IV.

Tariff and Customs Code of 1978, as amended

This was expressly repealed by The Customs Modernization and Tariff Act (CMTA)
[RA No. 10863] which took signed on 30 May 2016, and was published on 01 June 2016.

A. Tariff and duties, defined

 Tariffs or Custom duties is the name given to taxes on the importation and exportation of
commodities, the tariff or tax assessed upon merchandise imported from, or exported to, a
foreign country (Nestle Phils. vs. Court of Appeals, G.R. No. 134114, July 6, 2001).

Tariff Duty
Book of rates; rate of tax imposed upon Tax that is collected when goods are
importation of goods. imported.

List of articles liable to duties (Bouvier). List Taxes on the importation or exportation of
of schedule articles imposed upon the commodities. These are dutieswhich are
importation into the country, within the rates charged upon commodities on their being
at which they are severally taxed. imported into or exported out of a country (1
Cooley 73)
Derivatively it refers to a system of imposing
duties or taxes on the importation of foreign
merchandise (Black Law’s Dictionary)

B. General rule: all imported articles are subject to duty.

 All articles, when imported from any foreign country into the Philippines, shall be subject to duty
upon each importation, even though previously exported from the Philippines, except as
otherwise specifically provided for in this Code or in other laws (Sec. 101, Tariff and Customs
Code).

Importation by the government taxable

 All importations by the Government for its own use or that of its subordinate branches or
instrumentalities or owned or controlled by the Government, shall be subject to the duties,
taxes, fees and other charges provided for in the TCC [now CMTA] (Sec. 1205, TCCP; Sec.
406, CMTA).

Exemptions: The provisions of general and special laws, to the contrary notwithstanding,
including those granting franchises, there shall be no exemption whatsoever from the payment
of duties except:

1) as provided for in the CMTA

2) those granted to government agencies, instrumentalities or government-owned or -

controlled corporations (GOCCs) with existing contracts, commitments, agreements, or
obligations with foreign countries requiring such exemption;

3) those granted to international institutions, associations or organizations entitled to

exemption pursuant to agreements or special laws; and

4) those that may be granted by the President upon prior recommendation of the NEDA
in the interest of national economic development (Sec. 800, CMTA).

NOTE: UNDER OLD PROVISION, upon certification of the head of the

department or political subdivision concerned, with the approval of the Auditor
General, that the imported article is actually being used by the government or
any of its political subdivision concerned, the amount of duty, tax, fee or charge
is refunded to the entity which paid it (Sec. 1205, TCC).

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C. Purpose for imposition
 Tariff or customs duties are imposed for a special purpose:
1) to achieve some social or economic objectives; and
2) to protect local industries.

D. Flexible tariff clause Bar 2001

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

 Statutory basis: The power of the President upon recommendation1 of the National Economic
and Development Authority (NEDA) to:

1) to increase, reduce or remove existing protective tariff rates of import duty,

but in no case shall be higher than one hundred percent (100%) ad valorem

 Existing rates may be increased or decreased to any level, in one or several

stages
 But in no case shall the increased rate of import duty be higher than a maximum
of one hundred percent (100%) ad valorem [Sec. 401(a)(1), TCC; Sec. 1608
(a)(1), CMTA)

 The power of the President to increase or decrease rates of import duty

within the limits fixed in subsection (a) shall include the authority to
modify the form of duty. In modifying the form of duty, the
corresponding ad valorem or specific equivalents of the duty with
respect to imports from the principal competing foreign country for the
most recent representative period shall be used as bases (Sec. 401(c),
TCC; Sec. 1608(c), CMTA).

2) Increase, reduce or remove existing protective rates of import duties

including any necessary change in classification [Sec. 401(a)(2), TCC; Sec. 1608
(a)(2), CMTA)]

3) Impose an additional duty on all imports:

 Limit: not exceeding ten percent (10%) ad valorem whenever necessary;
Upon periodic investigations by the Commission and recommendation of the
NEDA, the President may cause a gradual reduction of protection levels granted
in Sec. 104 [rates of import duty granted in Section 1611] 2, including those
subsequently granted pursuant to this section. [Sec. 401(a)(3), TCC; Sec. 1608
(a)(3), CMTA)]

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Before any recommendation is submitted to the President by the NEDA pursuant to the provisions of this section,
except in the imposition of an additional duty not exceeding ten percent (10%) ad valorem, the Commission shall
conduct an investigation and shall hold public hearings wherein interested parties shall be afforded reasonable
opportunity to be present, to produce evidence and to be heard. The Commission shall also hear the views and
recommendations of any government office, agency, or instrumentality. The Commission shall submit its findings
and recommendations to the NEDA within thirty (30) days after the termination of the public hearings (Sec. 401(b),
TCC; Sec. 1608(b), CMTA).

2
Maximum rate shall not exceed one hundred per cent (100%) ad valorem. (Sec. 104, TCC; Sec. 1611, CMTA)

2
  Application: there are three (3) grounds where the power may be exercised by the President:
[WES]: (1) General Welfare, (2) Interest of national Economy, (3) Interest of national Security

a) Any order issued by the President shall take effect thirty (30) days after
promulgation, EXCEPT in the imposition of additional duty not exceeding ten percent
(10%) ad valorem which shall take effect at the discretion of the President [Sec.
401 (d), TCC; Sec. 1608 (d), CMTA].

b) Sec. 1608 (e) and (f) further limits the President’s power to exercise the “flexible
tariff clause”: (i) the power delegated to the President shall be exercised only when
Congress is not in session; and (ii) may be withdrawn or terminated by Congress
through a joint resolution.

Flexible tariff clause vis-à-vis Discriminatory Duties

401 [1608] 304 [714]

Imposition of ad valorem duties
 Both allow imposition of 100% ad valorem tax
Additional duties (on top of 100%)
Not more that 10% ad valorem duties Not more than 100% ad valorem duties
Effectivity
GR: 30 days from promulgation; XPN: No specific effectivity date
if additional duty does not exceed 10%
- discretion of the President.

E. Requirements of importation
1. Beginning and ending of importation Bar 1995
 “Importation” begins from the time the carrying vessel or aircraft enters the Philippine
territorial jurisdiction with the intention to unload therein and ends at the time the goods
are released or withdrawn from the customhouse upon payment of the customs duties or
with legal permit to withdraw (Viduya vs. Berdiago, 73 SCRA 553).

 The payment of the duties, taxes, fees and other charges must be in full. Merchandise, the
importation of which is effected contrary to law, is subject to forfeiture, and that goods
released contrary to law are subject to seizure and forfeiture (Mamalateo, Reviewer on
Taxation, 2014 Ed., p. 822).

Beginning Ending
Importation begins when the carrying Importation is deemed terminated when:
vessel or aircraft enters the Philippine
territory with the intention to unload (a) The duties, taxes and other charges due
therein. (Sec. 1202, TCC; Sec. 103, CMTA) upon the goods have been paid or secured
to be paid at the port of entry unless the
goods are free from duties, taxes and other
charges and legal permit for withdrawal has
been granted; or

(b) In case the goods are deemed free of duties,

taxes and other charges, the goods have
legally left the jurisdiction of the Bureau.
(Sec. 1202, TCCP; Sec. 103, CMTA)

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2. Obligations of importer
a) Cargo Manifest
 Every vessel from a foreign port must have on board a complete manifest of all
its cargoes. It is the document used in shipping, containing a list of the contents,
value, origin, carrier and destination of the goods to be shipped (Black Law’s
Dictionary)

 All cargoes intended to be landed at a port in the Philippines must be described

in separate manifests for each port of call. Each manifest shall include the port
of departure and the port of delivery with the marks, numbers, quantity, and
description of the packages and the names of the consignees. Every vessel from
a foreign port must have on board complete manifests of passengers and
baggage, in the prescribed form, setting forth the destination and all particulars
required by immigration laws. Every vessel shall present to the proper customs
officers upon arrival in ports of the Philippines a complete list of all sea stores
then on board. If the vessel does not carry cargo or passengers, the manifest
must show that no cargo or passenger is carried from the port of departure to
the port of destination in the Philippines.

 A cargo manifest shall in no case be changed or altered after entry of vessel,

except by means of an amendment, under oath, by the master, consignee or
agent thereof, which shall be attached to the original manifest; Provided, That
after the invoice and/or goods declaration covering an importation have been
received and recorded in the office of the appraiser, no amendment of the
manifest shall be allowed, except when it is obvious that a clerical error or any
other discrepancy has been committed in the preparation of the manifest,
without any fraudulent intent, the discovery of which would not have been made
until after examination of the importation has been completed. (Sec. 1021,
TCCP; Sec. 1204, CMTA)

b) Import entry
 Also known as “Marine Entry and Internal Revenue Declaration”
 A declaration to the Bureau of Customs showing particulars of the imported articles that
will enable the customs authorities to determine the correct duties and internal revenue
taxes due on the importation. It must be accomplished from disembarking of last cargo
from vessel (Domondon, Bar Reviwer in Taxation, Vol 1, 7th ed., 2006, p.506)

Sec. 1301, TCC Secs. 401 -402, CMTA

GR: All imported articles shall be subject to a GR: Importations Subject to Goods
formal or informal entry. Declaration: All imported goods shall be
subject to the lodgement4 of a goods
XPN: importations admitted free of duty under, declaration, unless otherwise provided for in
Section 105 (k)3 [donations/for account of duly this Act.
registered relief organizations]

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Sec. 105 (k): Imported articles donated to, or for the account of, any duly registered relief organization, not
operated for profit, for free distribution among the needy, upon certification by the Department of Social Services
and Development or the Department of Education, Culture and Sports. as the case may be.
4
Lodgement refers to the registration of a goods declaration with the Bureau (Sec. 101 [dd], CMTA)

4
 Formal Entry Formal Entry
1) Commissioner may, upon instruction of the All goods declaration for consumption shall be
Secretary of Finance, for the protection of cleared through a formal entry process.
domestic industry or of the revenue,
require a formal entry, regardless of value, All importations entered through, a formal
whatever be the purpose and nature of the entry process shall be covered by a letter of
importation credit or any verifiable commercial document
evidencing payment or in cases where there
2) For immediate consumption, or under is no sale for export, by any commercial
irrevocable domestic letter of credit, bank document indicating the commercial value of
guarantee or bond for: (a) Placing the the goods.
article in customs bonded warehouse; (b)
Constructive warehousing and immediate Consumption entry: a government form
transportation to other ports of the accompanied by an importer or his
Philippines upon proper examination and representative, which is ultimately submitted
appraisal; or (c) Constructive warehousing to the proper office of the BOC, as basis for
and immediate exportation. inspection of the importations of the correct
customs duties and internal revenue taxes
3) Import entries under irrevocable domestic due on importation (Hantex Trading Co., Inc.
letter of credit, bank guarantee or bond v. CIR, CA-GR No. 47172, September 20,
shall be subject to the provisions of Title V, 1998)
Book 11 of this Code.

4) 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)

Informal Entry Informal Entry

Cleared on an informal entry whenever duty, The following goods which shall be cleared
tax or other charges are collectible: through an informal entry process:
1) Articles of a commercial nature intended for 1) Goods of a commercial nature with Free
sale, barter or hire, the dutiable, value of on Board (FOB) or Free Carrier Act
which is P2,000.00 or less (FCA) value of less than fifty thousand
pesos (₱50,000.00).5
2) Personal and household effects or articles, 2) Personal and household effects or
not in commercial quantity, imported in goods, not in commercial quantity,
passenger's baggage, mail or otherwise, for imported in a passenger’s baggage or
personal use. mail.

NOTE: Under Section 1301 of the TCCP, imported articles must be entered within a non-
extendible period of 30 days from the date of discharge of the last package from a
vessel. Otherwise, the BOC will deem the imported goods impliedly abandoned under
Section 1801 (Chevron Philippines vs. Commissioner of the Bureau of Customs, G.R.
No. 178759, August 11, 2008).

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Every three (3) years after the effectivity of this Act, the Secretary of Finance shall adjust this amount as provided
herein to its present value, using the Consumer Price Index (CPI) as published by the PSA. The Commissioner may
adjust the value of goods of commercial nature that shall be cleared through an informal entry process without
prejudice to the periodic adjustment period.

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c) Declaration of correct weight or value

 Declaration of the Import Entry: Except in case of informal entry, no entry

of article shall be effected until there shall have been submitted to the collector
a written declaration under penalties of falsification or perjury, in such form as
shall be prescribed by the Commissioner, containing statements in substance as
follows:

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 (Sec. 1304, TCCP).

 Where the entry is filed by a party other than the importer, said importer shall
himself be required to declare under oath and under the penalties of falsification
or perjury that the declarations and statements contained in the entry are true
and correct (Sec. 1301, TCCP, as amended by R.A. 7651)

 Discrepancy Between Actual and Declared Weight of Manifested

Article.: If the gross weight of any article or package described in the manifest
exceeds by more than twenty (20) percentum the gross weight as declared in
the manifest or bill of lading thereof, and the Collector shall be of the opinion
that such discrepancy was due to the carelessness or incompetency of the
master or pilot in command, owner or employee of the vessel or aircraft, a fine
of not more than fifteen (15) percentum of the value of the package or article
in respect to which the deficiency exists, may be imposed upon the importing
vessel or aircraft. (Sec. 2523, TCCP)

UNDER THE CMTA

 Rights and Responsibilities of the Declarant/Licensed Custom Broker:

a) Declarant shall be responsible for the accuracy of the goods
declaration and for the payment of all duties, taxes and other charges
due on the imported goods.
b) Licensed customs broker shall likewise be responsible for the accuracy
of the goods declaration but shall not be responsible for the payment
of duties, taxes and other charges due on the imported goods.
c) The declarant shall sign the goods declaration, even when assisted by
a licensed customs broker, who shall likewise sign the goods
declaration. (Sec. 107, CMTA)

 Penalties for Errors in Goods Declaration: The Bureau shall not impose
substantial penalties for errors when such errors are inadvertent and there was
no fraudulent intent or gross negligence in the commission thereof: Provided,
That in order to discourage repetition of such errors, a penalty may be imposed
hut shall not be excessive (Sec. 108, CMTA).

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Undervaluation, Misclassification and Misdeclaration in Entry.

TCCP
Error Surcharge
1. When the dutiable value of the imported articles shall be so Not less than the difference between
declared and entered that the duties, based on the declaration of the full duty and the estimated duty
the importer on the face of the entry would be less by ten percent based upon the declaration of the
(10%) than importer’s description on the face of the entry than importer, nor more than twice of such
should be legally collected based on the tariff classification difference
2. When the dutiable weight, measurement or quantity of imported Not less than the difference between
articles is found upon examination to exceed by ten percent (10%) the full duty and the estimated duty
or more than the entered weight, measurement or quantity based upon the declaration of the
importer, nor more than twice of such
difference
3. Misdeclaration in 50 weight, measurement or quantity of more than 1. Prima facie evidence of fraud
thirty percent (30%) between the value, weight, measurement or under Section 2530 (infra.) of the
quantity declared in the entry, and the actual value, weight, TCCP;
quantity, or measurement 2. Any misdeclaration or undeclared
imported article/items found upon
examination shall ipso facto be
forfeited in favor of the
Government to be disposed of

4. Misdescription, misclassification or misdeclaration in the import 3. Importer shall be subject to penal

entry is intentional provision under Section 3602 of
this Code6

(Sec. 2503,TCCP, as amended by R.A. 7651, June 04, 1993).

CMTA
Error Surcharge
Misdeclaration
1. Misdeclaration as to quantity, quality, description, weight, or 250% of the duty and tax due.
measurement of the goods, or misclassification through insufficient
or wrong description of the goods or use of wrong tariff heading
resulting to a discrepancy in duty and tax to be paid between what is
legally determined upon assessment and what is declared
2. Discrepancy in duty is less than ten percent (10%) No surcharge

3. Declared tariff heading is rejected in a formal customs dispute No surcharge

settlement process involving difficult or highly technical question of
tariff classification
4.
5. Tariff classification declaration relied on an official government ruling No surcharge

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Sec 3602. Various Fraudulent Practices Against Customs Revenue. - Any person who makes or attempts to make
any entry of imported or exported article by means of any false or fraudulent invoice, declaration, affidavit, letter,
paper or by any means of any false statement, written or verbal, or by any means of any false or fraudulent practice
whatsoever, or knowingly effects any entry of goods, wares or merchandise, at less than true weight or Measures
thereof or upon. a false classification as to quality or value, or by the payment of less than the amount legally due,
or knowingly and willfully files any false or fraudulent entry or claim for the payment of drawback or refund of duties
upon the exportation of merchandise, or makes or files any affidavit abstract, record, certificate or other document,
with a view to securing the payment to himself or others of any drawback, allowance, or refund of duties on the
exportation of merchandise, greater than that legally due thereon, or who shall be guilty of any willful act or omission
shall, for each offence, be punished in accordance with the penalties prescribed in the preceding section.

