2014 BAR

2013 BAR

Choose the correct answer. Smuggling - (1%)

On October 15, 2005, ABC Corp. imported 1,000 kilos of steel ingots
and paid customs duties and VAT to the Bureau of Customs on the
importation. On February 17, 2009, the Bureau of Customs, citing
provisions of the Tariff and Customs Code on post-audit, investigated
and assessed ABC Corp. for deficiency customs duties and VAT.

(A) does not extend to the entry of imported or exported articles by

means of any false or fraudulent invoice, statement or practices; the
entry of goods at less than the true weight or measure; or the filing of
any false or fraudulent entry for the payment of drawback or refund of
duties.
(B) is limited to the import of contraband or highly dutiable cargo
beyond the reach of customs authorities.
(C) is committed by 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 any manner facilitate the
transportation, concealment or sale of such article after importation,
knowing the same to have been imported contrary to law.

Is the Bureau of Customs correct? (7%)

MSI Corp. imports orange and lemon concentrates as raw materials for
the fruit drinks it sells locally. The Bureau of Customs (BOC) imposed a
1% duty rate on the concentrates. Subsequently, the BOC changed its
position and held that the concentrates should be taxed at 7% duty
rate. MSI disagreed with the ruling and questioned it in the CTA which
upheld MSI's position. The Commissioner of Customs appealed to the
CTA en bane without filing a motion for reconsideration.
Resolve the appeal. (1%)
(A) The appeal should be dismissed because a motion for
reconsideration is mandatory.
(B) The appeal should be dismissed for having been filed out
of time.
(C) The appeal should be given due course since a motion
for reconsideration is a useless exercise.
(D) The appeal should be upheld to be fair to the
government which needs taxes.
Mr. Z made an importation which he declared at the Bureau of
Customs (BOC) as "Used Truck Replacement Parts". Upon
investigation, the container vans contained 15 units of Porsche and
Ferrari cars.
Characterize Mr. Z's action. (1%)
(A) Mr. Z committed smuggling.
(B) Mr. Z did not commit smuggling because he submitted
his shipment to BOC examination.
(C) Mr. Z only made a misdeclaration, but did not commit
smuggling.
(D) Mr. Z did not commit smuggling because the shipment
has not left the customs area.

TARIFF AND CUSTOMS LAWS

ORGANIZATION AND FUNCTIONS OF THE BUREAU OF INTERNAL

REVENUE

discriminatory duty, and the marking duty, and under the Safeguard
Measures Act (SMA) additional tariffs as safeguard measures.

6.
The special customs duties are imposed for the
protection of consumers and manufacturers, as well as Philippine
products.

TARIFF AND CUSTOMS CODE

1.
When does importation begin, and why is it
important to know whether importation has already begun or not ?
SUGGESTED ANSWER:
Importation begins when the
conveying vessel or aircraft enters the jurisdiction of the Philippines with
intention to unlade therein. (Sec. 1202, TCCP)
The jurisdiction of the Bureau of Customs to enforce the
provisions of the TCCP including seizure and forfeiture also begins from
the beginning of importation. Thus, the Bureau of Customs obtains
jurisdiction over imported articles only after importation has begun.

7.
Dumping duty is an additional special duty
amounting to the difference between the export price and the
normal value of such product, commodity or article (Sec. 301 (s)
(1), TCC, as amended by Rep. Act No. 8752, Anti-Dumping Act of
1999.) 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
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 (s) (5), TCC, as amended by Rep.
Act No. 8752, Anti-Dumping Act of 1999]

8. When is the anti-dumping duty imposed ?

2.
When is importation deemed terminated and
why is it important to know whether importation has already
ended?
SUGGESTED ANSWER: Importation is deemed terminated
upon payment of the duties, taxes and other charges due upon the
agencies, or secured to be paid, at the port of entry and the legal permit
for withdrawal shall have been granted.
In case the articles are free of duties, taxes and other charges,
until they have legally left the jurisdiction of the customs. (Sec. 1202,
TCCP) The Bureau of Customs loses jurisdiction to enforce the TCCP
and to make seizures and forfeitures after importation is deemed
terminated.

