CUSTOMS MODERNIZATION AND TARIFF ACT (CMTA)

Republic Act (RA) No. 10863, otherwise known as the Customs Modernization and Tariff Act
(CMTA), was signed into law on 30 May 2016.

CMTA amended the Tariff and Customs Code of the Philippines (TCCP) with the aim of
modernizing Customs rules and procedures for faster trade, reduce opportunities for corruption,
improve Customs service delivery and improve supply chain.

The first tariff legislation in the Philippines was Philippine Tariff Act of 1909 which gave started
the imposition of tariff on goods coming from foreign countries and entering the Philippines. RA No.
1937 was passed by the Philippine Congress as the first TCCP that codified customs laws for the country,
superseding the 48-year colonial regime of the Tariff Act of 1909. It took effect on 1 July 1957. In 1972,
Presidential Decree (PD) No. 34 was published by former president Ferdinand Marcos as a form of
consolidating all the amendments made by him after exercising the powers of the Congress during
Martial Law. A more strengthened punitive force was given in the RA No. 1464 of 1978. This law revised
the PD No. 34 and has been stricter against smuggling and customs fraud.

The Philippines, being a signatory in the Revised Kyoto Convention (the blueprint for modern
and efficient customs procedures of the World Customs Organization [WCO]), considered the standards
lay therein to modernize its customs laws, rules and regulations. It also aimed to transform the Bureau
of customs (BOC) at par with the global standards. Therefore, the Customs Modernization and Tariff Act
(CMTA) is passed in 2016. The Act also considered international agreements, recommendations from
the business sectors and industry groups as well as some of the best practices in customs
administration, among others.

TIMELINE OF THE CMTA

LAW DATE OF EFFECTIVITY
1. Philippine Tariff Act 1909
2. RA No. 1937 1 July 1957
3. Presidential Decree (PD) No. 34 1 January 1973
4. RA No. 1464 11 June 1978
5. Customs Modernization and Tariff Act (CMTA) 30 May 2016

BUREAU OF CUSTOMS (BOC)

Composed of:

1. (1) Commissioner

2. (at least 4 but not more than 6) Deputy Commissioners

The Commissioner and the Deputy Commissioners of Customs shall be appointed by the
President of the Philippines. The majority of the Deputy Commissioners must come from the ranks of
the Bureau.
Commissioner

a) Exclusive and original jurisdiction to interpret the provisions of this Act, in collaboration with
other relevant government agencies, subject to review by the Secretary of Finance;

b) Exercise any customs power, duties and functions, directly or indirectly;

c) Review any action or decision of any customs officer performed pursuant to the provisions of
this Act;

d) Review and decide disputed assessments and other matters related thereto, subject to review
by the Secretary of Finance and exclusive appellate jurisdiction of the Court of Tax Appeals
(CTA);

e) Delegate the powers vested under this Act to any customs officer with the rank equivalent to
division chief or higher, except for the following powers and functions:

1) Promulgation of rules and regulations;

2) Issuance, revocation or modification of rulings; and

3) Compromise or abate of customs obligations.

f) Assignment or reassignment of any customs officer subject to the approval of the Secretary of
Finance; Provided, That District Collectors and other customs officers that perform assessment
functions shall not remain in the same area of assignment for more than three (8) years; and

g) Perform all other duties and functions as may be necessary for the effective implementation of
this Act and other customs related laws.

Promulgation of Rules and Regulations

subject to approval of the Secretary of Finance, the Commissioner shall promulgate all rules and
regulations necessary to enforce the provisions of this Code

shall prepare and publish an updated customs manual, and the rules, regulations and decisions
of the Bureau

furnish the NEDA, Tariff Commission, and the Congress with electronic copies of orders,
circulars, rules and regulations of the Bureau

Annual Report of Commissioner

An annual report of the BOC shall present the performance of the Bureau for the year. The report shall
be submitted on or before March 31 of each year to the following:

1. President

2. Congress

3. NEDA
Copies of Goods Declaration

The Commissioner shall regularly submit electronic copies of all customs goods declaration
processed and cleared by the Bureau to the following:

1. NEDA

2. Philippine Statistics Authority (PSA)

3. Bureau of Internal Revenue (BIR), and

4. Tariff Commission electronic copies of all customs goods declaration processed and cleared by
the Bureau.

Upon request, the Tariff Commission shall have access to, and the right to be furnished with
copies of liquidated goods declaration and other documents supporting the goods declaration as finally
filed in the Commission on Audit (COA).

Functions of BOC

The general duties, powers and jurisdiction of the BOC shall include:

a) Assessment and collection of customs revenues from imported goods and other dues, fees,
charges, fines and penalties accruing under this Act;

b) Simplification and harmonization of customs procedures to facilitate movement of goods in

international trade;

c) Border control to prevent entry of smuggled goods;

d) Prevention and suppression of smuggling and other customs fraud;

e) Facilitation and security of international trade and commerce through an informed compliance
program;

f) Supervision and control over the entrance and clearance of vessels and aircraft engaged in
foreign commerce;

g) Supervision and control over the handling of foreign mails arriving in the Philippines for the
purpose of collecting revenues and preventing the entry of contraband;

h) Supervision and control on all import and export cargoes, landed or stored in piers, airports,
terminal facilities, including container yards and freight stations for the protection of
government revenue and prevention of entry of contraband;

i) Conduct a compensation study with the end view of developing and recommending to the
President a competitive compensation and remuneration system to attract and retain highly
qualified personnel, while ensuring that the Bureau remains financially sound and sustainable;

j) Exercise of exclusive original jurisdiction over forfeiture cases under this Act; and

k) Enforcement of this Act and all other laws, rules and regulations related to customs
administration.
 TARIFF COMMISSION (TC)
The Tariff Commission (TC) performs governmental and quasi-judicial functions.

