Q and A in Tariff and Customs Law

References:

a) Handbook on the Tariff and Customs Code of the Philippines (TCCP) by Atty. Ferdinand
A. Nague, C.B. 2004 ed. (Nague);
b) www.wto.org (WTO); and,
c) Answers to Bar Examination Questions UP Law Center (UP Law Center).

1. What is a Tariff?

A Tariff is a list or schedule of articles on which a duty is imposed upon their importation into a
country, with the rates at which they are severally taxed. It is also derivatively referred to as the
system of imposing duties or taxes on the importation of foreign merchandise. (Blacks Law
Dictionary 6th Ed.)

2. What are Customs Duties?

"Customs 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 Philippines, Inc. vs. CA, GR No. 134114 dated July 6, 2001)

3. What is the statutory basis for the collection of customs duties and taxes?

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 the TCCP and in other laws. (Sec. 100 of the TCCP)

4. Are importations made by the government subject to customs duties and taxes?

Yes, except those provided for in Section 105 of the TCCP, all importations of the government
for its own use or that of its subordinate branches or instrumentalities, or corporations,
agencies or instrumentalities owned or controlled by the government, shall be subject to the
duties, taxes, fees and other charges provided for in the TCCP. (Sec. 1205 of the TCCP)

5. What is the purpose for the imposition of customs duties?

Customs duties are imposed for the purpose of raising revenues and to protect the local
economy from the effects of the importation of foreign goods in the Philippines.

6. What is the flexible tariff clause?

It refers to the authority given to the President to adjust tariff rates under Section 401 of the
TCCP. (Nague)
7. When may the power under the flexible tariff clause be exercised by the President?

Upon recommendation of the National Economic and Development Authority (NEDA) and in
the interest of national economy, general welfare and/or national security. (Sec. 401a of the
TCCP)

8. What may the President do in the exercise of his power under the flexible tariff clause?

a) Increase, reduce or remove existing protective rates of import duty (including any necessary
change in classification). Limitation: rate of increase shall not be higher than a maximum of
100% ad valorem;
b) Establish import quota or to ban imports of any commodity;
c) Impose an additional duty on all imports not exceeding 10% ad valorem; and,
d) Modify the form of duty.

Before any recommendation is submitted to the President, conduct of investigation, public

hearings, hearing of views and recommendations of government offices by the Tariff
Commission is necessary except under letter c); (Sec. 401 of the TCCP)

9. When shall the Order issued by the President pursuant to the exercise of his powers under the
flexible tariff clause take effect?

Any Order issued by the President pursuant to the provisions of Sec. 401 of the TCCP shall take
effect thirty (30) days after promulgation, except in the imposition of additional duty not
exceeding 10% ad valorem which shall take effect at the discretion of the President. (Sec. 401
of the TCCP)

10. When does importation begin and when does it end?

Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines
with intention to unload therein.

It is clear from the provision of the law that mere intent to unload is sufficient to commence an
importation. (Feeder International Line, Pte., Ltd. vs. CA, GR No. 94262 dated May 31, 1991)

Importation is deemed terminated upon the payment of duties, taxes and other charges due
upon the articles, or secured to be paid, at a port of entry and the legal permit for withdrawal
shall have been granted, or in case said articles are free of duties, taxes and other charges, until
they have legally left the jurisdiction of the customs. (Sec. 1202 of the TCCP)

As long as the importation has not been terminated, the imported goods remain under the
jurisdiction of the Bureau of Customs. Importation is deemed terminated only upon the
payment of the duties, taxes and other charges upon the articles, or secured to be paid, at the
port of entry and the legal permit for withdrawal shall have been granted. The payment of the
duties, taxes, fees and other charges must be in full. (Papa vs. Mago, GR No. L-27360 dated
February 28, 1968)
11. Will mere possession of merchandise on board a vessel in Philippine waters constitute
importation of the said merchandise?

No, the mere possession of merchandise on board a vessel in the Philippine waters is not of
itself sufficient to amount to an importation of the same. There must be proof of an intent to
import. (U. S. vs. Jose, 34 Phil. Rep., 840; U. S. vs. Ah Sing, 36 Phil. Rep., 978. cited in US vs. Chu
Loy, GR No. L-12594 dated January 31, 1918)

12. Glory Shipping Lines (GSL) imported one (1) unit of shipping vessel which was authorized by
the Department of Finance subject to the posting of a re-export bond. After expiration of the
re-export bond, GSL, however, refused to pay the correct amount of taxes after demand and
thereafter sold the same to Oro Maura Shipping Lines (OMSL). OMSL separately filed for the
importation of the same vessel.

Was the importation made by OMSL separate from that of GSLs importation?

No, with the knowledge that the vessel was released under a re-export bond, OMSL should have
known that this original entry was subject to specific conditions, among them, the obligation to
guarantee the re-export of the vessel within a given period, or otherwise to pay the customs
duties on the vessel. It should have known, too, of the conditions of the vessels release under
the re-export bond and of the state of GSLs status of compliance.

There was an original but incomplete importation by GSL that OMSL could not have simply
disregarded proceeds from knowledge of the vessels history and the application of the relevant
law. In this respect, Section 1202 of the TCCP provides:

Importation begins when the carrying vessel or aircraft enters the jurisdiction
of the Philippines with intention to unlade therein. Importation is deemed
terminated upon payment of the duties, taxes and other charges due upon the
articles, or secured to be paid, at a port of entry and the legal permit for
withdrawal shall have been granted, or in case said articles are free of duties,
taxes and other charges, until they have legally left the jurisdiction of the
customs.

In order for an importation to be deemed terminated, the payment of the duties, taxes, fees and
other charges of the item brought into the country must be in full. For as long as the
importation has not been completed, the imported item remains under the jurisdiction of the
BOC. From the perspective of process, the importation that originally started with GSL was
therefore never completed and terminated, so that the OMSLs present importation is merely
a continuation of that original process. (Secretary of Finance vs. Oro Maura Shipping Lines, GR
No. 156946, July 15, 2009).

13. What is a cargo manifest?

A written document required to be carried by merchant vessels, containing an account of the

cargo, with other particulars, for the facility of the customs officers. (Black laws Dictionary 5th
Ed.)
14. What is the purpose of a cargo manifest?

The object of a manifest is to furnish the customs officers with a list to check against, to inform
our revenue officers what goods are being brought into the country, and to provide a safeguard
against goods being brought into this country on a vessel and then smuggled ashore. It is also
designed to defeat any attempt to make use of vessels to secure the unlawful entry of persons
or things into the country. (Macondray vs. Acting Commissioner of Customs, GR No. L-25783
dated February 25, 1975)

15. What are the distinctions between a cargo manifest and a bill of lading?

a) a manifest is a declaration of the entire cargo, while a bill of lading is but a

declaration of a specific part of the cargo and is a matter of business
convenience based exclusively on a contract; and,

b) A bill of lading is ordinarily merely a convenient commercial instrument

designed to protect the importer or consignee while a manifest of the cargo is
absolutely essential to the exportation or importation of property in all vessels.
(Macondray vs. Acting Commissioner of Customs, GR No. L-25783 dated
February 25, 1975)

16. What details/information must the cargo manifest contain?

Every vessel from a foreign port must have on board a complete manifest of all her cargo. All of
the cargo intended to be landed at a port in the Philippines must be described in separate
manifests for each port of call therein. Each manifest shall include:

a) Port of departure and port of delivery;

b) Marks, numbers, quantity and description of the packages; and,
c) Names of the consignees of the packages. (Sec. 1005 of the TCC)

17. May the cargo manifest be changed or altered after entry of the vessel?

A cargo manifest shall in no case be changed or altered after entry of the vessel except by
means of an amendment by the master, consignee or agent thereof, under oath, and attached
to the original manifest: Provided, however, that after the invoice and/or entry 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, discovery of which could not have been made until after examination of the importation
has been completed. (Sec. 1005 of the TCCP)

18. Who are those considered as owners of imported articles?

a) The consignee;
b) Holder of a bill of lading duly endorsed by the consignee therein named;
c) The consignor, if consigned to order;
d) The underwriters of abandoned articles; and,
 e) Salvors of articles saved from wreck at sea, along a coast or in any area of the
Philippines. (Sec. 1203 of the TCCP)

19. What does the term entry mean under customs law?

The term "entry" in customs law has a triple meaning. It means (1) the documents filed at the
customs house; (2) the submission and acceptance of the documents and (3) the procedure of
passing goods through the customs house. (Chevron Philippines, Inc. vs. Commissioner of the
Bureau of Customs, GR No. 178759 dated August 11, 2008)

20. When is there entry under customs law?

The law itself, in Section 205, defines the meaning of the technical term "entered" as used in the
TCCP:

Section 205. Entry, or Withdrawal from Warehouse, for Consumption. -

Imported articles shall be deemed "entered" in the Philippines for
consumption when the specified entry form is properly filed and
accepted, together with any related documents regained by the provisions of
this Code and/or regulations to be filed with such form at the time of entry, at
the port or station by the customs official designated to receive such entry
papers and any duties, taxes, fees and/or other lawful charges required to be
paid at the time of making such entry have been paid or secured to be paid with
the customs official designated to receive such monies, provided that the article
has previously arrived within the limits of the port of entry.

Clearly, the operative act that constitutes "entry" of the imported articles at the port of entry is
the filing and acceptance of the "specified entry form" together with the other documents
required by law and regulations. (Chevron Philippines, Inc. vs. Commissioner of the Bureau of
Customs, GR No. 178759 dated August 11, 2008)

21. Where must an entry of imported articles be made?

All articles imported into the Philippines, whether subject to duty or not shall be entered
through a customhouse at a port of entry. (Sec. 1201 of the TCCP)

22. When must an entry be made?

Under Section 1301 of the TCCP, imported articles must be entered within a non-extendible
period of thirty (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, Inc. vs. Commissioner of the Bureau of Customs, GR No. 178759 dated
August 11, 2008)

23. What is the distinction between an Import Entry Declaration (IED) and an Import Entry and
Internal Revenue Declaration (IEIRD)?

The IED serves as basis for the payment of advance duties on importations whereas the IEIRD
 evidences the final payment of duties and taxes. (Chevron Philippines, Inc. vs. Commissioner of
Bureau of Customs, GR No. 178759 dated August 11, 2008)

24. Does entry refer to the filing of the IED or the IEIRD?

Entry under Sections 1301 and 1801 of the TCCP refers to both the filing of the IED and the
IEIRD.

The filing of the IEIRDs has several important purposes: to ascertain the value of the imported
articles, collect the correct and final amount of customs duties and avoid smuggling of goods
into the country. Petitioners interpretation would have an absurd implication: the 30-day
period (for filing of an entry) applies only to the IED while no deadline is specified for the
submission of the IEIRD. Strong issues of public policy militate against petitioners
interpretation. It is the IEIRD which accompanies the final payment of duties and taxes. These
duties and taxes must be paid in full before the BOC can allow the release of the imported
articles from its custody.

Taxes are the lifeblood of the nation. Tariff and customs duties are taxes constituting a
significant portion of the public revenue which enables the government to carry out the
functions it has been ordained to perform for the welfare of its constituents. Hence, their
prompt and certain availability is an imperative need and they must be collected without
unnecessary hindrance. Clearly, and perhaps for that reason alone, the submission of the IEIRD
cannot be left to the exclusive discretion or whim of the importer.

