Luis Guerrero 5/15/21

BSCA – B118 Prelim and Midterm Output

1. An act of any person who shall fraudulently import or bring into the Philippines, or assist in so
doing, any article, contrary to law or shall receive, conceal, buy, sell or in any manner facilitate
the transportation, concealment, or sale of such article after importation, knowing the same to
have been imported contrary to law. This is an act known as?

This act is known as smuggling. The term can be immediately found under Subsec. (nn)
of Sec. 102 Definition of Terms of the CMTA. The legal effect of committing this
fraudulent act can be found under Sec. 1401 of the CMTA.

2. Customs Fraud is consist of any act which a person deceives or attempts to deceive, the Bureau of
Customs and thus evades or attempts to evades, wholly or partly, the payment of import or export
duties, taxes and other charges, or the application of prohibitions or restrictions laid down by the
statutory or regulatory provision enforced or administered by the Customs administration or
obtains, or attempt to obtain, any advantage contrary to such provisions, thereby committing a
Customs offense. True or False. Justify your answer.

True. Even though the given statement is not explicitly stated word by word in the
CMTA, the concept of customs fraud itself as defined is implicated in “Title XIV –
Offenses and Penalties” of the said act in which tackles upon fraudulent practices, such
as – “Sec. 1403 Other Fraudulent Practices Against Customs Revenue” that directly
speaks of deceiving for such intent to defraud customs revenue.

The given definition more so, can actually be found in the Glossary of International
Customs Terms of the World Customs Organization (WCO) and even in the Nairobi
Convention of 1985 by the United Nations. As the definition itself, word by word has
verified by the WCO – hence it would be valid to say that it is true as the country’s BOC
is fully committed and based upon the WCO Framework of Standards.

Other information that can support this answer is also the case supporting case studies
such as Chevron Philippines v. Commissioner of Customs (G.R. NO. 178759), and
Gonzalo Rubic v. Auditor General (G.R. No. L-9507)

a. Chevron Philippines V. Commissioner of Customs (G.R. No. 178759)

The court finds that there is the existence of fraud made by the petitioner –
Chevron Philippines intentionally bided its time in order to avail the 3%
duty of their importation compared to the 10% duty as the law in order to
lower it by 3% was just about to be amended. The court defined fraud as
“anything calculated to deceive” in which there was by Chevron to pay less
tax.
 b. Gonzalo Rubic v. Auditor General (G.R. No. L-9507)
The court did not find any existence of fraud made by Rubic, yet it was
clarified by the court to settle the definition. The court provided Sec 2703.
Various Fraudulent Practices Against Customs Revenues in which states
— “Any person who makes or attempts to make any entry of imported or
dutiable exported merchandise by means of any false statement, written or
verbal, or by means of any false or fraudulent practice whatsoever, or
shall be guilty of any willful act or omission by means whereof the
Government of the Republic of the Philippines might be deprived of the
lawful duties, or any portion thereof, accruing from the merchandise or
any portion thereof, embraced or referred to in such invoice, declaration,
affidavit, letter, paper, or statement, or affected by such act or omission....
(Of the Adm. Code, as amended by section 2, Republic Act No. 455)”

3. It is settled law and jurisprudence in this jurisdiction that the customs authorities acquire
exclusive jurisdiction over goods sought to be imported into the Philippines, for the purpose of
the enforcement of Philippine custom laws, from the moment the goods came to their actual
possession and control, even if no warrant for seizure or detention thereof has previously been
issued by the port collector of Customs. True or False. Explain.

True. There are a number of case laws that may be presented in order to validate the
statement on customs authorities having exclusive jurisdiction over goods sought to be
imported into the Philippines. The Doctrine of Primary Jurisdiction may even be
applied to prove this point as other courts such as the RTC, cannot and is not under
jurisdiction to determine controversies involving customs jurisdiction and disputes.
Hence, RTCs are devoid of any competence to pass upon the validity or regularity of
seizure and forfeiture proceedings and or to interfere in such.

Below are the case studies in which validates exclusive jurisdiction of customs authorities
over goods:

a. Jao vs. CA, GR No. 104604

The court explained that there is a policy of placing no unnecessary
hindrance on the government’s drive as to render effective and efficient
collection of import and export duties (which enables the government to do
their function), and at the same time to prevent smuggling and other
customs frauds.

b. Chua vs. Commissioner Titus G.R. No. 157591

The court ruled that the RTCc have no review powers as they have no
jurisdiction over the goods as it is the duty and obligation of the BOC to do
so in order to carry out their functions.
 c. R.V. Marzan Freight, Inc. vs. CA, GR No. 128064
The court stated that even if the seizure by the Collector of Customs were
illegal, which has yet to be proven, such act does not deprive the Bureau of
Customs of jurisdiction thereon.