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 Error Surcharge
Undervaluation7
1. Established without the need to go through the formal dispute 250%
settlement process

2. Discrepancy in duty is less than ten percent (10%) No surcharge

3. Declared value is rejected as a result of an official ruling or decision No surcharge

under the customs dispute settlement process involving difficult or
highly technical question relating to the application of customs
valuation rules.
Fraudulent /Intentional8
1. Misdeclaration 1. 500% of the duty and tax due
2. Misclassification 2. Seizure regardless of the
3. Undervaluation amount of the discrepancy
3. Application of fines or penalties
against the importer and other
person or persons who willfully
participated in the fraudulent
act.

d) Liability for payment of duties

 Unless relieved by laws or regulations, the liability for duties, taxes, fees, and
other charges attached to importation constitutes a personal debt due and
demandable against the importer in favor of the government and shall be
discharged only upon payment of duties, taxes, fees and other charges. It also
constitutes a lien on the imported goods which may be enforced while such
goods are under customs' custody [or subject to the control of the government].
(Sec. 1204, TCCP; Sec. 405, CMTA).

e) Liquidation of duties

 Liquidation and Record of Entries: If the Collector shall approve the returns
of the appraiser and the report of the weights, gauge or quantity, the liquidation
shall be made on the face of the entry showing the particulars thereof, initiated
by the customs assessor, approved by the chief customs assessor, and recorded
in the record of liquidations. A daily record of all entries liquidated shall be
posted in public corridor of the customhouse, 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 the date of the entry. The daily record must also be
kept by the collector of all additional duties, taxes and other charges found upon
liquidation, and notice shall promptly the interested parties. (Sec. 1601, TCCP)

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There is undervaluation when:
a) 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
b) when an incorrect valuation method is used or the valuation rules are not properly observed, resulting in a
discrepancy in duty and tax to be paid between what is legally determined as the correct value against the
declared value.

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False or altered document is submitted or when false statements or information are knowingly made. A discrepancy
in duty and tax to be paid between what is legally determined and what is declared amounting to more than thirty
percent (30%) shall constitute a prima facie evidence of fraud.

8
  Tentative Liquidation: If to determine the exact amount due under the law in
part some future action is required, the liquidation shall be deemed to be
tentative as to the item or items affected and shall to that extent be subject to
future and final readjustment and settlement within a six (6) months from date
of tentative liquidation. The entry in such case shall be stamped liquidation.
(Sec. 1602, TCCP;)

 [BAR 2013] Finality of Liquidation (SEC. 1603, TCCP as amended by R.A.

9135): When articles have been entered and passed free of duty or final
adjustments of duties made, with subsequent delivery, such entry and passage
free of duty or settlements of duties will, after the expiration of three (3) years
from the date of the final payment of duties, be final and conclusive upon all
parties:

 In the absence of:

1. fraud
2. protest
3. compliance audit
 Unless the liquidation of the import entry was merely tentative.

f) Keeping of records

 Audit and Examination of Records (Sec. 1000, CMTA) — Within three (3) years
from the date of final payment of duties and taxes or customs clearance, as the case
may be, the Bureau may conduct an audit examination, inspection, verification, and
investigation of records pertaining to any goods declaration, which shall include
statements, declarations, documents, and electronically generated or machine
readable data, for the purpose of ascertaining the correctness of the goods
declaration and determining the liability of the importer for duties, taxes and other
charges, including any fine or penalty, to ensure compliance with this Act.

 Requirement to Keep Records (Sec. 1003, CMTA):

(a) All importers are required to keep at their principal place of business, in the
manner prescribed by regulations to be issued by the Commissioner and for
a period of three (3) years from the date of final payment of duties and
taxes or customs clearance, as the case may be, all records pertaining to
the ordinary course of business and to any activity or information contained
in the records required by this title in connection with any such activity.

(b) All parties engaged in customs clearance and processing are required to
keep at their principal place of business, in the manner prescribed by
regulations to be issued by the Commissioner and for a period of three (3)
years from the date of filing of the goods declaration, copies of the
aboveraentioned records covering the transactions handled.

(c) Locators or persons authorized to bring imported goods into free zones, such
as the special economic zones and free ports, are required to keep subject-
records of all its activities, including in whole or in part, records on imported
goods withdrawn from said zones into the customs territory for a period of
three (3) years from the date of filing of the goods declaration.

(d) Failure to keep the records required by this Act shall constitute a waiver of
this right to contest the results of the audit based on records kept by the
Bureau.

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 Sec. 710, TCCP Sec. 210, CMTA
Collectors, assistant collectors, District Collectors, Deputy District
deputy collectors, surveyors, and Collectors, and customs officers
other customs officials acting in such acting in such capacities must
capacities are required to keep true, maintain permanent records of official
correct and permanent records of transactions and turn-over all records
their official transactions, to submit and official papers to their respective
the same to the inspection of successors or other authorized
authorized officials at all times, and officials. The records shall be made
to turn over all records and official available for inspection by other
papers to their successors or other authorized officials of the Bureau.
authorized officials
If required, the District Collector shall
affix the official dry seal of the Bureau
on all documents and records
requiring authentication.

F. Importation in violation of tax credit certificate

1. Smuggling [Bar 1994, 2013]

Any person who shall fraudulently import or export or bring into or outside of the Philippines any
goods, or assist in so doing, contrary to law, or shall receive, conceal, buy, sell, or in any manner
facilitate the transportation, concealment, or sale of such goods after importation, or shall commit
technical smuggling.

Kinds Elements
(1) Fraudulent smuggling a. Bringing an article into the country from the outside;
b. There must be intentional fraud, consisting of deception, willfully and
deliberately dared or resorted to in order to give up some right

(2) Degree of participation in the a. Assists in bringing into the country from the outside any article contrary
commission of unlawful to law
importation

(3) Accused found to have a. Receive, conceal, buy, sell, or in any manner facilitate the transportation,
possession of dutiable articles concealment, or sale of such article after importation
inside the airport premises b. Knowing the same to have been imported contrary to law

(4) Technical smuggling Act of importing goods into the country by means of fraudulent, falsified or
erroneous declaration of the goods to its nature, land, quality, quantity or
weight, for the purpose of reducing or avoiding payment of prescribed taxes,
duties and other charges

There is smuggling when new motor vehicles were declared as used truck
replacement parts. Under Sec. 1203, TCCP, the owner of the imported articles
is the consignee. The law created presumption of ownership. Whether or not
the accused participated in the preparation of the of the bill of land is
immaterial to disprove ownership of said articles, for the law created a
presumption of ownership. Therefore, it is imperative for Sayson to disprove
ownership of said articles by showing proof to the contrary. (People v.
Sayson, CTA Criminal Case, December 12, 2012).

(Sec. 3601, TCCP; Sec. 1401, CMTA;Tomas Salvador v. People, in Mamalateo, 2014, p. 843; Jardeleza vs.
People,G.R. No. 165265, February 6, 2006 citing Rodriguez vs. Court of Appeals, G.R. No. 115218, September 18,
1995, 248 SCRA 288, 296)

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2. Other fraudulent practices
Various Fraudulent Any person who:
Practices Against Customs 1. Makes or attempts to make any entry of imported or exported article by
Revenue means of:
(Sec. 3602, TCCP) a. any false or fraudulent invoice, declaration, affidavit, letter, paper
or by any means of any false statement, written or verbal, or
b. any false or fraudulent practice whatsoever, or
2. Knowingly effects any entry of goods, wares or merchandise
a. At less than true weight or measures thereof or upon a false
classification as to quality or value, or
b. By the payment of less than the amount legally due
3. Knowingly and willfully files any false or fraudulent entry or claim for the
payment of drawback or refund of duties upon the exportation of
merchandise
4. Makes or files any affidavit abstract, record, certificate or other document,
with a view to securing the payment to himself or others of any drawback,
allowance, or refund of duties on the exportation of merchandise, greater
than that legally due thereon
5. Shall be guilty of any willful act or omission

Other Fraudulent Practices Any person who makes or attempts to make any entry of imported or exported
Against Customs Revenue goods by means of any false or fraudulent statement, document or practice or
(Sec. 1403, CMTA) knowingly and willfully files any false or fraudulent claim for payment of
drawback or refund of duties shall, for each act, be punished in accordance with
the penalties prescribed in Section 1401 (supra) of the CMTA.

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G. Classification of goods
1. Taxable importation
 All articles, when imported from any foreign country into the Philippines, shall be
subject to duty upon each importation, even though previously exported from the
Philippines, except as otherwise specifically provided for in this Code or in other laws
(Sec. 100, TCCP; Sec. 104, CMTA).

2. Prohibited importation [WINGS]:

W Weapons of War 1. Dynamite, gunpowder, ammunitions and other explosives,
firearms and weapons of war, and parts thereof, except when
authorized by law. (Omitted in CMTA)
I Insidious, immoral, 2. Written or printed articles in any form containing any matter
obscene articles advocating or inciting treason, or rebellion, insurrection, sedition
or subversion against the Government of the Philippines, or
forcible resistance to any law of the Philippines, or containing any
threat to take the life of, or inflict bodily harm upon any person in
the Philippines.
3. Written or printed articles, negatives or cinematographic film,
photographs, engravings, lithographs, objects, paintings,
drawings or other representation of an obscene or immoral
character.
4. Articles, instruments, drugs and substances designed, intended or
adapted for producing unlawful abortion, or any printed matter
which advertises or describes or gives directly or indirectly
information where, how or by whom unlawful abortion is
produced.
5. Any article manufactured in whole or in part of gold, silver or other
precious metals or alloys thereof, the stamps, brands or marks or
which do not indicate the actual fineness of quality of said metals
or alloys.
N Narcotics and other 6. Marijuana, opium, poppies, coca leaves, heroin or any other
prohibited narcotics or synthetic drugs which are or may hereafter be
substances, declared habit forming by the President of the Philippines, or any
compound, manufactured salt, derivative, or preparation thereof,
paraphernalia
except when imported by the Government of the Philippines or
any person duly authorized by the Dangerous Drugs Board, for
medicinal purposes only.
7. Opium pipes and parts thereof, of whatever material.

G Gambling devices 8. Roulette wheels, gambling outfits, loaded dice, marked cards,
machines, apparatus or mechanical devices used in gambling or
the distribution of money, cigars, cigarettes or other articles when
such distribution is dependent on chance, including jackpot and
pinball machines or similar contrivances, or parts thereof.
9. Lottery and sweepstakes tickets except those authorised by the
Philippine Government, advertisements thereof, and lists of
drawings therein.
S Prohibited under 10. Any adulterated or misbranded articles of food or any adulterated
Special law or misbranded drug in violation of the provisions of the "Food and
Drugs Act " [relevant laws and regulations].
11. Infringing goods as defined under the Intellectual Property Code
and related laws; and
12. All other goods or parts thereof which importation and exportation
are explicitly prohibited by law or rules and regulations issued by
the competent authority.

(Sec. 101, TCCP; Sec. 118, CMTA)

12
3. Conditionally-free importation (duty free) [SAReP]:
 The following goods shall be exempt from the payment of import duties upon
compliance with the formalities prescribed in the regulations which shall be
promulgated by the Commissioner with the approval of the Secretary of Finance:

S Supply; Samples; Shooting, entertainment and exhibition

R 1. Goods [Articles] brought by foreign film producers directly and exclusively used for
making or recording motion picture films on location in the Philippines, upon their
identification, examination and appraisal and the giving of a security [bond] in an amount
equal to one and 100% [one -half times] the ascertained duties, taxes and other charges
thereon, conditioned for exportation thereof or payment of the corresponding duties, taxes
and other charges within six (6) months from the date of acceptance of the import entry,
unless extended by the Collector of Customs or another six (6) months;

Photographic and cinematographic films, underdeveloped, exposed outside the

Philippines by resident Filipino citizens or by producing companies of Philippine registry
where the principal actors and artists employed for the production are Filipinos, upon
affidavit by the importer and identification that such exposed films are the same films
previously exported from the Philippines. As used in this paragraph, the terms "actors "
and "artists " include the persons operating the photographic camera or other
photographic and sound recording apparatus by which the film is made.
E 2. (a) Goods [Articles] used exclusively for public entertainment, and for display in public
expositions, or for exhibition or competition for prizes, and devices for projecting pictures
and parts and appurtenances thereof:
 upon identification, examination, and appraisal and the giving of a security [bond] in
an amount equal to 100% [one and one -half times] of the ascertained duties, taxes
and other charges thereon, conditioned for exportation thereof or payment of the
corresponding duties, taxes and other charges within six (6) months from the date of
acceptance of the import entry; Provided, That the Collector of Customs may extend
the time for exportation or payment of duties, taxes and other charges for a term not
exceeding six (6) months from the expiration of the original period; and
b.
(b) Technical and scientific films when imported by technical, cultural and scientific
institutions, and not to be exhibited for profit: Provided, further, That if any of the said
films is exhibited for profit, the proceeds therefrom shall be subject to confiscation, in
addition to the penalty provided under [Section Thirty -six hundred and ten as amended,
of this Code] the CMTA
S 3. Supplies which are necessary for the reasonable requirements of the vessel or
aircraft in her voyage or flight outside the Philippines, including articles transferred
from a bonded warehouse any collection district to any vessel or aircraft engaged in
foreign trade, for use or consumption the passengers or its crew on board such
vessel or aircrafts as sea or air stores; or article purchased abroad for sale on board
a vessel or aircraft as saloon stores or air store supplies
 Surplus or excess of such vessel or aircraft supplies arriving from foreign ports or
airports shall be dutiable.
S 4. Samples of the kind, in such quantity and of such dimension or construction as
to render them unsalable or of no appreciable commercial value; models not
adapted for practical use; and samples of medicines, properly marked "sample-sale
punishable by law", for the purpose of introducing a new article in the Philippine market
and imported only once in a quantity sufficient for such purpose by a person duly
registered and identified to be engaged in that trade

Sample medicines
 Previously authorized by the Secretary of Finance
 New medicines not available in the Philippines
 Not previously authorized and/or properly marked in accordance with this section
shall be levied the corresponding tariff duty.

Commercial Samples:
 Commercial samples the value of any single importation of which does not

13
 exceed FCA value of ₱50,000.009 [P10,000] upon the giving of a security[bond]
in an amount equal to [twice] the ascertained duties, taxes and other charges
thereon, conditioned for the exportation of said samples within 3 [6] months
from the date of the acceptance of the goods declaration [import entry] or in
default thereof, the payment of the corresponding duties, taxes and other
charges.
 If the FCA value of any single consignment of such commercial samples exceeds
₱50,000.00 [P10,000], the importer thereof may select any portion of same not
exceeding [in] the FCA value of ₱50,000.00 [P10,000] for entry under the
consumption, as the importer may elect
 EXCEPTION: those that are not readily and easily identifiable as in the case of
[(e.g.,] precious and semi -precious stones, cut or uncut, and jewelry set with
precious or semi-precious stones,
S 5. Spare parts of vessels or aircraft of foreign registry engaged in foreign trade
when brought into the Philippines exclusively as replacements or for the
emergency repair thereof, upon proof satisfactory to the District Collector [of
Customs] that such spare parts shall be utilized to secure the safety,
seaworthiness or airworthiness of the vessel or aircraft, to enable it to continue
its voyage or flight.
T 6. Trailer chassis when imported by shipping companies:
 for their exclusive use in handling containerized cargo,
 upon posting a security [bond] in an amount equal to 100% [one and one -
half times] the ascertained duties, taxes and other charges due thereon to
cover a period of 1 year from the date of acceptance of the entry, which
period for meritorious reasons may, be extended by the Commissioner of
Customs from year to year, subject to the following conditions:
a. That they shall be properly identified and registered with the Land
Transportation Commission;
b. That they shall be subject to customs supervision fee to be fixed by
the District Collector [of Customs] and subject to the approval of
the Commissioner of Customs;
c. That they shall be deposited in the customs [zone] territory when
not in use; and
d. That upon the expiration of the period prescribed above, duties and
taxes shall be paid unless otherwise re-exported.
M 7. Machineries, equipment, tools for production, plants to convert mineral ores
into saleable form, spare parts, supplies, materials, accessories, explosives,
chemicals, and transportation and communication facilities imported by and for
the use of new mines and old mines which resume operations, when certified to
as such by the Secretary of [Agriculture] the Department of Environment and
Natural Resources (DENR) upon the recommendation of the Director of Mines
and Geosciences Bureau, for a period ending five (5) years from the first date
of actual commercial production of saleable mineral products:
 Such articles are not locally available in reasonable quantity, quality and
price and are necessary or incidental in the proper operation of the mine;
 Aircrafts imported by agro-industrial companies to be used by them in their
agriculture and industrial operations or activities, spare parts and
accessories thereof, when certified to as such by the Secretary of the
Department of Agriculture (DA) or the Secretary of the Department of Trade
and Industry (DTI), as the case may be;
A 8. Aircraft, equipment and machinery, spare parts commissary and catering
supplies, aviation gas, fuel and oil, whether crude or refined except when
directly or indirectly used for domestic operations, and such other articles or
supplies imported by and for the use of scheduled airlines operating under
congressional franchise:
 Articles or supplies must not be locally available in reasonable quantity,

9
Provided, Further, That every three (3) years after the effectivity of this Act, the Secretary of Finance shall adjust
the amount herein stated to its present value using the CPI as published by the PSA.