We hold, therefore, that under the relevant provisions of the TCCP, both the IED and IEIRD
should be filed within 30 days from the date of discharge of the last package from the vessel
or aircraft. As a result, the position of petitioner, that the import entry to be filed within the 30-
day period refers to the IED and not the IEIRD, has no legal basis. (Chevron Philippines, Inc. vs.
Commissioner of Bureau of Customs, GR No. 178759 dated August 11, 2008)

25. Who are the persons required to make an import entry?

a) The importer being a holder of the bill of lading; and,

b) a customs broker;

If 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. Such statements under oath shall
constitute prima facie evidence of knowledge and consent of the importer of violation against
applicable provisions of this Code when the importation is found to be unlawful. (Sec. 1301 of
the TCCP)

26. Which imported articles are subject to entry?

All imported articles, except articles considered importations for the official use of foreign
embassies, legations, and other agencies of foreign governments (subject to reciprocity) shall be
subject to a formal or informal entry. (Sec. 1302 of the TCCP)
27. When is an informal entry allowed?

a) Articles of a commercial nature intended for sale, barter or hire, the dutiable
value of which is Two thousand pesos (PhP2,000.00) or less;
b) Personal and household effects or articles, not in commercial quantity; and,
c) Articles imported in passengers baggage, mail or otherwise, for personal use.
(Sec. 1302 of the TCCP)

28. Who are required to sign an Import Entry?

The Import Entry shall be signed, under the penalties of falsification or perjury by:

a) If an individual - the importer, consignee or holder of the bill of lading or a

licensed customs broker; or,
b) If a corporation, firm or association by its general manager or licensed
customs broker duly authorized. (Sec. 1305 of the TCCP)

29. What are the contents of an Import Entry?

a) Name of the importing vessel or aircraft;

b) Port of departure and date of arrival;
c) Number and mark of packages or the quantity, if in bulk; and,
d) The nature and correct commodity description of the articles contained herein and its
transaction value. (Sec. 1306 of the TCCP)

30. Who is liable for the payment of import duties?

Unless relieved by laws or regulations, the liability for duties, taxes, fess, and other charges
attaching on importation constitute a personal debt due from the importer to the government
which can be discharged only by payment in full of all duties, taxes, fees and other charges
legally accruing. It also constitutes a lien upon the articles imported which may be enforced
while such articles are in custody or subject to the control of the government. (Sec. 1204 of the
TCCP)

31. Glory Shipping Lines (GSL) imported one (1) unit of shipping vessel which was authorized by
the Department of Finance subject to the posting of a re-export bond. After expiration of the
re-export bond, GSL, however, refused to pay the correct amount of taxes after demand and
thereafter sold the same to Oro Maura Shipping Lines (OMSL). OMSL separately filed for the
importation of the same vessel.

Did the transfer of ownership of the vessel extinguish the liability to pay the tax?

No, an important factual circumstance that the CTA and the CA appear to have completely
overlooked is that the vessel first entered the Philippines through the Port of Mactan and it was
the Collector of the Port of Mactan who first acquired jurisdiction over the vessel when he
approved the vessels temporary release from the custody of the BOC, after GSL filed Ordinary
Re-Export Bond No. C(9) 121818.
 When this re-export bond expired on March 22, 1994, GSL filed a letter dated May 10, 1994
guaranteeing the renewal of the re-export bond on or before May 20, 1994, otherwise the
duties, taxes and other charges on the vessel would be paid. Therefore, when May 20, 1994
came and went without the renewal of the vessels re-export bond, the obligation to pay
customs duties, taxes and other charges on the importation in the amount of P1,296,710.00
arose and attached to the vessel. Undoubtedly, this lien was never paid by GSL, thus it
continued to exist even after the vessel was sold to the respondent. Section 1204 of the TCCP in
this regard states:

Section 1204. Liability of Importer for Duties. Unless relieved by laws or

regulations, the liability for duties, taxes, fees and other charges attaching on
importation constitutes a personal debt due from the importer to the
government which can be discharged only by payment in full of all duties, taxes,
fees and other charges legally accruing. It also constitutes a lien upon the
articles imported which may be enforced while such articles are in custody or
subject to the control of the government.

As defined by Blacks Law Dictionary, a lien is a claim or charge on property for payment of some
debt, obligation or duty. In this particular instance, the obligation is a tax lien that attaches to
imported goods, regardless of ownership.

Consequently, when the respondent bought the vessel from Glory Shipping Lines on December
2, 1994, the obligation to pay the BOC P1,296,710.00 as customs duties had already attached to
the vessel and the non-renewal of the re-export bond made this liability due and demandable.
The subsequent transfer of ownership of the vessel from Glory Shipping Lines to the
respondent did not extinguish this liability. (Brion, J., Secretary of Finance vs. Oro Maura
Shipping Lines, GR No. 156946, July 15, 2009).

32. What is liquidation under the TCCP?

Liquidation is the final computation and ascertainment by the Collector of the duties due on
imported merchandise, based on official reports as to the quantity, character, and value thereof,
and the Collectors own finding as to the applicable rate of duty.

Assessments inform taxpayers of their tax liabilities. Under the TCCP, the assessment is in the
form of a liquidation made on the face of the import entry return and approved by the Collector
of Customs. Liquidation is the final computation and ascertainment by the Collector of
Customs of the duties due on imported merchandise based on official reports as to the
quantity, character and value thereof, and the Collector of Customs' own finding as to the
applicable rate of duty. A liquidation is considered to have been made when the entry is
officially stamped "liquidated." (Pilipinas Shell Petroleum Corporation vs. Republic, GR No.
161953 dated March 6, 2008)

A liquidation is the final computation and ascertainment by the collector of the duties on
imported merchandise, based on official reports as to the quantity, character, and value thereof,
and the collectors own finding as to the applicable rate of duty; it is akin to an assessment of
internal revenue taxes under the National Internal Revenue Code where the tax liability of the
taxpayer is definitely determined. (Pilipinas Shell Petroleum Corporation vs. Commissioner of
 Customs, G.R. No. 176380 dated June 18, 2009)

33. When can there be a tentative liquidation under the TCCP?

If to determine the exact amount due under the law in whole or 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 six (6)
months from date of Tentative liquidation. The entry in such case shall be stamped "Tentative
liquidation". (Sec. 1602 of the TCCP)

34. When does liquidation become final? (similar to the prescriptive period under the NIRC)

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, in the absence of
fraud or protest or compliance audit pursuant to the provisions of this Code, be final and
conclusive upon all parties, unless the liquidation of the import entry was merely tentative. (Sec.
1603 of the TCCP)

The liquidation of an import entry shall be deemed final and conclusive upon all parties after the
expiration of three (3) years from the date of final payment of the duties due, except where:

a) Fraud has been committed; or

b) A protest has been filed under the provision of Section 2308 of the TCCP; or
c) Where the import entry is selected for post audit within the three (3) year
period required for record-keeping provided that once started, the audit can be
completed beyond said period; or
d) The liquidation of import entry was merely tentative. (CAO No. 4-2004 dated
November 8, 2004)

35. Within what period must importers keep their records?

All importers are required to keep at their principal place of business, in the manner prescribed
by regulations to be issued by the Commissioner of Customs and for a period three (3) years
from the date of importation, all the records of their importations and/or books of accounts,
business and computer systems and all customs commercial data including payment records
relevant for the verification of the accuracy of the transaction value declared by the
importers/customs brokers on the import entry. (Sec. 3514 of the TCCP)

36. Within what period must brokers keep their records?

All brokers are required to keep at their principal place of business, in the manner prescribed by
regulations to be issued by the Commissioner of Customs and for a period of three (3) years
from the date of importation copies of the above mentioned records covering transactions that
they handle. (Sec. 3514 of the TCCP)

Note that under RMO No. 10-2014 dated February 10, 2014 issued by the BIR, importers and
 brokers are required to execute an undertaking to comply with the duty to preserve and
maintain records for a period of ten (10) years and to allow access to examination by the BIR,
BOC and the Fiscal Intelligence Unit of the Department of Finance (DOF-FIU) as a condition
precedent for approval of accreditation as importer or broker.

37. What is the legal basis for a Post Entry Audit of importers even after release of the goods?

"Section 3515. Compliance Audit or Examination of Records. - The importers/customs brokers

shall allow any customs officer authorized by the Bureau of Customs to enter during office hours
any premises or place where the records referred to in the preceding section are kept to
conduct audit examination, inspection, verification and/or investigation of those records either
in relation to specific transactions or to the adequacy and integrity of the manual or electronic
system or systems by which such records are created and stored. For this purpose, a duty
authorized customs officer shall be full and free access to all books, records, and documents
necessary or relevant for the purpose of collecting the proper duties and taxes.

In addition, the authorized customs officer may make copies of, or take extracts from any such
documents. The records or documents must, as soon as practicable after copies of such have
been taken, be returned to the person in charge of such documents.

A copy of any such document certified by or on behalf of the importer/broker is admissible in

evidence in all courts as if it were the original.

An authorized customs officer is not entitled to enter any premises under this Section unless,
before so doing, the officer produces to the person occupying or apparently in charge of the
premises written evidence of the fact that he or she is an authorized officer. The person
occupying or apparently in charge of the premises entered by an officer shall provide the officer
with all reasonable facilities and assistance for the effective exercise of powers under this
Section.

Unless otherwise provided herein or in other provisions of law, the Bureau of Customs may, in
case of disobedience, invoke the aid of the proper regional trial court within whose jurisdiction
the matter falls. The court may punish contumacy or refusal as contempt. In addition, the fact
that the importer/broker denies the authorized customs officer full and free access to
importation records during the conduct of a post-entry audit shall create a presumption of
inaccuracy in the transaction value declared for their imported goods and constitute grounds for
the Bureau of Customs to conduct a re-assessment of such goods.

This is without prejudice to the criminal sanctions imposed by this Code and administrative
sanctions that the Bureau of Customs may impose against contumacious importers under
existing laws and regulations including the authority to hold delivery or release of their imported
articles."