3. The flexible tariff clause is a provision in the Tariff

and Customs Code, which implements the constitutionally delegated
power to the Congress to further delegate to the President of the
Philippines, in the interest of national economy, general welfare and/or
national security upon recommendation of the NEDA (a) to increase,
reduce or remove existing protective rates of import duty, provided that,
the increase should not be higher than 100% ad valorem; (b) to establish
import quota or to ban imports of any commodity, and (c) to impose
additional duty on all imports not exceeding 10% ad valorem, among
others.

4.
Customs duties defined. 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 Phils. v. Court of Appeals, et al., G.R. No.
134114, July 6, 2001)

5. Special customs duties are additional import duties

imposed on specific kinds of imported articles under certain
conditions. The special customs duties under the Tariff and Customs
Code (TCCP) are the anti-dumping duty, the countervailing duty, the

SUGGESTED ANSWER: The anti-dumping duty is imposed

a. Where a product, commodity or article of commerce is
exported into the Philippines at a price less than its normal value when
destined for domestic consumption in the exporting country,
b. and such exportation is causing or is threatening to cause
material injury to a domestic industry, or materially retards the
establishment of a domestic industry producing the like product. [Sec.
301 (a), TCC, as amended by Rep. Act No. 8752, Anti-Dumping Act of
1999]

9.
Normal value for purposes of imposing the antidumping duty is the comparable price at the date of sale of like product,
commodity, or article in the ordinary course of trade when destined for
consumption in the country of export. [Sec. 301 (s) (3 ), TCC, as
amended by Rep. Act No. 8752, Anti-Dumping Act of 1999]

10.
The imposing authority for the anti-dumping
duty is 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, after formal investigation and affirmative finding of the Tariff
Commission. [Sec. 301 (a), TCC, as amended by Rep. Act No. 8752,
Anti-Dumping Act of 1999]

11.
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 Tariff Commission. [Sec. 301 (a), TCC, as amended by Rep. Act
No. 8752, Anti-Dumping Act of 1999] Thus, the cabinet secretaries
could not contravene the recommendation of the Tariff Commission.
They could not impose the anti-dumping duty or any special customs
duty without the favorable recommendation of the Tariff Commission.

12. In the determination of whether to impose the antidumping duty, the Tariff Commission, may consider among others,
the effect of imposing an anti-dumping duty on the welfare of the
consumers and/or the general public, and other related local
industries. (Sec. 301 (a), TCC, as amended by Rep. Act No. 8752,
Anti-Dumping Act of 1999)

13. The amount of anti-dumping duty that may be imposed

is the difference between the export price and the normal value of
such product, commodity or article. (Sec. 301 (s) (1), TCC, as
amended by Rep. Act No. 8752, Anti-Dumping Act of 1999)
The anti-dumping duty shall be equal to the margin of dumping
on such 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.

14. What are countervailing duties and when are they

imposed ?
SUGGESTED ANSWER: Countervailing duties are additional
customs duties imposed on any product, commodity or article of
commerce which is granted directly or indirectly by the government in the
country of origin or exportation, any kind or form of specific subsidy upon
the production, manufacture or exportation of such product commodity or
article, and the importation of such subsidized product, commodity, or
article has caused or threatens to cause material injury to a domestic
industry or has materially retarded the growth or prevents the
establishment of a domestic industry. (Sec. 302, TCCP as amended by
Section 1, R.A. No. 8751)

15. The imposing authority for the countervailing duties is

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.
Even when all the requirements for the imposition have been
fulfilled, the decision on whether or not to impose a definitive antidumping duty remains the prerogative of the Tariff Commission. (Sec.
301 (a), TCC, as amended by Rep. Act No. 8752, Anti-Dumping Act of
1999)

19. The marking duty is equivalent to five percent (5%) ad

valorem.

20. A discriminatory duty is a new and additional customs

duty imposed upon articles wholly or in part the growth or product of, or
imported in a vessel, of any foreign country which imposes, directly or
indirectly, upon the disposition or transportation in transit through or reexportation from such country of any article wholly or in part the growth
or product of the Philippines, any unreasonable charge, exaction,
regulation or limitation which is not equally enforced upon like articles of
every foreign country, or discriminates against the commerce of the
Philippines, directly or indirectly, by law or administrative regulation or
practice, by or in respect to any customs, tonnage, or port duty, fee,
charge, exaction, classification, regulation, condition, restriction or
prohibition, in such manner as to place the commerce of the Philippines
at a disadvantage compared with the commerce of any foreign country.