14
 quality and price and are necessary or incidental for the proper operation of
the scheduled airline importing the same;
C 9. Containers, holders and other similar receptacles of any material including kraft
paper bags for locally manufactured cement for export, including corrugated boxes for
bananas, mangoes, pineapples and other fresh fruits for export, except other containers
made of paper, paperboard and textile fabrics, which are of such character as to be readily
identifiable and/or reusable for shipment or transportation of goods shall be delivered to
the importer thereof upon identification, examination and appraisal and the giving of a
security in an amount equal to 100% [equal to one and one -half times] of the ascertained
duties, taxes and other charges thereon, within six (6) months from the date of
acceptance of the goods declaration.

A Animals, plants for experimentation

A 1. Aquatic products such as fishes, crustaceans, mollusks, marine animals, seaweeds, fish
oil, roe, caught or gathered by fishing vessels of Philippine registry;10
A 2. Animals, except race horses, and plants for scientific, experimental,
propagation, botanical, breeding, zoological and national defense purposes:
 No live trees, shoots, plants, moss, and bulbs, tubers and seeds for
propagation purposes may be imported under this section, except by order
of the Government or other duly authorized institutions:
 Free entry of animals for breeding purposes shall be restricted to animals
of recognized breed duly registered in the book of record established for
that breed, certified as such by the Bureau of Animal Industry (BAI)
 Certificate of such record, and pedigree of such animal duly authenticated
by the proper custodian of such book of record, shall be produced and
submitted to the District Collector [of Customs], together with affidavit of
the owner or importer, that such animal is the animal described in said
certificate of record and pedigree:
 Animals and plants are certified by the NEDA as necessary for economic
development.

10
Provided, That they are imported in such vessels or in crafts attached thereto; Provided, However, That they have
not been landed in any foreign territory or, if so landed, that they have been landed solely for transshipment without
having been advanced in condition;

15
 R Repair and recondition; rescue; relief; returned

C 1. Cost of repairs, excluding the value of the article used, made in foreign countries upon
vessels or aircraft documented, registered or licensed in the Philippines11
U 2. Equipment for use in the salvage of vessels or aircrafts, not available locally12
R 3. Goods brought into the Philippines for repair, processing or reconditioning to be
reexported upon completion of the repair, processing or reconditioning.13
R 4. Goods and salvage from vessels recovered after a period of two (2) years from the
date of filing the marine protest or the time when the vessel was wrecked or abandoned,
or parts of a foreign vessel or its equipment, wrecked or abandoned in Philippine waters
or elsewhere: Provided, That goods and salvage recovered within the said period of two
(2) years shall be dutiable;
R 5. Philippine articles previously exported from the Philippines and returned
without having been advanced in value or improved in condition by any process
of manufacture or other means, and upon which no drawback or bounty has been allowed,
including instruments and implements, tools of trade, machinery and equipment, used
abroad by Filipino citizens in the pursuit of their business, occupation or profession; and

Foreign articles previously imported when returned after having been exported
and loaned for use temporarily abroad solely for exhibition, testing and
experimentation, for scientific or educational purposes; and

Foreign containers previously imported which have been used in packing

exported Philippine articles and returned empty if imported by or for the account of
the person or institution who exported them from the Philippines and not for sale, barter
or hire subject to identification:

Provided, That any Philippine article falling under this subsection upon which drawback or
bounty has been allowed shall, upon reimportation thereof, be subject to a duty under
this subsection equal to the amount of such drawback or bounty;
R 6. Goods exported from the Philippines for repair, processing or reconditioning
without having been substantially advanced in value, and subsequently
reimported in its original form and in the same state:
 In case the reimported goods advanced in value, whether or not in their original
state, the value added shall be subject to the applicable duty rate of the tariff heading
of the reimported goods;
D 7. Imported goods donated to or, for the account of the Philippine government or any
duly registered relief organization, not operated for profit, for free distribution among
the needy, upon certification by theDSWD or the Department of Education (DepED), or
the Department of Health (DOH), as the case may be.

11
Upon proof satisfactory to the Collector of Customs (1) that adequate facilities for such repairs are not afforded in
the Philippines, or (2) that such vessels or aircrafts, while in the regular course of her voyage or flight, was compelled
by stress of weather or other casualty to put into a foreign port to make such repairs in order to secure the safety,
seaworthiness or airworthiness of the vessel or aircraft to enable her to reach her port of destination; [Excluded
under the CMTA: Articles brought into the Philippines for repair, processing or reconditioning to be re-exported upon
completion of the repair, processing or reconditioning: Provided, That the Collector of Customs shall require the
giving of a bond in an amount equal to one and one -half times the ascertained duties, taxes and other charges
thereon, conditioned for the exportation thereof or payment of the corresponding duties, taxes and other charges
within six (6) months from the date of acceptance of the import entry.]

12
Upon identification and the giving of a bond in an amount equal to [one and one -half times] 100% of the
ascertained duties, taxes and other charges thereon, conditioned for the exportation thereof or payment of
corresponding duties, taxes and other charges within six (6) months from the date of acceptance of the import entry:
Provided, That the Collector of Customs may extend the time for exportation or payment of duties, taxes and other
charges for a term not exceeding six (6) months from the expiration of the original period.

13
Provided, That the Bureau shall require security equal to one hundred percent (100%) of the duties, taxes and
other charges thereon, conditioned for the exportation thereof or payment of the corresponding duties, taxes and
other charges within six (6) months from the date of acceptance of the goods declaration.

16
 P Personal and household effects; professional instruments

M 10. Medals, badges, cups and other small articles bestowed as trophies or prizes, or those
received or accepted as honorary distinction;
R 11. [Bar 2003] Personal and household effects14 belonging to residents of the Philippines
returning from abroad: Except: Luxury items for personal adornment; Vehicles,
Watercrafts, Aircrafts, Animals
Returning resident - nationals who have stayed in a foreign country for a period
of at least six (6) months. Requisites:
a. Purchased in foreign countries by residents of the Philippines which were
necessary, appropriate and normally used for their comfort and convenience
during their stay abroad;
b. Accompanying them on their return, or arriving within a reasonable time which,
barring unforeseen and fortuitous events, in no case shall exceed sixty (60) days
after the owner's return
c. Personal and household effects shall neither be in commercial quantities nor
intended for barter, sale or hire;
d. [Total dutiable value of which shall not exceed P 10,000.00, and returning
resident has not previously availed of the privilege under this section within 365
days prior to his arrival] - Limited to the FCA or FOB value15 of:

Length of Stay Abroad Value

At least ten (10) years and have not availed of this ₱350,000.00
privilege within ten (10) years prior to returning resident's
arrival.
At least five (5) but not more than ten (10) years and have ₱250,000.00
not availed of this privilege within five (5) years prior to
returning resident's arrival.
Less than five (5) years and have not availed of this ₱150,000.00
privilege within six (6) months prior to returning resident's
arrival
e. [50% ad valorem duty across the board shall be levied and collected on the personal
and household effects (except luxury items) in excess of P10,000.00.] Any amount
in excess of the above-stated threshold shall be subject to the corresponding duties
and taxes under this Act.
Special Rules for OCWs/OPW:
Overseas Contract/Filipino Workers – Holders of Valid passports duly issued by the
Department of Foreign Affairs and Certified by the Department of Labor and
Employment/Philippine Overseas Employment Agency for overseas employment
purposes. It covers all nationals working in a foreign country under employment contracts
including Middle East Contract Workers, entertainers, domestic helpers, regardless of their
employment status in the foreign country.
In addition to the privilege granted under the immediately preceding paragraph, returning
overseas contract workers shall have the privilege to bring in, duty and tax free, used
home appliances, limited to one of every kind once in a given calendar year16
accompanying them on their return, or arriving within a reasonable time which, barring
unforeseen and fortuitous events, in no case shall exceed sixty (60) days after the owner's
return upon presentation of their original passport at the Port of Entry: Provided, That any
excess of [P10,000.00] FCA value of ₱150,000.0017 for personal and household effects
and/or of the number of duty and tax-free appliances as provided for under this section,
shall be subject to the corresponding duties and taxes provided under the [TCCP] CMTA.

14
Including jewelry, precious stones and other articles of luxury which were formally declared and listed before
departure and identified under oath before the Collector of Customs when exported from the Philippines by such
returning residents upon their departure therefrom or during their stay abroad. Personal and household effects
including wearing apparel, articles of personal adornment (except luxury items), toilet articles, instruments related
to one's profession and analogous personal or household effects.
15
Every three (3) years after the effectivity of this Act, the Secretary of Finance shall adjust the amount herein stated
to its present value using the CPI as published by the PSA.
16
January 1 to December 31.

17
Every three (3) years after the effectivity of this Act, the Secretary of Finance shall adjust the amount herein stated
to its present value using the CPI as published by the PSA.

17
 B 12. Balikbayan boxes: Residents of the Philippines, OPWs or other Filipinos while residing
abroad or upon their return to the Philippines shall be allowed to bring in or send to their
families or relatives in the Philippines balikbayan boxes which shall be exempt from
applicable duties and taxes imposed under the NIRC of 1997, as amended:
 Balikbayan boxes shall contain personal and household effects only and shall neither
be in commercial quantities nor intended for barter, sale or for hire
 FCA value of which shall not exceed ₱150,000.00 (every three (3) years after the
effectivity of this CMTA, the Secretary of Finance shall adjust the amount herein
stated to its present value using the CPI as published by the PSA)
 Can only be availed up to three (3) times in a calendar year.
 Any amount in excess of the allowable non-dutiable value shall be subject to the
applicable duties and taxes;
B 13. Economic, technical, vocational, scientific, philosophical, historical, and cultural books
and/or publications, and religious books like Bibles, missals, prayer books, the Koran,
Ahadith and other religious books of similar nature and extracts therefrom, hymnal and
hymns for religious uses:
 Those which may have already been imported but pending release by the Bureau of
Customs at the effectivity of this Decree may still enjoy the privilege herein provided
upon certification by the Department of Education, Culture and Sports that such
imported books and/or publications are for economic, technical, vocational, scientific,
philosophical, historical or cultural purposes or that the same are educational,
scientific or cultural materials covered by the International Agreement on Importation
of Educational Scientific and Cultural Materials (XAEESCM) signed by the President of
the Philippines on August 2, 1952, or other agreements binding upon the Philippines.
Educational, scientific and cultural materials covered by international agreements or
commitments binding upon the Philippine Government so certified by the Department
of Education, Culture and Sports.
O 14. Professional instruments and implements, tools of trade, occupation or employment,
wearing apparel, domestic animals, and personal and household effects belonging to
persons coming to settle in the Philippines or Filipinos and/or their families and
descendants who are now residents or citizens of other countries, such parties hereinafter
referred to as Overseas Filipinos:18
 Quantities and of the class suitable to the profession, rank or position of the persons
importing them, for their own use
 Not for barter or sale, accompanying such persons, or arriving within a reasonable;
 Upon production of satisfactory evidence that such persons are actually coming to
settle in the Philippines and that the goods are brought from their former place of
abode, exempt such goods from the payment of duties and taxes
 Vehicles, vessels, aircrafts, machineries and other similar goods for use in
manufacture, shall not fall within this classification and shall therefore be subject to
duties, taxes and other charges.
W 15. Wearing apparel, articles of personal adornment, toilet articles, portable tools and
instrument, theatrical costumes and similar effects.19

18
[In the discretion of the Collector of Customs, before or after the arrival of their owners, which shall not be later
than February 28, 1979 upon the production of evidence satisfactory to the Collector of Customs that such persons
are actually coming to settle in the Philippines, that change of residence was bona fide and that the privilege of free
entry was never granted to them before or that such person qualifies under the provisions of Letters of Instructions
105, 163 and 210, and that the articles are brought from their former place of abode, shall be exempt from the
payment of customs, duties and taxes: Provided, That vehicles, vessels, aircrafts, machineries and other similar
articles for use in manufacture, shall not be classified hereunder] Provided, That the Bureau may, upon the production
of satisfactory evidence that such persons are actually coming to settle in the Philippines and that the goods are
brought from their former place of abode, exempt such goods from the payment of duties and taxes; Provided,
Further, That vehicles, vessels, aircrafts, machineries and other similar goods for use in manufacture, shall not fall
within this classification and shall therefore be subject to duties, taxes and other charges;

19
Provided, further, That the Collector of Customs may in his discretion, require either a written commitment or a
bond in an a mount equal to one and one-half times the ascertained duties, taxes and other charges conditioned for
the exportation thereof or payment of the corresponding duties, taxes and other charges within three (3) months
from the date of acceptance of the import entry: And Provided, finally, That the Collector of Customs may extend
the time for exportation or payment of duties, taxes and other charges for a term not exceeding three (3) months
from the expiration of the original period;

18
  Accompanying travelers, or tourists, or arriving within a reasonable time before or
after their arrival in the Philippines;
 Necessary and appropriate for the wear and use of such persons according to the
nature of the journey, their comfort and convenience
 Not applicable to articles intended for other persons or for barter, sale or hire.

Special rule on Foreign Consultants and Experts hired by the Government

a. Personal and household effects and vehicles belonging to foreign consultants and
experts hired by, and/or rendering service to, the government, and their staff or
personnel and families
b. Articles must accompany them or arrive within a reasonable time before or after
their arrival in the Philippines
c. In quantities and of the kind necessary and suitable to the profession, rank or
position of the person importing them, for their own use
d. Not for barter, sale or hire20

C 16. Coffins or urns containing human remain, bones or ashes, used personal and household
effects (not merchandise) of the deceased person, except vehicles, the FCA value of which
does not exceed ₱150,000.00 21[P10,000], upon identification as such;

F Foreign government; Foreign Service; Military Service

O 1. Importations for the official use of foreign embassies, legations, and other
agencies of foreign governments:
 That those foreign countries accord like privileges to corresponding agencies of the
Philippines.
P 2. Goods [Articles] imported for the personal or family use of the members and
attaches of foreign embassies, legations, consular officers and other representatives of
foreign governments:
 Accorded under special agreements between the Philippines and the countries which
they represent;
 Granted only upon specific instructions of the Secretary of Finance in each instance
which be issued only upon request of the Department of Foreign Affairs on behalf of
members or attaches of foreign embassies, legations, consular officers and other
representatives of foreign governments;
A 3. [Bar 2005] Any officer or employee of the DFA, including any attache, civil or military or
member of the staff assigned to a Philippine diplomatic mission abroad by the Department
or any similar officer or employee of other departments assigned to any Philippine consular
office abroad, or any AFP military personnel accorded assimilated diplomatic rank or on
duty abroad who is returning from a regular assignment abroad, for reassignment to the
home office, or who dies, resigns, or is retired from the service, after the approval of this
Act, shall be exempt from the payment of all duties and taxes on personal and household
effects, including one (1) motor car which must have been ordered or purchased prior to
the receipt by the mission or consulate of the order of recall, and which must be registered
in the name of the officer or employee:
 That this exemption shall apply only to the value of the motor car and to the aggregate
assessed value of the personal and household effects, the latter not to exceed thirty
percent (30%) of the total amount received by the officer or employee in salary and
allowances during the latest assignment abroad, but not to exceed four (4) years:
 However, that this exemption shall not be availed of more than once every four (4)
years
 The officer or employee concerned must have served abroad for not less than two (2)
years.

