
2. Over imported goods subject to seizure during its transport by land, air, water. Example: Authority to search vehicle – primarily pertains
to imported goods when they are being transported through a vehicle by land.
Territory :
 All seas within the jurisdiction of the Philippines:
1. Territorial seas (12 nautical miles from the baseline) and
2. Contiguous Zones (24 nautical miles from the baseline)
 Exclusive Economic Zone (EEZ)
 All coasts, ports, airports, harbors, bays, rivers, and inland waters, whether navigable or not from the sea.
But when we say water of course the jurisdiction of the BOC when it comes to seas and water covers only the territorial waters, contiguous zone and
up to the exclusive economic zone. We still follow the rule na once maabot mo sa high seas beyond na na sa jurisdiction.
Let us say for example smuggling, gikugod ka from the territorial waters unya pag-abot sa high seas, diba naa mana if continuing crime
Why do we need to define this? Ngano apilun ang water?
Because again the BOC has jurisdiction over vessels especially if it engaged in commercial operations.
What vessel? Cargo or passenger?
Cargo because when it comes to passenger sa vessel dili na within the jurisdiction of BOC, it is the MARINA who has the jurisdiction over passenger
ships.
Kinds of Goods/Merchandise
1. Articles subject to duty or Dutiable Goods (Sec. 104, R.A. 10863)
Under the CMTA we have this so called articles subject to duty or dutiable goods that i under section 104 under RA 10863.
2. Duty free imports and exports (Sec. 116)
When we say duty-free goods these are exempted.
The duty free imports and exports are divided into two, the Relief Consignment (Sec. 120-121) and the Conditionally Tax and/or duty-free
importation.
a. Relief Consignment (Sec. 120-121)

This is an inserted provision because of the Yolanda na relief. One of the criticisms there is ang ubang na mga goods kay wala na release because wala
nabayaran ang duties and taxes because gi-subject to duties and taxes. Because it was not properly addressed to the government. If it has been
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coursed through the DSWD there would have been no problem. Pero ang ubang relief goods kay gi course through pa man sa relative nila kay ang
pamilya nila ang mu distribute so mao to na assessan ug duties and taxes.
Because of that there is this provision inserted that if it is a relief consignment its exempted from duties but there conditions, such that there must
be calamity that happened in our country, there must be a declaration from a government agency that there is a crisis and there is a calamity and
the relief consignment must be properly addressed to the government agency (example: DSWD)
b. Conditionally Tax and/or duty-free importation (Sec. 800)

Then you have the conditionally taxed and/or duty free importation, this is provided under section 800. When we say conditionally taxed or duty
free importation, meaning when you meet the conditions, it is considered duty free.
But if you do not meet that condition, then you subject it to appropriate taxes.
Please read section 800.
3. Regulated imports and exports (Sec. 117)

4. Prohibited imports and exports
a. Absolutely prohibited (Sec. 118)
b. Restricted/Qualifiedly prohibited (Sec. 119)
Absolutely prohibited, dili jud kasulod.
Qualifiedly prohibited, pwede musulod pero naay condiitons.
Sa CMTA gi klaro na niya like guns and ammunitions, it is prohibited but if it is being imported by the government or AFP it can enter.
Please read section 118 and 119.
DUTIABLE GOODS (AFP-CPP-NPA-VMH-FAT-WE-MAMO)

1. Animals and animal product
2. Animal or vegetable Fats; oil and their cleavage products
What is this cleavage product?
That is the by-product of oil so related sa oil, like baby oil.
3. Prepared foodstuffs; beverages, spirits and vinegar; tobacco and manufactured tobacco
4. Products of Chemical or allied industries
5. Plastic and rubber articles
6. Pulp or wood;
7. Natural or cultural stones
8. Plaster, cements and other related articles
9. Arms and ammunitions
10. Vegetable products
11. Mineral products
12. Hides (skin, fur, leather)
13. Footwear, headgear, etc.
14. Aircraft, vessels, vehicles and all other mode of transportation
15. Textile and textile products
16. Wood and related articles
17. Electrical and mechanical machineries
18. Metals
19. Artworks, antique
20. Manufactured/Miscellaneous articles
21. Optical products, medical and surgical products
This is not a favorite bar question, so dili favourite sa bar, dili sad favorite sa exam.
Mas important to remember the prohibited goods kay meaning mas gamay siya, at least kabalo naka na dili sila kasulod. If wala sa prohibited so
pwede isulod sa dutiable goods.
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Prohibited Importations (AMOT2- AmigO)
a. Articles for unlawful abortion;
b. Any goods manufactured in whole or in part of gold, silver or other precious metals or alloys and the stamp, brand or mark does not indicate
the actual fineness of quality of the metals or alloys;
Alloys means that alloys na wala na properly brand or stamp ang finess and quality.
c. Obscene or immoral articles;
d. Written or printed goods in any form containing any matter advocating or inciting treason, rebellion, insurrection, sedition, or threat to
take life or inflict bodily harm upon any person in the Philippines;
e. Any adulterated or misbranded food or goods for human consumption or any adulterated or misbranded drug in violation of relevant laws
and regulations;
f. Infringing goods as defined under the Intellectual Property Code and related laws; and
g. All other goods or parts thereof which importation and exportation are explicitly prohibited by law or rules and regulations issued by the
competent authority.
If ganahan mu memorize, pwede ra sa prohibited importations
You go lang sa section 112.
Conditionally-Free Importation [PSST-BAR-FEW-PERA-SAM-CPP-VICE]

1. Professional instruments and implements
2. Sea store supplies to the vessel or aircraft
3. Salvage articles recovered from an abandoned vessel
4. Trailer chassis by a shipping company
5. Books
6. Aquatic products
7. Relief organization and articles used for relief operations
8. Film production by foreign media or movie outfit
9. Equipment used in salvaging vessels
10. Wearing apparels
11. Personal and household effects
12. Importation for the use of Foreign Embassies
13. Receptacles, containers holders and other similar boxes
14. Animals, EXCEPT race horse
15. Samples of any kind
16. Articles for repair, re-conditioning for export
17. Mining equipment and tools
18. Cost of repair made abroad upon a vessel registered in the Philippines
19. Articles which are previously exported but returned in the Philippines
20. Prizes, medals, trophies, badges, and other things bestowed as an award
21. Vessels spare parts of foreign vessel and aircraft
22. Articles which are Imported subsequently in the Philippines
23. Coffin, caskets
24. Exhibition, competition articles for display
Then you have the conditionally free importation
When we say conditionally free importation it means to say pwede musulod without any imposition of duties and taxes.
CLASSIFICATION OF CUSTOMS DUTIES

We move on now to the amount that will be collected and assess by the BOC.
When it comes to duties we divide it to two, we have the ordinary or the regular customs duties and the special customs duties.
I. ORDINARY OR REGULAR DUTIES- imposed and collected merely as a source of revenue.

A. Ad Valorem - the duty is based on the market value or price of the imported article.
If Market price is not available:
1. FMV or price in the principal market of the country of manufacture or origin;
2. From reports of revenue or commercial attaches to be ascertained by the COC
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3. Domestic wholesale market price + 25% of expenses
For the ordinary or regular customs duties, this is classified as revenue tariff. Therefore, medyo minimal ang amount, and either it is an ad valorem
or specific.
When we say ad valorem, the duty is based on the market value or price of the imported article.
When we say market value it must be declared and based on the fair market value or price.
Kung walay gi declare nga market price in the import entry declaration, the BOC can refer to this items, fair market value or price of the principal
market of the country of the manufacturer or the origin if walay FMV diri and dili pa known sa Philippines or new product then pwede ang basehan
nila is the market price kung asa sila gikan. Kung dili makit-an then it can be based on the reports of revenue or commercial attaches to be ascertained
by the commissioner of customs or domestic wholesale market price plus 25% of the expenses.
Kinsa ang naay authority or mag buot?

It is the BOC examiner because inig sulod sa product, naa man sad kay i declare. Naa kay import entry declaration. Make sure you declare a certain
value in the Import entry declaration nga correct market value. Becasue if dili nimo i- declare si assessor ang mangita ug market value.
There was this case before na gi sendan ug 2nd hand Louie Vuitton bag but walay value so ang gibuhat sa examiner is miadto sa website sa Louie
Vuitton then second hand baya to so wala na claim ang bag kay wala man nabayran.
B. Specific – the duty is based on the weight or volume of the imported article.
When we say weight, we have this so called gross weight, legal weight, and the net weight.
Gross weight- it means everything is taken into consideration including the container van, container, the carton of the product. Naka specify na na
sa administrative order ni BOC kung unsa ang basehan gross weight ba or legal weight or net weight.
Legal weight- it is based on the weight of the goods and the immediate container,
Net weight- it is based on the weight of the item
C. Alternating- alternates between ad valorem and specific duties.