The Commission is the principal authority on tariffs and trade remedy measures. It investigates
and recommends/decides on petitions for tariff modification and tariff classification. It is an
independent adjudicatory body on trade remedy cases.

The Commission is a key adviser to the executive and legislative branches of government on
tariff and related matters, promotes trade by providing recommendations on trade negotiating
strategies and participating in policy dialogues and international trade negotiations, and is an advocate
of industry competitiveness and consumer welfare.

The Commission is an attached agency of the National Economic and Development Authority.
Under Republic Act 10863, known as the Customs Modernization and Tariff Act, the Commissions
functions under Presidential Decree 1464, also known as the Tariff and Customs Code of the
Philippines, were updated and expanded.

Functions of the Tariff Commission

The Commission shall have the following functions:

a) Adjudicate cases on the application of trade remedies against imports pursuant to

Sections 711, 712 and 713 of this Act;

Conduct of formal investigation and submission of report of findings to the Secretary of

Agriculture (for agricultural goods) or Secretary of Trade and Industry (for industrial
products)

711 including amount of the definitive dumping duty to be imposed in cases of affirmative
Dumping Duty findings

*"ANTI-DUMPING DUTY" refers to a special duty imposed on the importation of a

product into the Philippines at less than its normal value when destined for domestic
consumption in the country of export or origin, it being the difference between the
export price and the normal value of such product.
712 including recommendation on the appropriate definitive safeguard measure in cases of
Safeguard positive determination
Duty
*The Secretary shall apply a general safeguard measure upon a positive final
determination of the Commission that a product is being imported into the country in
increased quantities, whether absolute or relative to the domestic production, as to be a
substantial cause of serious injury or threat thereof to the domestic industry; however, in
the case of non-agricultural products, the Secretary shall first establish that the
application of such safeguard measures will be in the public interest.
713 including amount of the definitive countervailing duty to be imposed in cases of
Countervailing affirmative findings
Duty
*"Whenever any product, commodity or article of commerce is granted directly or
indirectly by the government in the country of origin or exportation, any kind or form of
 specific subsidy upon the production, manufacture or exportation of such product,
commodity or article, and the importation of such subsidized product, commodity or
article has caused or threatens to cause material injury to a domestic industry or has
materially retarded the growth or prevents the establishment of a domestic industry shall
be issued a department order imposing a countervailing duty equal to the ascertained
amount of the subsidy.

b) Study the impact of tariff policies and programs on national competitiveness and
consumer welfare in line with the economic objectives of the government;

c) Administer the Philippine tariff schedules and tariff nomenclatures;

d) Issue advance rulings on tariff classification of imported goods and render rulings on
disputes over tariff classification of goods pursuant to Section 1100 of this Act, except in
cases involving goods on which the Commission has provided advance ruling on tariff
classification;

Sec. 1100. Classification Ruling: An importer or exporter may file a written application for an advance
ruling on the tariff classification of goods with the Commission. The Commission shall render a ruling
within thirty (30) days from receipt of a properly documented application.

e) Provide the President and Congress with independent analysis, information and
technical support on matters related to tariff and nontariff measures affecting Philippine
industries and exports for policy guidance;

f) Analyze the nature and composition, and the classification of goods according to tariff
commodity classification and heading number for customs and other related purposes,
which information shall be furnished the NEDA, DTI, DA, DOF, DENR, and BSP;

g) Review the trade agreements for negotiation and trade agreements entered into by the
Philippines and make recommendations, if necessary, on the consistency of the terms of
the agreements with the national policy objectives;

h) Conduct public consultations and public hearings pursuant to its functions; and

i) Deputize or delegate, to appropriate government agency its function of rendering

rulings on disputes over tariff classification of goods, until the plantilla positions
necessary for undertaking such function have been approved and filled-up: Provided,
That such delegation of function shall not extend beyond three (3) years from the
effectivity of this Act.

NATURE OF TARIFFS AND CUSTOMS DUTY

TARIFF AND DUTIES, DEFINED

Tariff

(a) Taxes or list of articles liable to duties

 (b) A list or schedule of articles on which a duty is imposed upon the importation into
the country, with the rates at which they are severally taxed. And derivatively, the
system of imposing duties or taxes on the importation of foreign merchandise

FLEXIBLE TARIFF CLAUSE

Constitutional Basis: Sec. 28(2), Art. VI, 1987 Constitution:

The Congress may, by law, authorize the President to fix with specified limits, and subject to
such limitations and restrictions, as it may impose, tariff rates, import and export quotas,
tonnage and wharfage duties, and other duties or imposts within the framework of the national
development program of the Government.

The flexible tariff clause refers to the authority given to the President, upon the
recommendation of NEDA, to adjust the tariff rates in the interest of national economy, general
welfare and/or national security (Sec. 401, TCC)

The President is empowered to:

(1) increase, reduce or remove existing rates (increase in the rate cannot exceed 100%
ad valorem), including authority to modify the form of duty

(2) establish import quota or ban import of any commodity

(3) impose an additional duty not exceeding 10% ad valorem

Procedure:

(1) Tariff Commission shall conduct an investigation and hold public hearings wherein
interested parties shall be afforded reasonable opportunity to be present, produce
evidence, and be heard. It shall also hear the views and recommendations of any
government office, agency or instrumentality concerned.