21.
The President of the Philippines imposes the
discriminatory duties.

22. Safeguard measures are emergency measures,

including tariffs, to protect domestic industries and producers from
increased imports which inflict or could inflict serious injury on them.
The CTA is vested with jurisdiction to review decisions of the
Secretary of Trade and Industry imposing safeguard measures as
provided under Rep. Act No. 8800 the Safeguard Measures Act (SMA).
(Southern Cross Cement Corporation v. The Philippine Cement
Manufacturers Corp., et al., G. R. No. 158540, July 8, 2004)
The DTI Secretary cannot impose the safeguard measures if the
Tariff Commission does not favorably recommend its imposition.

23.
Imposing authority for safeguard measures.
The imposing authority for the countervailing duties is 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.

24.
Safeguards measures that may be imposed.
Additional tariffs, import quotas or banning of imports.
16. The countervailing duty is equivalent to the value of the
specific subsidy.

17. Marking duties are the additional customs duties

imposed on foreign articles (or its containers if the article itself cannot be
marked), not marked in any official language in the Philippines, in a
conspicuous place as legibly, indelibly and permanently in such manner
as to indicate to an ultimate purchaser in the Philippines the name of the
country of origin.

18. The Commissioner of Customs imposes the marking

duty.

25. The basis of dutiable value of merchandise that is

subject to ad valorem customs duties the transaction value, which
shall be the price actually paid or payable for the goods when sold for
export to the Philippines, adjusted by adding certain cost elements to the
extent that they are incurred by the buyer but are not included in the
price actually paid or payable for the imported goods, and may include
the following:
a.

Cost of containers and packing,

b.

Insurance, and

c.
Freight. (Sec. 201, TCC as amended by Sec. 1,
Rep. Act No. 9135)

 26. The above transaction value is the primary method

of determining dutiable value. If the transaction value of the
imported article could not be determined using the above, the
following alternative methods should be used one after the other:
a.

Transaction value of identical goods

b.

Transaction value of similar goods

c.

Deductive method

d.

Computed method

e.

Fallback method

SUGGESTED ANSWER: No. Sec. 3601 does not define a

crime. It merely provides, inter alia, the administrative remedies which
can be resorted to by the Bureau of Customs when seizing dutiable
articles found the baggage of any person arriving in the Philippines which
is not included in the accomplished baggage declaration submitted to the
customs authorities, and the administrative penalties that such person
must pay for the release of such goods if not imported contrary to law.
Such administrative penalties are independent of the criminal
liability for smuggling that may be imposed under Sec. 3601, and other
provisions of the TCC which can only be determined after the
appropriate criminal proceedings, prescinding from the outcome in any
administrative case that may have been filed and disposed of by the
customs authorities.
Indeed the second paragraph of Sec. 2505 provides that nothing
shall prevent the bringing of a criminal action against the offender for
smuggling under Section 3601. (Jardeleza v. People, G. R. No. 165265,
February 6, 2006)

27.
How and to whom should claims for refund of
customs duties be made ?
SUGGESTED ANSWER: All claims for refund of duties shall be
made in writing and forwarded to the Collector of Customs 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 of Customs 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, TCC)

28.

What is mean by the term entry in Customs

Law ?
SUGGESTED ANSWER: It has a triple meaning.
a.the documents filed at the Customs house;
b.the submission and acceptance of the documents; and
c. Customs declaration forms or customs entry forms required
to be accomplished by passengers of incoming vessels or passenger
planes as envisaged under Sec. 2505 of the TCCP (Failure to declare
baggage). (Jardeleza v. People, G.R. No. 165265, February 6, 2006)

29. A flight stewardess arrived from Singapore. Upon her

arrival she was asked whether she has anything to declare. She
answered none, and she submitted her Customs Baggage
Declaration Form which she accomplished and signed with
nothing or written on the space for items to be declared. When her
hanger bag was examined some pieces of jewelry were found
concealed within the lining of said bag.
She was then convicted of violating of Sec. 3601 of the
Tariff and Customs Code for unlawful importation which penalizes
any person who shall fraudulently import or bring into the
Philippines any article contrary to law.
She now appeals claiming that lower court erred n
convicting her under Sec. 3601 when the facts alleged both in the
information and those shown by the prosecution constitute the
offense under Sec. 2505 Failure to Declare Baggage, of which she
was acquitted. Is she correct ?

