TAXATION LAW

REVIEW
A Report on Customs
and Tariff

Submitted by:

Guardian, Abegail

Sanchez, Troy (Refresher)

Punzalan, Sharon (Refresher)

Vergel de Dios, Ramon Miguel (Refresher)

Submitted to:

Atty. Rosario Bernaldo

 CUSTOMS AND TARIFF

I. APPLICABLE LAW
P.D. No. 1464 - The Tariff and Customs Code of the Philippines (TCCP) as amended by:
1. R.A. No. 8751 (Countervailing Duties)
2. R.A. No. 8752 (Anti-Dumping Act of 1999)
3. R.A. No. 9135
DUTIES, POWERS, AND
JURISDICTION OF BUREAU
OF CUSTOMS
As reported by:
Troy Sanchez (Refresher)
II. DUTIES, POWERS AND JURISDICTION

A. Officials of the Bureau of Customs

Section 601. Chief Officials of Bureau of Customs. The Bureau of Customs shall have one
chief and one assistant chief, to be known respectively at the Commissioner (hereinafter known
as the "Commissioner") and Assistant Commissioner of Customs, who shall each receive an
annual compensation in accordance with the rates prescribed by existing laws. The Assistant
Commissioner of Customs shall be appointed by the proper department head.

B. Functions of the Bureau of Customs

Sec. 602. Functions of the Bureau. The general duties, powers and jurisdiction of the bureau
shall include:

a. The assessment and collection of the lawful revenues from imported articles and all
other dues, fees, charges, fines and penalties accruing under the tariff and customs laws.

b. The prevention and suppression of smuggling and other frauds upon the customs.

c. The supervision and control over the entrance and clearance of vessels and
aircraft engaged in foreign commerce.

d. The general supervision, control and regulation of vessels engaged in the carrying
of passengers and freight or in towage in coastwise trade and in the bays and rivers of
the Philippines.

e. The prohibition and suppression of unnecessary noises, such as explosion of

gasoline engines, the excessive blowing of whistles or sirens, and other needless and
disturbing sounds made by water craft in the ports of the Philippines or in parts of
rivers included in such ports.

f. The exclusion, if the conditions of traffic should at any time so require, of vessels of
more than one hundred and fifty tons from entering, berthing or mooring in the Pasig
River.

g. The admeasurement, registration, documenting and licensing of vessels built or

owned in the Philippines, the recording of sales, transfers and encumbrances of such
vessels, and the performance of all the duties pertaining to marine registry.

h. The inspection of Philippine vessels, and supervision over the safety and
sanitation of such vessels.

i. The enforcement of the lawful quarantine regulations for vessels entering

Philippine ports.
 j. The enforcement of the tariff and customs laws and all other laws, rules and
regulations relating to the tariff and customs administration.

k. The licensing of marine officers who have qualified in the examination required
by law to be carried on Philippine vessels, the determination of the qualifications of
pilots, the regulation of this service, and the fixing of the fees which they may charge.

l. The supervision and control over the handling of foreign mails arriving in the
Philippines, for the purpose of the collection of the lawful duty on dutiable articles thus
imported and the prevention of smuggling through the medium of such mails.

C. Territorial Jurisdiction

Sec. 603. Territorial Jurisdiction. For the due and effective exercise of the powers conferred
by law and to the extent requisite therefor, said bureau shall have the right of supervision and
police authority over all seas within the jurisdiction of the Philippines and over all coasts,
ports, airports, harbors, bays, rivers and inland waters navigable from the sea.

When a vessel becomes subject to seizure by reason of an act done in Philippine waters in
violation of the tariff and customs laws, a pursuit of such vessel begun within the
jurisdictional waters may continue beyond the maritime zone, and the vessel may be seized
on the high sea. Imported articles which may be subject to seizure for violation of the tariff and
customs laws may be pursued in their transportation in the Philippines by land, water or air and
such jurisdiction exerted over it at any place therein as may be necessary for the due
enforcement of the law.

D. Jurisdiction over Premises Used for Customs Purposes

Sec. 604. Jurisdiction over Premises Used for Customs Purposes -The Bureau of Customs shall,
for customs purposes, have exclusive control, direction and management of custom-houses,
warehouses, offices, wharves, and other premises in the respective ports of entry, in all cases
without prejudice to the general police powers of the city or municipality wherein such premises.