38. How is the offense of Unlawful Importation or Smuggling committed?

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. (Sec. 3601 of the TCCP)

39. What are the requisites of smuggling or illegal importation?

a) that the merchandise must have been fraudulently or knowingly imported

contrary to law;
b) that the defendant, if he is not the importer himself, must have received,
concealed, bought, sold or in any manner facilitated the transportation,
concealment or sale of the merchandise; and,
c) that the defendant must be shown to have knowledge that the merchandise
had been illegally imported. If the defendant, however, is shown to have had
possession of the illegally imported merchandise, without satisfactory
explanation, such possession shall be deemed sufficient to authorize conviction.
(Rieta vs. People, GR No. 147817 dated August 12, 2004)

40. What is the legal effect of possession of smuggled goods?

When, upon trial for a violation of Sec. 3601 of the TCCP, the defendant is shown to have or to
have had possession of the article in question, such possession shall be deemed sufficient
evidence to authorize conviction, unless the defendant shall explain the possession to the
satisfaction of the court. (Sec. 3601 of the TCCP)

41. What is the effect of payment of the tax due in Smuggling Cases?

Payment of the tax due after apprehension shall not constitute a valid defense in any
prosecution under Sec. 3601 of the TCCP. (Sec. 3601 of the TCCP)

42. What are the other fraudulent practices under the TCCP?

a) 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 means of any false statement, written or verbal, or
by means of any false or fraudulent practice whatsoever, or
b) Any person guilty of any willful act or omission by means of whereof the
Government might be deprived of the lawful duties, taxes and other charges, or any
portion thereof, accruing from the article or any portion thereof, embraced or
referred to in such invoice, declaration, affidavit, letter, paper, or statement, or
affected by such act or omission; (Sec. 3602 of the TCCP)

43. Which articles are subject to customs duties and taxes?

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 the TCCP in other laws. (Sec. 100 of the TCCP)
44. Which commodities are not allowed to be imported in the Philippines?

a) Dynamite, gunpowder, ammunitions and other explosives, firearms and

weapons of war, and parts thereof, except when authorized by law;
b) Written or printed articles in any form containing any matter advocating or
inciting treason, or rebellion, or 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;
c) Written or printed articles, negatives or cinematographic film, photographs,
engravings, lithographs, objects, paintings, drawings or other representation of
an obscene or immoral character;
d) 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;
e) 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;
f) Lottery and sweepstakes tickets except those authorized by the Philippine
Government, advertisements thereof, and lists of drawings therein;
g) 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;
h) Any adulterated or misbranded articles of food or any adulterated or
misbranded drug in violation of the provisions of the "Food and Drugs Act";
i) Marijuana, opium, pipes, coca leaves, heroin or any other narcotics or synthetic
drugs which are or may hereafter be declared habit forming by the President of
the Philippines, or any compound, manufactured salt, derivative, or preparation
thereof, except when imported by the Government of the Philippines or any
person duly authorized by the Dangerous Drugs Board, for medicinal purposes
only;
j) Opium pipes and parts thereof, of whatever material; and,
k) All other articles and parts thereof, the importation of which prohibited by law
or rules and regulations issued by competent authority. (Sec. 101 of the TCCP)

45. Who has jurisdiction over the importation of prohibited or conditionally-free articles?

It is the Collector of Customs. Where articles are of prohibited importation or subject to

importation only upon conditions prescribed by law, it shall be the duty of the Collector to
exercise such jurisdiction in respect thereto as will prevent importation or otherwise secure
compliance with all legal requirements. (Sec. 1207 of the TCCP)
46. Which commodities are allowed exemption from payment of import duties subject to certain
conditions?

The following articles shall be exempt from the payment of import duties upon compliance
with the formalities prescribed in, or with, the regulations which shall be promulgated by the
Commissioner of Customs with the approval of the Secretary of Finance; Provided, That any
article sold, bartered, hired or used for purposes other than that they were intended for without
prior payment of the duty, tax or other charges which would have been due and payable at the
time of entry if the article had been entered without the benefit of this section, shall be subject
to forfeiture and the importation shall constitute a fraudulent practice against customs
revenue punishable under Section Thirty-six hundred and two, as amended of the TCCP:
Provided, further, That a sale pursuant to a judicial order or in liquidation of the estate of a
deceased person shall be subject to the preceding proviso, without prejudice to the payment of
duties, taxes and other charges: Provided, finally, That the President may upon
recommendation of the Secretary of Finance, suspend, disallow or completely withdraw, in
whole or in part, any of the conditionally-free importation under this section:

a) Aquatic products (e.g., fishes, crustaceans, mollusks, marine animals, seaweeds, fish oil,
roe), caught or gathered by fishing vessels of Philippine registry: Provided, That they
are imported in such vessels or in crafts attached thereto: And provided, further, That
they have not been landed in any foreign territory or, if so landed, they have been
landed solely for transshipment without having been advanced in condition;

b) Equipment for use in the salvage of vessels or aircrafts, not available locally, upon
identification and 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: 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;

c) Cost of repairs, excluding the value of the article used, made in foreign countries upon
vessels or aircraft documented, registered or licensed in the Philippines, 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;

d) 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;

e) Medals, badges, cups and other small articles bestowed as trophies or prizes, or those
 received or accepted as honorary distinction;

f) Personal and household effects belonging to residents of the Philippines returning from
abroad 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, excluding vehicles, watercraft, aircraft and animals 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,
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: Provided, That the personal and households effects shall neither be in
commercial quantities nor intended for barter, sale or hire and that the total dutiable
value of which shall not exceed Ten Thousand Pesos (P10,000.00): Provided, further,
That the returning resident has not previously availed of the privilege under this section
within three hundred sixty five (365) days prior to his arrival: Provided, finally, That a
fifty percent (50%) ad valorem duty across the board shall be levied and collected on the
personal and household effects (except luxury items) in excess of Ten Thousand Pesos
(P10,000.00);

The phrase "returning residents" shall refer to nationals who have stayed in a foreign
country for a period of at least six (6) months.

(f-1) 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 year
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 Ten Thousand Pesos (P10,000.00) 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 this Code.

Overseas Contract Workers shall be understood to mean: 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.

g) Wearing apparel, articles of personal adornment, toilet articles, portable tools and
instruments, theatrical costumes and similar effects accompanying travelers, or tourists
or arriving within a reasonable time before and after their arrival in the Philippines,
which are necessary and appropriate for the wear and use of such persons according to
the nature of the journey, their comfort and convenience: Provided, That this
 exemption shall not apply to articles intended for other persons or for barter, sale or
hire: Provided, further, 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
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;

(g-1) 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, accompanying them or arriving within a reasonable time before or after their
arrival in the Philippines, in quantities and of the kind necessary and suitable to the
profession, rank or position of the person importing them, for their own use and not for
barter, sale or hire 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 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;

h) 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, in quantities and of the class suitable to the
profession, rank or position of the persons importing them, for their own use and not
for barter or sale, accompanying such persons, or arriving within a reasonable time, 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;

i) 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 bond in an amount equal to one and 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; 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 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 the TCCP;

j) 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 bond in an amount equal to one and 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 for another six (6) months; photographic and
cinematographic films, undeveloped, 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 cameras or other photographic and sound
recording apparatus by which the film is made;

k) Importations for the official use of foreign embassies, legations, and other agencies of
foreign governments: Provided, That those foreign countries accord like privileges to
corresponding agencies of the Philippines;

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: Provided, That such privilege shall be accorded under special agreements
between the Philippines and the countries which they represent: And Provided, further,
That the privilege may be granted only upon specific instructions of the Secretary of
Finance in each instance which will be issued only upon request of the Department of
Foreign Affairs;

Note: All imported articles, except articles considered importations for the official use of
foreign embassies, legations, and other agencies of foreign governments (subject to
reciprocity) shall be subject to a formal or informal entry. (Sec. 1302 of the TCCP)

l) 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 Welfare and Development or the
Department of Education, as the case may be;

m) 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 bond in an amount equal to one and one-half times the ascertained
duties, taxes and other charges within six (6) months from the date of acceptance of the
import entry;

n) 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 in any collection district to any vessel or aircraft engaged in foreign trade, for
use or consumption of the passengers or its crew on board such vessel or aircrafts as sea
or air stores; or articles purchased abroad for sale on board a vessel or aircraft as saloon
stores or air store supplies: Provided, That any surplus or excess of such vessel or aircraft
supplies arriving from foreign ports or airports shall be dutiable;

o) Articles 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 her equipment, wrecked, abandoned in
Philippine waters or elsewhere: Provided, That articles and salvage recovered within the
said period of two (2) years shall be dutiable;

p) Coffins or urns containing human remains, bones or ashes, used personal and household
effects (not merchandise) of the deceased person, except vehicles, the value of which
does not exceed ten thousand pesos (P10,000.00), upon identification as such;

q) 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: Provided, That importations under this subsection shall be
previously authorized by the Secretary of Finance: Provided, however, That importation
of sample medicine shall be previously authorized by the Secretary of Health that such
samples are new medicines not available in the Philippines: Provided, finally, That
samples not previously authorized and/or properly marked in accordance with this
section shall be levied the corresponding tariff duty.

Commercial samples, except those that are not readily and easily identifiable (e.g.,
precious and semi-precious stones, cut or uncut, and jewelry set with precious stones),
the value of any single importation of which does not exceed ten thousand pesos
(P10,000.00) upon the giving of a bond in an amount equal to twice the ascertained
duties, taxes and other charges thereon, conditioned for the exportation of said samples
within six (6) months from the date of the acceptance of the import entry or in default
thereof, the payment of the corresponding duties, taxes and other charges. If the value
of any single consignment of such commercial samples exceeds ten thousand pesos
(P10,000.00), the importer thereof may select any portion of same not exceeding in
value of ten thousand pesos (P10,000.00) for entry under the provision of this
subsection, and the excess of the consignment may be entered in bond, or for
consumption, as the importer may elect;
r) Animals (except race horses), and plants for scientific, experimental, propagation,
botanical, breeding, zoological and national defense purposes: Provided, That 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: Provided, further, That the 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:
Provided, furthermore, That 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 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: And
Provided, finally, That the animals and plants are certified by the National Economic and
Development Authority as necessary for economic development;

s) Economic, technical, vocational, scientific, philosophical, historical, and cultural books

and/or publications: Provided, That 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 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.

Bibles, missals, prayer books, Koran, Ahadith and other religious books of similar nature
and extracts therefrom, hymnal and hymns for religious uses;

t) 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 re-
importation thereof, be subject to a duty under this subsection equal to the amount of
such drawback or bounty.

u) Aircraft, equipment and machinery, spare parts commissary and catering supplies,
 aviation gas, fuel and oil, whether crude or refined, and such other articles or supplies
imported by and for the use of scheduled airlines operating under Congressional
franchise: Provided, That such articles or supplies are not locally available in reasonable
quantity, quality and price and are necessary or incidental for the proper operation of
the scheduled airline importing the same;

v) 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
Environment and Natural Resources 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: Provided, That such articles are
not locally available in reasonable quantity, quality and price and are necessary or
incidental in the proper operation of the mine; and aircrafts imported by agro-industrial
companies to be used by them in their agriculture and industrial operations or activities,
spare parts and accessories thereof;

w) Spare parts of vessels or aircraft of foreign registry engaged in foreign trade when
brought into the Philippine exclusively as replacements or for the emergency repair
thereof, upon proof satisfactory to the 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;

x) Articles of easy identification exported from the Philippines for repair and subsequently
reimported upon proof satisfactory to the Collector of Customs that such articles are not
capable of being repaired locally: Provided, That the cost of the repairs made to any
such article shall pay a rate of duty of thirty per cent ad valorem;

y) Trailer chassis when imported by shipping companies for their exclusive use in handling
containerized cargo, upon posting a bond in an amount equal to one and one-half times
the ascertained duties, taxes and other charges due thereon to cover a period of one
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:

1. That they shall be properly identified and registered with the Land Transportation
Office;

2. That they shall be subject to customs supervision fee to be fixed by the Collector of
Customs and subject to the approval of the Commissioner of Customs;

3. That they shall be deposited in the Customs zone when not in use; and

4. That upon the expiration of the period prescribed above, duties and taxes shall be
paid, unless otherwise re-exported.

47. What are the privileges granted to an officer or employee of the Department of Finance, Civil
 or Military Attaches or member of his staff assigned to a Philippine Diplomatic Mission?