The examiner either uses the ad valorem or the specific manner in computing the regular customs duties.
This is applicable of you are shipping several goods or several items na ang uban mu fall under specific, ang uban mu fall under ad valorem.
D. Compound - consists of ad valorem and specific duties.

II. SPECIAL DUTIES (A-CoMADS)
-imposed and collected in addition to ordinary customs duties usually to protect local industries against foreign competition.
Basis of Dutiable Value
But let us talk first unsaon pag compute ni regular duty before we go to special customs duties.
When we say regular duty, diba sa nirc naa gtay gitawag na tax base. Unsa to ang purpose sa tax base? Diha nimo i-multiply whatever is the tax rate,
same thing also in the imposition of regular duties. Instead of calling it tax base, ang gitawag is transaction value.
TRANSACTION VALUE – the price actually paid or payable for the goods when sold for export to the Philippines.
▪ Value reflected in the Import Entry Declaration
▪ It is adjusted by adding certain expenses 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, the value of the materials, components, parts and items incorporated in the imported goods; amount of royalties and license
fees; cost of transport; loading, unloading and handling charges; and the cost of the insurance.
Kung tan-awon nimo transaction value basically, ang pinaka meat niya is the market price or the market value of the goods or item. However, what
makes it different from market price and market value is that the transaction value is adjusted by adding certain expenses and not just the market
price to the extent that they are incurred by the buyer but they are not included in the price actually paid or payable.
Say for example, other than the value of the materials, component, parts and items incorporated in the goods you can also add the amount of
royalties and license fees caused of transport, loading and unloading, handling charges as well as the cost of insurance during the shipping process
So all those expenses plus the market price will constitute your transaction value.
Kinsa ang mudeclare sa transaction value of the goods? It is the importer.
When we say importation, there is that importation known as the import entry declaration.
Kinsa ang primary signatory sa import entry declaration?
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It is the importer. But of course problem creeps up because ang mag fill up actually is the broker. Si importer mu sign na lang sa bottom. But the
problem comes in if masayup si broker ug fill up. Ang balikan ni BOC is not the broker but the importer because it is the importer who signed the
import entry declaration.
What is the consequence if ever there is a mistake in the entry declaration?
Pwede na maka trigger ug physical examination.
Sequence in Determination of Value – Sec 700

1. Transaction value
2. Transaction value of identical goods
3. Transaction value of similar goods
4. Deductive value
5. Computed value
6. Other reasonable means or fallback value
What if the importer will not declare any transaction value?

In that case the BOC can base the transaction value on identical goods. If wala, transaction value of similar goods. If wala, it can be based on deductive
value, computed value and other reasonable means or fall back valuation.
So when we say transaction value of identical goods and similar goods, unsa ang difference between nila?
When we say identical goods, kung iphone 10 na, Iphone 10 sad ang basehan sa transaciton value, meaning they are the same in all respect when it
comes to the features, brand, use, etc.
But what if walay identical goods in the market, it is the first time nga mu sulod sa pilipinas?
Then ang basehan niya, pwede ang transaction value sa similar goods. Kung walay transaction value dili kinahanglan isunod ni BOC nga dapat kani
before musulod mu base siya sa number3.
Any of these items up to the discretion of the assessor or the examiner.
If walay identical goods existing in the market then it can be based on the similar goods basically they are more or less a substitute to each other.
Fourth is the so called deductive value.

Deductive value- the value is based on the wholesale price based on the number of units sold in the market. Kinahanglan tan-awn ni BOC kung
pila ang nabaligya and pila ang wholesale price. Kung asa pinaka daghan nga nabaligya mao to ang wholesale price na gamiton niya as transaction
value.
For example, in the market if you sell 1000 pieces of that item the wholesale price is 100 and you sold 2000 units and the wholesale price is 95, so
ang gamitun niya na transaction value would be the 95 pesos. Based kung asa ang pinkadgahan nga untis na nabaligya.
Kaning computed value, this relies on the system of the BOC.
This other reasonable means and fall back value, for example, if nag import ka ug loiue vuitton unya you did not specify the transaciton value the pila
ra ang paga dto sa google or internet.
Basis for dutiable weight for specific custom duties:

1. Gross weight - weight of all, including the container vans
2. Legal weight - weight including the boxes (immediate container), excluding the container van
3. Net weight - weight of the articles/goods, excluding all the containers.
Pwede ba na madugangan nag regular customs duties nimo?
The answer is yes. Ang madugang is the special customs duties.
When we say special custom duties take note mao ni ang paborito if bar exam.
Kinds of Special Customs Duties:

1. Anti – Dumping Duty – imposed upon foreign products with value lower than their fair market value to the detriment of local products.
Rate: Difference between the actual price or export price and the normal value of the article. [Normal Value – Export Price]
Imposing authority: Special Committee on Anti- Dumping composed of the Sec. of Finance as chairman; members: Sec. of DTI, and either
of the Sec. of Agriculture if the article in question is agricultural product or the Sec. of Labor if non- agricultural product
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Again this is a Filipino first policy. So if that foreign product supposedly has lower price, we don't want na madali mahalin, so we add this anti-dumping
duty. So inig sulod sa market, it will be sold in a much higher price.
Mas barato daw sa Hongkong ang Uniqlo, Giordano, so maybe different ang tarrification nila ngadto.
The amount of the anti-dumping duty is the difference between the actual price and the normal value of the article.
2. Countervailing Duty - imposed upon foreign goods enjoying subsidy thus allowing them to sell at lower prices to the detriment of local
products similarly situated.
Rate: Equivalent to the bounty, subsidy, or subvention granted by the country of origin of the product.
Imposing Authority: Secretary of Finance
We have this countervailing duty.
Kung nag enjoy na ug subsidy in the country of origin lower ang cost of production so lower sad ang selling price compared to the local product. So
to be at par or to be sold at a higher price kay protective tariff man, gina impose ang gitawag na countervailing duty.
What is the difference between bounty, subsidy or subvention?

Bounty- refers to the cash award paid to an exporter or manufacturer in that foreign country, to encourqge that foreign manufacturer to manufacture
and export. So we impose countervailing, once i-import sa Pilipinas or export sa Pilipinas.
Subsidy- financial incentives, not necessarily in the form of direct cash or award. Basta point is na gamay ang cost manufacturing niya so miubos ang
cost of selling niya arun ma equate or ma sell higher to the local product na giimpose of this duty.
Subvention- refer to any assistance other than a bounty or cash subsidy given by the government for the manufacture or export of that particular
product.
3. Marking Duty - imposed upon those not properly marked as to place of origin of the goods.
Rate: 5% ad valorem of articles
Imposing authority: Commissioner of Customs
Mao na if it is an imported item diba naa jud nay nakabutang na, for example product of New Zealand, product of USA. There must be proper marking
so if there is no proper marking then a 5% ad valorem will be imposed by the commissioner of customs.
4. Discriminatory Duty - imposed upon goods coming from countries that discriminate against Philippine products
Rate: any amount not exceeding 100% ad valorem of the subject articles
Imposing authority: President of the Philippines
Discriminatory duty this is more of a bargaining tariff. This refers to a situation nga if ang tariff rate for Philippine product coming in in that foreign
country is high then the government will impose this discriminatory duty for product coming from that foreign country. The purpose is to bargain
nga dili nato i lower down ang tariff rate for their product unless they lower down their tariff rate which is prejudicial to Philippine products.
DRAWBACK
A device resorted to for enabling a commodity affected by taxes to be exported and sold in foreign markets upon the same terms as if it had not
been taxed at all. It may be full or partial.
Drawback, this is more of a refund mechanism na on the part of the importer. Usually this is applicable if a product originated in the Philippines it
was exported, it reached that foreign country, but imported back to the Philippines and then re-exported. So kadaghan ka nag bayad2 sa duties. If
you are the importer your remedy is the so called draw back. So usually, gina-apply ni sa petroleum products.
OTHER CUSTOMS FEES, DUES, OR CHARGES PAYABLE TO BOC