d. Feeder International Line, Pte., Ltd. vs. CA, GR No. 94262

The court found that the petitioner is in fact fall upon administrative
penalties for as the proceeding is a probe on contraband to which violates
the laws for revenue, and not criminal liability. Moreso, it was also stated
by the court that “proceedings for the forfeiture of goods illegally imported
are not criminal in nature since they do not result in the conviction of the
wrongdoer”

e. Transglobe International, Inc. vs. CA, GR No. 126634

The court stated that forfeiture of seized goods in the Bureau of Customs is
a proceeding against the goods and not against the owner. The issue was
limited to whether or not the goods must be forfeited in accordance with
law. Hence it would be implicated that the customs authorities have the
right over such cases as it is against the goods and not of the owner,
making an exclusive original jurisdiction over such importations.

f. Papa vs. Mago G.R. No. L-27360

The court explained that as for the enforcement of the TCCP – thus it was
within their jurisdiction to have possession over the imported goods even
for the purpose of the petitioners to enforce the act, hence they acquired
jurisdiction in Mago’s goods with exclusion of the civil courts. The
petitioners, Alagao and Papa does not need of a warrant in order to search
the questioned goods, they were given police authority of effecting
searches, seizures and arrest of Mago’s goods as it was subject to seizure
and forfeiture.

All of such cases present the exclusivity of the Bureau of Customs over goods to be
imported. It is expressly stated by court ruling, either through stare decisis or original
decision, that customs authorities indeed have this kind of jurisdiction. No warrants for
seizure or detention, or even search is needed or to be issued for it as for the very fact that
this is an administrative power of which enforces the laws by statutory power. The only
exemption for issuing a warrant is if authorities search through a dwelling house, in
which a judge of a competent court is needed for it to be searched (as provided in Sec.220
of the CMTA
4. When the Philippines joined the Customs Cooperation Council there was a need again for the
revision of our tariff system. This ordered the alignment of the Philippine Tariff Nomenclature
and the General Rules of Classification with that of the Customs Cooperation Council
Nomenclature. The CCCN have been the tariff structure of the Philippines ever since but
presently influenced by the GATT. This is why Former Pres. Marcos prompted form to issue this
Executive Order. What Executive Order is this?

This is Executive Order No. 688 – Aligning the Philippine Tariff Nomenclature and the
General Rules of Classification Provided for Under Sections 104 and 203 of Presidential
Decree No. 1464 in Accordance with the Customs Cooperation Council Nomenclature

This order was dated May 9, 1981 in which the Tariff Commission was ordered to
prepare a draft of the Philippine Tariff Nomenclature, and a draft for rules of
classification - all in accordance with the Customs Cooperation Council Nomenclature.

5. This new tariff measure was passed by the 11th Congress and signed into law by former President
Macapagal – Aroyo on April 27, 2001 and took effect June 2, 2001 after its publication in 2
newspapers of general circulation. The legislature now authorizes the shift from the interim
valuation of Export Value to the use of the Transaction Value as mandated by the WTO valuation
agreement where the Philippines was committed to implement way back January 1, 2000. The
legislature clarified and carefully structured the Transaction Value, which is the price actually
paid or payable for the goods when sold for export to the Philippines. The law applies additional
“safety measure” against undervaluation and other customs fraud by the introduction of “force
acquisition” by the Bureau of Customs against gross undervalued goods. It introduces the dual
mandatory requirement of “Record Keeping” and the “Post Entry Audit System” which have for
its object the determination of whether or not the importer declared the correct Transaction Value
of his imported articles. What is this law and state what do its greatest effect to the Philippine
economy.

This law is Republic Act No. 9135 – An Act Amending Certain Provisions of
Presidential Decree No. 1464, otherwise known as The Tariff and Customs Code of
The Philippines, as Amended, and for other purposes.

RA 9135’s effect to the Philippine economy was to be a stepping stone for progress in
terms of customs collection and revenue. Before the existence of this law, Republic Act
8181 of 1997 was the transaction basis for customs valuation in which created the reform
for valuation. RA 8181 even though looked good on paper, had several errors in its de
jure state such as with importers taking advantage of their legal rights, would undervalue
their importations together with falsified commercial invoices and documents in order to
pay lower customs duties and other charges. The Bureau of Customs even claimed that
RA 8181 during that time caused an amount of legal issues due to having two valuation
rules in customs administration of which complicated things further as customs
authorities have to choose the higher of the two, the published official or transaction
value, in which was not a concrete nor fair policy for importers and consignees. As RA
8181 was looked down upon and was realized to have such errors that may injure more
on customs administration to collecting revenue, RA 9135 was introduced by which
replaced published values with post-entry audits as to ensure the collection of duties and
taxes. RA 9135 enabled the transaction valuation, by which also have expressly given
more transparency and compliance with the WTO customs valuation agreement.
Additionally, this new law as signed by President Aroyo, has as well minimized in a
wider extent the attempt for fraud of undervalued importations through removing
unnecessary discretion, hence guarantees revenue more compared to RA 8181.

In a nutshell, with RA 9135 being the immediate solution for the complications of RA
8181, it has strengthened trade facilitation and customs administration of the government
through making more assurance of revenues for the government. Hence, RA 9135 in its
simplest effect have boost the national economy by collecting duties and taxes which are
revenues efficiently and more effectively compared to before.