(2) Commission shall be submit their findings and recommendations to the NEDA within
30 days after the termination of the public hearings

(3) NEDA recommends the same to the President

(4) Order issued by the President shall take effect 30 days after promulgation

Note: Only number 3 is required in cases of imposition of additional duty not exceeding 10% ad
valorem

REQUIREMENTS OF IMPORTATION

(1) Beginning and ending of importation

 (a) Importation begins when the carrying vessel or aircraft enters the jurisdiction of
the Philippines with intention to unload therein (Sec. 1202, TCC)

(b) Importation is deemed terminated upon payment of duties, taxes and other charges
due upon the articles, or secured to be paid, at a port of entry AND the legal permit for
withdrawal shall have been granted, or in case

Custom duties

(a) Taxes on the commodities importation or exportation of

(b)Tariff or tax assessed upon the merchandise imported from or exported to a foreign country

(1) Export tariff levied, assessed and collected an export duty on the gross FOB value
at the time of shipment based on the prevailing rate on traditional export products,
such as certain wood products, mineral products, plant and vegetable products (Sec.
514, TCC) Note: export tariff had been abolished except upon logs (Sec. 1, EO 26).

(2) Import tariff articles, when imported from any foreign country, shall be subject to
duty upon each importation, even though previously exported from the Philippines,
except as otherwise specifically provided under the Code or special laws (Sec. 100, TCC)

GENERAL RULE: ALL IMPORTED ARTICLES ARE SUBJECT TO DUTY. IMPORTATION BY THE
GOVERNMENT TAXABLE.

(a) All articles, when imported from any foreign country into the Philippines, shall be
subject to duty upon each importation, even though previously exported from the Philippines,
except as otherwise specifically provided (Sec. 100, TCC)

(b)Articles = goods, wares, merchandise and in general anything that may be made
subject of importation or exportation (Sec. 3574, TCC)

(c) U.S. Dollars, having ceased to be legal tender in the Philippines, fall within the
meaning of the term merchandise (Bastida v, Commissioner of Customs, G.R. No. L-20411,
October 24, 1970)

PURPOSE FOR IMPOSITION

For the protection of consumers and manufacturers, as well as Phil. products from undue
competition posed by foreign-made products. said articles are free of duties, taxes and other
charges, until they have legally left the jurisdiction of the customs. (Sec. 1202, TCC)

Note: The payment of the duties, taxes, fees and other charges must be in full. (Papa v. Mago,
G.R. No. L-27360, February 28, 1968)
(2) Obligations of importer

(a) Cargo manifest

(1) Every vessel from FOREIGN PORT must have on board a complete MANIFEST of all
the cargo

(2) All the cargo intended to be landed at a port in the Philippines must be described in
separate manifests for each port of call

(b) Import entryImported articles must be entered in the customhouse at the port of entry
within fifteen days from date of discharge of the last package from the vessel either (a) by the
importer, being holder of the bill of lading, (b) by any other holder of the bill of lading in due
course, (c) by a customs broker acting under authority from a holder of the bill, or (d) by a
person duly empowered to act as agent or attorney-in-fact for such holder. The Collector may
grant an extension of not more than fifteen days. (Sec. 1301, TCC)

All imported articles, except importation admitted free of duty, shall be subject to a formal or
informal entry.

Kinds of Import Entry:

(1) Formal Entry

(2) Informal Entry

Content and Form of Import Entry:

Content (Sec. 1304):

(a) That the entry delivered to the Collector contains a full account of the value or price
articles, including subject of the entry;

(b) That the invoice and entry contain a just and faithful account of the value or price of
said articles including and specifying the value of all containers or coverings, and that
nothing has been omitted, therefrom or concealed whereby the government of the
Republic of the Philippines be defrauded of any part of the duties lawfully due on the
articles;

(c) That, to the best of the declarant's information and belief, all the invoke and bills of
lading to the articles are the only ones in existence relating to the importation in
question and that they are in the state in which they were actually received by him;

(d) That, to the best of the declarant's information and belief, the entries, invoices and
bill of and the declaration thereon under penalties of falsification of perjury are in all
respects genuine and true, and were made by the person by whom the same purpose to
 have been made.

(3) Shall include:

(i) Port of departure

(ii) Port of delivery

(iii) Marks, numbers, and quantity description of the packages

(iv) Names of the consignees

CANNOT be changed or altered after entry of vessel

EXCEPT:(1) amendment by the master, consignee or agent(2) attached to the original

manifest CANNOT amend the manifest after the invoice and/or entry covering the importation
have been received and recorded in the office of the appraiser

EXCEPT:

(1) Obvious clerical error or any other discrepancy is committed in the preparation

(2) Without fraudulent intent

(3) Discovery would not have been made until after examination of the importation is
completed

Translated into the official language, if written in another language

Master shall deliver and mail the cargo manifest to: (endorsed by boarding officer)

(a) Chairman

(b) COA

(c) Collector (Present original)

Form:

(a) signed by the importer, consignee or holder of the bill, by or for whom the entry
is effected (Sec. 1305)
(b) in the required number of copies in such form as prescribed by regulations; and
(c) shall contain the names of the importing vessel or aircraft, port of departure and
date of a the number and mark of packages, or the quantity, if in bulk, the nature
and correct commodity description of the articles contained therein, and its
value as set forth in a proper invoice to be presented in duplicate the entry (Sec.
 1306)

Articles to be cleared on informal entry (Sec. 1302):

(a) Articles of a commercial nature intended for sale, barter or hire, the dutiable value
of which is P2000 or less, and

(b) Personal and household effects or articles, regardless of value, imported in

passenger's baggage mail, or otherwise, for personal use, may be cleared on an informal
entry whenever duty, tax or other charges are collectible.

The Collector may, upon instruction of the Secretary of Finance, when he deems it necessary
for the protection of the revenue, require a formal entry regardless of value.