The provisions of Sec. 105 of Presidential Decree No. 34, dated October 27, 1972, to the
contrary notwithstanding any officer or employee of the Department of Foreign Affairs,
including any attach, civil or military, or member of his staff assigned to a Philippine diplomatic
mission abroad by his Department or any similar officer or employee assigned to a Philippine
consular office abroad, or any personnel of the Reparations Mission in Tokyo or AFP military
personnel detailed with SEATO or any AFP military personnel accorded assimilated diplomatic
rank on duty abroad who is returning from a regular assignment abroad, for reassignment to his
Home office, or who dies, resigns, or is retired from the service, after the approval of this
Decree, shall be exempt from the payment of all duties and taxes on his personal and
household effects, including one motor car which must have been ordered or purchased prior
to the receipt by the mission or consulate of his order of recall, and which must be registered
in his name: Provided, however, That this exemption shall apply only to the value of the motor
car and to aggregate assessed value of said personal and household effects the latter not to
exceed thirty per centum (30%) of the total amount received by such officer or employee in
salary and allowances during his latest assignment abroad but not to exceed four years; And
Provided, finally, That the officer or employee concerned must have served abroad for not less
than two years. (Sec. 105 of the TCCP)

48. What are the sources of exemption from the imposition of Customs Duties?

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

a) those provided for under the TCCP;

b) those granted to government agencies, instrumentalities or government-owned
or controlled corporations with existing contracts, commitments, agreements,
or obligations (requiring such exemption) with foreign countries;
c) international institutions, associations or organizations entitled to exemption
pursuant to agreements or special laws; and,
d) those that may be granted by the President upon prior recommendation of the
National Economic and Development Authority in the interest of national
economic development. (Sec. 105 of the TCCP)

49. What is customs valuation?

Customs valuation is a customs procedure applied to determine the customs value of imported
goods. If the rate of duty is ad valorem, the customs value is essential to determine the duty to
be paid on an imported good. (WTO definition)

50. What is the Doctrine of Classification by Use in Customs Cases?

The general purpose for which an article is used must govern the assessment of duty; any other
rule would lead to confusion and injustice. It is the general use to which articles are chiefly
adopted and for which they are chiefly used that determine their character within the meaning
of the Tariff laws. It is the predominating use to which articles are generally applied or used that
 determines their character for the purpose of fixing the duty, and not the specific or special use
which any particular importer may make of the articles imported (Hartranft v. Langfeld, 125
U.S., 128). (Commissioner of Customs vs. Campos Rueda, GR No. 55020 dated August 20, 1990)

51. What are the methods of determining the dutiable value of an imported article?

a) Method 1 Transaction Value;

b) Method 2 Transaction Value of Identical Goods;
c) Method 3 Transaction Value of Similar Goods;
d) Method 4 Deductive Value;
e) Method 5 Computed Value; and,
f) Method 6 Fall Back Value.

52. How are the methods applied?

The principal method used is Method 1 or the transaction value. For cases in which there is no
transaction value, or where the transaction value is not acceptable as the customs value
because the price has been distorted as a result of certain conditions, the WTO Valuation
Agreement lays down five other methods of customs valuation, to be applied in the prescribed
hierarchical order.

The sequence of Methods 4 and 5 can be switched at the request of the importer (not, however,
at the discretion of the customs officer) except when the Commissioner of Customs finds
difficulty in determining the dutiable value of the imported article under Method 5. (WTO)

53. How is Method 1 Transaction Value determined?

The price actually paid or payable is the total payment made or to be made by the buyer to or
for the benefit of the seller for the imported goods, and includes all payments made as a
condition of sale of the imported goods by the buyer to the seller, or by the buyer to a third
party to satisfy an obligation of the seller.

It is the price actually paid or payable of the goods when sold for export to the Philippines
adjusted by adding the following value components not included in the price actually paid or
payable:

a) Selling Commissions and Brokerage;

b) Assists;
c) Royalty and license fees;
d) Packing and Container Costs;
e) Proceeds of subsequent resale;
f) Insurance; and,
g) Freight.

The following adjustments are excluded:

a) Charges for construction, erection, assembly, maintenance, technical assistance,

undertaken after importation;
 b) Cost of transport after importation;
c) Philippine duties and taxes; and,
d) Permissible deductions, e.g., trade discounts. (WTO and RA No. 9135)

54. What are the limitations on the use of Method 1 Transaction Value?

The use of the Method 1 Transaction Value is acceptable if the following conditions are
present:

a) There must be an evidence of sale for export to the Philippines;

b) No restriction as to disposition or use of the goods by the buyer;
c) Sale of goods must not be subject to conditions or considerations;
d) No part of the proceeds of subsequent resale, disposition, or use of the goods
by the buyer will accrue to the seller; and,
e) Prices of goods must not be influenced by relationship between the buyer and
the seller. (WTO and RA No. 9135)

55. How is Method 2 Transaction Value of identical goods determined?

Where the dutiable value cannot be determined under Method 1, 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" shall mean 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.

The transaction value is calculated in the same manner on identical goods if the goods are:

a) the same in all respects including physical characteristics, quality, and

reputation;
b) produced in the same country as the goods being valued; and,
c) produced by the producer of the goods being valued.

For this method to be used, the goods must be sold for export to the same country of
importation as the goods being valued. The goods must also be exported at or about the same
time as the goods being valued. (WTO and RA No. 9135)
56. How is Method 3 Transaction Value of similar goods determined?

Where the dutiable value cannot be determined under the preceding method (Method 2), 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" shall mean
goods which, although not alike in all respects, have like characteristics and like component
materials which enable them to perform the same functions and to be commercially
interchangeable. The quality of the goods, their reputation and the existence of a trademark
shall be among the factors to be considered in determining whether goods are similar.

The transaction value is calculated in the same manner on similar goods if:
 a) goods closely resembling the goods being valued in terms of component
materials and characteristics;
b) goods which are capable of performing the same functions and are
commercially interchangeable with the goods being valued; and,
c) goods which are produced in the same country as and by the producer of the
goods being valued.

For this method to be used, the goods must be sold to the same country of importation as the
goods being valued. The goods must be exported at or about the same time as the goods being
valued. (WTO and RA No. 9135)

57. How is Method 4 Deductive Value determined?

The dutiable value of the imported goods under this method shall be the deductive value which
shall be based on 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 (if none,
at the earliest date after importation but before the end of 30 days after importation), to
persons not related to the persons from whom they buy such goods, subject to deductions for
the following:

a) Commission on per unit basis on domestic sales for goods of same kind;
b) Additions made for expenses and profit;
c) Transport, Insurance and related costs; and,
d) Duties and taxes for the importation and sale.

The WTO Customs Valuation Agreement provides that when customs value cannot be
determined on the basis of the transaction value of the imported goods or identical or similar
goods, it will be determined on the basis of the unit price at which the imported goods or
identical or similar goods are sold to an unrelated buyer in the greatest aggregate quantity in
the country of importation. The buyer and the seller in the importing country must not be
related and the sale must take place at or about the time of importation of the goods being
valued. If no sale took place at or about the time of importation, it is permitted to use sales up
to 90 days after importation of the goods being valued. (WTO and RA No. 9135)

58. How is Method 5 Computed Value determined?

The dutiable value under this method shall be the computed value which shall be the sum of:

a) The cost or the value of materials and fabrication or other processing employed
in producing the imported goods;
b) The 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;
c) The freight, insurance fees and other transportation expenses for the
importation of the goods;
d) Any assist, if its value is not included under paragraph (a) hereof; and
 e) The cost of containers and packing, if their values are not included under
paragraph (a) hereof.

The Bureau of Customs 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 they will give sufficient advance notice to the
government of the country in question and the latter does not object to the investigation.

Computed value, the most difficult and rarely used method, determines the customs value on
the basis of the cost of production of the goods being valued, plus an amount for profit and
general expenses usually reflected in sales from the country of exportation to the country of
importation of goods of the same class or kind. (WTO and RA No. 9135)

59. How is Method 6 Fallback Method determined?

If the dutiable value cannot be determined under the preceding methods (Methods 1 to 5)
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 6 and the method used to determine
such value. No dutiable value shall be determined under Method 6 on the basis of:

a) The selling price in the Philippines of goods produced in the Philippines;

b) A system that provides for the acceptance for customs purposes of the higher of
two alternative values;
c) The price of goods in the domestic market of the country of exportation;
d) The cost of production, other than computed values, that have been
determined for identical or similar goods in accordance with Method Five
hereof;
e) The price of goods for export to a country other than the Philippines;
f) Minimum customs values; or
g) Arbitrary or fictitious values. (WTO and RA No. 9135)

60. What is the remedy of the importer if there is a delay in the determination of the dutiable
value?

The importer shall nevertheless be able to secure the release of the imported goods upon the
filing of a sufficient guarantee in the form of a surety bond, a deposit, cash or some other
appropriate instrument in an amount equivalent to the imposable duties and taxes on the
imported goods in question conditioned upon the payment of customs duties and taxes for
which the imported goods may be liable: Provided, however, That goods, the importation of
which is prohibited by law shall not be released under any circumstance whatsoever. (Sec. 201
of the TCCP)
61. When may an Anti-Dumping Duty be imposed?

Anti-dumping duty refers to a special duty imposed on the importation of a product, commodity
or article of commerce into the Philippines at less than its normal value when destined for
domestic consumption in the exporting country, which is the difference between the export
price and the normal value of such product, commodity or article.

Whenever any product, commodity or article of commerce imported into the Philippines at an
export price less than its normal value in the ordinary course of trade for the like product,
commodity or article destined for consumption in the exporting country is causing or is
threatening to cause material injury to a domestic industry, or materially retarding the
establishment of a domestic industry producing the like product. (Sec. 301 of the TCCP)

62. How much amount of Anti-Dumping Duty may be imposed?

The Secretary of Trade and Industry, in the case of non-agricultural product, commodity or
article, or the Secretary of Agriculture, in the case of agricultural product, commodity or article,
after formal investigation and affirmative finding of the Tariff Commission (hereinafter referred
to as the Commission), shall cause the imposition of an anti-dumping duty equal to the margin
of dumping on such product, commodity or article and on like product, commodity or article
thereafter imported to the Philippines under similar circumstances, in addition to ordinary
duties, taxes and charges imposed by law on the imported product, commodity or article.
However, the anti-dumping duty may be less than the margin if such lesser duty will be
adequate to remove the injury to the domestic industry. Even when all the requirements for the
imposition have been fulfilled, the decision on whether or not to impose a definitive anti-
dumping duty remains the prerogative of the Commission. It may consider, among others, the
effect of imposing an anti-dumping duty on the welfare of consumers and/ or the general public,
and other related local industries. (Sec. 301 of the TCCP)

63. When may a Countervailing Duty be imposed?

Whenever any product, commodity or article of commerce is granted directly or indirectly by

the government in the country or origin or exportation, any kind or form of specific subsidy
upon the production, manufacture or exportation of such product, commodity or article, and
the importation of such subsidized product, commodity or article has caused or threatens to
cause material injury to a domestic industry or has materially retarded the growth or prevents
the establishment of a domestic industry as determined by the Tariff Commission. (Sec. 302 of
the TCCP)

64. How much amount of Countervailing Duty may be imposed?

The Secretary of Trade and Industry, in the case of nonagricultural product, commodity or
article, or the Secretary of Agriculture, in the case of agricultural product, commodity or article
shall issue a department order imposing a countervailing duty equal to the ascertained amount
of the subsidy. The same levy shall be imposed on the like product, commodity or article
thereafter imported to the Philippines under similar circumstances. The countervailing duty shall
be in addition to any ordinary duties, taxes and charges imposed by law on such imported
product, commodity or article. (Sec. 302 of the TCCP)
65. What is a Marking Duty?