20
Provided that, the Collector of Customs may in his discretion require either a written commitment or a bond in an
amount equal to [one and one-half times] 100% of the ascertained duties, taxes and other charges upon the articles
classified under this subsection; conditioned for the exportation thereof or payment of the corresponding duties,
taxes and other charges within six (6) months after the expiration of their term or contract; And Provided, finally,
That the Collector of Customs may extend the time for exportation or payment of duties, taxes and other charges
for term not exceeding six (6) months from the expiration of the original period;

21
Provided, That every three (3) years after the effectivity of this Act, the value herein stated shall be adjusted to
its present value using the CPI as published by the PSA;

19
  Conditions:
1. Goods sold, bartered, hired or used for purposes other than what they were
intended for and without prior payment of the duty, tax or other charges which
would have been due and payable at the time of entry if the goods had been
entered without the benefit of this section, shall be subject to forfeiture and the
importation shall constitute a fraudulent practice against customs laws
2. However, a sale pursuant to a judicial order or in liquidation of the estate of a
deceased person shall not be subject to the preceding proviso, without prejudice
to the payment of duties, taxes and other charges
3. The President may, upon the recommendation of the Secretary of Finance,
suspend, disallow or completely withdraw, in whole or in part, any conditionally
free importation under this section.
 [Bar 2008] By fiction of law, areas declared as a special economic zones or Freeport
zone have been treated for tax purposes as foreign territories. Therefore, no customs
duties, value added tax and excise tax shall be due thereron while they remain within
the special economic zone or Freeport zone (Mamalateo, 2014, p. 820; citing R.A. 7916
[PEZA Law] and R.A. No. 7227 [BCDA Law]).

H. Classification of duties
1. Ordinary/regular duties:
 Taxes that are imposed or assessed upon merchandise from, or exported to a
foreign country for the purpose of raising revenue (Domondon, Bar Reviewer in
Taxation, Vol. 1, 7th ed. 2006, p. 477).
 They may also be imposed to serve as protective barriers which would prevent the
entry of merchandise that would compete with locally manufactured items. Also
referred to as Tariff Barriers (Ibid).

a) Ad valorem; methods of valuation

 Ad valorem duties are computed based on the value of the imported articles.

Methods of valuation
 Sequential Application of Valuation Methods (Sec. 700): Imported goods shall
be valued in accordance with the provisions of Section 701 (Transaction Valuation
System) whenever the conditions prescribed therein are fulfilled. Where the customs
value cannot be determined under the provisions of Section 701 of the CMTA, it is
to be determined by proceeding sequentially through the succeeding sections hereof
to the first such section under which the customs value can be determined.

 If the importer does not request that the order of Sections 704 and 705 of this Act
be reversed, the normal order of the sequence is to be followed. If the importer so
requests but it is impossible to determine the customs value under Section 705 of
this Act, the customs value shall be determined under Section 704.

 When the customs value cannot be determined under Sections 701 through 705, it
may be determined under Section 706 of this Act.

20
1 Transaction Value System [Bar 2004]
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 (Sec. 701, CMTA). The
dutiable value of an imported article subject to an ad valorem rate of duty shall be the transaction
value, which shall be the price actually paid or payable for the goods when sold for export to the
Philippines, adjusted by adding (Sec. 201 [A], TCCP):
Formula:

Transaction Value = (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.

NOTE: All additions to the price actually paid or payable shall be made only on the basis of objective and
quantifiable data.

Conditions
a) No restrictions as to the disposition or use Exceptions:
of the goods by the buyer 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) 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

21
c) The buyer and the seller are not related, or Related persons
where the buyer and the seller are related,
that the transaction value is acceptable for For purposes of this Act, persons shall be deemed
customs purposes under the provisions related only if:
hereof. i. They are officers or directors of one
another's business;
Sale between related persons ii. They are legally recognized partners in
In a sale between related persons, the business;
transaction value shall be accepted as basis for iii. There exists an employer-employee
customs valuation whenever the importer relationship between them;
demonstrates that such value closely iv. Any person directly or indirectly owns,
approximates one of the following occurring at or controls or holds five percent (5%) or
about the same time: more of the outstanding voting stocks or
shares of both seller and buyer; One of
(a) TV in sales to unrelated buyers of them directly or indirectly controls the
identical or similar goods for export to the other;
same country of importation; v. Both of them are directly or indirectly
(b) Customs value of identical or similar controlled by a third person;
goods as determined under the provisions vi. Together they directly or indirectly
of Section 704 of this Act; or control a third person; or
(c) Customs value of identical or similar vii. They are members of the same family,
goods are determined under the including those related by affinity or
provisions of Section 705 of this Act. consanguinity up to the fourth civil
degree.

Persons who are associated in business with one

another in that one is the sole agent, sole
distributor or sole concessionaire, however
described, of the other shall be deemed to be
related for the purposes of this Act if they fall
within any of the eight (8) cases cited in the
preceding paragraph.

2 Transaction Value of Identical Goods System

 Where the dutiable value cannot be determined under method one, the dutiable value shall
be the transaction value of identical goods sold for export to the Philippines and exported at
or about the same time as the goods being valued.
 “Identical goods” – 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, in applying this section, more than one transaction value of identical goods are found, the
lowest value shall be used to determine the customs value. (Sec. 702, CMTA)

3 Transaction Value of Similar Goods System

 Where the dutiable value cannot be determined under the preceding method, the dutiable
value shall be the transaction value of similar goods sold for export to the Philippines and
exported at or about the same time as the goods being valued.
 “Similar goods” – 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, in applying this section, more than one transaction value of identical goods are found, the
lowest such value shall be used to determine the customs value. (Sec. 703, CMTA)

22
4 Deductive Value System
 Where the dutiable value cannot be determined under the preceding method, the dutiable
value shall be the deductive value. XPN: unless otherwise requested by the importer.
 Basis: the unit price at which the imported goods or identical or similar imported
goods are sold in the Philippines, in the same condition as when imported, in the greatest
aggregate quantity, at or about the time of the importation of the goods being valued, to
persons not related to the persons from whom they buy such goods, subject to deductions.
Formula

Deductive Value = Unit price

Less:
1) Commissions (usually paid/agreed to be paid);
Additions usually made for profit; general expenses in
connection with sales in such country of imported
goods of the same class or kind
2) Usual costs of transport and insurance and associated
costs incurred within the Philippines
3) Where appropriate, the costs of: (i) transport of the
imported, goods from the port of exportation to the
port of entry in the Philippines; (ii) 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 (iii) insurance
4) Customs duties and other national taxes payable in the
Philippines by reason of the importation or sale of the
goods

Condition Valuation
(a) If neither the imported goods nor identical Unit price at which the imported goods or
nor similar imported goods are sold at or identical or similar imported goods sold in the
about the time of importation of the goods Philippines in the condition they were imported
being valued in the Philippines in the and at the earliest date after the importation of
conditions they were imported. the goods being valued, but before the expiration
of ninety (90) days after such importation.

(b) If neither the imported goods nor identical Unit price at which the imported goods, after
nor similar imported goods are sold in the further processing, are sold in the greatest
Philippines in the condition as imported, then, aggregate quantity to persons in the Philippines
if the importer so requests who are not related to the persons from whom
they buy such goods, subject to allowance for the
value added by such processing and deductions
provided under subsections (1), (2), (3) and (4)
hereof.

23
5 Computed Value System
 The Bureau shall not require or compel any person not residing in the Philippines to produce
for examination, or to allow access to, any account or other record for the purpose of
determining a computed value.
 However, information supplied by the producer of the goods for the purposes of determining
the customs value may be verified in another country with the agreement of the producer
and provided that said producer will give sufficient advance notice to the government of the
country in question and that the latter does not object to the investigation.
Formula

Computed Value = Add:

1) Cost or the value of materials and fabrication or other
processing employed in producing the imported goods;
2) Amount for profit and general expenses equal to that
usually reflected in the sale of goods of the same class
or kind as the goods being valued which are made by
producers in the country of exportation for export to
the Philippines
3) Freight, insurance fees and other transportation
expenses for the importation of the goods
4) Any assist, if its value is not included under paragraph
(1) hereof
5) The cost of containers and packing, if their values are
not included under paragraph (1) hereof

6 Fallback Value System

 If the dutiable value cannot be determined under the preceding methods described above, it
shall be determined by using other reasonable means and on the basis of data available in
the Philippines. If the importer so requests, the importer shall be informed in writing of the
dutiable value determined under method six and the method used to determine such value.

No dutiable value determined on the basis of :

(1) Selling price in the Philippines of goods produced in the Philippines;
(2) A system that provides for the acceptance for customs purposes of the higher of two (2)
alternative values;
(3) Price of goods in the domestic market of the country of exportation;
(4) Cost of production, other than computed values, that have been determined for identical or
similar goods in accordance with method five hereof;
(5) Price of goods for export to a country other than the Philippines;
(6) Minimum customs values; or
(7) Arbitrary or fictitious values.

b) Specific
a) Computed based in dutiable weight of goods (Sec. 202, TCCP).
Gross Legal Net
Weight of the same, Weight of the same, together with the Actual weight of the articles
together with the weight of the immediate containers, at the time of importation,
weight of all containers, holders, and/or packing in which excluding the weight of the
packages, holder and articles are usually contained, held or immediate and all other
packing, of any kind, in packed at the time of importation containers, holders or
which said articles are and/or, when imported in retail packing.
contained, held or packages, at the time of their sale to
packed at the time of the public usual retail quantities,
importation. provided, that when articles are
packaged in a single container, the
weight of the latter shall be included
in the legal weight.

24
 2. Special duties [Bar 2005, 1997]
b) Additional import duties imposed on specific kinds of imported articlesunder
certain conditions for the protection of consumers and manufacturers, as well
as Philippine products from undue competition posed by foreign made products
(Vitug & Acosta, Tax Law and Jurisprudence, 3rd ed. 2006, p.364)

Duty Imposed on Purpose Amount Imposing Judicial

Authority Review
a) Dumping Imported goods To protect Up to the extent 1. Agriculture Petition for
sold below local of the Secretary Review with
normal value industries underpricing (for the CTA,
against (Prevailing agricultural within 30 days
unfair market price products) from receipt of
foreign less actual notice.
competition price) 2. DTI
Secretary Petition shall
(for non- not stay or
agricultural suspend the
products) imposition of
duty.
b) Countervailing Goods enjoying To protect Up to the extent 1. Agriculture Petition for
subsidy in the local of the amount Secretary Review with
exporting industries of subsidy. (for the CTA,
country against agricultural within 30 days
unfair products) from receipt of
foreign 2. DTI notice.
competition Secretary
(for non- Petition shall
agricultural not stay or
products) suspend the
imposition of
duty.
c) Marking Imported goods To prevent 5% ad Customs
not properly deception Commissioner -
marked
d) Discriminatory Goods coming To protect 100% ad President of the
from countries national valorem Philippines
that discriminate industry
-
against
Philippine
products
e) Safeguard General: goods To protect General: General: Petition for
or products domestic increase, either DTI Secretary; Review with
imported in industries ad valorem or Agriculture the CTA,
increased and specific, or Secretary within 30 days
quantities producers both, sufficient from receipt of
from to redress or Special: notice.
Special: increased prevent injury Agriculture
volume of imports to the domestic Petition shall
imports exceed industry not stop,
a trigger level or suspend or
price falls below Special: toll the
a trigger price 1) Volume test imposition of
level 2) Price Test duty or the
adoption of
other
appropriate
safeguard
measures, as
the case
maybe.

25
 1 Dumping duty
 Dumping occurs when foreign producers sell their products to an importer in the domestic
market at prices lower than in their own national markets, or at prices below cost of
production, the sale or importation of which injures or threatens to injure a domestic industry
producing like or comparable products or retards the establishment of a potential industry.
Dumping is a form of price discrimination between two national markets. (Tariff Commission,
Anti-Dumping Law: Primer 2016, p. 2)
Elements of Dumping Requisites for the imposition of
Dumping Duties
1. Like product: product produced by the 1. Where a product, commodity or article of
domestic industry which is identical or alike commerce
in all respects to the article under a. Is exported to the Philippines
consideration, or in the absence of such a b. At a price less than its normal value22
product, another product which, although c. When destined for domestic
not alike in all respects, has consumption
characteristics closely resembling those of the
product under consideration. 2. And such importation:
a. Is causing, or
2. Price difference: amount by which the b. Is threatening to cause material
normal value (the price prevailing in the injury to a domestic industry
exporting country) exceeds the export producing the like product.
price (selling price to an importer in the
Philippines). Exemptions from Anti-Dumping Protest
1. Products imported by, or consigned to,
3. Injury: means “material” injury to a domestic government agencies not organized for
industry, threat of material injury or material profit and particularly designated by
retardation of the establishment of a law or proper authorities to import,
domestic industry. directly or through awardees, such
articles as would stabilize and/or
Injury test must be based on positive supplement shortages; and
evidence and shall involve an objective 2. Conditionally duty-free importations
examination of both
(i) Volume of the dumped imports;
(ii) Effects of dumped imports on prices in
the domestic market for like product;
and
(iii) Consequent impact of these imports on
the domestic producers of such
products.

4. Causal link: refers to a finding that the

material injury suffered by the domestic
industry is the direct result of the importation
of the dumped product. It must be clear that
the injury suffered is directly attributable to
the alleged dumping.

Sec. 301, TCCP, as amended by RA 8752 (Anti-dumping Act of 1999); Sec. 711, CMTA

22
Normal value is the foreign producer's domestic selling price of the article. It is the comparable price in
the ordinary course of trade for the like product when destined for consumption in the country of export or
origin. (Tariff Commission, Anti-Dumping Law: Primer 2016, p. 7)

26
2 Countervailing Duties
 Duty imposed whenever any 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 or article caused or threatens to cause material injury
or materially retarded the growth or prevents the establishment of a domestic industry (Sec.
1, RA 8751)
 This duty shall be in addition to any ordinary duties, taxes and charges imposed by law on
such imported product or article. (Ibid)
 Subsidies: any specific assistance (e.g., financial contribution, income or price support
schemes) directly or indirectly provided by the government of the country of export or
origin in respect of the product imported into the Philippines. An industry is deemed
to have received subsidy where a benefit is conferred as a result of:

(1) Direct and/or potential transfer of government funds (e.g.,grants, loans, equity
infusion, loan guarantees);
(2) The government foregoing the revenue that should otherwise have been
collected (e.g., tax credits); or
(3) The government providing goods or services, or purchasing goods

Actionable Subsidies Non-Actionable Subsidy Prohibited Subsidy

“Yellow” subsidies are those “Green” subsidies are those which “Red” subsidies include export
falling under the definition are permitted as they are of a subsidies, i.e., those that are
of subsidy which are neither general nature, i.e., applied contingent on export
non-actionable nor prohibited across-the-board to all industries performance, and subsidies
subsidies. and not limited to a specific that are contingent on the use
industry or enterprise, or group of domestic over imported
of enterprises or industries. goods. An importing country
alleging this kind of subsidy can
A subsidy under this category avail of remedy measures by
cannot be subjected to either bringing the matter before
countervailing measures or other the WTO Dispute Settlement
disciplines under the World Trade Body for redress.
Organization (WTO) Agreement
on Subsidies and Countervailing
Measures.
Elements Importations exempted from countervailing action
1. Like product 1. Articles imported by, or consigned to, government agencies
2. Subsidy not organized for profit and particularly designated by law or
3. Injury proper authorities to import, directly or through awardees, such
4. Causal link articles as would stabilize and/or supplement shortages; and
2. Conditionally duty-free importations

27
Stages in Dumping/Countervailing Investigation

•Filing of Petition for Countervailing Action/Anti-Dumping Protest

•petition may be filed by, or on behalf of, the domestic industry, in writing and in a notarized form.
1

•Prima Facie Determination

•DTI-BSI/DA within 10 days from receipt of petition shall examine the accuracy and adequcy of petition, sufficiency of
2 evidence to justify initiation of investigation

•Preliminary Determination
•DTI/DA initiates investigation and make preliminary determination whether or not a provisional measure may be
3 imposed within 20 days from receipt of answers of the questionnaires from respondents and other interested parties.

•Final Determination
•Tariff Commission notifies all intersted parties; recreives representation and/or submissions; hold primary conference
and public consultation; on site investigation and data verification both foreighn and domestic.
4 •Commission has 120 days from receipt of the advice from either Secretary of DTI/DA to complete its investigation and
submit its report of findings to the Secretary.

•Issuance of Department Order

•Within ten (10) days from receipt of the affirmative final determination by the Tariff Commission, the Secretaryof DTI
or DA issues a Department Order for the imposition of a definitive countervailing/anti-dumping duty, unless the
Secretary has earlier accepted a price undertaking from the foreign exporter, producer or government of the
5 country of export or origin. In case of a negative determination, the Secretary, after the lapse of the period for
the petitioner to appeal to the Court of Tax Appeals, issue, through the Secretary of Finance, an Order for the
Commissioner of Customs to immediately release thecash bond to the importer.