E. Power of the President to Subject Premises to Jurisdiction of the Bureau of Customs

Sec. 606. Power of the President to Subject Premises to Jurisdiction of Bureau of Customs.
When any public wharf, landing place, street or land, not previously under the jurisdiction of the
Bureau of Customs, in any port of entry, is necessary or desirable for any proper customs
purpose, the President of the Philippines may, by executive order, declare such premises to be
under the jurisdiction of the Bureau of Customs, and thereafter the authority of such Bureau in
respect thereto shall be fully effective.
When any public wharf, landing place, street or land, not previously under the jurisdiction of the
Bureau of Customs, in any port of entry, is necessary or desirable for any proper customs
purpose, the President of the Philippines may, by executive order, declare such premises to be
under the jurisdiction of the Bureau of Customs, and thereafter the authority of such Bureau in
respect thereto shall be fully effective.

F. Right of Peace Officers to Enter Enclosure

Sec. 2208. Right of Police Officer to Enter Inclosure. 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 inclosure or any warehouse, store or other building, not being a
dwelling house.

A warehouse, store or other building or inclosure 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.

Sec. 2208. Right of Police Officer to Enter Inclosure.

General Rule: Persons exercising police authority under the customs laws may effect
search and seizures without a search warrant in the enforcement of customs laws. (See
Sec. 2208, TCC)

Exception: In the case of a dwelling house (Pacis etc. vs. Pamaran, March 15, 1974).

Reason: On grounds of practicality.

G.R. No. 138081. March 30, 2000, THE BUREAU OF CUSTOMS (BOC) and THE
ECONOMIC INTELLIGENCE AND INVESTIGATION BUREAU (EIIB), petitioners, vs.
NELSON OGARIO and MARK MONTELIBANO, respondents.

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 hearings. As the Court held in Ponce Enrile v. Vinuya:

The governmental agency concerned, the Bureau of Customs, is vested with

exclusive authority. Even if it be assumed that in the exercise of such exclusive
competence a taint of illegality may be correctly imputed, the most that can be
said is that under certain circumstances the grave abuse of discretion conferred
may oust it of such jurisdiction. It does not mean however that correspondingly a
 court of first instance is vested with competence when clearly in the light of the
above decisions the law has not seen fit to do so.

The proceeding before the Collector of Customs is not final. An appeal lies to the
Commissioner of Customs and thereafter to the Court of Tax Appeals. It may
even reach this Court through the appropriate petition for review. The proper
ventilation of the legal issues raised is thus indicated. Certainly, a court of first
instance is not therein included. It is devoid of jurisdiction.

G. Search of Dwelling

Sec. 2209. Search of Dwelling House. 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.

H. Right to Search Vessels or Aircrafts and Persons or Articles Conveyed?

Sec. 2210. Right to Search Vessels or Aircrafts and Persons or Articles Conveyed Therein. - It
shall be lawful for any official or person exercising police authority under the provisions of this
Code to go abroad any vessel or aircraft within the limits of any collection to go aboard any
vessel or aircraft within the limits of any collection district, and to inspect, search and examine
said vessel or aircraft and any trunk, package, box or envelope on board, and to search any
person on board the said vessel or aircraft and to this end to hail and stop such vessel or aircraft
if under way, to use all necessary force to compel compliance; and if it shall appear that any
breach or violation of the customs and tariff laws of the Philippines has been committed,
whereby or in consequence of which such vessels or aircrafts, or the article, or any part thereof,
on board of or imported by such vessel or aircraft, is liable to forfeiture, to make seizure of the
same or any part thereof.

The power of search hereinabove given shall extend to the removal of any false bottom,
partition, bulkhead or other obstruction, so far as may be necessary to enable the officer to
discover whether any dutiable or forfeitable articles may be concealed therein.

No proceeding herein shall give rise to any claim for the damage thereby caused to article or
vessel or aircraft.

I. Right to Search Vehicles, Beasts and Persons

Sec. 2211. Right to Search Vehicles, Beasts and Persons. It shall also be lawful for a person
exercising authority as aforesaid to open and examine any box, trunk, envelope or other
container, wherever found where he has reasonable cause to suspect the presence therein of
dutiable or prohibited article or articles introduced into the Philippines contrary to law, and
likewise to stop, search and examine any vehicle, beast or person reasonably suspected of
holding or conveying such article as aforesaid.

J. Search of Persons Arriving From Foreign Countries

Sec. 2212. Search of Persons Arriving From Foreign Countries. All persons coming into the
Philippines from foreign countries shall be liable to detention and search by the customs
authorities under such regulations as may be prescribed relative thereto.