Marking duty refers to a duty on ad valorem basis imposed for improperly marked articles. The
law requires that foreign importations must be marked in any official language of the Philippines
the name of the country of origin of the article. (Nague and UP Law Center)

66. What is the rationale for the imposition of a Marking Duty?

In order to protect consumers from the deceptive practice of passing of imported articles, as
coming from a particular country other than its actual country of origin. (Customs Memorandum
Order 121-88 dated October 13, 1988)

67. How much Marking Duty may be imposed?

The Commissioner of Customs may impose a Marking Duty not to exceed 5% ad valorem of the
articles subject to marking. (Sec. 303 of the TCCP)

68. What is a Discriminatory or Retaliatory Duty?

This is a duty imposed on imported goods whenever it is found as a fact that the country of
origin discriminates against the commerce of the Philippines in such a manner as to place the
commerce of the Philippines at a disadvantage compared with the commerce of any foreign
country. (Nague and UP Law Center)

69. When may a Safeguard Duty be imposed?

The Secretary of the Department of Trade and Industry in the case of non-agricultural products
or the Secretary of the Department of Agriculture in the case of agricultural products shall apply
a general safeguard measure upon a positive final determination of the Tariff Commission that a
product is being imported in to the country in increased quantities, whether absolute or relative
to the domestic production, as to be a substantial cause of serious injury or threat thereof to the
domestic industry; however in the case of non-agricultural products; the Secretary shall first
establish that the application of such safeguard measure will be in the public interest. (Republic
Act No. 8800)

70. May the DTI Secretary impose general safeguard measures in the absence of a positive final
determination by the Tariff Commission?

No, the plain meaning of Section 5 of Republic Act No. 8800 shows that it is the Tariff
Commission that has the power to make a "positive final determination." This power lodged in
the Tariff Commission, must be distinguished from the power to impose the general safeguard
measure which is properly vested on the DTI Secretary.

All in all, there are two condition precedents that must be satisfied before the DTI Secretary may
impose a general safeguard measure on grey Portland cement. First, there must be a positive
final determination by the Tariff Commission that a product is being imported into the country
in increased quantities (whether absolute or relative to domestic production), as to be a
substantial cause of serious injury or threat to the domestic industry. Second, in the case of non-
 agricultural products the Secretary must establish that the application of such safeguard
measures is in the public interest. (Southern Cross Cement Corporation vs. Philippine Cement
Manufacturers Corporation, GR No. 158540 dated July 8, 2004)

71. Who are the persons having police authority under the TCCP?

For the enforcement of the customs and tariff laws, the following persons are authorized to
effect searches, seizures and arrests comformably with the provisions of said laws:

a) Officials of the Bureau of Customs, district collectors, deputy collectors, police

officers, agents, inspectors and guards of the Bureau of Customs;
b) Officers of the Philippine Navy and other members of the Armed Forces of the
Philippines and national law enforcement agencies when authorized by the
Commissioner;
c) Official of the Bureau of Internal Revenue on all cases falling within the regular
performance of their duties, when then the payment of internal revenue taxes
are involved; and,
d) Officers generally empowered by law to effect arrests and execute processes of
courts, when acting under direction of the Collector. (Sec. 2203 of the TCCP)

72. Raul Boac (Boac) is a member of the Philippine National Police - Criminal Investigation and
Detection Group (PNP-CIDG). He and his team flagged down three (3) container vans with
alleged contraband in violation of Customs Laws. Boac and his members did not have any
written authority from the Commissioner of Customs or District Collector. Is Boac guilty of
violating Sec. 2203 (d) of the TCCP?

No, the act of flagging down the vehicles is not among those proscribed by Sec. 2203 of the
Tariff and Customs Code. Mere flagging down of the container vans is not punishable under the
said law.

In this case, the prosecution failed to show that Boac and his team members committed the acts
prohibited by Sec. 2203 of the Tariff and Customs Code. There is no such evidence, testimonial
or otherwise, that identifies Boac as responsible for the alleged illegal search. Hence, acquittal is
in order.

The jurisdiction of the Commissioner of Customs is clearly with regard to customs duties. Should
the PNP suspect anything, it should coordinate with the BOC and obtain the written authority
from the Collector of Customs in order to conduct searches, seizures, or arrests. Coordination is
emphasized in the laws. While it is an admitted fact that there was no such coordination
initiated by the PNP-CIDG in this instance, nevertheless, Boac and his team members cannot be
convicted under the Tariff and Customs Code since there is no evidence that they did actually
search the container vans. (Boac vs. People, GR No. 180597 dated November 7, 2008)

73. May a dwelling house be searched without a warrant pursuant to a customs law violation?

No, a dwelling house may be entered and searched only upon warrant issued by a judge or
justice of the peace, upon sworn application showing probable case and particularly describing
 the place to be searched and person or thing to be seized.

For the more effective discharge of his official duties, any person exercising the powers herein
conferred, may at anytime enter, pass through, or search any land or enclosure or any
warehouse, store or other building, not being a dwelling house.

A warehouse, store or other building or enclosure used for the keeping of storage of articles
does not become a dwelling house within the meaning hereof merely by reason of the fact that
a person employed as watchman lives in the place, nor will the fact that his family stays there
with him alter the case. (Secs. 2208 and 2209 of the TCCP)

74. When may customs seizures and forfeitures be initiated?

a) Discovery of unmanifested cargo under Sec. 1005 of the TCCP in relation to Sec.
2530 of the TCCP;
b) In case of undervaluation, misclassification and misdeclaration of imported
articles when prima facie fraud is presumed under Sec. 2503 of the TCCP and
those under Sec. 2530 of the TCCP;
c) Abandonment under Sec. 1801 of the TCCP;
d) Under the visitorial powers of the Bureau of Customs on imported articles
openly offered for sale under Sec. 2536 of the TCCP;
e) Upon failure to withdraw articles from the Customs Bonded Warehouse under
Sec. 1908 of the TCCP and thru those audit reports and violations of Customs
Bonded Warehouses; and,
f) Violation of Intellectual Property Rights under the Intellectual Property law and
pursuant to CAO 6-2002. (Nague)

75. What are some of the important doctrines laid down by the Supreme Court involving customs
seizures and forfeitures?

a) There is no question that Regional Trial Courts are devoid of any competence to
pass upon the validity or regularity of seizure and forfeiture proceedings conducted
by the Bureau of Customs and to enjoin or otherwise interfere with these
proceedings

The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive
jurisdiction to hear and determine all questions touching on the seizure and
forfeiture of dutiable goods. The Regional Trial Courts are precluded from assuming
cognizance over such matters even through petitions of certiorari, prohibition
or mandamus.

The rule that Regional Trial Courts have no review powers over such proceedings is
anchored upon the policy of placing no unnecessary hindrance on the government's
drive, not only to prevent smuggling and other frauds upon Customs, but more
importantly, 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 vs. CA, GR No. 104604 dated October 6, 1995)
b) 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.
(R.V. Marzan Freight, Inc. vs. CA, GR No. 128064 dated March 4, 2004)

c) The decision of the Collector of Customs in seizure proceedings, concerns

the res rather than the persona. The proceeding is a probe on contraband or illegally
imported goods. These merchandise violated the revenue law of the country, and as
such, have been prevented from being assimilated in lawful commerce until
corresponding duties are paid thereon and the penalties imposed and satisfied
either in the form of fine or of forfeiture in favor of the government who will
dispose of them in accordance with law. The importer or possessor is treated
differently. The fact that the administrative penalty be falls on him is an
inconsequential incidence to criminal liability. By the same token, the probable guilt
cannot be negated simply because he was not held administratively liable. The
Collector's final declaration that the articles are not subject to forfeiture does not
detract his findings that untaxed goods were transported in respondents' car and
seized from their possession by agents of the law. Whether criminal liability lurks on
the strength of the provision of the Tariff and Customs Code adduced in the
information can only be determined in a separate criminal action. Respondents'
exoneration in the administrative cases cannot deprive the State of its right to
prosecute. But under our penal laws, criminal responsibility, if any, must be proven
not by preponderance of evidence but by proof beyond reasonable doubt.

Considering, therefore, 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 nor in the imposition upon him of a penalty, proof beyond reasonable
doubt is not required in order to justify the forfeiture of the goods. In this case, the
degree of proof required is merely substantial evidence which means such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.
(Feeder International Line, Pte., Ltd. vs. CA, GR No. 94262 dated May 31, 1991)

d) The acquittal in a criminal proceeding is not a bar to a forfeiture proceeding. Thus, it

has been held that since the forfeiture proceedings is one in rem under which the
offense is attached primarily to the thing rather than the offender, the forfeiture
proceedings stands independent of, and wholly unaffected by, any criminal
proceeding in personam and is not barred by a conviction of the individual under a
criminal charge. (Acting Commissioner of Customs vs. CTA, GR No. 62636 dated April
27, 1984)

e) Forfeiture of seized goods in the Bureau of Customs is a proceeding against the

goods and not against the owner. It is in the nature of a proceeding in rem, i.e.,
directed against the res or imported articles and entails a determination of the
legality of their importation. In this proceeding, it is in legal contemplation the
property itself which commits the violation and is treated as the offender, without
reference whatsoever to the character or conduct of the owner. The issue here is
limited to whether the imported goods should be forfeited and disposed of in
accordance with law for violation of the Tariff and Customs Code. Hence, the ruling
of the District Collector in the forfeiture case, insofar as the aspect of fraud is
 concerned, is not conclusive; nor does it preclude the importer from invoking
absence of fraud in the redemption proceedings. (Transglobe International, Inc. vs.
CA, GR No. 126634 dated January 25, 1999)

76. What are the procedures involving seizure/forfeiture cases under the TCCP?

1. Issuance and Service of Warrant Sec. 2301 of the TCCP provides that Upon making any
seizure, the Collector shall issue a warrant for the detention of the property.
a. Determination of Probable Cause that the articles were imported or attempted to be
exported contrary to the TCCP and other related laws;
b. Issuance of Warrant of Seizure and Detention (WSD); and,
c. Service of WSD to the person who has temporary custody of the imported articles.
2. Seizure and Turnover of the RES; - Sec. 2301 of the TCCP owner/importer to secure immediate
release of his seized properties; Upon showing of a reasonable ground for legitimate use, by
posting a sufficient cash bond, subject to the following conditions:
i. Cash bond not less than the appraised value of the article plus fine, expenses, and costs
that may be adjudged in the case;
ii. No prima facie evidence of fraud attendant to the importation;
iii. Importation of article is not prohibited by law; and,
iv. Release under cash bond (Under RA 9135, surety bond and other sufficient instrument
is permitted) - has been approved by the Commissioner. (Customs Administrative Order
No. 9-93 dated November 16, 1993)
3. Description, Appraisal and Classification of Seized Articles Section 2305 of the TCCP provides
that the Collector shall also cause a list and particular description and/or classification of the
property seized xxx.;

4. Notification of the Seizure

a. Section 2303 of the TCCP. Notification to Owner or Importer. The Collector shall give the
owner or importer of the property or his agent a written notice of the seizure and shall
give him an opportunity to be heard in reference to the delinquency which was the
occasion of such seizure.
b. Section 2304 of the TCCP. Notification to Unknown Owner. Notice to an unknown
owner shall be effected by posting a notice for fifteen (15) days in the public corridor of
the customhouse of the district in which the seizure was made, and, in the discretion of
the Commissioner, by publication in a newspaper or by such other means as he shall
consider desirable.
c. Section 2306 of the TCCP. Proceedings in Case of Property Belonging to Unknown
Parties. If, within fifteen days after the notification prescribed in Sec. 2304 of the TCCP,
no owner or agent can be found or appears before the Collector, the latter shall declare
the property forfeited to the government to be sold at auction in accordance with law.