Measures/Remedies Against Dumping/Countervailing

1. Provisional  Takes the form of a provisional duty or, preferably, a 4 months, extendable to
Measure security by cash deposit or bond equal to the estimated 6months upon request by the
difference between the normal value and the export price of exporter.
the protested article, the former being higher than the latter.
Applied only after the DTI-BIS or DA has made a preliminary
affirmative determination no sooner than 60 days from the
initiation of the case (Tariff Commission, Anti-Dumping Law:
Primer 2016, p. 9).
2. Price  Price undertaking is a voluntary commitment by the exporter Price undertaking is effective
undertaking to increase his price or to cease exporting to the Philippines for a period of 5 years unless
at a dumped price, thereby eliminating the material injury the foreign exporter proves to
to the domestic industry. the satisfaction of the
 Offer of price undertaking shall be made only after a authorities that the
preliminary affirmative determination of dumping and undertaking is no longer
injury to the domestic industry. necessary.

3. Lesser duty Imposition of anti-dumping duty in amounts lower than the calculated margin of dumping, if
rule such a lesser duty is adequate to remove the injury to the domestic industry.
4. Definitive  Final anti-dumping duty imposed, in addition to the regular 5 years from the date of
duty duty and other charges, on a protested product imported imposition
from a specific country following an affirmative final
determination (Tariff Commission, Anti-Dumping Law: Primer
2016, p. 9).

28
 Review of Anti- Dumping Measure/Countervailing
A. Administrative
1. Sunset review Maybe initiated by any interested party or upon own motion of the
Commission before the sunset date (i.e., the 5thyear) to determine
whether the expiry of the anti-dumping/countervailing duty would likely lead
to a continuation or recurrence of dumping/subsidization and injury
2. Interim review Conducted by the Commission motu Conducted by the Commission,
proprio, or upon the direction of motu proprio, or upon the direction
the Secretary, or upon petition of of the Secretary or upon petition of
any interested party to determine any interested party to determine
whether: whether
(i) the need for the (i) the imposition of the
continued imposition of countervailing duty is no
the anti-dumping duty longer necessary to offset
is no longer necessary subsidization, taking into
to Interim review offset consideration the need to
dumping taking into protect the existing
consideration the need domestic industry against
to protect the existing dumping, or
domestic industry; or
(ii) the existing duty is not (ii) the existing duty is not
sufficient to counteract sufficient to counteract the
the dumping which is subsidization which is
causing injury. causing injury.

At least one (1) year should have

elapsed since the imposition of the
anti-dumping duty before an interim At least one (1) year should have
review can be made elapsed since the imposition of the
countervailing duty before an interim
review can be initiated
3. Newcomer review Carried out on an accelerated basis for the purpose of determining
individual margins of dumping for new exporters (new shippers) in the
exporting country in question which have not exported the product
during the period of investigation on which the measures were based.
The new foreign exporters requesting for such review must not be related
to any foreign exporter who is subject to the anti-dumping duty [no provision
for countervailing duty]

B. Judicial
Judicial Review Any aggrieved and/or interested party may file a petition for review with
the Court of Tax Appeals within thirty (30) days from receipt of notice of the
final ruling on the imposition of an anti-dumping duty. Filing of such petition
for review shall not in any way stop or suspend the imposition and
collection of the anti-dumping/countervailing duty.

29
3 Safeguarding Measures
 Safeguard measures are trade remedy measures adopted by the government to provide
affected domestic industries relief against imports.
 Purpose: give the affected domestic industry time to prepare itself for and adjust to increased
import competition resulting from the reduction of tariffs or the lifting of quantitative
restrictions agreed upon in multilateral trade negotiations.

General safeguard measure Special safeguard measures

Definition Imposed against imports if the Imposed against importations of
products at issue are being imported in agricultural products whose quantitative
such increased quantities, either import restrictions were converted
absolute or relative to domestic (tariffed) into ordinary customs duties
production, and under such conditions and agricultural products designated with
as to cause or threaten to cause serious the symbol “SSG” in the GATT Schedule of
injury to the domestic industry; and Concessions.

It may be invoked if:

(1) the volume of imports exceeds a

trigger level; or, but not
concurrently,

(2) the price of imports falls below a

trigger price.
In either case, injury to the domestic
industry need not be established
Amount of Tariff increase, either ad valorem or Volume Test
Duty specific, or both, to be paid through a Under the volume test, additional duty
cash bond set at a level sufficient to should not exceed one-third (1/3) of the
redress or prevent injury to the applicable out-quota customs duty on
domestic industry. the agricultural product under
consideration
Price Test
Price Difference Rate
At most 10% of the TP 0
Exceeds 10% to 40% 30% of amount
of TP by which the PD
exceeds 10% of
TP
Exceeds 40% to 60% 50% of the
amount by which
the exceeds 40%
of TP
Exceeds 60% to 75% 70% of the
amount by which
the exceeds 60%
of TP
Exceeds 75% 90% of the
amount by which
the exceeds 75%
of TP

30
Measures General safeguard measure Special safeguard measures
Provisional
Tariff increase either ad valorem or Not applied
specific, or both, to be paid through
a cash bond set at a level sufficient
to redress or prevent serious injury
to the domestic industry.
Definitive
i. Increase in, or imposition of, 1. Volume test (supra).
any duty on the imported 2. Price test (supra)
product;
ii. Decrease in or the imposition of
a tariff-rate quota (Minimum
Access Volume) on the product;
iii. Modification or imposition of
any quantitative restriction on
the importation of the product
into the Philippines;
iv. One or more appropriate
adjustment measures,
including the provision of trade
adjustment assistance; or
v. Any combination of actions
described in subparagraphs (i)
to (iv).

The Commission may also recommend

other actions, including the initiation
of international negotiations, to
address the underlying cause of the
increase in imports of the product to
alleviate the injury or threat thereof
to the domestic industry and to
facilitate positive adjustment to import
competition.
Duration Provisional Effective only until the end of the year in
Not exceeding 200 calendar days which the measure is imposed
from the date of imposition.

Definitive
Maximum initial period: 4 years,
including the period in which
provisional measure is imposed.
Extension: up to a maximum of eight
(8) years, or ten (10) years for
developing countries.

31
 General safeguard measure Special safeguard measures
Limitations The general safeguard measures should To safeguard and enhance the interest of
be limited to: farmers and fisherfolk, the provisions of RA
8435, otherwise known as the Agriculture
i) extent of redressing or preventing and Fisheries Modernization Act, will not
serious injury to the domestic be affected by the provisions of the
industry; and special safeguard measures prescribed
under RA 8800. There shall be no recourse
ii) to facilitate the domestic to the use of special safeguards measures
industry’s adjustments from the concurrently with the general safeguard
adverse effects directly attributed measure.
to the increased imports.

When quantitative import restrictions The special safeguard provisions of RA

are used, such measures shall not 8800 shall lapse with the duration of
reduce the quantity of imports below the reform process in agriculture as
the average imports for the three (3) determined in the World Trade
preceding representative years, unless Organization (WTO). Thereafter, recourse
clear justification is given that a to safeguard measures shall be subject to
different level is necessary to prevent the provisions on general safeguard
or remedy a serious injury. measures as provided in RA 8800

General safeguard measure shall not

be applied to a product originating
from a developing country, if that
country’s share of total imports of
the product is less than 3%, provided
that the developing countries with less
than 3% share collectively account
for not more than 9% of the total
imports.

Procedural Aspect
General safeguard measure Special safeguard measures
Who may 1. Domestic producers as a whole, of 1. Any person, whether natural or
file Petition like or directly competitive juridical may request a verification if
for products manufactured or produced a particular agricultural product can be
Safeguard in the Philippines, or those whole imposed a special safeguard duty; or
measures? collective output of like or directly
competitive products constitute a 2. The DA Secretary may, motu proprio,
major proportion of the total initiate the imposition of a special
domestic production of those safeguard measure following the
products; satisfaction of the conditions for
imposing the measure
2. The President, or the House or
Senate Committee on Agriculture,
or the House or Senate Committee
on Trade and Commerce; or

3. The DTI or DA Secretary, motu

proprio, provided there is
evidence of increased imports of
the product under consideration

32
Stages in Investigation for the imposition of a general safeguard measure

•Filing of Petition.
1

•Prima Facie Determination

•DTI-BSI/DA has 5 calendar days to decide whether prima facie cases exists to merit the initiation of PI.
2 •No prima facie case - reject

•Preliminary Determination
•DTI/DA initiates PI and make preliminary determination whether or not a provisional safeguard measure may
be imposed within 30 calendar days from receipt of answers of the questionnaires from respondents and other
interested parties.
3
•Affirmative = Sec issues Department Order (DO) for imposition of PSM; Negative = terminate investigation

•Final Determination
•The TC has 120 days (or 60 days if the Secretary certifies the case as urgent) from receipt of endorsement from
the Sec. to conclude its formal investigaton and submit its report of findings and recommendations to the Sec
4
in whether or not to impose definitive safeguard measures.

•Decision
•Within 15 calendar days from receipt of Commissionreport to make a decision.
• Affirmative = a Department Order is issued to implement the imposition of the general safeguard measure.
5 • Negative = Secretary issues a DOfor the termination of the case as well as a written instruction to the
Commissioner of Customs, through the Secretary of Finance, authorizing BOC the return of the cash bond
previously collected

33
Safeguard Measures Vis-À-VisAnti-Dumping and Countervailing Measures
Anti-Dumping/Countervalining Measures Safeguard Measure
(General and Special)
Nature of Measure
Address unfairly traded imports: Address fairly traded imports:
1. Export price is lower than the normal value 1. Export price at the level of normal value
2. Subsidized production or exportation of the foreign 2. Increased level of imports absolute or relative to
merchandise production (general safeguards)
3. Volume of imports exceed a base trigger level or
price falls below a trigger price level (special
safeguards)
Objective
1. Dumping duties and countervailing duties seek to 1. General safeguards will remove injury and facilitate
level the playing field by providing remedies and structural adjustments that will enable an industry
protecting domestic industries against the unfair gain competitiveness.
trade practices of dumping and/or subsidization. 2. Special safeguards will assist farmers whose
products were previously protected by quantitative
restrictions that have been terrified.
Coverage of Measure
1. Limited to like products 1. All like or directly competitive products
2. Country specific and exporter specific 2. All countries exporting of like or directly
competitive product
3. General safeguards apply to industrial and non-
tariffied goods
4. Special safeguards apply to tariffied agricultural
products denominated with the acronym “SSG” in
the GATT Schedule of Concessions
Minimum Threshold of Support of Industry for Application
A domestic Industry which is supported by domestic 1. Industry filing the case should be a producer of the
producers whose collective output constitutes more like or directly competitive product whose collective
than 50% of the total production of the like product output constitutes a major proportion of the total
produced by other domestic producers that are domestic production –general safeguards
expressing either support for or opposition to the 2. DA (motu proprio) for special safeguards
application. However, no investigation shall be initiated
when domestic producers expressly supporting the
application account for less than 25% of the production
of the like product produced by the domestic industry.
Elements to Be Established
1. Product comparability -like” product General Safeguards
2. Price difference / subsidy 1. Product comparability -like or directly competitive
3. Material injury or threat of material injury product
4. Causal link 2. Increased imports
3. Serious injury or threat of serious injury
4. Causal link

Special Safeguards:
1. Product comparability -like product
2. Volume of imports exceed a base trigger level, or
3. Price falls below a trigger price level
Forms of Measure
1. Provisional measure –anti-dumping bond / General Safeguards
countervailing bond 1. Provisional measure –tariff increase
2. Definitive anti-dumping duty / countervailing duty 2. Definitive safeguard measure -tariff increase;
quantitative restrictions (e.g., import quota;
import licensing)

Special Safeguards:
1. Additional duty not exceeding one-third of the
level of the ordinary customs duty in effect
during the year in which the action is taken.

34
 Imposition of Definitive Measure
1. Requires the conduct of a preliminary investigation 1. General Safeguards: In critical circumstances
(affirmative preliminary determination) prior to where delay may cause damage that is difficult to
imposition of a dumping or countervailing bond for repair, safeguard measure in the form of tariff
a period of 4 months or 120 days. adjustment may be imposed for 200 days pursuant
to a preliminary determination.

2. Special Safeguards: Not provisionally applied

Duration of Definitive Measure

1. Five (5) years, subject to sunset review to General Safeguards:
determine whether or not to extend the effectivity 1. Four (4) years, extendable for another 4 years
of the dumping / countervailing duty provided the industry can show that structural
adjustment is being implemented with an extension
for another 2 years for developing countries.

Special Safeguards:
1. Shall only be maintained until the end of the year
in which it has been imposed

4 Marking Duties
 Duty to Mark: All goods of foreign origin imported into the Exceptions from requirements of
Philippines or their containers shall be conspicuously marking (Sec. 303 [1][3], TCCP; Sec.
marked in any official language of the Philippines as legibly, 710 [A][3], CMTA)
indelibly and permanently as the nature of the goods or
I Incapable of being marked;
container will permit and in such manner as to indicate to
I Cannot be marked prior to shipment to
an ultimate purchaser in the Philippines the name of the
the Philippines without injury
country of origin of the goods (Sec. 303 [1], TCCP; Sec.
C Marking of a container of such goods
710 [A], CMTA).
will reasonably indicate the origin of
such goods
 Marking of Containers: Whenever goods are exempt from
the requirements of marking, the immediate container, if C Crude substances
any, of such goods, or such other container or containers of C An ultimate purchaser, by reason of the
such goods, shall be marked in such manner as to indicate character of such goods or by reason of
to an ultimate purchaser in the Philippines the name of the the circumstances of their importation,
country of origin of such goods in any official language of must necessarily know the country of
the Philippines (Sec. 303 [2], TCCP; Sec. 710 [B], CMTA). origin of such goods even though they
are not marked to indicate their origin
 Fine for Failure to Mark: If, at the time of importation U Imported for use by the importer and
any good or its container is not marked in accordance with not intended for sale in their imported
the requirements of this section, there shall be levied, or any other form
collected, and paid upon such good a marking duty of five P Cannot be marked prior to shipment to
percent (5%) of dutiable value, which shall be deemed to the Philippines, except at an expense
have accrued at the time of importation (Sec. 303 [3], economically prohibitive of their
TCCP; Sec. 710 [C], CMTA). importation.
P To be processed in the Philippines by
 Release withheld until marked: No imported goods held the importer or for the importer's
in customs custody for inspection, examination, or account other than for the purpose of
assessment shall be released until such goods or their concealing the origin of such goods and
containers shall have been marked in accordance with the in such manner that any mark
requirements of this section and until the amount of duty contemplated by this section would
estimated to be payable under subsection (C) of this section necessarily be obliterated, destroyed,
shall have been deposited (Sec. 303[4], TCCP; Sec. 710 or permanently concealed
[D], CMTA). A Cannot be marked after importation
except at an expense which is
 Effect of failure or refusal to mark: The failure or refusal economically prohibitive, and the
of the owner or importer to mark the goods as herein failure to mark the goods before
required within a period of thirty (30) days after due notice importation was not due to any purpose
shall constitute as an act of abandonment of said goods and of the importer, producer, seller or
their disposition shall be governed by the provisions of this shipper to avoid compliance
Act relative to abandonment of imported goods (Sec.
20 Produced more than 20 years prior to
303[5], TCCP; Sec. 710 [E], CMTA). their importation into the Philippines

35
4 Discriminatory/Retaliatory Duties

 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 one hundred
percent (100%) ad valorem upon goods wholly or in part the growth or product of, or imported in a
vessel of any foreign country whenever the President shall find as a fact that such country:

i. Imposes, directly or indirectly, upon the disposition or transportation in transit or through

reexportation 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

ii. Discriminates in fact against the commerce of the Philippines, directly or indirectly, by law or
administrative regulation or practice, by or in respect to any customs, tonnage, or port duty, fee,
charge, exaction, classification, regulation, condition, restriction or prohibition, in such manner
as to place the commerce of the Philippines at a disadvantage compared with the commerce of
any foreign country (Sec. 304 [a], TCCP; Sec. 711 [A], CMTA)

NOTE: This is without prejudice to the Philippine commitment in any ratified international
agreements or treaty.