29-A. Payment is not a defense in smuggling. When upon

trial for violation of this section, the defendant is shown to have
possession of the article in question, possession shall be deemed
sufficient evidence to authorize conviction, unless the defendant shall
explain the possession to the satisfaction of the court: Provided,
however, That payment of the tax due after apprehension shall not
constitute a valid defense in any prosecution under this section. (last
par., Sec. 3601, TCC)

30.

How is smuggling committed ?

SUGGESTED ANSWER:
person who:

Smuggling is committed by any

a.fraudulently imports or brings into the country any article

contrary to law;
b.assists in so doing any article contrary to law; or
c. receives, conceals, buys, sells or in any manner facilitates
the transportation, concealment or sale of such goods after
importation, knowing the same to have been imported contrary to law.
(Jardeleza v. People, G.R. No. 165265, February 6, 2006 citing
Rodriguez v. Court of Appeals, G. R. No. 115218, September 18, 1995,
248 SCRA 288, 296)
NOTES AND COMMENTS:
a.Importation consists of bringing an article into the country
from the outside. Importation begins when the conveying vessel or
aircraft enters the jurisdiction of the Philippines with intention to unload
therein.
b.When unlawful importation is complete. In the absence
of a bona fide intent to make entry and pay duties when the prohibited
article enters the Philippine territory. Importation is complete when the
taxable, dutiable commodity is brought within the limits of the port of
entry. Entry through a custom house is not the essence of the act.
(Jardeleza v. People, G.R. No. 165265, February 6, 2006)

31. 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. RTCs are precluded from assuming cognizance
over such matters even through petitions of certiorari, prohibition
or mandamus. (The Bureau of Customs, et al., v. Ogario, et al., G.R.
No. 138081, March 20, 2000)
What is the rationale for this doctrine ?
SUGGESTED ANSWER:
a.
Regional Trial Courts have no jurisdiction to replevin
a property which is subject to seizure and forfeiture proceedings for
violation of the Tariff and Customs Code otherwise, actions for forfeiture
of property for violation of the Customs laws could easily be undermined
by the simple device of replevin. (De la Fuente v. De Veyra, et al., 120
SCRA 455)
b.
The doctrine of exclusive customs jurisdiction over
customs cases to the exclusion of the RTCs is anchored upon the policy
of placing no unnecessary hindrance on the governments drive, not only
to prevent smuggling and other frauds upon Customs,
c. 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, et al., v. Court of Appeals, et al., and companion case, 249 SCRA
35, 43)
d.The issuance by regular courts of writs of preliminary
injunction in seizure and forfeiture proceedings before the Bureau of
Customs may arouse suspicion that the issuance or grant was for
consideration other than the strict merits of the case. (Zuno v. Cabredo,
402 SCRA 75 [2003])
e. Under the doctrine of primary jurisdiction, the Bureau of
Customs has exclusive administrative jurisdiction to conduct searches,
seizures and forfeitures of contraband without interference from the
courts. It could conduct searches and seizures without need of a judicial
warrant except if the search is to be conducted in a dwelling place.
Where an administrative office has obtained a technical
expertise in a specific subject, even the courts must defer to this
expertise.

32.
A claiming to be the owner of a vessel which
is the subject of customs warrant of seizure and detention sought
the intercession of the RTC to restrain the Bureau of Customs
from interfering with his property rights over the vessel. Would
the suit prosper?
SUGGESTED ANSWER: No. His remedy was not with the
RTC but with the CTA, as issues of ownership of goods in the custody
of customs officials are within the power of the CTA to determine.

hearings. (The Bureau of Customs, et al., v. Ogario, et al., G.R. No.

138081, March 20, 2000)

34. The Tariff and Customs Code allows the Bureau of Customs
to resort to the administrative remedy of seizure, such as by
enforcing the tax lien on the imported article when the imported
articles could be found and be subject to seizure and forfeiture.

35. The Tariff and Customs Code allows the Bureau of Customs
to resort to the judicial remedy of filing an action in court when the
imported articles could not anymore be found.