5. Hearing
a. Section 2307 of the TCCP. Settlement of Seizure Case by payment of fine or redemption
of forfeited property:
i. Case is pending before the Collector:
1. Subject to approval of the Commissioner;
2. There is no fraud;
 3. Importation is not absolutely prohibited or release is not contrary to
law;
4. the district collector may while the case is still pending, accept the
settlement of any seizure case provided that the owner, importer,
exporter, or consignee or his agent shall offer to pay to the collector a
fine imposed by him upon the property, or in case of forfeiture, the
owner, exporter, importer or consignee or his agent shall offer to pay
for the domestic market value of the seized article. or,
ii. if on appeal meaning the case is now with the Commissioner:
1. Same matter as i - The Commissioner may accept the settlement of
any seizure case on appeal in the same manner;
2. Upon payment of the fine or payment of the domestic market value the
property shall be forthwith released and all liability (except criminal
liability) which may or might attach to the property by virtue of the
offense which was the occasion of the seizure and all liability which
might have been incurred under any bond given by the owner or agent
in respect to such property shall thereupon be deemed to be
discharged.
b. Instances wherein settlement or redemption is not allowed:
1. Forfeiture has become final and executory;
2. Importation is attended with fraud;
3. The importation is absolutely prohibited; and,
4. Where the release of the property would be contrary to law; (Nague)

6. Collector of Customs (Collector) renders a decision:

Decision of Collector Adverse to the Claimant
Collector declares forfeiture of articles or fixes
a fine or take such other action as may be
proper (Sec. 2312)
Decision of Collector Adverse to the Government.
Published Value of imported article is less
than P5M automatic review by the
Commissioner of Customs (Commissioner)
(Sec. 2313);
Published Value of imported article is P5M or
more automatic review by the Secretary Of
Finance (Secretary) (Sec. 2313);
Records of the case are elevated within five
(5) days from the promulgation of the
decision of the Collector.

Claimant appeals to the Commissioner within
15 days from receipt of notice of decision;
Appeal by filing a Notice of Appeal with the
Collector copy furnished to the Commissioner.
Collector shall transmit all records of the
proceedings to the Commissioner; (Sec. 2313)
Published Value of imported article is less than
P5M Commissioner decides:
Commissioner decides in favor of the
Government Claimant must file a Petition
for Review within 30 days from receipt of the
Decision of the Commissioner with the Court
of Tax Appeals (CTA) Division;
Commissioner rules in favor of the Claimant
 Automatic review by the Secretary;
Commissioner does not rule within 30 days
from receipt of the records of the case
Automatic review by the Secretary; (Sec.
2313)

Claimant appeals to the Commissioner and Published Value of imported article is P5M or
the Commissioner decides: more Secretary decides:

Commissioner decides in favor of the Secretary rules in favor of the Government -

Claimant decision becomes Final and
Executory and is not subject to further
appeal; (Sec. 2313)
Commissioner decides in favor of the
Government - Claimant must file a Petition
for Review within 30 days from receipt of the
Decision of the Commissioner with the CTA
Division;
Claimant must file a Petition for Review
within 30 days from receipt of the Decision of
the Secretary with the CTA Division. (Sec.
2315)
Secretary rules in favor of the Claimant
decision becomes Final and Executory and is
not subject to further appeal. (Sec. 2313)
Secretary does not rule within 30 days from
receipt of records decision of the Collector
or Commissioner, as the case may be,
becomes Final and Executory and is not
subject to further appeal. (Sec. 2313)

77. When may the government exercise its right of compulsory acquisition?

In order to protect government revenues against the undervaluation of goods subject to ad

valorem duty, the Commissioner of Customs may acquire imported goods under question for a
price equal to their declare customs value plus any duties already paid on the goods, payment
for which shall be made within ten (10) working days from issuance of a warrant signed by the
Commissioner of Customs for the acquisition of such goods.

An importer who is dissatisfied with a decision of the Commissioner of Customs may, within
twenty (20) working days after the date on which notice of the decision is given, appeal to the
Secretary of Finance and thereafter if still dissatisfied, to the Court of Tax Appeals as provided
for in Section 2402 of the Tariff and Customs Code of the Philippines, as amended.

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

Nothing in this Section limits or affects any other powers of the Bureau of Customs with respect
to the disposition of the goods or any liability of the importer or any other person with respect
to an offense committed in the importation of the goods. (Sec. 2317 of the TCCP)
78. When may property be subjected to forfeiture under the TCCP?

Any vehicle, vessel or aircraft, cargo, article and other objects shall, under the following
conditions be subjected to forfeiture:

a. Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully in the
importation or exportation of articles or in conveying and/or transporting contraband or
smuggled articles in commercial quantities into or from any Philippine port or place. The mere
carrying or holding on board of contraband or smuggled articles in commercial quantities shall
be subject such vessel, vehicle, aircraft or any other craft to forfeiture; provided, That the vessel,
or aircraft or any other craft is not used as duly authorized common carrier and as such a carrier
it is not chartered or leased.

b. Any vessel engaging in the coastwise which shall have on board any article of foreign growth,
produce, or manufacture in excess of the amount necessary for sea store, without such article
having been properly entered or legally imported;

c. Any vessel or aircraft into which shall be transferred cargo unladen contrary to law prior to
the arrival of the importing vessel or aircraft at her port of destination;

d. Any part of the cargo, store or supplies of a vessel or aircraft arriving from a foreign port
which is unladen before arrival at the vessels or aircrafts port of destination and without
authority from the customs official; but such cargo, ship or aircraft stores and supplies shall not
be forfeited if such unlading was due to accident, stress of weather or other necessity and is
subsequently approved by the Collector;

e. Any article which is fraudulently concealed in or removed contrary to law from any public or
private warehouse, container yard or container freight station under customs supervision;

f. Any article the importation or exportation of which is effected or attempted contrary to law,
or any article of prohibited importation or exportation, and all other articles which, in the
opinion of the Collector, have been used, are or were entered to be used as instruments in the
importation or exportation of the former;

g. Unmanisfested article found on any vessel or aircraft if manifest therefore is required;

h. Sea stores or aircraft stores adjudged by the Collector to be excessive, when the duties
assessed by the Collector thereon are not paid or secured forthwith upon assessment of the
same;

i. Any package of imported article which is found by the examining official to contain any article
not specified in the invoice or entry, including all other packages purportedly containing
imported articles similar to those declared in the invoice or entry to be the contents of the
misdeclared package; Provided, That the Collector is of the opinion that the misdeclaration was
contrary to law;

j. Boxes, case, trunks, envelopes and other containers of whatever character used as receptacles
 or as device to conceal article which is subject to forfeiture under the tariff and customs laws or
which is so designated as to conceal the character of such articles;

k. Any conveyance actually being used for the transport of article subject to forfeiture under the
tariff and customs laws, with its equipage or trappings, and any vehicle similarly used, together
with its equipage and appurtenances including the beast, steam or other motive power drawing
or propelling the same. The mere conveyance of contraband or smuggled articles by such beast
or vehicle shall be sufficient cause for the outright seizure and confiscation of such beast or
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 his
agent in charge thereof at the time, has no knowledge of the unlawful act;

l. Any article sought to be imported or exported;

(1) Without going through a customhouse, whether the act was consummated, frustrated or
attempted;

(2) by failure to mention to a customs official, articles found in the baggage of a person arriving
from aboard;

(3) On the strength of a false declaration or affidavit executed by the owner, importer, exporter
or consignee concerning the importation of such article;

(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 article, and

(5) Through any other practice or device contrary to law by means of which such articles was
entered through a customhouse to the prejudice of the government. (Sec. 2530 of the TCCP)

Note, however, that: the forfeiture of the vehicle, vessel, or aircraft shall not be effected if it is
established that the owner thereof or his agent in charge of the means of conveyance used as
aforesaid has no knowledge of or participation in the unlawful act: Provided, however, That a
prima facie presumption shall exist against the vessel, vehicle or aircraft under any of the
following circumstances:

1. If the conveyance has been used for smuggling at least twice before;
2. If the owner is not in the business for which the conveyance is generally used; and,
3. If the owner is not financially in a position to own such conveyance. (Secs. 2530 and 2531
of the TCCP)

79. When may a vehicle, vessel or aircraft be subject to forfeiture under the TCCP?

a) Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully in the
importation or exportation of articles or in conveying and/or transporting contraband or
smuggled articles in commercial quantities into or from any Philippine port or place. The
mere carrying or holding on board of contraband or smuggled articles in commercial
quantities shall subject such vessel, vehicle, aircraft or any other craft to forfeiture;
 Provided, That the vessel, or aircraft or any other craft is not used as duly authorized
common carrier and as such a carrier it is not chartered or leased;
b) Any vessel engaging in the coastwise trade which shall have on board any article of foreign
growth, product or manufacture in excess of the amount necessary for sea stores, without
such article having been properly entered or legally imported;
c) Any conveyance actually being used for the transport of articles subject to forfeiture under
the tariff and customs laws, with its equipage or trappings, and any vehicle similarly used,
together with its equipage and appurtenances including the beast, steam or other motive
power drawing or propelling the same. The mere conveyance of contraband or smuggled
articles by such beast or vehicle shall be sufficient cause for the outright seizure and
confiscation of such beast or 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 his agent in charge thereof at the time has
no knowledge of the unlawful act. (Sec. 2530 of the TCCP)

Moreover, in Sec. 2531 of the TCCP, the forfeiture of the vehicle, vessel, or aircraft shall not be
effected if it is established that the owner thereof or his agent in charge of the means of
conveyance used as aforesaid has no knowledge of or participation in the unlawful act:
Provided, however, That a prima facie presumption shall exist against the vessel, vehicle or
aircraft under any of the following circumstances:

1. If the conveyance has been used for smuggling at least twice before;
2. If the owner is not in the business for which the conveyance is generally used;
and,
3. If the owner is not financially in a position to own such conveyance.

Note also that the burden of proof in seizure and forfeiture cases is with the claimant. (Sec. 2535
of the TCCP.)

80. Mr. Jose D. Cruz is a driver of a taxi cab. While in the Manila International Airport, he was
engaged by a passenger who loaded three (3) boxes in his taxi cab. When they were about to
depart, elements of the National Customs Police stopped the cab and upon investigation,
found that the three (3) boxes loaded therein contained articles smuggled out of the Manila
International Airport. As a consequence, the apprehending officers recommended that the
three (3) boxes, its contents and the taxi cab be seized and made subject of a forfeiture
proceeding under Section 2530 (k) of the Tariff and Customs Code as amended. Is the
recommendation correct? Why?