Types of Formal Entry(Sec. 1302, as amended):

A formal entry may be:

(a) for immediate consumption, or

(b) under irrevocable domestic letter of credit, bank guarantee or bond for:

(1) placing the article in customs bonded warehouse;

(2) Constructive warehousing and immediate transportation to other ports of

the Philippines upon proper examination and appraisal; or

(3) Constructive warehousing and immediate exportation.

Note: Import entries under irrevocable domestic letter of credit, bank guarantee or bond shall
be subject to the provisions of Title V, Book 11 of this Code. All importations entered under
formal entry shall be covered by a letter of credit or any other verifiable document evidencing
payment." (R.A. 9135, April 27, 2001)

(c) Declaration of correct weight or value Classification:

(d) When article not specifically classified in the Code, the interested party, importer or
foreign exporter may submit a sample with full description of component materials in a
written request.

Value:

(a) Upon written application, Collector shall furnish importer within 30 days the latest
information as to the DV of articles to be imported.

(b) Importer must present all pertinent papers and documents, act in good faith and
unable to obtain information due to unusual conditions
 (c) Information given is not an appraisal nor is it binding upon the Collectors right of
appraisal.

The declaration, ascertainment or verification of the correct weight of the cargo at the port of
loading is the duty or obligation of the master, pilot, owner, officer or employee of the vessel. If
he omits or disregards this duty and a punishable discrepancy between the declared weight and
actual weight of the cargo exists, the inevitable conclusion is that he is negligent or careless.
Similarly, if in the exercise or performance of this duty, he is negligent or careless resulting in
the commission of excessive discrepancy in the weight of the ship's cargo penalized under the
law, carelessness or incompetency is, nonetheless, imputable to him.

(d) Liability for payment of duties(Sec. 1204, TCC)

Rule: the liability for duties, taxes, fees and other charges attaching on importation constitutes
a personal debt due from the importer to the government; it constitutes a lien upon the articles
imported which may be enforced while such articles are in custody or subject to the control of
the government.

How to discharge: Discharged only by payment in full of all duties, taxes, fees and other charges
legally accruing

Exception: Relieved by laws or regulations

(e) Liquidation of duties

When made: Upon approval by the Collector of the returns of the appraiser and reports of the
weights, gauge or quantity(Sec. 1601, TCC)

How: the liquidation shall be made on the face of the entry showing the particulars thereof,
initiated by the liquidating clerk, approved by the chief liquidator, and recorded in the record of
liquidations. (Sec. 1601, TCC)

Additional Process: A daily record of all entries liquidated shall be posted in the public corridor
of the customhouse, stating the name of the vessel or aircraft, the port from which she arrived,
the date of her arrival, the name of the importer, and the serial number and date of the entry.
A daily record must also be kept by the Collector of all additional duties, taxes and other
charges found upon liquidation, and notice shall promptly be sent to the interested parties.
(Sec. 1601, TCC)

Tentative and Final Liquidation

(1) Tentative Liquidation(Sec. 1602, TCC) When liquidation shall be deemed to be tentative: If
to determine the exact amount due under the law in whole or in part some future action is
required (only as to item/s affected)
Effect: shall to that extent be subject to future and final readjustment and settlement; entry in
such case shall be stamped "Tentative liquidation"

(2) Final Liquidation(Sec. 1603, TCC as amended by RA 9135)When liquidation is final and
conclusive upon all the parties; When articles have been entered an passed free of duty or final
adjustment of duties made, after the expiration of THREE YEARS from the date of the final
payment of duties.

Exceptions:(1) Fraud(2) Protest(3) Compliance to the

Note: Exception dies not apply in case of TENTATIVE LIQUIDATION

Fractions in the Liquidation. A fraction of a peso less than fifty centavos shall be disregarded,
and a fraction of a peso amounting to fifty centavos or more shall be considered as one peso. In
case of overpayment or underpayment of duties, taxes, surcharges, wharfage and/or other
charges paid on entries, where the amount involved is less than five pesos, no refund or
collection shall be made. (Sec. 1604, TCC)

Other Notes:

Readjustment of Appraisal, Classification or Return (Sec. 1407, TCC)

Prescriptive Period for Appraisal, Classification or Return

Rule: Appraisal, classification or return as finally passed upon and approved or modified by the
Collector shall not be altered or modified in any manner.

Exceptions

(a) Within one year after payment of the duties, upon statement of error in conformity
with seventeen hundred and seven hereof, approved by the Collector

(b) Within fifteen days after such payment upon request for reappraisal and/or
reclassification addressed to the Commissioner by the Collector, if the appraisal and/or
classification is deemed to be low

(c) Upon request for reappraisal and/or reclassification, in the form of a timely protest
addressed to the Collector by the interested party if the latter should be dissatisfied
with the appraisal or return

(d) Upon demand by the Commissioner of Customs after the completion of compliance
audit pursuant to the provisions of this Code." (R.A. 9135, April 27, 21001)

(f) Keeping of records

(1) all importers are required to keep at their principal place of business, in the manner
 prescribed by regulations to be issued by the Commissioner of Customs and for a period
of 3 years from the date of importation , all records of their importations and/or books
of accounts, business and computer systems and all customs commercial data including
payment records relevant to the verification of the accuracy of the transactions value
declared by the importer/customs brokers on the import duty

(2) all brokers are required to keep at their principal place of business for a period of 3
years from date of importation copies

(a) custom officer authorized by BOC may enter during office hours any premises or
place where the records are kept to conduct an audit examination, inspection,
verification or investigation

(b) officer may make copies or take extracts from any of such documents

(c) certified copy may be evidence admissible in all courts as if original

BASIS OF VALUATION
Imported goods shall be valued in accordance with the provisions of Section 701 (Transaction
Value). If the value cannot be determined using Section 701, the succeeding sections shall be used in
sequence except for Section 704 where the importer is given the option whether to follow the normal
order or reverse the order of Sections 704 and 705. However, if value cannot be determined using
Section 705, the normal Section 704 shall be followed. If the value cannot be determined using Sections
701 through 705, Section 706 shall be followed.