1. Harbor Fees - imposed on vessels entering into or departing from a port of entry of the Philippines.
Necessary ba nga nag angkla siya or nag park dira sa port?
No, it is not necessary. Pwede ang vessel nimo is located medyo layo which is common sa mga cargo ships. Dili jud na sila muanha sa pier nimo.
Pwede ba na ma collectan ug harbor fees ni BOC? Yes.
2. Wharfage dues - assessed against the cargo of a vessel engaged in foreign or coastwise trade, based on the quantity, weight, or measure received
and/or discharged by such vessel.
In this case, this is only paid once the vessel mag diskarga or karga ug whatever goods or items.
3. Berthing dues - assessed against a vessel for mooring or berthing at a pier, wharf, or river at any port in the Philippines.
Mao na ni the moment na mu-dock na gud siya dira sa pier nimo then berthing dues can be collected.
4. Storage dues - assessed on the articles for storage in customs premises, cargo shed.
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This storage dues usually mao ni ang bayaran ni importer pending the release of the imported article or items and ni lapse na ang 30-day period na
given to process the necessary clearances.
5. Arrastre dues - imposed on all imported and exported articles and baggage of passenger for their handling, receiving, and custody.
Mao ni ang bayaran nimo inig handle imported goods, transporting form the storage to the vessel or to the vehicle.
6. Tonnage dues: paid by the owner, agent, operator or master of a vessel engaged in foreign trade based on the net tonnage of the vessel or weight
of the articles discharged or laden.
7. Other fees charged and collected for services rendered and documents issued by the BOC.
IMPORTATION
So we already have an idea sa jurisdiction ni BOC. We already have an idea sa mga articles na pwede musulod but subject to duties. We also have an
idea on how to compute the duties both regular and special. So now, we go to import.
Liability for Customs Duties
General Rule: All importations and exportations of goods are subject to customs duties. (Sec. 105, TCC)
Exceptions:
Again when it comes to exemption, we follow the double nexus rule.
Kinsa ang mu determine nga na meet nimo ang double nexus rule? It is the DOF.
1. Expressly exempted under the TCC, now the CMTA;

Take note even if it is exempted under the CMTA, dili na automatic class nga dili ka mubayad ug dues. Same sa BIR you still need to get a certification
of exemption, you still need to apply because it is a confirmation on the part of the BOC or DOF, because it is the DOF who usually issues the certificate
of exemption, that you indeed qualify under the exception.
2. Exemptions granted to government agencies or GOCCs with existing contracts, commitments, agreements, or obligations with foreign countries;
3. International organizations pursuant to agreement and special law;
Example of this is Red Cross like when magdala sila ug ambulance
4. Exemption granted by the President of the Philippines upon recommendation of the NEDA
When Importation Begins

This is a favourite question in the BAR.
Importation begins when carrying vessel or aircraft enters the jurisdiction of the Philippines with intent to unload its cargo.
Take note when it comes to the start of importation this begins the moment he carrying vessel or aircraft enters in the jurisdiction of the Philippines.
But entry in the jurisdiction is not enough. There must be intent to unload. Mao to gi discuss nato ganina unsa ang territorial waters, unsa ang
contiguous zone because that is considered as territory in so far as Philippines seas are concerned pero dapat naay intent to unload.
Pwede diay musulod unya walay intent to unload? (naay giingon si sir na dili madungog kay nangatawa ang mga peeps)
Yes, like for example when the vessel would just purchase supplies or mag refuel lang.
Importation terminates upon payment of the duties and other charges due upon the articles, or secured to be paid, at the port of entry and the legal
permit for withdrawal shall have been granted.
Now termination of importation, there are two things na dapat mahitabo to be considered terminated ang importation. One, is there must be
payment of duties and other charges and second, there must be certification which serves as you legal permit to withdraw. So dili pwede mu
withdraw without any consent from the BOC. So duha, payment and legal permit to withdraw.
In the case of articles that are free of duties, taxes and other charges, importation is deemed terminated from the time they have legally left the
jurisdiction of the customs.
Mao ni ako giingon sa inyo na if the item has left the jurisdiction, there is a presumption nga nabayran na tanan but it does not bar the BOC from
going after the item or importer especially if dili legal ang paggawas sa bureau of customs. So pwede gukuron on allegations of smuggling.
OWNER OF IMPORTED ARTICLES

Why do we need to ascertain the owner?
Because the one pwede gukuron ni BOC is the owner. Pwede niya paninglan si owner.
Section 404. Owner of Imported Goods.— All goods imported into the Philippines shall be deemed to be the property of the consignee or the holder
of the bill of lading, airway bill or other equivalent transport document if duly endorsed by the consignee therein, or, if consigned to order, duly
endorsed by the consignor. The underwriters of abandoned goods and the salvors of goods saved from wreck at sea, coast, or in any area of the
Philippines, may be regarded as the consignees.
Under the CMTA, the government presumes the following as owners:
1. Signing consignee of the Import Entry Declaration
Consignee- the one who receives the item the moment it reaches our country. This is usually the recorded importer. Dili man necessary na ako ang
importer, ako sad ang real owner sa items.
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2. Holder of the Bill of Lading duly endorsed by the consignee
3. Holder of the Bill of Lading, if consigned to order, as endorsed by the consignor
4. Underwriters of abandoned articles
Abandoned articles- mao ni ang articles nga wala gi claim or gi abyaran na dities. Pwede mana i-auction sale ni BOC. Of course, adto unsa ni
underwriter ang somehow mubayad or mu settle.
6. Salvors
Salvors- this is related to vessels. There are some vessels na i- abandon there are several cases na nahitabo na, it is used for smuggling then pwede
na i- seize or forfeit ni BOC so ang uban is biyaan lang jud so ibaligya na to the so called salvors.
Obligations of the importer:

1. Cargo manifest- contains a list of the contents, value, origin, carrier, and destination of the goods to be shipped.
2. Goods Declaration (Sec. 102)- A declaration to the BOC showing the description, value, tariff classification and other particulars of the
imported article to enable the customs authorities to determine the correct customs duties and internal revenue taxes due on the
importation. (Sec. 411)
Kung ikaw ang owner sa imported article, your responsibility is to fill up and file the so called goods declaration. This is the import entry declaration
that I've mentioned a hile ago.
The goods declaration this is compared to the cargo manifest.
This cargo manifest, kinsa ang mu fill up?

Si shipper kung diin gikan ang item, ang cargo manifest gunitan sad ni kung kinsa like ang forwarding company and then eventually inig abot i-submit
na to the BOC.
But the point here is if unsa ang gi declare nimo sa import enrty decalraiton, it should match 100% with the content of the cargo manifest. Because
if ever there is a difference in the declarations in both document it may trigger physical examination.
Once ma forfeit ang item under the name of the importer, take note gi hire ra sa importer sa real owner, automatic black listed si importer.
Entry at custom house

- All articles imported to the Philippines, whether subject to duty or not, shall be entered through a custom house at a port of entry
(sec. 400)
So naa na ang goods gi ship na, inig abot the goods will enter the customs house. It goes through the x-ray mao na ang pinaka una.
Si vessel pwede ba na i x-ray?

Yes. kabantay mo sa BOC if muadto mo naay dagko kaayo na hollow metal, those are x- ray machines.
Under all circumstances, i x-ray.
Port of entry
1. Principal port of entry
2. Sub- ports of entry – under the administrative jurisdiction of the collector
Preparation of import entry revenue declaration (IERD)

 Prepared by the importer and customs broker or person duly empowered to act as agent
 A complete and correct declaration under oath on the specifications nad/ or particulars of importation.
 Within 30 days (non-extendible) upon entry of imported articles in the custom house, counted from the date of discharge of the last package
from the vessel or aircraft.
The importer will then prepare the Import Entry Revenue Declaration. This is signed and notarized, signed by the importer.
You are given 30 days to process the clearance. So kung mag broker ka, kabalo na ka sa pressure nimo.
After the 30 day period dira na musulod ug dagan ang dues and fees if you failed to claim the items or goods, worse if i- declare na abandoned by
the BOC.
Kinds of import entry

There are two types import entry declaration; formal and informal.
A. Informal entry (Informal Import Entry Declaration )
 Articles of a commercial nature (intended for sale, barter or hire) with Free on Board or Free Carrier Arrangement (FCA)
value which does not exceed P50, 000 (as increased from 2,000 and USD 500)
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 Personal and household effects or articles, not in commercial quantity, imported in passenger's baggage for personal
use
For informal, you fill this up of it pertains to articles of commercial value which does not exceed 50,000, or personal and household effects not in
commercial quantity imported in passengers baggage for personal use. Mao ni ang usually i-fill up if gikan ta sa abroad. Naa nay usual ipa fill up if
naa ba kay goods na i- declare before the BOC. This is the informal entry declaration.
Kung kadto lang not exceeding 10,000 like plato, baso no need to declare under the import declaration.
 Required attachments to Informal entry
a. Commercial invoice.
b. Packing list
c. Authority if exemption if exempted
d. Bill of lading or airway bill
e. Passport to passenger
B. Formal Entry and Internal Revenue Declaration (IEIRD)
 Articles of a commercial nature (intended for sale, barter or hire), dutiable value of which is more than P50,000
 Articles required to be declared using formal entry regardless of the value and whatever purpose and nature of the
importation
If it cargo usually ang gina ship or gina import ang i-fill up is the formal entry declaration. Articles of commercial nature with a dutiable value exceeding
50,000 or articles required to be declared using the formal entry regardless of the value and whatever nature or purpose of the importation.
 Required attachments to Formal Entry:
a. Commercial invoice
b. Bill of lading/ Airway Bill
c. Import permits
d. Certificate of origin
e. Packing list/ manifest
f. Other documents as required by special laws or other government agencies
Kaning A to F mao ni imo basehan in preparing the import entry declaration, so whatever is the content of the import entry declaration, it must be
the same as the content of these attachments.
To Summarize the Process:

1. Lodgement of Goods Declaration (final or provisional)
2. Physical Examination, if required
3. Preparation of discrepancy report, if any (prepared by BOC Official)
4. Protest on civil matters (pay computed duties and taxes and protest on discrepancy report)
5. Payment of the computed duties and taxes and release of imported goods
6. Customs compliance audit/post-audit (negligence and discrepancy can still be given here)
7. Finality of liquidation
Once you have the import entry declaration unsa na ang mahitabo? What happens in the Bureau of customs?
The goods declaration will be filed before the BOC. There could be physical examination, if required. If different ang declared items and value in the
goods declaration from the result of the physical examination, a discrepancy report will be prepared of course apil na sa discrepancy report ang
demand to pay the correct duties and taxes.
The taxpayer may protest on the civil matter like question the amount of the duties, tax but it is required that you pay in protest. So there must be
payment of the computed duties and taxes. Only when you pay this duties and taxes nga ma release ang goods or items.
After that there is this post audit and then the finality of liquidation. Under the CMTA, there is a specific provision na gyud pertaining to post audit,
na kung unsa ang finding ni examiner or assessor, it will be reviewed by a post audit committee. The purpose of this to check if sakto ang treatment
and computation ni field officer.
Importation
Atty: As a rule when it comes to imported articles or items, these are subject to customs duties especially when it is considered dutiable goods
because of course if it is a prohibited item then no importation can occur because it cannot in the first place enter our jurisdiction.
There are exemptions, meaning it is not subject to customs duties or it is duty free.
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Exemptions:
1. Expressly exempted under the TCC, now the CMTA;
2. Exemptions granted to government agencies or GOCCs with existing contracts, commitments, agreements, or obligations with foreign countries;
3. International organizations pursuant to agreement and special law;
4. Exemption granted by the President of the Philippines upon recommendation of the NEDA
Important item that is favorite in the bar exam is the concept of importation when it will start and when it will be terminated.
When Importation Begins

Importation begins when carrying vessel or aircraft enters the jurisdiction of the Philippines with intent to unload its cargo.
TN: There must be intention of unloading before it is deemed nga the act of importation is being committed or conducted. In such case, because of
this intent there must be proper goods declaration.
On the other hand, it is deemed terminated under two situations/requisites:
(1) Upon payment of the duties and other charges upon the articles/merchandise
- Prior to the payment, there must be proper declaration for there to have an assessment
(2) There must be a certificate or clearance issued by the Bureau which as a permit to withdraw the goods from the premises of the BOC
If it is a duty free article/item, importation is deemed terminated from the time they have legally left the jurisdiction of the BOC. Because of course,
kay exempted man, no more payment na mahitabo. But then again, if it is exempted there must be proper certification of exemption from appropriate
government agency primarily the department of finance.
Who are owners of Imported Articles?

Atty: we don't look at ownership here the same ownership as we have under Civil laws.
Owner of Imported Articles (Sec 404)

1. Signing consignee of the Import Entry Declaration
2. Holder of the Bill of Lading duly endorsed by the consignee
3. Holder of the Bill of Lading, if consigned to order, as endorsed by the consignor
4. Underwriters of abandoned articles
5. Salvors
-When it comes to vessels being abandoned by the owner of the vessel or vessels used in the conduct of smuggling which will be forfeited or seized
by the BOC. Di man na pwede idestory jud so sometimes it will be sold to salvors. So in that case, they are considered as owners of the imported
article.
Why is it important for us to know if you are deemed as the owner of the imported article insofar as the BOC is concerned?
Because you are primarily tasked to prepare or to sign the goods declaration or specifically the import entry revenue declaration (IERD). You are the
one--remember we've discussed in our previous meeting about the transaction value which is similar to the taxable based where you're going to
apply the duties so you are primarily responsible following the concept of self-assessment so it's as if ikaw ang voluntarily mu-declare ana nga item-
-the description, quantity, as well as transaction value thereof.
Obligations of importer/consignee/owner of the goods
a. Prepare cargo manifest also known as packing list –list of contents, value and designation of the goods to be shipped
b. And also goods declaration – a declaration to the BOC the description, rate and value to enable the customs authority to determine the proper tax
on the items.
c. Whatever has been declared must coincide with the packing list and the goods declaration. This is basically a sworn statement. If you under value
it the one signing the declaration can be held criminally liable
Atty: In all circumstances, this goods declaration must sync or the content must be the same as that of the cargo manifest or bill of lading or in short
the supporting documents. Because again, even a slight discrepancy in the description, unit, or samot na in the or transaction value could trigger
physical examination.
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Once you have these documents, the goods imported will now enter the customs house.
Entry at custom house

- All articles imported to the Philippines, whether subject to duty or not, shall be entered through a custom house at a port of entry (sec. 400)
Atty: Primarily gyud mahitabo is the x-ray. It will be determined if the goods or items that you are bringing in are not prohibited items even if you
declare it to be legal items na in reality diay ang sulod is illegal.
Port of Entry:
1. Principal port of entry
- this is where the district collector is holding office
2. Sub-ports of entry- under the administrative jurisdiction of the collector.
-this is still within the jurisdiction of the district collector
Port of Entry - A domestic port open to both foreign and coastwise trade including airport of entry (Sec 3514, TCC). All articles imported into the
Philippines whether subject to duty or not shall be entered through a custom house at a port of entry.
Three meanings of term "ENTRY"

(meaning kanus-a ka makaingon nga ni enter or nisulod nana siya sa customhouse)
1. documents filed at the custom house

2. submission and acceptance of the documents
3. physical procedure of passing the goods through the custom house
Atty: Whichever comes first. So it's either nauna ug process ang documents or nauna ug x-ray ang goods/items so in that case, the concept of entry
in the customs house is deemed fulfilled.
For the goods declaration, just to discuss in detail, it is termed by the BOC as the Import Entry Revenue Declaration (IERD).
Preparation of import entry revenue declaration (IERD)

➢ Prepared by the importer and customs broker or person duly empowered to act as agent
➢ A complete and correct declaration under oath on the specifications and/ or particulars of importation.
➢ Within 30 days (non-extendible) upon entry of imported articles in the custom house, counted from the date of discharge of the last package
from the vessel or aircraft.
Atty: Of course inig exam medyo taas kaayo hinomdoman ang IERD, so at least you should explain there about the so-called goods declaration. Take
note, this IERD is a notarized document which serves as a complete and correct declaration on the specifications of particulars of importation and
this must be filed within a non-extendible period of 30 days.
Sa previous tariff and customs code (TCC), 30 days ang nakabutang but under the CMTA, they amended it to 15 days pero extendible for another 15
days so you will apply for an extension so bottom line 30 days gihapon upon entry of imported articles in the customs house counted from the date
of discharge of the last package from the vessel of aircraft.
Two Kinds of Import Entry

A) Informal Entry (Informal Import Entry Declaration) (IIED)
B) Formal Entry (Import Entry and Internal Revenue Declaration) (IEIRD)
A. Informal entry (Informal Import Entry Declaration)

➢ Articles of a commercial nature (intended for sale, barter or hire) with Free on Board or Free Carrier Arrangement (FCA) value which does
not exceed P50, 000 (as increased from 2,000 and USD 500)
➢ Personal and household effects or articles, not in commercial quantity, imported in passenger's baggage for personal use
Atty: It is informal if what you are bringing in to the country are either commercial or non-commercial. If commercial, the value does not exceed 50k.
Another is the personal and household effects not in commercial quantity imported in passenger's baggage for personal use so you'll just have to
declare it with the BOC. Mao ni usually i-fill up nimo di ba sa airplane pa lang if you have goods or items to declare.
Attachments to the Informal Entry

a. Commercial invoice.
b. Packing list
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c. Authority if exemption duly issued by the DoF, if applicable
d. Bill of lading or airway bill
e. Passport passenger
Atty: But of course the issues is not more on the informal entry, rather it's more on the formal entry.
B. Formal Entry and Internal Revenue Declaration (IEIRD)