36.
Instances where there is no right of redemption
of seized and forfeited articles:
a. There is fraud;
b. The importation is absolutely prohibited, or
c. The release of the property would be contrary to law.
(Transglobe International, Inc. v. Court of Appeals, et al., G.R. No.
126634, January 25, 1999)

37. In Aznar v. Court of Tax Appeals, 58 SCRA 519, reiterated

in Farolan, Jr. v. Court of Tax appeals, et al., 217 SCRA 298, the
Supreme Court clarified that the fraud contemplated by law must be
actual and not constructive. It must be intentional, consisting of
deception, willfully and deliberately done or resorted to in order to induce
another to give up some right.

38.

Requisites for forfeiture of imported goods:

a.
Wrongful making by the owner, importer, exporter or
consignee of any declaration or affidavit, or the wrongful making or
delivery by the same person of any invoice, letter or paper all touching
on the importation or exportation of merchandise.
b.
the falsity of such declaration, affidavit, invoice,
letter or paper; and
c.
an intention on the part of the importer/consignee to
evade the payment of the duties due. (Republic, etc., v. The Court of
Appeals, et al., G.R. No. 139050, October 2, 2001)

The Collector of Customs has exclusive jurisdiction over

seizure and forfeiture proceedings and trial courts are precluded from
assuming cognizance over such matters even through petitions for
certiorari, prohibition or mandamus. (Commissioner of Customs v.
Court of Appeals, et al., G. R. Nos. 111202-05, January 31, 2006)

39.
On January 7, 1989, the vessel M/V Star Ace,
coming from Singapore laden with cargo, entered the Port of San
Fernando, La Union for needed repairs. When the Bureau of
Customs later became suspicious that the vessels real purpose in
docking was to smuggle cargo into the country, seizure
proceedings were instituted and subsequently two Warrants of
Seizure and Detention were issued for the vessel and its cargo.

33.
The customs authorities do not have to prove to
the satisfaction of the court that the articles on board a vessel were
imported from abroad or are intended to be shipped abroad before
they may exercise the power to effect customs searches, seizures,
or arrests provided by law and continue with the administrative

Cesar does not own the vessel or any of its cargo but
claimed a preferred maritime lien. Cesar then brought several
cases in the RTC to enforce his lien. Would these suits prosper ?

SUGGESTED ANSWER: No. The Bureau of Customs having

first obtained possession of the vessel and its goods has obtained
jurisdiction to the exclusion of the trial courts.
When Cesar has impleaded the vessel as a defendant to
enforce his alleged maritime lien, in the RTC, he brought an action in
rem under the Code of Commerce under which the vessel may be
attached and sold.
However, the basic operative fact is the actual or constructive
possession of the res by the tribunal empowered by law to conduct the
proceedings. This means that to acquire jurisdiction over the vessel, as
a defendant, the trial court must have obtained either actual or
constructive possession over it. Neither was accomplished by the RTC
as the vessel was already in the possession of the Bureau of Customs.
(Commissioner of Customs v. Court of Appeals, et al., G. R. Nos.
111202-05, January 31, 2006)

and Customs Code. .(Transglobe International, Inc. v. Court of Appeals,

et al., G.R. No. 126634, January 25, 1999)
Forfeiture of seized goods in the Bureau of Customs is a
proceeding against the goods and not against the owner. (Asian
Terminals, Inc. v. Bautista-Ricafort, G .R. No. 166901, October 27, 2006
citing Transglobe)

40. The Collector of Customs upon probable cause that the

articles are imported or exported, or are attempted to be imported
or exported, in violation of the tariff and customs laws shall issue a
warrant of seizure. (Sec. 6, Title III, CAO No. 9-93)
If the search and seizure is to be conducted in a dwelling place,
then a search warrant should be issued by the regular courts not the
Bureau of Customs.

NOTES AND COMMENTS:

a.
Forfeiture of seized goods in the Bureau of
Customs is in the nature of a proceeding in rem, i.e. directed against
the res or imported goods 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 is limited to whether the imported goods should be
forfeited and disposed of in accordance with law for violation of the Tariff

There may be instances where no warrants issued by the

Bureau of Customs or the regular courts is required, as in search and
seizures of motor vehicles and vessels.

41. Smuggled goods seized by virtue of a court warrant

should be surrendered to the court that issued the warrant and not
to the Bureau of Customs because the goods are in custodia legis.