I. Transaction Value SystemMethod One. The transaction value shall be the price actually paid
or payable for the goods when sold for export to the Philippines adjusted in accordance with the
provisions of tins section: Provided, That:

a. There are no restrictions as to the disposition or use of the goods by the buyer other
than restrictions which:

i. Are imposed or required by law or by Philippine authorities;

ii. Limit the geographical area in which the goods may be resold; or

iii. Do not substantially affect the value of the goods:

b. The sale or price is not subject to some condition or consideration for which a value
cannot be determined with respect to the goods being valued; and

c. The buyer and the seller are not related, or where the buyer and the seller are related,
that the transaction value is acceptable for customs purposes under the provisions
hereof.

For purposes of this Act, persons shall be deemed related only if:
 i. They are officers or directors of one another's business;

ii. They are legally recognized partners in business;

iii. There exists an employer-employee relationship between them;

iv. Any person directly or indirectly owns, controls or holds five percent (5%) or
more of the outstanding voting stocks or shares of both seller and buyer;

v. One of them directly or indirectly controls the other;

vi. Both of them are directly or indirectly controlled by a third person;

vii. Together they directly or indirectly control a third person; or

viii. They are members of the same family, including those related by affinity or
consanguinity up to the fourth civil degree.

Persons who are associated in business with one another where one is the sole agent, sole
distributor or sole concessionaire of the other shall be deemed to be related if they fall within any of the
eight (8) cases cited above.

In a sale between related persons, the transaction value shall be accepted if the importer
demonstrates that such value closely approximates one of the following occurring at or about the same
time:

a. The transaction value in sales to unrelated buyers of identical or similar goods for export
to the same country of importation;

b. The customs value of identical or similar goods as determined under the provisions of
Section 704; or

c. The customs value of identical or similar goods are determined under the provisions of
Section 705.

In determining the transaction value, the following shall be added to the price actually paid or
payable for the imported goods:

1. To the extent that they are incurred by the buyer but are not included in the price actually paid
or payable for the imported goods:

a. Commissions and brokerage fees except buying commissions;

b. Cost of containers;

c. Cost of packing, whether for labor or materials

d. Value, apportioned as appropriate, of the following goods and services:

materials, components, parts and similar items incorporated in the imported
goods; tools; dies; moulds and similar items used in the production of imported
goods; materials consumed in the production of the imported goods; and
engineering, development, artwork, design work and plans and sketches
 undertaken elsewhere than in the Philippines and necessary for the production
of imported goods, where such goods and services are supplied directly or
indirectly by the buyer free of charge or at a reduced cost for use in connection
with the production and sale for export of the imported goods; and

e. Amount of royalties and license fees related to the goods being valued that the
buyer must pay either directly or indirectly, as a condition of sale of the goods
to the buyer.

2. Value of any part of the proceeds of any subsequent resale, disposal or use of the imported
goods that accrues directly or indirectly to the seller;

3. Cost of transport of the imported goods from the port of exportation to the port of entry in the
Philippines;

4. Loading, unloading and handling charges associated with the transport of the imported goods
from the country of exportation to the port of entry in the Philippines; and

5. Cost of insurance.

II. Transaction Value of Identical GoodsMethod Two. If the dutiable value cannot be
determined under method one, the dutiable value shall be the transaction value of identical goods sold
for export to the Philippines. Identical goods refer to goods which are the same in all respects,
including physical characteristics, quality and reputation. Minor differences in appearances shall not
preclude goods otherwise conforming to the definition from being regarded as identical.

If there is more than one transaction value of identical goods found, the lowest value shall be
used to determine the customs value.

III. Transaction Value of Similar GoodsMethod Three. If the dutiable value cannot be determined
under method two, the dutiable value shall be the transaction value of similar goods sold for export to
the Philippines. Similar goods refer to goods which, although not alike in all respects, have like
characteristics and similar component materials which enable them to perform the same functions and
to be commercially interchangeable. The quality of the goods, its reputation and the existence of a
trademark shall be among the factors to be considered in determining whether goods are similar.

If there is more than one transaction value of identical goods found, the lowest value shall be
used to determine the customs value.

IV. Deductive Value Method Four. The dutiable value is the deductive value based on the unit
price of the imported article or identical or similar goods when sold in the country, in the same
condition when imported and in the greatest aggregate quantity at or about the time of the importation
of the goods being valued, to persons not related to the seller of the said goods. Such is subject to
deductions for the following:

a) Either commission agreed/usually paid or the additions usually made for profit and general
expenses in connection with sales in such country of imported goods of the same class or kind;

b) The usual cost of transportation and insurance, as well as associated costs incurred within the
Philippines;
 c) Where appropriate, the cost of insurance, transport, loading, unloading, and handling charges
associated with the transport of the imported goods the port/country of exportation to the port
of entry in the Philippines; and

d) The customs duties and other national taxes payable in the Philippines by reason of the
importation or sale of the goods.

If neither the imported nor the identical or similar goods are sold in the country at or about the
time of importation of the goods being valued in the Philippines in the conditions as imported, the
deductive value shall be based, subject to the conditions above, on

The unit price at which the imported or identical or similar imported goods are sold in the
Philippines in the condition as imported at the earliest date after the importation of the
imported goods until 90 days after such importation.