➢ Articles of a commercial nature (intended for sale, barter or hire), dutiable value of which is more than P50,000
➢ Articles required to be declared using formal entry regardless of the value and whatever purpose and nature of the importation
Atty: When it comes to these formal entries, mas daghan ang attachment as compared to the informal entry.
Attachments to the Formal Entry

a. Commercial invoice
b. Bill of lading/ Airway Bill
c. Import permits
d. Certificate of origin
e. Packing list/ manifest
f. Other documents as required by special laws or other government agencies
Atty: Kanang import permits, di ba ingon ko ninyo na if mu import ka, the importer must be an accredited importer by the BOC and there must be a
permit to import such item.
Take note kaning commercial invoice, bill of lading/airway bill, packing list/manifest, these are deemed prepared from abroad. In short dili ni gi
prepare pag abot pa lang sa PH. So the cargo manifest, bill of lading/airway bill kuyog ni during the transport of the goods/items.
The document that will be prepared here in the PH is the Formal Import Entry Revenue Declaration (IERD). Mao toh ako gi ingon sa inyo na as much
as possible there should be proper communication with the shipper or with the seller from abroad and the importer or the consignee here in the PH
so that there is no discrepancy when it comes to the information of the declaration.
*chika ni atty sa iya experience before*

It's very common na big companies di ba different department ang in charge into shipping, releasing, or documentation or issuance of commercial
invoice. So what happened lahi ang ang gideclare sa cargo manifest ug sa commercial invoice from the actual goods shipped in the cargo. Although
the goods are legal, pero ang description sa items in the cargo manifest, bill of lading/airway bill is way too different in the actual cargo or container.
So pagkita ni examiner nga naay discrepancy sa documents, ni request ug random physical examination. Pag examine, naa man juy discrepancy, so
naay report of discrepancy diretso.
Summary of Imported Cargo Clearance Procedure

1. Lodgement of Goods Declaration (final or provisional)
2. Physical Examination, if required
3. Preparation of discrepancy report, if any (prepared by BOC Official)
4. Protest on civil matters (pay computed duties and taxes and protest on discrepancy report)
5. Payment of the computed duties and taxes and release of imported goods
6. Customs compliance audit/post-audit (negligence and discrepancy can still be given here)
7. Finality of liquidation
Atty: For the imported goods the usual process is of course the lodgement of goods declaration or the IERD, then it will be compared to the actual
physical goods nga ni arrive or nisulod sa customs house. As what I've mentioned it's not in all circumstances nga mag physical examination gyud si
BOC, only if required. Kay ang primary icompare sa physical count or examination is the goods declaration--airway bill/commercial invoice/cargo
manifest--these are the supporting documents. So if there is difference, there will be a discrepancy report that will be prepared by the examiner.
Then of course, next is the demand for payment of the fines, penalties, and additional duties or taxes. It can be protested by the taxpayer. Later on
we will discuss on the manner of protest. You can basically pay with protest, of course if you want to release ang goods nimo you have to pay because
di ba para mahatagan ka ug clearance for the release primary requirement is the payment so mao na ang uban they have no choice but they will have
to pay with protest. After that, even if the goods are released na it's not yet the end of the process because under the CMTA, there is this provision
on post-audit. There is a post- audit committee which is primarily tasked to review the examination, assessment, and collection made of the field
officer. That's under the law but if you will ask me as to the implementation, I haven't experienced pa a situation nga nibalik mi from the start because
of a post-audit. But this concept of post-audit is also present in the NIRC. The region can basically conduct post-audit on every assessments being
done by the RDOs. And then of course, finally is the finality of liquidation.
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We go now to the usual violations under the CMTA or usual situations in connection with importation.
ABANDONMENT & SMUGGLING
Abandonment - It is the renunciation by an importer of all his interest in the property rights in the imported article. It may be expressed or implied.
1. Express
a. When there is a letter or any memorandum given to the collector stating the abandonment of the articles.
b. The effect of abandonment is that all custom duties are discharged.
c. BUT DOES NOT discharge criminal liability because the liability attaches to the person not the goods. But this applies only when what is involved
are prohibited goods or smuggled goods.
d. Once it is communicated to commission the goods directly owned by government
Atty: It is express if there is a signification on the part of the importer in writing that he will not anymore claim the goods or items. Why man mu
resort siya to abandonment? Because dili siya ka-afford mubayad sa duties and taxes. Katong situation nga gihatagan ug second hand louis vuitton
pero gi assess based on brand new louis vuitton, o di ba mas dako pa ug bayad niya kay sa tinuod nga louis vuitton, aw so abandon kay sa di ba
maglabad2x pa ko sa process before the BOC.
2. Implied
Atty: It is implied if ni lapse na ang katong 30 day period and the extension, yet still no action was made by the importer/consignee/owner of the
imported article.
And then we have ang pinaka famous in the bar exam is Smuggling.
Smuggling or Unlawful Importation

What are the elements of smuggling? (Btw wala nigawas ang elements of smuggling recently sa bar exam, ang nigawas are the types of smuggling,
differentiation between actual smuggling and technical smuggling.)
Any person who shall FART is considered as conducting smuggling or guilty of smuggling:
1. Fraudulently import or bring into the Philippines,
2. Assist in doing so, any article, contrary to law,
3. Receive, conceal, buy or sell in any manner or facilitate transportation, concealment, or sale of such article after importations,
4. Commit technical smuggling
Atty: When it comes to smuggling it can be actual smuggling/outright smuggling or it can be technical smuggling
KINDS
a. Actual/Outright Smuggling
i. Act of importing goods into the country without complete customs documents or without being cleared by customs.
ii. Imported goods are not registered in the BOC
iii. Wa ni agi sa BOC; backdoor ang gi-agian wala nisulod sa ports of entry especially kay archipelago baya ta so pwede ka bisag asa gyud kung tan-
awon nimo noh especially if it's a vessel
b. Technical Smuggling
i. Niagi ka sa legala channel. There was declaration, payment and clearance its just that the declaration is falsified, fraudulent or erroneous in nature
, kind or quality , quantity or weight. There is misdeclaration. For example, ni declare ug mga lansang but in reality bugas diay ang sulod so basically
that's misdeclaration.
ii. There could be underdeclaration which is also considered technical smuggling
Atty: You might ask, sir fraud is involved and we know that fraud is a question of state of mind, intention. Sa BIR we've said na if the underdeclaration
or overdeclaration exceeds 30% of the correct amount, it can be deemed intentional or fraudulent. The BOC also more or less apply that same rule.
Mind you, mas strikto si BOC, mas dali iapply ni BOC as compared to the BIR.
Because I think I've mentioned this to you, ang 30% man gud, you have to know the correct amount and compare it with the amount declared, but
for BIR purposes, it's arguable ang pag determine sa correct amount because there are many possible explanation na para niya mao ni ang correct
amount pero based ra man na sa system, so it must be based man jud on actual facts so you can very well explain. Mao na dili kaayo mu rely si BIR
on assessment based on falsity or based on fraud except if it's very obvious nga sa tax return sa buyer nimo 10M unya sa tax return nimo 1M kana
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gyud obvious there is fraud. But for some other items, based lang ang deficiency sa system, it's very difficult to allege there is fraud just by the mere
fact nga ni exceed ug 30% ang under or over.
But it's different for BOC because all that the BOC will do is to physicall examine the container or actual goods that comes in into the country and
compare it with your declaration. As simple as that. Automatic nana, tan-awon niya, inspect niya ang items, pila ang price ana nga items versus sa
goods declaration nimo. If the total after inspection, if ang underdeclaration exceeds 30%, pwede ideclare naka nga fraudulent, there is already
smuggling. Mao sad na dali ra kaayo ka dakpon mao na ang uban dili ganahan madakpan so UTT unfortunately.
Instance of Implied Abandonment