 Maintained/Increased discrimination; Exclusion: The President is authorized, if deemed

consistent with the interests of the Philippines and of public interest, to issue a further proclamation
directing that such product of said country or such goods imported in their vessels be excluded from
importation into the Philippines. (Sec. 304 [b], TCCP; Sec. 711 [B], CMTA)

 Scope of application of proclamation: Any proclamation issued by the President, 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 interest requires, suspend, revoke, supplement or amend any such proclamation.
(Sec. 304 [c], TCCP; Sec. 711 [C], CMTA)

 Forfeiture/Seizure/Condemnation of goods in favor of Government: 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 he 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. (Sec. 304 [d], TCCP; Sec. 711 [D], CMTA)

 Duty of the BOC: 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. (Sec. 304 [e], TCCP; Sec. 711 [E],
CMTA)

 Rule-making Power of the SOF: 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. (Sec. 304 [f], TCCP; Sec. 711 [F], CMTA)

36
I. Remedies

SUMMARY OF REMEDIES
Government Taxpayer
Administrative/Extrajudicial
1. Enforcement of Tax Lien 1. Protest
2. Search, Seizure, Forfeiture, Arrest 2. Refund (Abatement/Drawback)
3. Reduction of custom duties/Compromise 3. Abandonment (Express/Implied)

Judicial
1. Civil Action 1. Appeal to CTA
(a) Distraint
(b) Constructive
(c) Levy
2. Criminal Action

Remedies of the Government

ADMINISTRATIVE REMEDIES

GA1 ENFORCEMENT OF TAX LIEN

 Liability of Importer for Duties and Taxes: Unless relieved by laws or regulations, the
liability for duties, taxes, fees, and other charges attached to importation constitutes a
personal debt due and demandable against the importer in favor of the government and
shall be discharged only upon payment of duties, taxes, fees and other charges. It also
constitutes a lien on the imported goods which may be enforced while such goods are
under customs' custody (Sec. 1204, TCCP; Sec. 405, CMTA)

 Enforcement of Lien: Administrative fines and forfeitures shall be enforced by the seizure
of the vehicle, vessel or aircraft or other property subject to the fine or forfeiture and by
subsequent proceedings. For the purpose of enforcing the lien for customs duties, fees and
other charges on any seized or confiscated article in the custody of the Bureau of Internal
Revenue, the Bureau of Internal Revenue is hereby authorized to impose and enforce the
said lien. (Sec. 2533, TCCP)

 [BAR 1997] The BOC normally avails itself of the administrative remedy of seizure, such
as by enforcing the tax lien on the imported articles, instead of the judicial remedy when
the goods to which the tax lien attaches, regardless of ownership, is still in the custody or
control of the government.
(1) XPN: In the case, however, of importations which are prohibited or undeclared,
the remedy of seizure and forfeiture may still be exercised by the BOC even if the
goods are no longer in its custody. (Mamalateo, Reviewer on Taxation, 2014 ed.,
p. 837)

 When the goods are properly released and thus beyond the reach of the tax lien, the
government can seek payment of the tax liability through judicial action since the tax
liability of the importer constitutes a personal debt to the government; therefore,
enforceable by action. (Ibid).

37
GA2-A FORFEITURE

 Conditions Affecting Forfeiture of Goods. The forfeiture shall be effected only:

(1) When and while the goods are in:
a) Custody or within the jurisdiction of customs officers, or
b) Possession or custody of or subject to the control of the importer, exporter,
original owner, consignee, agent of another person effecting the
importation, entry or exportation in question, or
c) Possession or custody of or subject to the control of persons who shall
receive, conceal, buy, sell, or transport the same, or aid in any of such
acts
(2) With knowledge that the goods were imported, or were the subject of an attempt
at importation or exportation contrary to law. (Sec. 2532, TCCP; Section 1115,
CMTA)
 May be exercised even when the articles are 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.
 Sale of Perishable Goods During Forfeiture Proceedings: Upon motion of the
importer of the perishable goods, the goods may be sold at a public auction during the
pendency of the forfeiture proceedings. The proceeds of the auction shall be held in escrow
until the final resolution of the proceedings (Sec. 1118, CMTA).

 Burden of Proof in Forfeiture Proceedings: In all proceedings for the forfeiture of any
vehicle, vessel, aircraft, or goods under this Act, the burden of proof shall be borne by the
claimant.
 Not subject to compromise (Sec. 1131, CMTA)

Sec. 2530, TCCP;

Property Subject to Forfeiture Under Tariff and Customs Laws
Sec. 1113, CMTA

Vessel, Vehicle and/or Cargo

(a) [Bar 1994] Used unlawfully in the importation or exportation of goods or in conveying or
transporting smuggled goods in commercial quantities into or from any Philippine port or
place.

 The mere carrying or holding on board of smuggled goods in commercial quantities

shall subject such vehicle, vessel, aircraft, or any other craft to forfeiture:
Provided, That the vehicle, vessel, aircraft or any other craft is not used as a
common carrier which has been chartered or leased for purposes of conveying or
transporting persons or cargo;
 There is no illegal importation when a non-motorized vessel, being towed
by a tugboat, that entered the jurisdiction of the Philippines only for
emergency bunkering needs of the tugboat, which principally navigates
and controls the route. The Court finds the element of intent wanting
(Mamalateo, Reviewer in Taxation, 2014 ed., p. 828; citing Barge v. COC,
CTA, February 17, 2011)
 The complementary, if not, collateral use of the place for smuggling
operation is sufficient for it to be deemed to have been used in smuggling
(Llamado v. COC, G.R. No. L-28809, May 16, 1983)
(b) Vessel engaging in the coastwise trade which shall have on board goods of foreign growth,
produce, or manufacture in excess of the amount necessary for sea stores, without such
goods having been properly entered or legally imported;

(c) Vessel or aircraft into which shall be transferred cargo unloaded contrary to law prior to the
arrival of the importing vessel or aircraft at the port of destination;

38
 (d) Part of the cargo, stores, or supplies of a vessel or aircraft arriving from a foreign port which
is unloaded before arrival at the vessel’s or aircraft’s port of destination and without
authority from the customs officer;
 XPN: but such cargo, ship, or aircraft stores and supplies shall not be forfeited if
such unloading was due to accident, stress of weather, or other necessity and is
subsequently approved by the District Collector;
Goods

(e) Goods fraudulently concealed in or removed contrary to law from any public or private
warehouse, container yard, or container freight station under customs supervision; [BAR
2008]
(f) Goods, the importation or exportation of which are effected or attempted contrary to law,
or any goods of prohibited importation or exportation, and all other goods which, in the
opinion of the District Collector, have been used, are or were entered to be used as
instruments in the importation or the exportation of the former;
(g) Unmanifested goods found on any vessel or aircraft if manifest therefor is required;
(h) Sea stores or aircraft stores adjudged by the District Collector to be excessive, when the
duties and taxes assessed by the District Collector thereon are not paid or secured forthwith
upon assessment of the same;
(i) Any package of imported goods which is found upon examination to contain goods not
specified in the invoice or goods declaration including all other packages purportedly
containing imported goods similar to those declared in the invoice or goods declaration to
be the contents of the misdeclared package;
(j) Boxes, cases, trunks, envelopes, and other containers of whatever character used as
receptacle or as device to conceal goods which are subject to forfeiture under this Act or
which are so designed as to conceal the character of such goods;
(k) Any conveyance actually used for the transport of goods subject to forfeiture under tbis Act,
with its equipage or trappings, and any vehicle similarly used, together with its equipment
and appurtenances. The mere conveyance of smuggled goods by such transport vehicle
shall be sufficient cause for the outright seizure and confiscation of such transport vehicle
but the forfeiture shall not be effected if it is established that the owner of the means of
conveyance used as aforesaid, is engaged as common carrier and not chartered or leased,
or that the agent in charge thereof at the time, has no knowledge of the unlawful act; and

(l) Goods sought to be imported or exported:

1. Without going through a customs office, whether the act was consummated,
frustrated, or attempted;
2. Found in the baggage of a person arriving from abroad and undeclared by such person;

3. Through a false declaration or affidavit executed by the owner, importer, exporter, or

consignee concerning the importation of such goods;

4. On the strength of a false invoice or other document executed by the owner, importer,
exporter, or consignee concerning the importation or exportation of such goods; or

5. Through any other practice or device contrary to law by means of which such goods
entered through a customs office to the prejudice of the government.

39
 Sec. 2531, TCCP;
Property Subject to Forfeiture Under Tariff and Customs Laws
Sec. 1114, CMTA
[BAR 1994] The forfeiture of the vehicle, vessel, or aircraft shall not be effected if it is established
that the owner thereof or the agent in charge of the means of conveyance used as aforesaid has
no knowledge of or participation in the unlawful act:

Prima facie presumption shall exist against the vehicle, vessel, or aircraft under any of the
following circumstances:

(a) If the conveyance has been used for smuggling before;

(b) If the owner is not in the business for which the conveyance is generally used; and
(c) If the owner is not financially in a position to own such conveyance.

GA2-B SEARCH, SEIZURE, ARREST

Exercise of Police Authority

 Police Authority: includes the power to effect search, seizure, and arrest for the effective
implementation of the tariff and customs law

 Persons Exercising Police Authority (Sec. 214, CMTA):

(a) Officials of the Bureau, District Collectors, Deputy District Collectors, police officers,
agents, inspectors and guards of the Bureau;
(b) Upon authorization of the Commissioner, officers and members of the Armed Forces
of the Philippines (AFP) and national law enforcement agencies; and
(c) Officials of the BIR on all cases falling within the regular performance of their duties,
when payment of internal revenue taxes is involved.
(d) [Officers generally empowered by law to effect arrests and execute processes of
courts, when acting under the direction of the Collector. (Sec. 2203, TCCP)]

NOTE: All seizures pursuant to this section must be effected in accordance with the
provisions on the conduct of seizure proceedings provided for in Chapters 3 and 4 of
Title XI of this Act. Mission orders shall clearly indicate the specific name carrying out
the mission and the tasks to be carried out (Sec. 214, CMTA).

 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 (Sec. 218, CMTA).

 Duty of Officer to Disclose Official Character: For the proper exercise of police
authority, any authorized person shall disclose the nature of the authority upon being
questioned at the time of exercise thereof and shall exhibit the corresponding written
authority issued by the Commissioner (Sec. 217, CMTA).

40
GA2-B-1 SEARCH

Search

 Place Where Authority May be Exercised (Sec. 215, CMTA): All persons exercising
police authority as described in the preceding section shall, only exercise powers within
customs premises as provided for in Section 303 of this Act, and within the limits of the
authority granted by the Commissioner, Port and airport authorities in all ports of entry
shall provide authorized customs officers with unhampered access to all premises within
their administrative jurisdiction.

(1) Control Over Premises Used for Customs Purposes: The Bureau shall, for
customs purposes, have exclusive control, direction and management of customs
offices, facilities, warehouses, ports, airports, wharves, infrastructure and other
premises in the Customs Districts, in all cases without prejudice to the general
police powers of the local government units (LGUs), the Philippine Coast Guard
and of law enforcement agencies in the exercise of their respective functions (Sec.
303, CMTA).

 Authority to Enter Properties (Sec. 219, CMTA): 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.
(1) Not considered dwelling: 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.

 Authority to Search Dwelling House (Sec. 220, CMTA): 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.

 Authority to Search Vessels or Aircrafts and Persons or Goods Conveyed Therein

(Sec. 221, CMTA): 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.
(1) Power to seize: In case of any probable violation of the CMTA, the person
exercising police authority may seize the goods, vessel, aircraft, or any part
thereof
(2) Power to remove obstruction: 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 goods.
(3) Immunity from damage claims; exception: 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.

 Authority to Search Vehicles, Other Carriers, Persons and Animals

(Sec. 222, CMTA):
(1) For purposes of determining the presence of dutiable or prohibited goods.
(2) Upon reasonable cause
(3) Any person exercising police authority may:
a) Open and examine any box, trunk, envelope, or other container;
b) Search of receptacles used for the transport of human remains and dead
animals.
c) Stop, search, and examine any vehicle or carrier, person or animal
suspected of holding or conveying dutiable or prohibited goods

41
  Authority to Search Persons Arriving from Foreign Countries (Sec. 223, CMTA):
(1) Upon reasonable cause

(2) Travelers arriving from foreign countries may be subjected to search and detention
by the customs officers.

(3) The dignity of the person under search and detention shall be respected at all
times.

(4) Female inspectors may be employed for the examination and search of persons of
their own sex.

 Power to Inspect and Visit (Section 224,CMTA): 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.
(1) 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:

(2) 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:

(3) 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

(4) Provided that the release thereof shall not be contrary to law.

GA2-B-2 SEIZURE

ALERT ORDER

 Alert Orders (Sec. 1111, CMTA): Alert orders are written orders issued by customs
officers as authorized by the Commissioner on the basis of derogatory information
regarding possible noncompliance with this Act.

(1) Effect: (a) suspension of the processing of the goods declaration; (b) conduct of
physical or nonintrusive inspection of the goods within forty-eight (48) hours from
issuance of the order.

(2) Action/Recommendation by alerting officer: Within forty-eight (48) hours or,

in the case of perishable goods, within twenty-four (24) hours from inspection, the
alerting officer shall recommend:
a) Continuance of processing of goods in case of a negative finding, or
b) Issuance of a warrant of seizure and detention if a discrepancy between
the declaration and actual goods is found.

(3) No alert order shall be issued on account of allegations of undervaluation unless

said undervaluation is caused by the submission to customs of forged or spurious
invoice or other commercial documents.

42
GA2-B-3 SEIZURE

SEIZURE OR RELEASE OF GOODS/VESSEL

 Seizure or Release of Goods (Section 1116-1117, CMTA):

(1) Issuing authority: District Collector shall issue an order of release or a warrant
of seizure upon the recommendation of the alerting officer or any other customs
officer.
i. [BAR 1992] Appurtenant to its power under the TCCP to enforce
the provisions of such law, the BOC may conduct searches and
seizures even without the benefit of a warrant issued by a judge
upon probable cause. This is historically considered an exemption
from the constitutional guarantee against unreasonable searches
and seizures (Mamalateo, Reviewer in Taxation, 2014 ed., p.838)
(2) Grounds for Issuance of Warrant Seizure: existence of probable cause
a) Nonexistence of probable cause: Issue Order of Release
b) Automatic review: District Collector shall immediately transmit all the
records to the Commissioner who shall automatically review within forty-
eight (48) hours, or within twenty-four (24) hours in case of perishable
goods. When no decision is made by the Commissioner within the
prescribed period, the imported goods shall be deemed released.
(3) Period: (a) perishable goods: 2 days; (b) non-perishable goods: within five (5)
(4) Lifting of Alert Order: The lifting of the alert order shall be issued by the District
Collector only upon the affirmation of the decision of the District Collector by the
Commissioner, or after the lapse of the period of review by the Commissioner,
whichever is earlier.
(5) Description, Classification and Valuation of Seized Goods: The District
Collector shall cause the preparation of a list and particular description,
classification, and valuation of the goods seized and valuation of identical or similar
goods.

 Seizure of Vessel or Aircraft for Delinquency of Owner or Officer (Section 1122,

CMTA): the owner, agent, master, pilot in command or other responsible officer of any
vessel or aircraft becomes liable for any violation of this Act, the vessel or aircraft may be
seized and be subjected to forfeiture proceedings for the settlement of any fine or penalty
for which such person is liable. In determining whether or not to seize a vessel or aircraft,
the Bureau shall take into account the amount of fine or penalty in relation to the
commercial impact that be caused to international trade by the seizure or detention as
well as the value of the vessel or aircraft.

 Service of Warrant of Seizure:

(1) Purpose: The owner or importer shall be given, an opportunity to be heard during
the forfeiture proceedings. Due process.

(2) To whom served: owner or importer of the goods or the authorized

representative thereof.
a) “Owner”: For the purpose of serving the warrant, the importer,
consignee, or person holding the bill of lading or airway bill shall be
deemed the “owner” of the goods.
b) “Authorized Representative”: For the same purpose, “authorized
representative” shall include any agent of the owner and if the owner or
the agent is unknown, any person having possession of the goods at the
time of the seizure.

(3) Unknown Owner; Service: Service of warrant to an unknown owner shall be

effected by posting the warrant for fifteen (15) days in a public place at the
concerned district, and by electronic or printed publication. If, within fifteen (15)

43
 days after service of warrant, no owner or agent can he found or appears before
the District Collector, the seized goods shall be forfeited ipso facto in favor of the
government to be disposed of in accordance with the CMTA (Sec. 1121, CMTA).

GA2-B-4 SEIZURE

SETTLEMENT PENDING SEIZURE CASE

 Settlement of Pending Seizure Case by Payment of Fine or Redemption of

Forfeited Goods (Sec. 1124, CMTA):
(1) During the course of the forfeiture proceeding, DC may allow the settlement by:
a) Payment of fine
i. In case of settlement by payment of fine, the owner, importer,
exporter, or consignee or agent shall offer to pay a fine equivalent
to thirty percent (30%) of the landed cost of the seized goods.

ii. No settlement by payment of fine shall be allowed when:

o there is fraud, or
o when the discrepancy in duties and taxes to be paid
between what is determined and what is declared amounts
to more than thirty percent (30%).
b) Redemption of forfeited goods
i. In case of settlement by redemption, the owner, importer,
exporter, or consignee or agent shall offer to pay the redeemed
value equivalent to 100% of the landed cost.