If the importer requests, the unit price at which imported goods, after further processing, are
sold in the greatest aggregate quantity to persons in the Philippines who are not related to the
seller of such goods, subject to allowance for the value of the deductions above.

V. Computed Value Method Five. The dutiable value is the sum of:

a) Cost/value of the materials and fabrication or other processing employed in producing the
imported goods;

b) Amount for profit and general expenses equal to that usually reflected in the sale of goods of
the same class or kind as the goods being valued which are made by producers in the exporting
country for export in the Philippines;

c) Freight, insurance fees, and other transportation expenses for the importation of goods;

d) Any assist, if its value is not included under (a); and

e) The cost of containers and packing, if their values are not included under (a).

The Bureau of Customs shall not require any person not residing in the Philippines to allow
access to any account or other record for the purpose of determining the computed value. However,
such information by the producer may be verified in another country with the agreement of the
producer, provided they will give advance notice to the government of the country in question and the
latter does not object to the investigation.

VI. Fallback Value Method Six. When the dutiable value cant be determined using the previous
methods, it shall be determined using other reasonable means with the data available in the Philippines.
No dutiable value shall be determined under this method on the basis of:

a) The Philippine selling price of goods produced in the country;

b) A system that provides for the acceptance for customs purposes of the higher of two alternative
values;

c) The price of goods in the domestic market of the country of exportation;

 d) The cost of production, other than computed values, that have been determined for identical or
similar goods in accordance with method five thereof;

e) The price of goods for export to a country other than the Philippines;

f) Minimum customs value; or

g) Arbitrary or fictitious values.

No basis of valuation shall be interpreted as restricting as to the rights of the Bureau to discover
the accuracy of any statement or declaration presented for customs valuation purposes. When the
Bureau has the reason to doubt the valuations accuracy, it may ask the importer to provide sufficient
documents and further explanations to ensure the accuracy of the declared value.

If, after receiving further information, of absence thereof, the Bureau still has doubts on the
accuracy of the declared value, it may deem that the customs value of the imported goods cannot be
determined under method one, without prejudice to the importers right to appeal. Before making the
final decision, the District officer must communicate with the importer the grounds for his doubts as to
the accuracy and give the importer the right to respond. When the final decision is already made, the
Bureau must communicate its decision and grounds for doubt in writing.

The dutiable value quoted in foreign currency must be assessed and collected in the Philippine
currency, converted at the current foreign exchange value or value specified or published, from time to
time, by the Central Bank.

Special Duties and Trade Remedy Measures

1. Government's Right of Compulsory Acquisition

In order to protect government revenues against undervaluation of goods, the Commissioner

may, motu proprio or upon the recommendation of the District Collector, acquire imported goods under
question for a price equal to their declared customs value plus any duties already paid on the goods,
payment for which shall be made within ten (10) working days from issuance of a warrant signed by the
Commissioner for the acquisition of such goods.

An importer who is dissatisfied with a decision of the Commissioner pertaining to this section
may, within twenty (20) working days after the date on which notice of the decision is given, appeal to
the Secretary of Finance, and if still dissatisfied, to the CTA.

Where no appeal is made by the importer, or upon reaffirmation of the Commissioner's decision
during the appeals process, the Bureau or its agents shall sell the acquired goods pursuant to existing
laws and regulations.

2. Marking of Imported Goods and Containers

All goods of foreign origin imported into the Philippines or their containers, as provided in
subsection (B) hereof shall be conspicuously marked in any official language of the Philippines as legibly,
indelibly and permanently as the nature of the goods or container will permit and in such manner as to
indicate to an ultimate purchaser in the Philippines the name of the country of origin of the goods.
Pursuant thereto, the Commissioner shall, with the approval of the Secretary of Finance:
 a. Determine the character of words and phrases or abbreviation thereof which shall be
acceptable as indicating the country of origin and prescribe any reasonable method of
marking, whether by printing, stenciling, stamping, branding, labeling or by any other
reasonable method, and in a conspicuous place on the goods or container where the
marking shall appear;

b. Require the addition of other words or symbols which may be appropriate to prevent
deception or mistake as to the origin of the goods or as to the origin of any other goods with
which such imported goods is usually combined subsequent to importation but before
delivery to an ultimate purchaser; and

c. Authorize the exception of any goods from the requirements of marking if:

i. Such goods are incapable of being marked;

ii. Such goods cannot be marked prior to shipment to the Philippines without
injury;

iii. Such, goods cannot be marked prior to shipment to the Philippines, except at an
expense economically prohibitive of their importation;

iv. The marking of a container of such goods will reasonably indicate the origin of
such goods;

v. Such goods are crude substances;

vi. Such goods are imported for use by the importer and not intended for sale in
their imported or any other form;

vii. Such goods are to be processed in the Philippines by the importer or for the
importer's account other than for the purpose of concealing the origin of such
goods and in such manner that any mark contemplated by this section would
necessarily be obliterated, destroyed, or permanently concealed;

viii. An ultimate purchaser, by reason of the character of such goods or by reason of

the circumstances of their importation, must necessarily know the country of
origin of such goods even though they are not marked to indicate their origin;

ix. Such goods were produced more than twenty (20) years prior to their
importation into the Philippines; or

x. Such goods cannot be marked after importation except at an expense which is

economically prohibitive, and the failure to mark the goods before importation
was not due to any purpose of the importer, producer, seller or shipper to avoid
compliance with this section.

Whenever goods are exempt from the requirements of marking, the immediate container, if
any, of such goods, or such other container or containers of such goods, shall be marked in such manner
as to indicate to an ultimate purchaser in the Philippines the name of the country of origin of such goods
in any official language of the Philippines, subject to all provisions of this section, including the same
exceptions.
 If, at the time of importation any good or its container, is not marked in accordance with the
requirements of this section, there shall be levied, collected, and paid upon such good a marking duty of
five percent (5%) of dutiable value, which shall be deemed to have accrued at the time of importation.