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

K. Cases on Search and Seizure

1. G.R. No. 104604; October 6, 1995; NARCISO O. JAO and BERNARDO M. EMPEYNADO,
petitioners, vs. COURT OF APPEALS; COMMISSIONER OF CUSTOMS; COLLECTOR OF
CUSTOMS, Port of Manila; Col. SINDULFO R. SEBASTIAN, Director, Enforcement and
Security Services, Bureau of Customs; and Maj. JAIME MAGLIPON, Chief, Operations and
Intelligence Staff, Enforcement and Security Services, Bureau of Customs, respondents.
ROMERO, J; EN BANC

G.R. No. 111223; October 6, 1995; NARCISO O. JAO and BERNARDO M. EMPEYNADO,
petitioners, vs. THE HONORABLE OMBUDSMAN CONRADO M. VASQUEZ, and
SINDULFO SEBASTIAN, JAIME MAGLIPON; JOSE YUCHONGCO; RICARDO
CORONADO; VICTOR BARROS; DENNIS BANTIGUE; ROY LARA; BENJAMIN
SANTOS; RODOLFO GONDA; ADONIS REJOSO; DANIEL PENAS; NICANOR BONES;
ABUNDIO JUMAMOY; ARTEMIO CASTILLO; ANDRESITO ABAYON; RUBEN
TAGUBA; JAIME JAVIER; HERBERT DOLLANO, all with the Bureau of Customs; JOVY
GUTIERREZ of the Makati police, and 'JOHN DOES', respondents. ROMERO, J; EN BANC

Facts: On August 10, 1990, the Office of the Director, Enforcement and Security Services
(ESS), Bureau of Customs, received information regarding the presence of allegedly untaxed
vehicles and parts in the premises owned by a certain Pat Hao located along Quirino Avenue,
Paranaque and Honduras St., Makati. After conducting a surveillance of the two places,
respondent Major Jaime Maglipon, Chief of Operations and Intelligence of the ESS,
recommended the issuance of warrants of seizure and detention against the articles stored in the
premises.

Customs Officers coordinated with the local police. When the Customs officers raided the place
Hao they were barred from entering the premises. However, there were some Customs officers
who was able to enter and they started to have an inventory of the articles and thereafter started
hauling the articles pursuant to the amended warrant.

Joa & Empeynado filed a case of Injunction & Damages against the BoC . The TC issued the
injunction on the same day. The MR from BoC was denied by the TC.

CA set aside the questioned orders of the TC.

The Petitioners (Joa & & Empeynado) filed a petition with the Court to review judgement of the
CA.

Issue: Whether or not the RTC have jurisdiction over seizure & forfeiture proceedings of the
BoC?

Ruling:

No.

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.

It is likewise well-settled that the provisions of the Tariff and Customs Code and that of Republic
Act No. 1125, as amended, otherwise known as "An Act Creating the Court of Tax Appeals,"
specify the proper fora and procedure for the ventilation of any legal objections or issues raised
concerning these proceedings. Thus, actions of the Collector of Customs are appealable to the
Commissioner of Customs, whose decision, in turn, is subject to the exclusive appellate
jurisdiction of the Court of Tax Appeals and from there to the Court of Appeals.

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.
Even if the seizure by the Collector of Customs were illegal, which has yet to be proven, we have
said that such act does not deprive the Bureau of Customs of jurisdiction thereon.

Respondents assert that respondent Judge could entertain the replevin suit as the seizure is
illegal, allegedly because the warrant issued is invalid and the seizing officer likewise was
devoid of authority. This is to lose sight of the distinction between the existence of the power and
the regularity of the proceeding taken under it. The governmental agency concerned, the Bureau
of Customs, is vested with exclusive authority. Even if it be assumed that in the exercise of such
exclusive competence a taint of illegality may be correctly imputed, the most that can be said is
that under certain circumstances the grave abuse of discretion conferred may oust it of such
jurisdiction. It does not mean however that correspondingly a court of first instance is vested
with competence when clearly in the light of the decisions the law has not seen fit to do so.

The allegations of petitioners regarding the propriety of the seizure should properly be ventilated
before the Collector of Customs. The Court had occasion to declare:

The Collector of Customs when sitting in forfeiture proceedings constitutes a tribunal

expressly vested by law with jurisdiction to hear and determine the subject matter of such
proceedings without any interference from the Court of First Instance. (Auyong Hian v.
Court of Tax Appeals, et al., 19 SCRA 10). The Collector of Customs of Sual-Dagupan
in Seizure Identification No. 14-F-72 constituted itself as a tribunal to hear and determine
among other things, the question of whether or not the M/V Lucky Star I was seized
within the territorial waters of the Philippines. If the private respondents believe that the
seizure was made outside the territorial jurisdiction of the Philippines, it should raise the
same as a defense before the Collector of Customs and if not satisfied, follow the correct
appellate procedures. A separate action before the Court of First Instance is not the
remedy.