(2) Release upon payment; without prejudice to filing of administrative or

criminal case: Upon payment of the fine or payment of the redeemed value, the
goods shall be released and all liabilities which may attach to the goods shall be
discharged without prejudice to the filing of administrative or criminal case.

(3) Approval of Commissioner: Settlement is subject to the approval of the

Commissioner. However, the Commissioner may accept the settlement by
redemption of any forfeiture case on appeal.

(4) Settlement not allowed: Settlement of any seizure case by payment of the fine
or redemption of forfeited goods shall not be allowed when there is:
a) Fraud
b) where the importation is prohibited
c) the release of the goods is contrary to law

GA2-B-5 DECISION

 Decision in Forfeiture Cases (Sec. 1125, CMTA):

(1) The DC shall:
Type of Goods Issue of Render of Decision
Order of Hearing
1. Perishable 5 days from issuance 10 days upon
of the warrant termination of the
hearing
2. Non-perishable 15 days from issuance 30 days upon
of the warrant termination of the
hearing
(2) Declaration of Forfeiture; imposition of fines; other actions: The decision
shall include a declaration of forfeiture, the imposition of a fine or such other action
as may be proper.

44
GA2-B-6-a AUTOMATIC REVIEW IN FORFEITURE
CASES

 Automatic Review in Forfeiture Cases (Sec. 1127, CMTA): The Commissioner shall
automatically review any decision by the District Collector adverse to the government.

 Periods:
Incident Period
1. Entire records of the case shall 5 days from the promulgation of the
be elevated from DC to decision
Commissioner
2. COC shall decide on the Perishable Non-Perishable
automatic review Within thirty Within ten (10)
(30) days from days from receipt
receipt of the of the records
records
3. Elevation from COC to SOF: Within five (5) days for review by the
a. When no decision is rendered Secretary of Finance.
within the prescribed period
b. Goods with FOB or FCA value
of ₱10,000,000.00 or more
4. SOF shall decide on automatic Within thirty Within ten (10)
review (30) days from days from receipt
receipt of the of the records
records

 The decision issued by the Secretary of Finance, whether or not a decision was rendered
by the Commissioner within thirty (30) days, or within ten (10) days in the case of
perishable goods, from receipt of the records, shall be final upon the Bureau.


GA2-B-6-b APPEAL IN FORFEITURE CASES

 Notice of Appeal; Appeal Fee: In forfeiture cases, the person aggrieved by the decision
of a District Collector may file a written notice of appeal, together with the required
appeal fee to the District Collector, furnishing a copy to the Commissioner.
 Duty of the DC: The District Collector shall immediately transmit all the records of the
proceedings to the Commissioner.

 Period to file Appeal; Review

Type of Goods Period to file Notice of Period to Review
Appeal
1. Perishable 5 days from receipt of the 15 days from receipt of the
decision records
2. Non- 15 days from receipt of 30 days from receipt of the
perishable the decision records

 If within thirty (30) days, no decision is rendered, the decision of the District Collector
under appeal shall be deemed affirmed.

 An appeal filed beyond the period herein prescribed shall be dismissed as may be proper.


45
GA2-B-6-c REVIEW BY THE CTA

 Unless otherwise provided in this Act or by any other law, the party aggrieved by the ruling
or decisions of the Commissioner may appeal to the CTA, in the manner and within the
period prescribed by law and regulations. Decisions of the Secretary of Finance when
required by this Act, may likewise be appealed to the CTA (Sec. 1136, CMTA).

 Unless an appeal is made to the CTA in the manner and within the period prescribed by
law and regulations, the ruling or decision of the Commissioner or the Secretary of Finance
shall be final and executory (Ibid).

 An aggrieved party may, within thirty (30) days from receipt of an adverse ruling or
decision, appeal the same to the CTA without prejudice to the authority of the Secretary
of Finance to review decisions adverse to the government in accordance with Sections
1127 and 1128 of this Act, as the case may be (Sec. 1104, CMTA).

 [Bar 2002] Where there is no decision as yet by the Commissioner of Customs, which can
be appealed to the CTA, the remedy of prohibition would not lie because the CTA has not
acquired jurisdiction over the seizure case. The writ of prohibition being merely ancillary
to the appellate jurisdiction over it until it has acquired jurisdiction on the petition fore
review. Since there is no appealable decision, the CTA has no jurisdiction over the petition
for review and writ of prohibition (COC v. Alikpala, 36 SCRA 208[1970]).


GA3 REDUCTION OF CUSTOM DUTIES

COMPROMISE

 Authority of the Commissioner to Make Compromise: Subject to the approval of the

Secretary of Finance, the Commissioner may compromise any administrative case arising
under this Act involving the imposition of fines and surcharges, including those arising
from the conduct of a post clearance audit, unless otherwise specified by law. (Sec. 2316,
TCCP; Sec.1131, CMTA)

Sec. 2316, TCCP Sec.1131, CMTA

COC may compromise any case arising Cases involving forfeiture proceedings
under the TCCP or other laws or part of shall however not be subject to any
laws enforced by the BOC involving the compromise.
imposition of fines, surcharges and
forfeitures

 Customs compromise do not extinguish criminal liability (People v. Desiderio, G.R.

L-20805, November 29, 1965)

46
RULES ON JURISDICTION

 Exclusive Jurisdiction of the Bureau (Sec. 1137, CMTA): Jurisdiction over imported
goods and goods for exportation shall be exclusive to the Bureau, or the Secretary of
Finance, when under review by the latter, subject to the proceedings described in this title.
Except for the CTA, no court may issue any order or decision until all the remedies for
administrative appeal have been exhausted.

 Forfeiture proceedings: The BOC shall exercise of exclusive original jurisdiction over
forfeiture cases under the CMTA (Sec. 202 [j], CMTA).

(1) Doctrine of Primary Jurisdiction: The BOC acquires exclusive jurisdiction over
imported goods, for the purposes of enforcement of the customs laws, from the
moment the goods are actually in the possession or control, even if no warrant of
seizure or detention had previously been issued by the Collector of Customs in
connection seizure and forfeiture proceedings (Republic v. CFI Manila, L-43747,
September 2, 1992). [BAR 1991,1993,1996]

(2) The collector of customs sitting in seizure and forfeiture proceedings has exclusive
jurisdiction to hear and determine all questions of dutiable goods. Regional trial
courts are devoid of any competence to pass upon validity or regularity of seizure
and forfeiture proceedings conducted by the BOC and to enjoin or otherwise
interfere with these proceedings conducted. RTCs are precluded from assuming
cognizance over such matters even through petitions for certiorari, prohibition or
mandamus (SBMA v. Merlino Rodriguez and WIRA International Trading Corp.,
G.R. No. 160270, April 23, 2010)

(3) [Bar 2000] The legislators intended to divest the RTCs of the jurisdiction to
replevin a property which is a subject of seizure and forfeiture proceedings for
violation of the TCCP otherwise, actions for forfeiture of property for violations of
the Customs laws could easily be undermined by the simple devise of replevin
(Dela Fuente v. De Veyra, et. al. 120 SCRA 455).

a) Claim that seizure of vessel by the Customs Collector was made outside
the territorial jurisdiction of the Philippines should be raised as a defense
before the Collector of Customs, not by a separate action before the CFI
(Ibid.)
b) There should be no unnecessary hindrance on the government’s drive to
prevent smuggling and other frauds upon the Customs. Furthermore, the
RTC do not have jurisdiction in order to render effective and efficient the
collection of import and export duties due the State, which enables the
government to carry out the functions it has been instituted to perform
(Jao, et. al. v. Court of Appeals, et. al. 249 SCRA 35,43).

(4) RTC and BOC do not have concurrent jurisdiction over seizure and forfeiture
proceedings, the BOC has primary jurisdiction. However, principle of exclusion
apply:
a) Criminal cases, the jurisdiction is with the courts; BOC excluded.
b) Forfeiture cases are within the jurisdiction of the BOC.

47
 ADMINISTRATIVE AND JUDICIAL PROCEDURES RELATVE TO CUSTOMS SEIZURE AND FORFEITURE

Alert Order by AO Determination of probable cause by DC Order of Release

Issuance of Warrant of Seizure List of description, classification, valuation

Order of Hearing Settlement by payment of fine/redemption of

forfeited goods

Decision of the District Collector

DECISION ADVERSE TO THE PROTESTANT DECISION ADVERSE TO THE GOVERNMENT

Review by Commissioner w/n 15 days from notice AUTOMATIC REVIEW BY COMMISSIONER

ADVERSE TO ADVERSE TO ADVERSE TO ADVERSE TO

PROTESTANT GOVERNMENT PROTESTANT GOVERNMENT

Appeal with the CTA AUTOMATIC REVIEW Appeal with the CTA AUTOMATIC REVIEW
Division within 30 days BY SOF Division within 30 days BY SOF
from notice from notice

MR within 15 days from ADVERSE ADVERSE MR within 15 days from ADVERSE ADVERSE
receipt of decision GOV’T PROTEST’ receipt of decision GOV’T PROTEST’

Appeal with CTA En Banc Appeal with CTA En Banc

within 15 days from receipt within 15 days from receipt
Appeal Appeal
of decision of decision
Decision with the Decision with the
shall be CTA shall be CTA
Final & Division Final & Division
Executory within 30 Executory within 30
Appeal by certiorari with SC Appeal by certiorari with SC
days from days from
within 15 days from notice within 15 days from notice
notice notice
of adverse decision of adverse decision

48
JUDICIAL REMEDIES

GJ1 CIVIL ACTION

 Remedies for the Collection of Duties, Taxes, Fines, Surcharges, Interests, and
Other Charges (Sec. 1132, CMTA): The civil remedies for the collection of import duties,
taxes, fees, or charges resulting from the conduct of a post clearance audit shall be
obtained by:

(a) Distraint of goods, chattels, or effects, and other personal property of whatever
character, including stocks and other securities, debts, credits, bank accounts,
and interest in and rights to personal property, and by levy upon real property
and interest in rights to real property; and

(b) Civil or criminal action.

Either or both of these remedies may be pursued at the discretion of the Bureau; Provided,
That the remedies of distraint and levy shall not be allowed when the amount of duties
and taxes involved is not more than ten thousand pesos (₱10,000.00).

The Bureau shall advance the amounts needed to defray costs of collection by means of
civil or criminal action, including the preservation or transportation of personal property
distrained and the advertisement and sale thereof as well as of real property and
improvements thereon.

GJ1-A DISTRAINT

DISTRAINT OF PERSONAL PROPERTY

 Distraint of Personal Property (Sec.1134[A],CMTA): Upon failure of the person owing any
delinquent duty, tax and other charges to pay at the time required, the Commissioner
shall seize and distraint the goods, chattels or effects, and the personal property, including
stocks and other securities, debts, credits, hank accounts, and interests in and rights to
personal property of such persons, in sufficient quantity to satisfy the duty, tax or other
charge and the expenses of the distraint and the cost of the subsequent sale.

(1) Duty of Officer Serving Warrant of Distraint (WOD): The officer serving the warrant of
distraint shall make or cause to be made an account of the goods, chattels, effects, or other
personal property distrained, a copy of which, signed by the said officer, shall he left either
with the owner or person from whose possession such goods, chattels, or effects or other
personal property were taken, or at the dwelling or other place of business of such person
and with someone of suitable age and discretion, to which list shall be added a statement of
the sum demanded and note of the time and place of sale.

(2) Stocks and Securities: Stocks and other securities shall be distrained by serving a copy of
the warrant of distraint upon the importer and upon the president, manager, treasurer, or
other responsible officer of the corporation, company or association, which issued the said
stocks or securities.

(3) Debts and credits: Debts and credits shall be distrained by leaving with the person owing
the debts or having in his/her possession or under his/her control such credits, or with his/her
agent, a copy of the warrant of distraint. The warrant of distraint shall be sufficient authority
to the person owing the debts or having in his possession or under his control any credits
belonging to the importer to pay to the Commissioner the amount of such debts of credits.

(4) Garnishment of Bank Accounts: Bank accounts shall be garnished by serving a warrant
of garnishment upon the importer and upon the president, manager, treasurer, or other
responsible officer of the bank Upon the receipt of the warrant of garnishment, the bank
shall turn over to the Commissioner so much of the bank accounts as may be sufficient to
satisfy the claim of the government.

49
  Filing of Report: A report on the distraint shall, within ten (10) days from receipt of the
warrant, be submitted by the Commissioner to the Secretary of Finance
 Lifting the Order of Distraint: The Commissioner shall have the power to lift such order
of distraint subject to the rules and regulations promulgated pursuant to this Act.

CONSTRUCTIVE DISTRAINT
 Constructive Distraint of the Property (Sec. 1133, CMTA): To safeguard the interest
of the government, the Commissioner may place under constructive distraint the property
of a delinquent importer who, in the opinion of the Commissioner, is: HIR2O
(1) to Hide or conceal the property, or
(2) Intending to leave the Philippines, or
(3) Retiring from any business subject to duty and tax, or
(4) to Remove the property therefrom, or
(5) to perform any act tending to Obstruct the proceedings for collecting the duty and
tax due, or which may be due.

a) How effected: The constructive distraint of personal property shall be

effected by requiring the importer or any person in possession or control
of such property to: NOS
i. Sign a receipt covering the property,
o Refusal or Failure to sign Receipt: In case the importer
or the person in possession and control of the property
sought to be placed under constructive distraint refuses or
fails to sign the receipt herein referred to, the customs
officer effecting the constructive distraint shall proceed to
prepare a list of such property and, in the presence of two
(2) witnesses, leave a copy thereof in the premises where
the property distrained is located, after which the said
property shall be deemed to have been placed under
constructive distraint.

ii. Obligate to preserve the distrained property on the state and

condition at the time of the government's seizure of the same, and

iii. Not dispose of the same in any manner whatsoever, without the
express authority of the Commissioner.

GJ1-B LEVY

LEVY ON REAL PROPERTY (Sec.1134[B], CMTA).

 When levy may be resorted to: After the expiration of the period within which to pay
the duty, tax and other charges as prescribed in this section, real property may be levied:
(1) Upon the distraint of personal property belonging to the importer
(2) Before the distraint of personal property belonging to the importer
(3) Simultaneously with the distraint of personal property belonging to the importer
(4) after the distraint of personal property belonging to the importer

 Warrant of Levy (WOL): To this end, the Commissioner or the duly authorized
representative shall prepare a duly authenticated certificate showing the name of the
importer and the amounts of the duty and tax and penalty due. The certificate shall operate
with the force of a legal execution throughout the Philippines

 How effected: The levy shall be effected by writing upon the certificate a description of
the property on which levy is made.

50
  Service of WOL: At the same time, written notice of the levy shall be mailed to or served
upon the: RIAMO
(1) Register of deeds of the province or city where the property is located
(2) Importer
(3) Agent or the Manager of the business from which the liability arose (if the importer
is not in the Philippines)
(4) Occupant of the property in question (if there be no manager)

 Insufficiency of distraint: In case the warrant of levy on real property is not issued
before or simultaneously with the warrant of distraint on personal property, and the
personal property of the importer is not sufficient to satisfy the duty and tax due, the
Commissioner or a duly authorized representative shall, within thirty (30) days after
execution of the distraint, proceed with the levy on the real property of the importer.

 Within ten (10) days after receipt of the warrant, a report on any levy shall be submitted
by the levying officer to the Commissioner; Provided, That the Commissioner may lift such
warrants of levy issued, subject to the rules and regulations promulgated pursuant to this
Act.

GJ2 CRIMINAL ACTION

 Fraud Investigation and Prosecution (Section 1138, CMTA): No criminal case for
violation of this title shall be instituted without the approval of the Commissioner. The
Bureau shall have the power to investigate and institute smuggling cases committed within
its jurisdiction; Provided, That in case of inquest, the same may be instituted by the
apprehending customs officer.

 Supervision and Control over Criminal and Civil Proceedings (Sec. 1135, CMTA):
Civil and criminal actions and proceedings instituted on behalf of the Government under
the authority of this Act or other laws enforced by the Bureau shall be brought in the name
of the government of the Philippines and shall be prosecuted and handled by the Bureau
with the assistance of the Department of Justice (DOJ).