1.) When the owner, importer, consignee, or interested party after due notice, fails to file the goods declaration within 15 days (extendible for
another 15 days) from notice of the date of discharge of the last package from the vessel or aircraft;
- Here, wala jud ka nag file ug goods declaration
2.) Having filed such goods declaration, the owner, importer, consignee or interested party after due notice, fails to pay the assessed duties, taxes
and other charges thereon within fifteen (15) days from the date of final assessment;
- Here nag file ka ug goods declaration but you failed to pay the duties and taxes the moment you are being assessed unya wala ka ni bayad for a
long period of time then deemed abandoned.
- The BOC will issue a declaration na abandoned article/item nana especially if you have already filed a goods declaration, you will be notified nga
kani, within this period will be declared abandoned by the BOC
3.) Having paid the assessed duties, taxes and other charges, the owner, importer or consignee or interested party after due notice, fails to claim the
goods within thirty (30) days from payment.
Atty: Kung tan-awon nimo, tulo ka series of situation. First is the filing of good declaration. Second is the payment of the duties and taxes upon
assessment. Third is the actual claim of the goods. Filing of the declaration must be done within 15 days, it can be extended to another 15
days.Payment must be done within 15 days from the receipt of the assessment. You must claim it within a period of 30 days.
Because of these number of days noh nga gihatag lang kang importer in payment and in the actual claim of the goods or imported articles, if you
notice, most of the importers have warehouses or spaces near the BOC mismo. Based on Cebu we have the truck ban di ba, mao na ang uban to
avoid the delay, diha na lang along the area in Pier 5.
Question from student: di ba naay storage fees, so the storage fees start after the 30 days that you failed to claim or does it start from the moment
nisulod sa (inaudible huhu)
Atty: The storage fees will start the moment the goods are discharged from the vessel and placed on storage house of the BOC. But minimal pa na,
wala pa nay penalty, walay interest. But the moment you failed to claim within 30 days other than storage fees, penalties and interest will begin to
set in on a daily basis.
If let's say for example naa nay declaration of abandonment, what's the remedy of the importer/importer in implied imporation? Basically you have
two remedies under the CMTA.
Remedy of Owner/Importer in Implied Importation
1. Within 30 days after the lapse of the prescribed period to file the declaration (15 days, extendible for another 15 days), the owner/importer may
still reclaim the goods by complying with all legal requirements and paying the corresponding duties, taxes and other charges
-meaning wala ko naka file ug declaration unya ni lapse na lang ang 30 day period
-dili man sad na nga on the 31st day naa na jud declaration of abandonment si BOC noh, system man na, naa lang nay i-generate na report internally
kung unsa na ang ni lapse sa 30 day period
If wala nimo gi claim, then ibaligya na ni BOC.
2. The proceeds of the sale shall be turned over to those persons entitled to receive them. The balance will then be deposited to a "forfeiture fund"
to be managed by the BOC which shall be used to, among others, support its modernization program and other operational efficiency and trade
facilitation initiatives
If wala nimo gi claim, then ibaligya na ni BOC basta di lang illegal because of course, kung illegal, then it will be destroyed by the BOC with the
presence of the media. If you notice, this is different from the NIRC because sa NIRC, kung i-distraint ka or i-levy nya ibaligya to, the excess will be
returned to the taxpayer. But in this case, kung ibaligya ang goods or items na gi-abandon nimu, if ever there is an excess, it will not be returned to.
Rather, it will be placed in a so-called forfeiture fund.
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We move on to SMUGGLING. So far, we’ve already discussed outright smuggling as well as technical smuggling. Basic rule, when it comes to case
laws…
Note: Anything that was used for smuggling is subject to confiscation (Lladoc vs. Com of Custom, RR L-28809, May 16, 1983)
- including the vessel or including the container used for smuggling.
EXCEPT: Common carriers that are not privately chartered cannot be confiscated.
- So kung ang smuggled goods/items gisakay nimu sa Cebu Pacific, commercial flight, di pwede i-confiscate ang Cebu Pacific commercial
flight, except if it is privately chartered.
Note: Mere possession of the articles in question is liable UNLESS defendant could explain that his possession is lawful to the satisfaction of the court
(Sec. 3601, TCC)
This refers to possession without proper goods declaration or proper cargo manifest.
Note: Payment of the tax due after apprehension is not a valid defense. (Rodriguez vs. CA, GR No. 115218, September 18, 1995)
When it comes to smuggling, even if you pay the duties and the taxes thereof after nasakpan ka, it is not a valid defense that you did not commit the
crime of smuggling because after all, that is a criminal act so even if na-settle nimu ang civil liability, the criminal prosecution for smuggling could still
continue.
How can technical smuggling be conducted? This may be done through

Misdeclaration, Misclassification, Undervaluation in Goods Declaration
Misdeclaration when the discrepancy pertains to quantity, quality, description, weight, or measurement of the imported goods
For example, relo gi-declare nimu na tsinelas; or 10 watches then gi-report lang nimu 3 ra kabuok.
Misclassification exists when insufficient or wrong description of the goods or use of wrong tariff heading was declared resulting in a discrepancy.
When it comes to BOC, naa nay classification of the goods if such are retail items/goods or if they are raw materials, industrial constructions. In
connection with this classification, lahi2x ang applicable customs duties or tariffs. Pareha ra pud sa BIR because sa BIR, naa man tay gitawag na mga
alpha-numeric tax codes. Di na nah trabaho natu as lawyers kung sakto ba ang ATC sa tax return nimu or sa tax declaration. Trabaho na nah sa
customs broker supposedly kay nagtake gud sila ug systems brokerage exam.
Undervaluation is present when:

 the declared value fails to disclose in full the price actually paid or payable or any dutiable adjustment to the price actually paid or payable;
or
in short, the market price or the transaction value
 when an incorrect valuation method is used; or
 the valuation rules are not properly observed.
When it comes to valuation, ang una nimu tan-awn should be the transaction value, not the wholesale market price.
Effect: Any misdeclaration, misclassification or undervaluation of imported goods resulting in a discrepancy (in duty and tax to be paid) between
what is legally determined upon assessment and what is declared will be subject to a fixed surcharge rate of 250% of the duty and tax due (previously,
100% to 200% of the duty due)
They see this increase as a deterrent. Mao sad nah ang buhaton nila sa Trabaho Bill but really personally, I don’t see that as effective kay musamut
nalang kag corrupt kaysa mubayad kas 250% surcharge. Samut pa if there is a finding of intentional fraud. A 500% surcharge of the duty of the tax
due will be imposed on the importer. If ang duties and taxes na bayranan nimu 1M, nya naay buang2x na examiner diha nya ang ibutang kay 5M. Nya
ingnan dayun ka sige ma-clear ka ani, taga-i lang kog 3M. Kung ikaw taxpayer, sugot nalang ka anang 3M kaysa 5M. Instead of making the process
way too simple, gi-increasean pa nuon nila ang fines. Mao man jud nang reason sa uban na they rather stick to UTT because if they’re going to comply,
the compliance cost would be very high.
NOTE:
Surcharge, however, will not be imposed when:
1. the discrepancy in duty is less than 10% of the importer’s declared value and/or tariff heading/classification;
2. relied on an official government ruling; or
3. is rejected in a formal customs dispute settlement process involving difficult or highly technical questions relating to the application of customs
valuation rules and/or tariff classifications.
If the misdeclaration, misclassification or undervaluation is intentional or fraudulent (such as when a false or altered document is submitted or when
false statements or information are knowingly made), a 500% surcharge (of the duty and tax due) will be imposed on the importer and to those who
willfully participated in the fraudulent act. The imported goods will be subject to seizure regardless of the amount of the discrepancy.
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Types of Valuation Frauds (UF2O):

1. undervaluation
2. false invoice description through reporting lower qualities in the invoice, not identifying branded items as such
3. false country of origin
4. overvaluation
Failure to pay correct taxes and duties on imported goods (Sec. 1005)
Degrees of Culpability
1. Negligence – deficiency resulting from an offender’s failure to exercise reasonable care and competence to ensure that a statement made is
correct.
Penalty: Fine = 50%-200% of the revenue loss.
2. Gross Negligence = 250%-400% of the revenue loss.
3. Fraud – when the material false statement or act was committed or omitted knowingly, voluntarily and intentionally, as established by clear
and convincing evidence.
Penalty: (a) Fine = 500% to 800% of the revenue loss;
(b) Imprisonment of 2-8 yrs
FLEXIBLE TARIFF CLAUSE
Authority of the President to adjust the tariff rates prescribed under the Tariff and Customs Code.
Basis: “The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as may impose,
tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development
program of the Government.”
Unsa na tariff ni? This is not revenue. This is not protective. This is more of bargaining tariff. So, the authority of the Pres is either to increase, reduce
or remove existing protective rates of import duties or imposition of the so-called discriminatory duty which must not exceed 100% ad valorem. The
president can also establish import quota or ban importation of any commodity whenever necessary.
Remember!!!
1. The power is exercised for the general welfare of the people;
2. Upon NEDA's recommendation; and
3. Tariff Commission shall conduct public hearing.
Tariff commission composes of the SOF, Commissioner of the NEDA and the DTI Secretary. They are the ones to ascertain whether there is a need
to increase or decrease this particular tariff rates.
Penalties & Effects for Violations of RA 10863 (Sec. 1430)