No imported goods held in customs custody for inspection, examination, or assessment shall be
released until such goods or their containers shall have been marked in accordance with the
requirements of this section and until the amount of duty estimated to be payable shall have been
deposited.

The failure or refusal of the owner or importer to mark the goods as herein required within a
period of thirty (30) days after due notice shall constitute as an act of abandonment of said goods.

3. Dumping Duty

Adopts RA 8752, also known as the Anti-Dumping Act of 1999, which aims to protect domestic
enterprises against foreign competition and trade prices.

4. Safeguard Duty

Adopts RA 8800, also known as the Safeguard Measures Act, which promotes the
competitiveness of domestic industries and producers based on sound industrial and agricultural
development policies, an efficient use of human, natural and technical resources, as well as protect
domestic industries from increased imports which cause or threaten to cause serious injury to those
domestic industries and producers.

5. Countervailing Duty

Adopts RA 8751, otherwise known as An Act Strengthening the Mechanisms for the Imposition
of Countervailing Duties on Imported Subsidized Products, Commodities or Articles of Commerce in
Order to Protect Domestic Industries from Unfair Trade Competition, Amending for the Purpose Section
302, Part 2, Title II, Book I of the Tariff and Customs Code of the Philippines.

6. Discrimination of Foreign Countries

The following recourse shall be applicable in case of discrimination by foreign countries:

a) When the President finds that the public interest will be served thereby, the President
shall, by proclamation, specify and declare new or additional duties in an amount not
exceeding 100% ad valorem upon goods wholly or in part the growth or product of, or
imported in a vessel of any foreign county whenever the president shall find as a fact
that such country:

Imposes upon the disposition or transportation in transit or through

reexportation in transit from such country of any goods wholly or in part the
growth or product of the Philippines, any unreasonable charge, exaction,
regulation or limitation which is not equally enforced upon the like goods of
every foreign country; or

Discriminates in fact against the commerce of the Philippines, by law or

administrative regulation or practice, by or in respect to any customs, tonnage,
or port duty, fee, charge, exaction, classification, regulation, condition,
 restriction or prohibition, in such manner as to place the commerce of the
Philippines at a disadvantage compared with the commerce of any foreign
country.

b) If at any time the President shall find it to be a fact that any foreign country has not only
discriminated against the commerce of the Philippines, but has, after the issuance of a
proclamation as authorized in subsection (a) of this section, maintained or increased its
said discrimination against the commerce of the Philippines, the President is hereby
authorized, if deemed consistent with the interests of the Philippines and of public
interest, to issue a further proclamation direction that such product of said country or
such goods imported in their vessels be excluded from importation into the Philippines.

c) Any proclamation issued by the President under this section shall, if the President
deems it consistent with the interest of the Philippines, extend to the whole of any
foreign country or may be confined to any subdivision or subdivisions thereof: Provided,
that, the President may, whenever the public interests require, suspend, revoke,
supplement or amend any such proclamation.

d) All goods imported contrary to the provisions of this section shall be forfeited to the
government of the Philippines and shall be liable to be seized, prosecuted and
condemned in like manner and under the same regulations, restrictions, and provisions
as may from time to time be established for the recovery, collection, distribution, and
remission or forfeiture to the government by the tariff and customs laws. Whenever the
provision of this section shall be applicable to importations into the Philippines of goods
wholly or in part the growth or product of any foreign country, it shall be applicable
thereto, whether such goods are imported directly or indirectly.

e) It shall be the duty of the Commission to ascertain and at all times be informed whether
any of the discriminations against the commerce of the Philippines enumerated in
subsections (a) and (b) of this section are practiced by any country; and if and when
such discriminatory acts are disclosed, it shall be the duty of the Commission to bring
the matter to the attention of the President, and to recommend measures to address
such discriminatory acts.

f) The Secretary of Finance shall make such rules and regulations as are necessary for the
execution of a proclamation that the President may issue in accordance with the
provisions of this section.

Documentation Needed For Importation of Goods

Informal Entry Process - Goods of a commercial nature with free on board (FOB) or free carrier at
(FCA) value of less than Fifty Thousand Pesos (P50,OOO.OO); and Personal and household effects or
goods, not in commercial quantity, imported in a passenger's baggage or mail.

1. Informal Import Declaration and Entry (B.C. no. 177)

2. Clearance of Single Consignees Shipment (CMO 10-91) or Clearance of Consolidated Shipment
(CMO 54-89 and CMO 79-90)
3.1 FOR SINGLE CONSIGNMENT
 Philippine passport of individual
Certificate of exemption acquired by sending a letter of request to Department of
Finance
Packing list itemized list of articles usually intended in each shipping package, giving
the quantity, description, and weight of the contents. Prepared by the shipper and sent
to the consignee for accurate tallying of the delivered goods.
Bill of lading a bill of lading is a legal document between the shipper of goods and the
carrier detailing the type, quantity, and destination of the goods being carried. The bill
of lading also serves as a receipt of shipment when the goods are delivered at the
predetermined destination. This document must accompany the shipped goods, no
matter the form of transportation, and must be signed by an authorized representative
from the carrier, shipper and receiver.
Permit to deliver imported goods (B.C. no. 194)
3.2 FOR CONSOLIDATED SHIPPING
Bill of Lading - a bill of lading is a legal document between the shipper of goods and the
carrier detailing the type, quantity, and destination of the goods being carried. The bill
of lading also serves as a receipt of shipment when the goods are delivered at the
predetermined destination. This document must accompany the shipped goods, no
matter the form of transportation, and must be signed by an authorized representative
from the carrier, shipper and receiver.
Packing list - itemized list of articles usually intended in each shipping package, giving
the quantity, description, and weight of the contents. Prepared by the shipper and sent
to the consignee for accurate tallying of the delivered goods.
Permit to deliver imported goods (B.C. no 194)

Formal Entry Process all goods declaration for consumption except those that shall be cleared
through an informal entry process.