2. G.R. No. 158150; September 10, 2014; AGRIEX CO., LTD., Petitioner, vs.HON. TITUS B.
VILLANUEVA, Commissioner, Bureau of Customs (now replaced by HON. ANTONIO M.
BERNARDO), and HON. BILLY C. BIBIT, Collector of Customs, Port of Subic (now replaced
by HON. EMELITO VILLARUZ), Respondents., BERSAMIN, J; FIRST DIVISION

Facts:

The petitioner, a foreign corporation whose principal office was in Bangkok, Thailand, entered
into a contract of sale with PT. Gloria Mitra Niagatama International of Surabaya, Indonesia (PT.
Gloria Mitra) for 180,000 bags (or 9,000 metric tons) of Thai white rice. it entered into another
contract of sale with R&C Agro Trade of Cebu City (R&C Agro Trade) for 20,000 bags of Thai
white rice. On July 27, 2001, it chartered the vessel MV Hung Yen to transport the 200,000 bags
of Thai white rice to the Subic Free Port for transshipment to their designated consignees in the
Fiji Islands and Indonesia (for the 180,000 bags), and in Cebu City (for the 20,000 bags).3 The
MV Hung Yen left Bangkok, Thailand on August 15, 2001 and arrived at the Subic Free Port on
August 20, 2001 with the inward foreign manifest indicating the final destinations of the
shipment. However, the Sea Port Department of the Subic Bay Metropolitan Authority (SBMA)
allowed the vessel to berth only 22 days later, or on September 11, 2001. SBMA advised the
vessel agent to secure from the National Food Authority (NFA) an amendment of the import
permit issued in favor of R&C Agro Trade to change the discharging port from the Port of Cebu
to the Port of Subic.

There was a delay in the berthing & unloading of the cargo from the vessel. Petitioner thru an
agent in Subic applied for vessel exit clearance to allow the MV Hung Yen to sail to Labuan Free
Port. The BOC issued the Clearance of Vessel to a Foreign Port. Despite its clearance it did not
sale to Malaysia.

Petitioners then requested permission from the BoC to unload the 200,000 bags of Thai rice.
Commissioner Titus B. Villanueva issued his 1st Indorsement on September 11, 2001 directing
respondent Collector of Customs Billy C. Bibit to issue a Warrant of Seizure and Detention
(WSD) against the 20,000 bags of Thai white rice consigned to R&C Agro Trade.

Accordingly, Collector Bibit issued WSD No. 2001-13 dated September 12, 2001 against the
20,000 bags of Thai white rice consigned to R&C Agro Trade notwithstanding that no bag of
rice had yet been unloaded from the vessel.8

After the unloading, transfer and storage of the rice shipment at SBMAs warehouse, Collector
Bibit issued amended WSDs on September 27, 2001 to cover the MV Hung Yen and the
remaining 180,000 bags of Thai white rice intended for transshipment.

CA In accordance with Section 2535 of the Tariff and Customs Code, as amended, since the
government has already complied with the two (2) conditions set forth therein, the burden of
proof now lies upon the complainant, who in this case is the petitioner, to prove otherwise.

Issue: Whether or not the SBMA is subject to the jurisdiction of the Boc?

Ruling:

Yes.

The Court agreed with the petitioner that the imported 2,000 bags of rice were in the actual
physical control and possession of the BOC as early as 25 October 2001, by virtue of the BOC
Subic Port Hold Order of even date, and of the BOC Warrant of Seizure and Detention dated 22
May 2002. As such, the BOC had acquired exclusive original jurisdiction over the subject
shipment, to the exclusion of the RTC.
It is well settled that the Collector of Customs has exclusive jurisdiction over seizure and
forfeiture proceedings, and regular courts cannot interfere with his exercise thereof or stifle or
put it at naught. 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. Regional Trial Courts are devoid of any competence to pass upon the validity
or regularity of seizure and forfeiture proceedings conducted by the BOC and to enjoin or
otherwise interfere with these proceedings. Regional Trial Courts are precluded from assuming
cognizance over such matters even through petitions for certiorari, prohibition or mandamus.