 Imprisonment of not less than 30 days and 1 day but not more than 1 year; or
 A fine of not less than Php 100,000 to Php 300,000; or
 BOTH
Effects of violations
1. Foreigner – deportation after service of sentence.
2. Public officer or employee – disqualification from holding public office, and the right to vote and participate in any public election for 10
years.
TAX REMEDIES UNDER THE TARIFF AND CUSTOMS CODE
TAX REMEDIES OF THE GOVERNMENT
A. ADMINISTRATIVE
1. Compulsory Acquisition (Sec. 709)
2. Reduction of Customs Duties/Compromise (Sec. 1131)
More or less the same nature as the compromise that you can enter before the Bureau.
3. Alert Orders (Sec. 1111)
This is issued by the Commissioner based on derogatory 3rd party information on possible non-compliance or violation of the CMTA. So if naay
mu-report sa BOC na naay ongoing smuggling being committed in the pier, the Commissioner may immediately issue this alert order.
4. Seizure and Forfeiture (Sec, 1113)
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Take note that when we say forfeiture, this is considered as both administrative and civil in nature. Because it is considered as such, summary
proceedings basically ang pwede buhaton. when it comes to forfeiture proceedings being implemented by the BOC. The purpose of the
forfeiture is either to avert an ongoing violation or to pay unpaid duties and taxes. This is a proceeding in re, therefore directed over the res or
property or subject matter as if it is the property which violated the provision in the CMTA. So, it is not excused if i-transfer nimu ang ownership
or iassign nimu ang bill of lading to somebody else becaudse bottom line, it will not be released by the BOC.
5. Distraint of personal property (Sec. 1132)
The purpose of this is more or less the same under the Tax Code. it will be distrained, then the personal property will be sold in an auction. The
proceeds of the sale will be used to satisfy the unpaid duties and taxes. Same also with…
6. Levy of Real Property
SEIZURE and Forfeiture

What is forfeiture:
What properties are subject to forfeiture? (Reference: CAO (draft)
General Rule is NO but if the owner has knowledge of its use in smuggling and consent, it may be forfeited.
The instances when Prima Facie presumption of knowledge by the owner of the common carrier is enumerated under Sec. 1114.
When it comes to properties that are subject of forfeiture, you can refer to this customs administrative order on the seize and forfeiture proceedings.
The subject of the customs administrative order is seizure and forfeiture proceedings and appeal process.
Primarily, what I want you to read other than the definition is Sec. 4 on general provisions of forfeiture and the properties subject to seizure and
forfeiture. If you look at Sec. 4, very lenthy ang enumerated properties na pwede i-seize and forfeit ni BOC. But ang common denominator is it can
be seized or forfeited if the goods or the items enter into the country due to smuggling or fraudulent manner or if there was no cargo manifest
declaring that particular properties entry. Goods sought to be imported through false declaration, sought to be imported or exporterd, the strength
of a sales invoice openly for sale or kept in storage which were discovered in the exercise of the Commissioner’s power to inspect, na wa gibayran
and duties and taxes so it can be seized and forfeited. As well as the vehicle the vessel or the aircraft containing the smuggled goods or the smuggled
items, it can be subject of seizures and forfeiture.
May common carriers be subjected to forfeiture?

Again, common carriers, as a rule, is not subject to forfeiture but if the owner has knowledge of its use in smuggling and consented thereto, it may
be forfeited. IOW, the burden of proof belongs to the BOC na naay knowledge ang owner sa commercial or common foreigner. The instances when
there is prima facie presumption of knowledge by the owner is enumerated under Sec. 1114. Let’s say for example kana na common carrier na involve
nasad previously in a smuggling situation, there could be a prima facie presumption na niconsent si owner sa common carrier. Or if dili commensurate
sa financial capacity ni common carrier ang pag carry ana na goods/items, it can be considered also as prima facie proof na niconsent sya to that fact.
DOCTRINE OF PRIMARY JURISDICTIN OVER SEIZURE AND FORFEITURE CASES

The prevailing doctrine is that the exclusive jurisdiction in seizure and forfeiture cases vested in the collector of customs precludes a regular court
from assuming cognizance of such matter. It is the settled rule that the BOC acquires exclusive jurisdiction over imported goods, for the purpose of
enforcement of the customs laws, form the moment the goods actually in its possession or control, even if no warrant of seizure or detention had
previously been issued by the Collector of Custom in connection with seizure and forfeiture proceedings.
Thus, the RTC does not have jurisdiction over seizure and forfeiture proceedings conducted by the BOC. Even if a Custom seizure is illegal, exclusive
jurisdiction still belongs to the BOC. (Jao vs. CA, GR No. 104604, Oct 6, 1995)
In this slide, ang term pa niya is collector of customs. It precludes regular courts from assuming cognizance of such matter. Bisag no warrant of seizure
or detention na previously gi-issue. So, di ka pwede muadtog RTC magpalaban and ask for injunction or replevin. Even if a custom seizure is illegal,
exclusive jurisdiction still belongs to the BOC. Icheck ang CMTA if naa bay instance na maka-ask ug injunction because if we base it in the NIRC,
lifeblood doctrine – collection belongs to the Commissioner. But really, there are instances na ma-stop nimus Commissioner, like if murequest ka for
reinvestigation which was granted or if you ask for a TRO or injuction before the CTA. But this rule, apparently (based on my limited readings lang),
walay in ani na exception ang CMTA.
DOCTRINE OF HOT PURSUIT

Requisites:
Other Vessels
A. An act is done in Philippine water which constitutes a violation of the CMTA
B. A pursuit of such vessel began within the jurisdictional waters (territorial sea, contiguous zone, EEZ) which may continue beyond the
maritime zone and the vessel may be seized on the high seas.
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Other Imported Articles
1. There is a violation of the CMTA
2. They may be pursued in the Philippines
3. With the jurisdiction over them at any place therein for the enforcement of the law.
Even if nigawas na nah sa premises ni BOC, pwede gihapon nah gukuron.
TAX REMEDIES OF THE GOVERNMENT

Administrative Fines and Forfeitures
Applied when the importation is unlawful and 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 and 2530 TCC)
Under Sec. 2530 (a), 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. (Llamedo
vs. Commissioner of Customs)
B. JUDICIAL REMEDIES
1. Civil action
2. Criminal action
Remember:
- Actions are instituted in the name of the government and shall be conducted by the Bureau with DOJ’s assistance.
- The civil or criminal action for recovery of duties or enforcement of any fine, penalty or forfeiture must be with approval of the Commissioner.
Search and Seizure
1. Imported articles seized
2. Collector reports to Commissioner
District collector or the port collector
3. Collector notifies importer na gi-seize ang imported item niya
4. Schedules hearing (15/5 days from seizure warrant issuance)
5 days if perishable item/goods; 15 days if non-perishable
5. Collector’s decision (30/15 days to decide)
30 days if non-perishable; 15 days if perishable
(15 days) from the issuance of the collector’s adverse decision to the importer or the owner of the goods
6. Appeal to Commissioner of Customs
7. Decision of the Commissioner of Customs
Unlike sa NIRC na naay period to decide (180/120/90), in this case, walay period to decide si Commissioner of Customs. But the moment
you receive the decision of the Customs, within (30 days), you file an appeal to the…
8. CTA (in division)
If still adverse, (15 days) [Rules of Court na ni]
9. Motion for Reconsideration in CTA division
if denied, file an appeal (15 days) from receipt of denial to
10. CTA (en banc)
If adverse, file a petition for review within (15 days) to the
11. Supreme Court
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So, if we’re going to summarize the ADMINISTRATIVE REMEDIES OF THE TAXPAYER, basically 4 nah under the CMTA. The taxpayer can:
1. Protest
Any importer or interested party if dissatisfied with published value within 15 days from date of publication or within 5 days from the date of
importer is entitled to refund if payment is rendered erroneous or illegal by events occurring after the payment.
For protest, to be clear, the moment you receive an adverse ruling from the Collector of Customs, adverse in the sense na pabayron jud ka ug
duties and taxes, basically you have 2 options. It is either:
▪ You pay without protest. But then again, if you avail of this remedy, di ma-release ang goods/item nimu. So, if you want na ma-release ang
goods/item nimu…
▪ You pay with protest
There will be an order for hearing which will be conducted within a period of 30 days; if you’re going to pay, you still have 15 days to file
your protest to the collector. After the date of the filing of the protest, another 15 days for a possible hearing. Once the hearing is
conducted, and there is no decision or it is an adverse decision, you have 15/5 days to appeal to the Commissioner of Customs. Again, 15
days if non-perishable (NP), 5 if perishable (P). If after the hearing, the decision is favorable to the importer/shipper, under the CMTA, we
have the so-called automatic review clause by the Commissioner and if his decision is favorable to the importer, there is also an automatic
review by the SOF. When it comes to forfeiture, automatic na mureview si Commissioner and SOF especially if the value involved of the
forfeited items exceeds P10M. If adverse decision, appeal to the Commissioner, if adverse gihapon ang decision ni Commissioner, 30/10
days (NP/P), file an appeal to the CTA in division. And same process as discussed earlier – If pildi ka CTA in division, within 15 days, file an
MR; if denied, within 15 days, you go to CTA en banc; If denied gihapon, 15 days go to the SC. So, the administrative remedies of the
taxpayer, basically you have the protest jud una. Same sa NIRC, principle of exhaustion of administrative remedies. Di pwede mudiretso ni
CTA.
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2. Settlement of any seizure by payment of fine or redemption