1. Single Administrative Document (CMO 29-15)

2. Commercial Invoice a bill for the goods from the buyer to the seller. A commercial invoice
should include basic information about the transaction, including a description of the goods, the
address of the shipper and seller, and the delivery and payment of terms. The buyer needs the
invoice to prove ownership and to arrange payment.
3. Packing List - itemized list of articles usually intended in each shipping package, giving the
quantity, description, and weight of the contents. Prepared by the shipper and sent to the
consignee for accurate tallying of the delivered goods.
4. Bill of Lading - a bill of lading is a legal document between the shipper of goods and the carrier
detailing the type, quantity, and destination of the goods being carried. The bill of lading also
serves as a receipt of shipment when the goods are delivered at the predetermined destination.
This document must accompany the shipped goods, no matter the form of transportation, and
must be signed by an authorized representative from the carrier, shipper and receiver.
5. Licenses/Permits/Clearance to certify legality as an importer.
6. Temporary Assessment Notice may be prepared and lodged by accredited customs broker.
Documentation Needed For Exportation of Goods

DOCUMENTATION

Exporters should seriously consider having the freight forwarder handle the formidable amount
of documentation that exporting requires; freight forwarders are specialists in this process. The
following documents are commonly used in exporting; which of them are actually used in each case
depends on the requirements of both our government and the government of the importing country.
Commercial invoice. As in a domestic transaction, the commercial invoice is a bill for the goods
from the buyer to the seller. A commercial invoice should include basic information about the
transaction, including a description of the goods, the address of the shipper and seller, and the
delivery and payment terms. The buyer needs the invoice to prove ownership and to arrange
payment. Some governments use the commercial invoice to assess customs duties.
Bill of lading. Bills of lading are contracts between the owner of the goods and the carrier (as
with domestic shipments). There are two types. A straight bill of lading is nonnegotiable. A
negotiable or shipper's order bill of lading can be bought, sold, or traded while goods are in
transit and is used for letter-of-credit transactions. The customer usually needs the original or a
copy as proof of ownership to take possession of the goods.
Consular invoice. Certain nations require a consular invoice, which is used to control and
identify goods. The invoice must be purchased from the consulate of the country to which the
goods are being shipped and usually must be prepared in the language of that country.
Certificate of origin. Certain nations require a signed statement as to the origin of the export
item. Such certificates are usually obtained through a semiofficial organization such as a local
chamber of commerce. A certificate may be required even though the commercial invoice
contains the information.
Inspection certification. Some purchasers and countries may require a certificate of inspection
attesting to the specifications of the goods shipped, usually performed by a third party.
Inspection certificates are often obtained from independent testing organizations.
Dock receipt and warehouse receipt. These receipts are used to transfer accountability when
the export item is moved by the domestic carrier to the port of embarkation and left with the
international carrier for export.
Destination control statement. This statement appears on the commercial invoice, ocean or air
waybill of lading, and SED to notify the carrier and all foreign parties that the item may be
exported only to certain destinations.
Insurance certificate. If the seller provides insurance, the insurance certificate states the type
and amount of coverage. This instrument is negotiable.
Export license. (when needed).
Export packing list. Considerably more detailed and informative than a standard domestic
packing list, an export packing list itemizes the material in each individual package and indicates
the type of package: box, crate, drum, carton, and so on. It shows the individual net, legal, tare,
 and gross weights and measurements for each package . Package markings should be shown
along with the shipper's and buyer's references. The packing list should be attached to the
outside of a package in a waterproof envelope marked "packing list enclosed." The list is used by
the shipper or forwarding agent to determine (1) the total shipment weight and volume and (2)
whether the correct cargo is being shipped. In addition, customs officials (both local and foreign)
may use the list to check the cargo.
Documentation must be precise. Slight discrepancies or omissions may prevent merchandise
from being exported, result in exporting firms not getting paid, or even result in the seizure of the
exporter's goods by local or foreign government customs. Collection documents are subject to precise
time limits and may not be honored by a bank if out of date. Much of the documentation is routine for
freight forwarders or customs brokers acting on the firm's behalf, but the exporter is ultimately
responsible for the accuracy of the documentation.
The number of documents the exporter must deal with varies depending on the destination of
the shipment. Because each country has different import regulations, the exporter must be careful to
provide proper documentation. If the exporter does not rely on the services of a freight forwarder, there
are several methods of obtaining information on foreign import restrictions:
Foreign government embassies and consulates can often provide information on import
regulations.
The Air Cargo Tariff Guidebook lists country-by-country regulations affecting air shipments.
Other information includes tariff rules and rates, transportation charges, air waybill information,
and special carrier regulations. Contact the Air Cargo Tariff, P.O. Box 7627, 1117 ZJ Schiphol
Airport, Netherlands.
The National Council on International Trade Documentation (NCITD) provides several low-cost
publications that contain information on specific documentation commonly used in
international trade. NCITD provides a free listing of its publications. Contact National Council on
International Trade Documentation, 350 Broadway, Suite 1200, New York, NY 10013; telephone
212-925-1400.
Source: http://philippines.smetoolkit.org/philippine/en/content/en/2052/Export-Documentation-Shipping-
and-Logistics