 Determination of Probable Cause for Filing Criminal and Civil Proceedings;

Approval of Commissioner Required:

(1) The determination of the existence of probable cause and the subsequent filing of
any criminal or civil case with the proper court against violators of this Act shall
exclusively belong to the DOJ:
(2) No civil or criminal action for the recovery of duties or the enforcement of any fine,
penalty or forfeiture under this Act shall be filed in court without the approval of
the Commissioner.

 Acquittal in criminal charge not res judicata in seizure or forfeiture proceedings. Criminal
proceedings are action in personam while seizure or forfeiture proceedings are action in
rem.

51
Remedies of the Tax Payer
ADMINISTRATIVE REMEDIES

TA1 PROTEST

 Protest: When, a ruling or decision of the District Collector or customs officer involving
goods with valuation, rules of origin, and other customs issues is made the party adversely
affected may appeal by way of protest against such ruling or decision by presenting to the
Commissioner at the time when payment of the amount claimed to be due the
government is made, or within fifteen (15) days thereafter, a written protest setting forth
the objection to the ruling or decision in question and the reasons therefore.

 Protest is appropriate when taxpayer is contesting:

Classification Ruling When a declared tariff classification of goods, not
subject of a pending application for advance ruling, is
in dispute, the importer, exporter, or the Bureau shall
submit the matter to the Commission for a ruling,
without prejudice to the application of Section 1106 of
this Act on “protest” (Sec. 1100, CMTA)
Valuation Ruling When the valuation method of goods not subject of an
application for advance valuation ruling or the declared
customs value is in dispute, the matter shall be
resolved in accordance with Section 1106 of this Act on
“protest” (Sec. 1101, CMTA)
Ruling on the Rules of When the declared origin of the goods, not subject of a
Origin request for advance ruling on origin, is in dispute, the
matter shall be resolved in accordance with Section
1106 of this Act on “protest” (Sec. 1102, CMTA)

 Exception: Fixing of fines in seizure cases.

 Payment under protest: Subject to the approval of the Secretary of Finance, the
Commissioner shall provide such rules and regulations as to the requirement for payment
or nonpayment of the disputed amount and in case of nonpayment, the release of the
importation under protest upon posting of sufficient security.
(1) Under old rule: Sec. 2308. Protest and Payment Upon Protest in Civil
Matters: When a ruling or decision of the Collector is made whereby liability for
duties, taxes, fees or other charges are determined, except the fixing of fines in
seizure cases, the partly adversely affected may protest such ruling or decision by
present Collector at the time when payment of the amount claimed to be due the
government is made, or wit, (15) days thereafter, a written protest setting forth
his objection to the ruling or decision in question with the reason's therefore. No
protest shall be considered unless payment of the amount due liquidation has first
been made and the corresponding docket fee.

 Protest Exclusive Remedy in Protestable Case (Sec. 1107, CMTA): In all cases subject
to protest, the interested party who desires to have the action of the District Collector
reviewed, shall file a protest, otherwise the action of the District Collector shall be final
and conclusive.

 Form and Scope of Protest (Sec. 1108, CMTA): A protest shall be filed in accordance
with the prescribed rules and regulations promulgated under this section. It shall specify
the particular decision or ruling of the District Collector for which protest is being made,
and shall indicate the particular ground or grounds upon which the protesting party bases
the claim for relief. The scope of a protest shall be limited to the particular goods subject
of a goods declaration, but any number of issues may be raised in a protest with reference
to the goods declaration constituting the subject matter of the protest.

52
  Samples to be Furnished by Protesting Parties (Sec. 1109, CMTA): If the nature of
the goods permit, importers filing protests involving questions offset must, upon demand,
present to the Commissioner samples of the goods which are the subject matter of the
protest. The samples of the goods shall be verified by the customs officer who made the
classification against which the protests are filed.

 Decision in Protest: When a protest is filed in proper form, the Commissioner shall
render a decision within thirty (30) days from receipt of the protest. In case the protest is
sustained, in whole or in part, the appropriate order shall be made, and the entry
reassessed, if necessary.

 Appeal in Protest Cases: Appeals to protest cases shall be governed by Section 114 of
this Act (Sec. 1126, CMTA).
(1) Under Sec. 114 of the CMTA (Right of Appeal, Forms and Ground):
a) Any party adversely affected by a decision or omission of the Bureau
pertaining to an importation, exportation, or any other legal claim shall
have the right to appeal within fifteen (15) days from receipt of the
questioned decision or order.
b) An appeal in writing shall be filed within the period prescribed in this Act
or by regulation and shall specify the grounds thereof.
c) The Bureau may allow a reasonable time for the submission of supporting
evidence to tbe appeal.

 Administrative and Judicial Appeals (Section 1104, CMTA): An aggrieved party may,
within thirty (30) days from receipt of an adverse ruling or decision, appeal the same to
the CTA without prejudice to the authority of the Secretary of Finance to review decisions
adverse to the government in accordance with Sections 1127 (Automatic Review in
Forfeiture Cases) and 1128 (Automatic Review by the Secretary of Finance in other
cases23) of this Act, as the case may be.

 Protest vis-à-vis Forfeiture

Protest Forfeiture
Issue
Validity or propriety of assessment of Validity or legality of importation
goods
Proof Required
1. The collector is wrong No probable cause exists regarding the
2. The assessment and classification illegality of the importation.
Procedure
1. Payment (if required) 1. Warrant of Seizure
15 days

2. Protest before Commissioner 2. After hearing, decision by Collector

[Collector] 15 days
15 days
3. Commissioner of Customs
3. [Commissioner of Customs] 30 days
[30 days]

4. Court of Tax Appeals Division

4. Court of Tax Appeals Division En Banc
En Banc 15 days
15 days

5. Supreme Court 5. Supreme Court

23
In cases not involving protest or forfeiture.

53
 TA2 ABANDONMENT

 Abandonment; Kinds and Effects (Sec. 1129, CMTA):

P Failure to pay the assessed duties, taxes and other charges: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,
or

Regulated goods: If the regulated goods failed to comply with Section 117 24
of this Act, within fifteen (15) days from the date of final assessment:

Regulated goods under Alert Order: If such regulated goods are subject of
an alert order and the assessed duties, taxes and other charges thereof are not
paid within fifteen (15) days from notification by the Bureau of the resolution
of the alert order, the same shall also be deemed abandoned.
E Express: When the owner, importer, or consignee of the imported goods
expressly signifies in writing to the District Collector the intention to abandon
the same.
G Failure to file goods declaration: When the owner, importer, consignee, or
interested party after due notice, fails to file the goods declaration within the
prescribed period in Section 40725 of this Act; Provided, That the term goods
declaration shall include provisional or incomplete goods declaration deemed
valid by the Bureau as provided in Section 40326 of this Act. For this purpose,
it is the duty of the District Collector to post a list of all packages discharged
and their consignees, whether electronically or physically in the District Office,
or send a notice to the consignee within five (5) days from the date of discharge
C Failure to claim: 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. For this purpose, the
arrastre or warehouse operator shall report the unclaimed goods to the District
Collector for disposition pursuant to the provisions of this Act.
W Failure to claim in customs bonded warehouses: When the owner or
importer fails to claim goods in customs bonded warehouses within the
prescribed period.

24
Regulated Importation and Exportation.— Goods which are subject to regulation shall be imported or exported only
after securing the necessary goods declaration or export declaration, clearances, licenses, and any other
requirements, prior to importation or exportation. In case of importation, submission of requirements after arrival of
the goods but prior to release from customs custody shall be allowed but only in cases provided for by governing
laws or regulations.
25
Goods declaration must be lodged within fifteen (15) days from the date of discharge of the last package from the
vessel or aircraft. The period to file the goods declaration may, upon request, be extended on valid grounds for
another fifteen (15) days: Provided, That the request is made before the expiration of the original period within which
to file the goods declaration: Provided, However, That the period of the lodgement of the goods declaration may be
adjusted by the Commissioner.
26
Provisional Goods Declaration.— Where the declarant does not have all the information or supporting documents
required to complete the goods declaration, the lodging of a provisional goods declaration may be allowed: Provided,
That it substantially contains the necessary information required by the Bureau and the declarant undertakes to
complete the information or submit the supporting documents within forty-five (45) days from the filing of the
provisional goods declaration, which period may be extended by the Bureau for another forty-five (45) days for valid
reasons. If the Bureau accepts a provisional goods declaration, the duty treatment of the goods shall not be different
from that of goods with complete declaration. Goods under a provisional goods declaration may be released upon
posting of any required security equivalent to the amount ascertained to be the applicable duties and taxes.

54
  Treatment and Disposition of Abandoned Goods (Sec. 1130):
(1) Expressly abandoned goods shall ipso facto be deemed the property of the
government and shall be disposed of in accordance with the provisions of this Act.

(2) If the Bureau has not disposed of the abandoned goods, the owner or importer of
goods impliedly abandoned may, at any time within thirty (30) days after the lapse
of the prescribed period to file the declaration, reclaim the goods provided that all
legal requirements have been complied with and the corresponding duties, taxes
and other charges, without prejudice to charges and fees due to the port or
terminal operator, as well as expenses incurred have been paid before the release
of the goods from customs custody.

(3) When the Bureau sells goods which have been impliedly abandoned, although no
offense has been discovered, the proceeds of the sale, after deduction of any duty
and tax and all other charges and expenses incurred as provided in Section 1143 27
of this Act, shall be turned over to those persons entitled to receive them or, when
this is not possible, held at their disposal for a specified period. After the lapse of
the specified period, the balance shall be transferred to the forfeiture fund.

TA3 ABATEMENT and REFUND

 Abatement (Sec. 102 [a], CMTA]: reduction or diminution, in whole or in part, of duties
and taxes where payment has not been made.
(1) Abatement of Duties and Taxes (Sec.904, CMTA): When goods have not yet
been released for consumption or have been placed under another customs
procedure, provided that no other offense or violation has been committed, the
declarant shall neither be required to pay the duties and taxes nor be entitled to
refund thereof in any of the following cases:
a) When, at the request of the declarant, the goods are abandoned, or as
determined by the Bureau, the goods are destroyed or rendered
commercially valueless while under customs control. Any cost herein
incurred shall be borne by the declarant;
b) When goods are destroyed or irrecoverably lost by accident or force
majeure, the remaining waste or scrap after destruction, if taken into
consumption, shall be subject to the duties and taxes that would be
applicable on such waste or scrap if imported in same state; and
c) When there are shortages due to the nature of the goods.

27
Disposition of Proceeds.— The following expenses and obligations shall be paid from the proceeds of the sale in
the order provided:

(a) Customs duties, except in the case of forfeited goods;

(b) Taxes and other charges due the government;

(c) Government storage charges;

(d) Expenses for the appraisal, advertisement, and sale of auctioned goods;

(e) Arrastre and private storage charges and demurrage charges; and

(f) Freight, lighterage or general average, on the voyage of importation, of which due notice shall have
been given to the District Collector.

The Commissioner is authorized to determine the maximum charges to be recovered by private entities concerned
under subsections (e) and (f) of this section.

55
(2) Abatement for Damage Incurred During Voyage: Except as otherwise
provided, no abatement of duties shall be made on account of damage incurred or
deterioration suffered during the voyage of importation; and duties will be
assessed on the actual quantity imported as determined by the customs officers
concerned (Sec. 905, CMTA).
(3) Abatement or Refund of Duty on Missing Package: When any package
appearing on the manifest or bill of lading or airway bill is missing, an abatement
or refund of the duty shall he made if it is certified by the importer or consignee,
under pain of penalty for falsification or perjury, and upon production of proof
satisfactory to the Collector concerned, that the package in question has not been
unlawfully imported into the Philippines (Sec. 906, CMTA)
(4) Abatement or Refund for Deficiency in Contents of Packages. If, upon
opening of any package, a deficiency in the quantity of the goods is found to exist
based upon the invoice, such deficiency shall be certified, under pain of penalty
for falsification or perjury, by the customs officers concerned and upon the
production of proof showing that the shortage occurred before the arrival of the
goods in the Philippines. Upon sufficient proof thereof, the proper abatement or
refund of the duty shall be made. (Sec. 907, CMTA)
(5) Abatement or Refund of Duties on Goods Lost or Destroyed After Arrival
(Sec. 908, CMTA): The Bureau may abate or refund the amount of duties accruing
or paid on any goods that have been lost due to injury, theft, destruction through
fire or through any other causes, upon satisfactory proof of the same, under any
of the following circumstances:
a) While within the territory of any port of entry, prior to unloading under the
Bureau’s supervision;
b) While remaining in customs custody after unloading;
c) While in transit from the port of entry to any port in the Philippines; and
d) While released under sufficient security for export except in case of loss
by theft.
(6) Abatement and Refund of Defective Goods (Sec. 909, CMTA): Under
conditions to be set by the Commissioner, and with the approval of the Secretary
of Finance, an abatement and refund shall be granted on imported or exported
goods which are found defective or otherwise not in accordance with the agreed
specifications at the time of importation or exportation and are returned either to
the supplier or to another person designated by the supplier, subject to the
following conditions:
a) The goods have not been worked, repaired, or used in the country of
importation, and are reexported within a reasonable time; and
b) The goods have not been worked, repaired, or used in the country to which
they were exported, and are reimported within a reasonable time.

Use of the goods shall, however, not hinder the refund if such use was
indispensable to discover the defects or other circumstances which caused the
reexportation or reimportation of the goods.

As an alternative to reexportation or reimportation, the goods may be expressly

abandoned or destroyed or rendered commercially valueless under customs
control as the Bureau may decide. In such case, the importer shall not be entitled
to an abatement or a refund if it does not defray the costs of such abandonment,
destruction, or rendition.

(7) Abatement of Duty on Dead or Injured Animals:Where it is certified, under

pain of penalty for falsification or perjury, and upon production of proof satisfactory
to the Bureau that an animal subject of importation dies or suffers injury before
arrival, or while in customs custody, the duty due thereon shall be abated provided
that its carcass on board or in customs custody is removed in the manner required
by the Bureau and at the expense of the importer. (Sec. 910, CMTA).

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 Refund of Duties and Taxes (Sec. 903, CMTA):
(1) Ground: duties and taxes have been overcharged as a result of an error in the
assessment or goods declaration.
(2) New procedure: Where permission is given by the Bureau for goods originally
declared for a customs procedure with payment of duties and taxes to be placed
under another customs procedure, a refund shall be made of any duties and taxes
charged in excess of the amount due under the new procedure, subject to such
regulation issued for the purpose.
(3) Less than 5k threshold: A refund shall not be granted if the amount of duties
and taxes involved is less than five thousand pesos (₱5,000.00); Provided, That
the Secretary of Finance, in consultation with the Commissioner, may adjust the
minimum amount specified in this Act, taking into account the CPI as published by
the PSA.
(4) Refund Arising from Correction of Errors: Manifest clerical errors made on an
invoice or entry, errors in return of weight, measure and gauge, when duly certified
under penalties of falsification or perjury by the surveyor or examining officer
when there are such officers at the port, and errors in the distribution of charges
on invoices not involving any question of law and certified under penalties of
falsification or perjury by the examining customs officer, may be corrected in the
computation of duties, if such errors are discovered before the payments of duties,
or if discovered within one (1) year after release from customs custody of imported
goods upon written request and notice of error from the importer, or upon
statement of error certified by the District Collector. For the purpose of
correcting errors specified in the next preceding paragraph, the Bureau is
authorized to make refunds within the statutory time limit (Sec. 912,
CMTA).

 Investigation Required in Case of Abatements and Refunds (Sec. 911, CMTA): The
Customs Officer concerned shall, in all cases of abatement or refund of duties, submit an
examination report as to any fact discovered which indicates any discrepancy and cause
the corresponding adjustment on the goods declaration.

 Claims for Refund (Sec. 913, CMTA): All claims and application for refund of duties and
taxes shall be made in writing and filed with the Bureau within twelve (12) months
from the date of payment of duties and taxes.
(1) If as a result of the refund of duties, a corresponding refund of internal revenue
taxes on the same importation becomes due, the Bureau shall cause the refund of
internal revenue taxes in favor of the importer after issuance of a certification from
the Commissioner of Internal Revenue, when applicable.
(2) The importer may file an appeal of a denial of a claim for refund or abatement,
whether it is a full or partial denial, with the Commissioner within thirty (30) days
from the date of the receipt of the denial. The Commissioner shall render a decision
within thirty (30) days from the receipt of all the necessary documents supporting
the application. Within thirty (30) days from receipt of the decision of the
Commissioner, the case may also be appealed to the CTA.
(3) Notwithstanding the provisions in the preceding paragraphs, the filing of claims
for refund of national internal revenue taxes shall be governed by the provisions
provided under the NTRC of 1997, as amended.

  

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