But this shall not be allowed in any case where importation is absolutely prohibited or the release would be contrary to law, or when there is
an actual and intentional fraud.
3. Abatement, refund, & drawback
A written claim for refund may be submitted by the importer in abatement cases on missing packages, deficiencies in the contents of packages
or shortages before arrival of the goods in the Philippines, articles, lost or destroyed after such arrival, dead or injured animal, and for manifest
clerical errors.
o Refund – If nakabayad na si shipper or importer and there is finding na erroneous or excessive
o compromise/abatement – If arbitrary ang fines and penalties, the remedy could either be these 2
o Drawback – kung pabalik2x sud and gawas same items; a portion of the duties and taxes will not anymore be imposed the moment
that very same item will come back to the country.
4. Abandonment
The renunciation of the importer of all his interests and property rights over the imported articles; either implied or express
JUDICIAL REMEDIES OF THE TAXPAYER
▪ Appeal
within 30 days from receipt of decision of the Commissioner or the SOF to the division of the CTA; or
▪ Court action to question the legality of the seizure.
But take note, you are just questioning the legality. You cannot prevent the seizure.
Informer’s reward
This is a reward given to persons instrumental in the discovery of violations, criminal or civil, before the provisions of the NIRC and the seizure and
discovery of smuggled goods/items pursuant to the provisions in the CMTA. However, you have to do a positive act before you can be considered as
an informer. So, when you say you have to do a positive act, it means to say you need to report to the BIR or to the BOC and the informer’s rewards
is basically to encourage 3rd party report. And this 3rd party information is equivalent to 10% of the taxes, fines, penalties, and surcharges that have
been imposed and collected or 1M, whichever is LOWER. So, the max amount that you can receive is only 1M. But you do not really receive the entire
1M because such will be subject to 10% FWT. Max lang na madawat nimu is around 900k. But take note, the nature of the 10% is final withholding
income tax. So, if ever you receive an informer’s reward, you do not need to declare it as part of your gross income which is subject to 0-35% GITR.
Take note also, kaning 10% is based on the fines, penalties and surcharges that have been collected. So, dapat the government was able to collect
24
A.Y. 2018-2019
kay pwede wala sya ka collect kay gi-question for example ang validity sa assessment nya it was found out na void jud diay, then you will not receive
this reward. But under the law, there are requisites before you qualify for informer’s reward:
(1) The person must not be an internal revenue official or employee, or other public official or employee (whether in active service or retired) or
his relative within the 6th degree of consanguinity;
- Kung naa kay relative na public official, most likely uncle or auntie nimu, pwede ka ma-informer but di ka ka-receive ug informer’s reward.
It does not necessarily mean na example, ngari na RDO ka nisumbong sa violation, di tan-awn kung naa ba kay relative in that RDO. So, if
there is a finding na naa kay relative in the BIR office, or naa kay relative na public official in congress which is not necessarily in that RDO,
you can be disqualified from this informer’s reward. Kay wa may distinction provided in the law na dapat within the RDO ang relative.
(2) The person must have given a definite and sworn information; there must be an affidavit duly notarized;
- Definite so dapat specific. When we say sworn, so di jud sya merely anonymous letter.
(3) The information must lead to discovery of fraudulent act which leads to conviction of the parties;
- information must lead to discovery of fraudulent act or fraudulent transaction which results in the recovery of revenues, surcharges, fees
and conviction of a guilty party.
(4) The information must not yet be in possession of the BIR or BOC
(5) It must not be pursuant to a case investigated by the Commissioner of BIR or BOC
- So, it must not be pursuant to a case already pending, previously investigated or examined by the CIR or SOF. Kay diba we’ve discussed na
if 3rd party information, pwede ka-isummon to present documents or information. Kana, di na ka ma-qualified para sa informer’s reward
kay that pertains to an ongoing case or investigation man. For you to avail of this reward, dapat wa pa juy idea si BIR or BOC. Dapat way
pending LOA, pending audit or investigation na gina-conduct si BIR or BOC.
(6) The reward should be in money
- Kung BOC, smuggled goods man nah. No problem with BIR kay recovery of tax, fees and surcharges man. But for BOC, kung ni-report ka na
nag smuggle illegally ug rice, your reward is not necessarily the rice. It has to be the value of the smuggled items which will be based on the
10% of the FMV of the smuggled and confiscated goods or 1M, whichever is LOWER.
(di favorite: types of dutiable goods; remedies when it comes to customs)
Be familiar with:
o Prohibited goods or items or articles
o Concept of smuggling and abandonment
25

Tax 2 Prefi Part 2 - Tariff-Transcripts

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Taxation II - Atty.

Kim Aranas SMLP | SDB | KDA | AC | JT

So what are the salient features of the CMTA?

Incentives for AEO

Scope of Tariff and Custom Laws

Who are the chief officials of the Bureau of Customs?

2. Deputy Commissioner – at least 4 but not more than 6.

POWERS, DUTIES AND JURISDICTION OF THE BOC

POLICE AUTHORITY OF THE BOC

2. Police officers within the BOC;

POWERS OF THE BOC under R.A. 10863

a. Relief Consignment (Sec. 120-121)

b. Conditionally Tax and/or duty-free importation (Sec. 800)

Please read section 800.

3. Regulated imports and exports (Sec. 117)

Qualifiedly prohibited, pwede musulod pero naay condiitons.

Please read section 118 and 119.

DUTIABLE GOODS (AFP-CPP-NPA-VMH-FAT-WE-MAMO)

You go lang sa section 112.

Conditionally-Free Importation [PSST-BAR-FEW-PERA-SAM-CPP-VICE]

CLASSIFICATION OF CUSTOMS DUTIES

I. ORDINARY OR REGULAR DUTIES- imposed and collected merely as a source of revenue.

Kinsa ang naay authority or mag buot?

C. Alternating- alternates between ad valorem and specific duties.

D. Compound - consists of ad valorem and specific duties.

Kinsa ang mudeclare sa transaction value of the goods? It is the importer.

Kinsa ang primary signatory sa import entry declaration?

What is the consequence if ever there is a mistake in the entry declaration?

Pwede na maka trigger ug physical examination.

Sequence in Determination of Value – Sec 700

What if the importer will not declare any transaction value?

Fourth is the so called deductive value.

Kaning computed value, this relies on the system of the BOC.

Basis for dutiable weight for specific custom duties:

Kinds of Special Customs Duties:

What is the difference between bounty, subsidy or subvention?

OTHER CUSTOMS FEES, DUES, OR CHARGES PAYABLE TO BOC

Pwede ba na ma collectan ug harbor fees ni BOC? Yes.

1. Expressly exempted under the TCC, now the CMTA;

When Importation Begins

OWNER OF IMPORTED ARTICLES

Obligations of the importer:

The goods declaration this is compared to the cargo manifest.

This cargo manifest, kinsa ang mu fill up?

Entry at custom house

Si vessel pwede ba na i x-ray?

Preparation of import entry revenue declaration (IERD)

Kinds of import entry

To Summarize the Process:

When Importation Begins

On the other hand, it is deemed terminated under two situations/requisites:

Who are owners of Imported Articles?

Owner of Imported Articles (Sec 404)

Obligations of importer/consignee/owner of the goods

Entry at custom house

Three meanings of term "ENTRY"

1. documents filed at the custom house

Preparation of import entry revenue declaration (IERD)

Two Kinds of Import Entry

A. Informal entry (Informal Import Entry Declaration)

Attachments to the Informal Entry

B. Formal Entry and Internal Revenue Declaration (IEIRD)

Attachments to the Formal Entry

chika ni atty sa iya experience before