The recommendation to seize the taxi cab is not correct. Sec. 2530 k provides that the
forfeiture shall not be effected if it is established that the owner of the means of conveyance is
engaged as a common carrier or his agent at the time has no knowledge of the unlawful act. The
taxi cab is a common carrier, and we presume that the driver had no knowledge of the unlawful
act. (1979 CBLE Question Nague citing M. Tejam)

81. Will lack of knowledge by the owner that a vessel is being used illegally in the importation of
goods absolve the vessel from forfeiture?

No, pursuant to the Section 2530 of the TCCP, the vessel is clearly subject to forfeiture in favor
 of the Government. Forfeiture proceedings are in the nature of proceedings in rem (Vierneza vs.
Commissioner of Customs, 24 SCRA 394) and are directed against the res. The fact that private
respondent has allegedly no actual knowledge that M/B "Maria Victoria-P" was used illegally
does not render the vessel immune from forfeiture. This is so because the forfeiture
proceedings in this case was instituted against the vessel itself. Private respondent's defense
that he has no actual knowledge that the vessel was used illegally is personal to him but cannot
absolve the vessel from liability of forfeiture.

Moreover, Section 2530 of the TCCP prescribes in an unequivocal term the imposition of the
penalty of forfeiture in cases of unlawful importation of foreign articles regardless of whether
such importation occurred with or without the knowledge of the owner of the vessel.
(Commissioner of Customs vs. CTA, GR No. L-31733 dated September 20, 1985).

82. When are Protest Proceedings applicable in customs cases?

Customs protest may be availed in the following instances:

a) Findings by examiners/appraisers of the erroneous value and classification of

the imported articles; and,
b) Unfavorable decision of the Value and Classification Review Committee
(VCRC). (Nague)

Note, however, that the unfavorable decision of the VCRC may also be the subject of the
following remedies:

a) Appeal to the Commissioner within fifteen (15) days from receipt of the adverse
VCRC decision subject to the condition that the importer shall undergo
voluntary Post Entry Audit; (CMO 37-2001 dated December 7, 2001) or,
b) Appeal the adverse VCRC decision to the Central Valuation Classification Review
and Ruling Committee (CVCRRC). The decision of the CVCRRC is subject to one
(1) motion for reconsideration which should be filed within five (5) days from
receipt of the decision. When no motion for reconsideration is filed or when the
same is denied, the CVCRRC resolution shall become final at the Assessment
level. However, the aggrieved importer may pay under formal protest pursuant
to Section 2308 of the TCCP, as amended. (Please see procedure under No. 85
below) (CMO 7-2006 dated March 15, 2006).

83. What is the nature of a tax protest case under the TCCP?

A tax protest case, under the TCCP, involves a protest of the liquidation of import entries. A
liquidation is the final computation and ascertainment by the collector of the duties on
imported merchandise, based on official reports as to the quantity, character, and value thereof,
and the collectors own finding as to the applicable rate of duty; it is akin to an assessment of
internal revenue taxes under the National Internal Revenue Code where the tax liability of the
taxpayer is definitely determined. (Pilipinas Shell Petroleum Corporation vs. Commissioner of
Customs, G.R. No. 176380 dated June 18, 2009)
84. Pilipinas Shell (Shell) is engaged in the importation of petroleum products. It paid customs
duties and taxes through the use of Tax Credit Certificates (TCCs). Subsequently, the One
Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (the Center) informed Shell
that it was cancelling the said TCCs because they were found to be fraudulently obtained.
Accordingly, the Commissioner of Customs demanded payment of the unpaid tax. Shell
protested the cancellation of the TCCs and demand for payment through letters sent to the
Commissioner of Customs. Instead of acting on the letters, the Bureau of Customs filed a
collection case with the Regional Trial Court. Within 30 days from receipt of summons in the
collection case, Shell filed a petition for review with the Court of Tax Appeals.

a) Does the Court of Tax Appeals have jurisdiction over the case?

No, Section 7 of RA No. 1125, as amended, states:

Sec. 7. Jurisdiction. The CTA shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal xxx;

xxx xxx xxx

4. Decisions of the Commissioner of Customs in cases involving liability for

customs duties, fees or other money charges, seizure, detention, or release or
property affected, fines, forfeitures or other penalties in relation thereto, or
other matters arising under the Customs Law or other laws administered by the
Bureau of Customs;

These decisions of the respondent involving customs duties specifically refer to his decisions
on administrative tax protest cases, as stated in Section 2402 of the Tariff and Customs Code of
the Philippines (TCCP):

Section 2402. Review by Court of Tax Appeals. The party aggrieved by a ruling
of the Commissioner in any matter brought before him upon protest or by his
action or ruling in any case of seizure may appeal to the Court of Tax Appeals, in
the manner and within the period prescribed by law and regulations.

Unless an appeal is made to the Court of Tax Appeals in the manner and within the period
prescribed by laws and regulations, the action or ruling of the Commissioner shall be final and
conclusive.

A tax protest case, under the TCCP, involves a protest of the liquidation of import entries. A
liquidation is the final computation and ascertainment by the collector of the duties on
imported merchandise, based on official reports as to the quantity, character, and value thereof,
and the collectors own finding as to the applicable rate of duty; it is akin to an assessment of
internal revenue taxes under the National Internal Revenue Code where the tax liability of the
taxpayer is definitely determined.

In the present case, the facts reveal that Shell received three sets of letters:
a. the Centers November 3 letter, signed by the Secretary of Finance, informing it of the
cancellation of the TCCs;

b. the respondents November 19 letter requiring it to replace the amount equivalent to the
amount of the cancelled TCCs used by Shell; and,

c. the respondents collection letters issued through Atty. Valera, formally demanding the
amount covered by the cancelled TCCs.

None of these letters, however, can be considered as a liquidation or an assessment of Shells

import tax liabilities that can be the subject of an administrative tax protest proceeding
before the respondent whose decision is appealable to the CTA. Shells import tax liabilities
had long been computed and ascertained in the original assessments, and Shell paid these
liabilities using the TCCs transferred to it as payment. It is even an error to consider the letters
as a "reassessment" because they refer to the same tax liabilities on the same importations
covered by the original assessments. The letters merely reissued the original assessments that
were previously settled by Shell with the use of the TCCs. However, on account of the
cancellation of the TCCs, the tax liabilities of Shell under the original assessments were
considered unpaid; hence, the letters and the actions for collection. When Shell went to the
CTA, the issues it raised in its petition were all related to the fact and efficacy of the payments
made, specifically the genuineness of the TCCs; the absence of due process in the enforcement
of the decision to cancel the TCCs; the facts surrounding the fraud in originally securing the
TCCs; and the application of estoppel. These are payment and collection issues, not tax protest
issues within the CTAs jurisdiction to rule upon.

We note in this regard that Shell never protested the original assessments of its tax liabilities
and in fact settled them using the TCCs. These original assessments, therefore, have become
final, incontestable, and beyond any subsequent protest proceeding, administrative or
judicial, to rule upon.

b) Since the Court of Tax Appeals does not have jurisdiction over the case, what should have
been the proper remedy availed by Shell?

To be very precise, Shells petition before the CTA principally questioned the validity of the
cancellation of the TCCs a decision that was made not by the respondent, but by the Center.
As the CTA has no jurisdiction over decisions of the Center, Shells remedy against the
cancellation should have been a certiorari petition before the regular courts, not a tax protest
case before the CTA. Records do not show that Shell ever availed of this remedy. Alternatively,
as we held in Shell v. Republic of the Philippines, the appropriate forum for Shell under the
circumstances of this case should be at the collection cases before the RTC where Shell can put
up the fact of its payment as a defense.

Parenthetically, our conclusions are fully in step with what we held in Shell v. Republic that a
case becomes ripe for filing with the RTC as a collection matter after the finality of the
respondents assessment. We hereby confirm that this assessment has long been final, and
this recognition of finality removes all perceived hindrances, based on this case, to the
continuation of the collection suits. In Dayrit v. Cruz, we declared on the matter of collection
 that:

[A] suit for the collection of internal revenue taxes, where the assessment has already become
final and executory, the action to collect is akin to an action to enforce the judgment. No inquiry
can be made therein as to the merits of the original case or the justness of the judgment relied
upon. (Brion, J., Pilipinas Shell Petroleum Corporation vs. Commissioner of Customs, G.R. No.
176380 dated June 18, 2009)

85. What are the procedures involving protest cases under the TCCP?

1. Collector issues a ruling or decision / VCRC / CVCRRC issues decision;

2. Payment under Protest after final liquidation (Sec. 2308);
3. File a Protest with the Collector within 15 days from payment (Sec. 2308);
4. Failure to protest renders the action of the Collector final and conclusive (Sec. 2309);
5. Hearing within 15 days from receipt of the protest and the Collector a renders decision
within 30 days after hearing (Sec. 2312):

Decision of the Collector adverse to the
importer/owner (Sec. 2308)
Importer/owner appeals to the Commissioner
within 15 days from receipt of notice of
decision;
Appeal is made by filing a Notice of Appeal
with the Collector copy furnished to the
Commissioner. Collector shall transmit all
records of the proceedings to the
Commissioner; (Sec. 2313)
Decision of the Collector adverse to the
Government Case is automatically reviewed by
the Commissioner (Sec. 2315)
Commissioner decides in favor of the
importer/owner Automatic Review to the
Secretary; (Sec. 2315)
Commissioner decides in favor of the
Government importer/owner must file a
Petition for Review within 30 days from
receipt of the decision of the Commissioner
with the CTA Division; (Sec. 2402)
Commissioner does not decide within 30 days
from receipt of the records decision of the
Collector becomes Final and Executory and is
not subject to further appeal.; (Sec. 2315)

Importer/owner appeals to the Commissioner Automatic Review by the Secretary and the
and the Commissioner decides: Secretary decides:

Commissioner decides in favor of the Secretary decides in favor of the

importer/owner decision is automatically
appealed to the Secretary. (Sec. 2315 and
CAO 3-2002 dated January 2, 2002) [See
further procedure in the next column]
Commissioner decides in favor of the
Government importer/owner must file a
Petition for Review within 30 days from
receipt of the decision of the Commissioner
with the CTA Division; (Secs. 2402 and 2315)
Government importer/owner must file a
Petition for Review within 30 days from
receipt of the decision of the Secretary with
the CTA Division;
Secretary decides in favor of the
importer/owner decision becomes Final
and Executory and is not subject to further
appeal. (Sec. 2315)
Secretary does not decide within 30 days
decision of the Commissioner becomes Final
 and Executory and is not subject to further
appeal. (Sec. 2315).

86. What is the judicial procedure with respect to customs cases?

1. Appeal to the Court of Tax Appeals Division within 30 days from receipt of the decision via
Petition for Review under Rule 42 in the following cases:

a) Decisions of the Commissioner of Customs in cases involving liability for customs

duties, fees or other money charges, seizure, detention or release of property
affected, fines, forfeitures of other penalties in relation thereto, or other matters
arising under the Customs Law or other laws administered by the Bureau of
Customs;
b) Decisions of the Secretary of Finance on customs cases elevated to him
automatically for review from decisions of the Commissioner of Customs adverse
to the Government under Section 2315 of the Tariff and Customs Code; and,
c) Decisions of the Secretary of Trade and Industry, in the case of non-agricultural
product, commodity or article, and the Secretary of Agriculture, in the case of
agricultural product, commodity or article, involving dumping and countervailing
duties under Section 301 and 302, respectively, of the Tariff and Customs Code,
and safeguard measures under Republic Act No. 8800, where either party may
appeal the decision to impose or not to impose said duties;

2. Party aggrieved by the decision of the Court of Tax Appeals Division should file a motion for
reconsideration or new trial (mandatory) with the Court of Tax Appeals Division within 15 days
from receipt of the decision.

3. From a denial of the motion for reconsideration or new trial, the Party aggrieved may appeal to
the Court of Tax Appeals En Banc via Petition for review under Rule 43 within 15 days from
receipt of the said denial.

4. Party aggrieved by the decision of the Court of Tax Appeals En Banc may file a motion for
reconsideration or new trial (optional) within 15 days from receipt of the said decision.

5. Party aggrieved by the decision of the Court of Tax Appeals En Banc or denial of the motion for
reconsideration or new trial may file an appeal with the Supreme Court via Petition for Review
on Certiorari under Rule 45 within 15 days from receipt of said decision or denial.

87. What is the rationale for providing an automatic review involving the decision made by the
Collector which is adverse to the Government?

It is intended to protect the interest of the Government in the collection of taxes and customs
duties in those seizure and protest cases which, without the automatic review provided therein,
neither the Commissioner of Customs nor the Secretary of Finance would probably ever know
about. Without the automatic review by the Commissioner of Customs and the Secretary of
Finance, a collector in any of our country's far-flung ports, would have absolute and unbridled
discretion to determine whether goods seized by him are locally produced, hence, not dutiable
 or of foreign origin, and therefore subject to payment of customs duties and taxes. His decision,
unless appealed by the aggrieved party (the owner of the goods), would become final with 'the
no one the wiser except himself and the owner of the goods. The owner of the goods cannot be
expected to appeal the collector's decision when it is favorable to him. A decision that is
favorable to the taxpayer would correspondingly be unfavorable to the Government, but who
will appeal the collector's decision in that case certainly not the collector.

Evidently, it was to cure this anomalous situation (which may have already defrauded our
government of huge amounts of uncollected taxes), that the provision for automatic review by
the Commissioner of Customs and the Secretary of Finance of unappealed seizure and protest
cases was conceived to protect the government against corrupt and conniving customs
collectors. (Yaokasin vs. Commissioner of Customs, GR No. 84111 dated December 22, 1989)

88. What are the kinds of abandonment?

a) Express abandonment There is an express abandonment when the owner, importer or

consignee signifies with the Collector of Customs in writing his intention to abandon his
importation in favor of the government; and,
b) Implied abandonment There is an implied abandonment when:
i. The importer, owner, consignee or interested party after due notice, fails to file an
entry for the importation within a non-extendible period of thirty (30) days from the
date of the discharge of the last package from the vessel or aircraft; and,
ii. Having filed an entry for shipment, an interested party fails to claim his importation
within a non-extendible period of fifteen (15) days from the date of posting of the
notice to claim such importation. (Sec. 1801 of the TCCP)

89. What are the effects of abandonment?

a) Renunciation of all interest and property rights; and,

b) The abandoned article shall be ipso facto be deemed the property of the government and to
be disposed off in accordance with the TCCP.

However, abandonment shall not relieve an owner or importer from any criminal liability which may
arise from any violation of law committed in connection with the importation of the abandoned
article. (Sec. 1802 of the TCCP)
90. What is the form of a claim for refund in involving customs duties?

All claims for refund of duties shall be made in writing, and forwarded to the Collector to whom
such duties are paid, who upon receipt of such claim shall verify the same by the records of his
office, and if found to be correct and in accordance with law, shall certify the same to the
Commissioner with his recommendation together with all necessary papers and documents.
Upon receipt by the Commissioner of such certified claim he shall cause the same to be paid if
found correct. (Sec. 1708 of the TCCP)

91. Nestle imported several milk products and was assessed of higher customs duties. Nestle paid
the customs duties and seasonably filed a protest. The Companys protest was not acted upon
for almost six (6) years. Within the 6 year period under Article 1145 in relation to Article 2154
of the Civil Code (solutio indebiti), Nestle filed a claim for refund with the Court of Tax Appeals.
 Does Article 2154 and 1145 of the Civil Code apply to Nestles claim for refund?

The petitioner is mistaken in its contention that its claims for refund of allegedly overpaid
customs duties are governed by Article 2154 of the New Civil Code on quasi-contract, or the rule
on solutio indebiti, which prescribes in six (6) years pursuant to Article 1145 of the same Code.

Sections 2308 and 2309 of the Tariff and Customs Code provide that:

"Sec. 2308. Protest and Payment upon Protest in Civil Matter: 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 seizures cases, the
party adversely affected may protest such ruling or decision by presenting to
the Collector 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 his objection to the ruling or decision in question, together with
the reasons therefor. No protest shall be considered unless payment of the
amount due after final liquidation has first been made and the corresponding
docket fee, as provided for in Section 3301."

"Sec. 2309. Protest Exclusive Remedy in Protestable Case. In all cases subject to
protest, the interested party who desires to have the action of the collector
reviewed, shall make a protest, otherwise, the action of the collector shall be
final and conclusive against him, x x x. "

"SEC. 2312. Decision or Action by the collector in Protest and Seizure Cases.
When a protest in a proper form is presented in a case where protest is
required, the collector shall issue an order for hearing within fifteen (15) days
from receipt of the protest and hear the matter thus presented. Upon
termination of the hearing, the Collector shall render a decision within thirty
(30) days, and if the protest is sustained, in whole or in part, he shall make the
appropriate order, the entry reliquidated necessary, xxx,"

In the light of the abovecited provisions of the Tariff and Customs Code, it appears that in all
cases subject to protest, the claim for refund of customs duties may be foreclosed only when
the interested party claiming refund fails to file a written protest before the Collector of
Customs. This written protest which must set forth the claimant's objection to the ruling or
decision in question together with the reasons therefor must be made either at the time when
payment of the amount claimed to be due the government is made or within fifteen (15) days
thereafter. In conjunction with this right of the claimant is the duty of the Collector of Customs to
hear and decide such protest in accordance and within the period of time prescribed by the law.

Accordingly, once a written protest is seasonably filed with the Collector of Customs the failure
or inaction of the latter to promptly perform his mandated duty under the Tariff and Customs
Code should not be allowed to prejudice the right of the party adversely affected thereby.
Technicalities and legalisms, however exalted, should not be misused by the government to
keep money not belonging to it, if any is proven, and thereby enrich itself at the expense of the
tax payers. If the State expects its taxpayers to observe fairness and honesty in paying their
 taxes, so must it apply the same standard against itself in refunding excess payments, if any, of
such taxes. Indeed the State must lead by its own example of honor, dignity and uprightness.

Here, it is undisputed that the inaction of the Collector of Customs of Manila for nearly six (6)
years on the protests seasonably filed by the petitioner has caused the latter to immediately
resort to the CTA. The petitioner did so on the mistaken belief that its claims are governed by
the rule on quasi-contract or solutio indebiti which prescribes in six (6) years under Article 1145
of the New Civil Code.

This belief or contention of the petitioner is misplaced. In order for the rule on solutio
indebiti to apply it is an essential condition that petitioner must first show that its payment of
the customs duties was in "excess of what was required by the law at the time when the
subject sixteen (16) importations of milk and milk products were made. Unless shown
otherwise, the disputable presumption of regularity of performance of duty lies in favor of the
Collector of Customs.

In the present case, there is no factual showing that the collection of the alleged overpaid
customs duties was more than what is required of the petitioner when it made the aforesaid
separate importations. There is no factual finding yet by the government agency concerned that
petitioner is indeed entitled to its claim of overpayment and, if true, for how much it is entitled.
It bears stress that in determining whether or not petitioner is entitled to refund of alleged
overpayment of customs duties, it is necessary to determine exactly how much the Government
is entitled to collect as customs duties on the importations. Thus, it would only be just and fair
that the petitioner-taxpayer and the Government alike be given equal opportunities to avail of
the remedies under the law to contest or defeat each other's claim and to determine all matters
of dispute between them in one single case. If the State expects its taxpayers to observe fairness
and honesty in paying their taxes, so must it apply the same standard against itself in refunding
excess payments, if truly proven, of such taxes. Indeed, the State must lead by its own example
of honor, dignity and uprightness. (Nestle Philippines, Inc. vs. CA, GR No. 134114 dated July 6,
2001)

Note: It appears that there is no provision in the TCCP providing for a prescriptive period to file a
judicial refund case with the CTA. Based on the Nestle Case, the judicial claim for refund must be
filed after a decision has already been rendered by the Commissioner. In the Nestle Case,
because of the delay and inaction of the Collector to decide the refund/protest filed by Nestle
the Supreme Court remanded and allowed the CTA to take cognizance of the case even if the
Collector has not yet decided the refund/protest filed by Nestle. It also appears that in refund
cases, the procedure on customs protest must be followed.

92. In the case of an EPZA (now PEZA) registered enterprise filing a claim for refund of customs
duties, what is the prescriptive period to file the said claim?

This leads to another question well-worth resolving what is the prescriptive period which a
duly registered enterprise should observe in applying for a refund to which it is entitled under
the EPZA Law? The EPZA Law itself is silent on the matter, and the prescriptive periods under
the Tariff and Customs Code and other revenue laws are inapplicable, by specific mandate of
Section 17(1) of the EPZA Law. This does not mean though that prescription will not lie, as the
Civil Code provisions on solutio indebiti may find application. The Civil Code is not a customs
 and internal revenue law. The Court has in the past sanctioned the application of the provisions
on solutio indebiti in cases when taxes were collected thru error or mistake. Solutio indebiti is a
quasi-contract, thus the claim for refund must be commenced within six (6) years from date of
payment pursuant to Article 1145(2) of the New Civil Code. (Commissioner of Customs vs.
Philippine Phosphate Fertilized Corporation, GR No. 144440 dated September 1, 2004)

93. May manifest clerical errors committed in an invoice or entry be corrected in relation to the
computation of duties?

Yes, manifest clerical errors made in an invoice or entry, errors in return of weight, measure and
gauge, when duly certified to by the surveyor or examining official (when there are such officials
at the port), and errors in the distribution of charges on invoices not involving any question of
law and certified to by the examining official, may be corrected in the computation of duties, if
such errors be discovered before the payment of duties, or, if discovered within one year after
the final liquidation, upon written request and notice of error from the importer, or upon
statement of error certified by the Collector.

For the purpose of correcting errors specified in the next preceding paragraph the Collector is
authorized to reliquidate entries and collect additional charges, or to make refunds on
statement of error within the statutory time limit. (Sec. 1707 of the TCCP)

94. When is abatement or refund of customs duties allowed?

a) In the case of missing packages appearing on the manifest or bill of lading (Sec. 1702);
b) In the case of deficiency or absence of any article or part of its contents upon
production of proof that the shortage occurred before the arrival of the article in the
Philippines (Sec. 1703);
c) In the case of articles lost or destroyed after arrival while in customs custody (Sec.
1704); and,
d) In the case of dead or injured animals (Sec. 1705).

************Good Luck and God Bless************