Verily, the rule is that from the moment imported goods are actually in the possession or control
of the Customs authorities, even if no warrant for seizure or detention had previously been issued
by the Collector of Customs in connection with the seizure and forfeiture proceedings, the BOC
acquires exclusive jurisdiction over such imported goods for the purpose of enforcing the
customs laws, subject to appeal to the Court of Tax Appeals whose decisions are appealable to
this Court. As the Court have clarified in Commissioner of Customs v. Makasiar, the rule that
RTCs 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.

The issuance of the October 18, 2001 Notice of Sale was merely an incident of the seizure
proceedings commenced by the Collector of Customs. Consequently, the correctness of its
issuance was necessarily subsumed to the determination of the propriety of the seizure
proceedings, a matter that was within the exclusive jurisdiction of the Bureau of Customs. In that
context, the proper recourse of the petitioner from the February 4, 2002 Consolidated Order of
Commissioner Villanueva, which reviewed the November 14, 2001 action of Collector Bibit,
was an appeal in due course to the CTA, in accordance with Section 7(4) of RA No. 1125, as
amended, in relation to Section 2402 of the Tariff and Customs Code, within 30 days after the
receipt of the order. Without the appeal having been timely filed in the CTA, the February 4,
2002 Consolidated Order became final and executory.
3. G.R. No. L-29043; January 30, 1971; HON. JUAN PONCE ENRILE, Commissioner of
Customs and LT. GENERAL PELAGIO A. CRUZ, (Ret.) Chairman, Anti-Smuggling Action
Center (ASAC), petitioners, vs. ANDRES M. VINUYA and HON. WALFRIDO DE LOS
ANGELES, presiding judge of Branch IV, Court of First Instance of Rizal (sitting at Quezon
City), respondents.; FERNANDO, J.; EN BANC

Facts:

Rodolfo Canedoza imported a Cadillac but taxes & duties has not been paid. However, the
predecessor-in-interest Andres Vinuya claims that the taxes & duties of the imported vehicle has
already been paid for as evidence, Vinuya, used Informal Entry No. 1563652 dated May 9,
1967. But upon further investigation the Informal Entry presented was already used for a Fiat
600 & not the Cadillac car in dispute.

Issue:

Whether or not the Judge Walfrido de los Angeles is vested with jurisdiction to entertain a
complaint for replevin filed by the other respondent, Andres M. Vinuya, for the recovery of a
Cadillac car, subject of a seizure and forfeiture proceeding.

Ruling:

1. The prevailing doctrine is that the exclusive jurisdiction in seizure and forfeiture cases
vested in the Collector of Customs precludes a Court of First Instance from assuming cognizance
over such a matter. This has been so, as noted, since Pacis v. Averia. In an opinion penned by
Justice J. P. Bengzon, there was a statement of the legal provisions that call for application.
Thus: "The Tariff and Customs Code, in Section 2530 thereof, lists the kinds of property subject
to forfeiture. At the same time, in Part 2 of Title VI thereof, it provides for the procedure in
seizure and forfeiture cases and vests in the Collector of Customs the authority to hear and
decide said cases. The Collector's decision is appealable to the Commissioner of Customs whose
decision is in turn appealable to the Court of Tax Appeals. An aggrieved party may appeal from
a judgment of the Court of Tax Appeals directly to this Court. On the other hand, Section 44(c)
of the Judiciary Act of 1948 lodges in the Court of First Instance original jurisdiction in all cases
in which the value of the property in controversy amounts to more than ten thousand pesos. This
original jurisdiction of the Court of First Instance, when exercised in an action for recovery of
personal property which is a subject of a forfeiture proceeding in the Bureau of Customs, tends
to encroach upon, and to render futile, the jurisdiction of the Collector of Customs in seizure and
forfeiture proceedings. This is precisely what took place in this case. The seizure and forfeiture
proceedings against the M/B 'Bukang Liwayway' before the Collector of Customs of Manila, was
stifled by the issuance of a writ of replevin by the Court of First Instance of Cavite."

The crucial question whether Section 44 (c) of the Judicial Act should give way to the provisions
of the Tariff and Customs Code was answered in the affirmative, the opinion clearly stating that
"the Court of First Instance should yield to the jurisdiction of the Collector of Customs. The
jurisdiction of the Collector of Customs is provided for in Republic Act 1937 which took effect
on July 1, 1957, much later than the Judiciary Act of 1948. It is axiomatic that a later law
prevails over a prior statute. Moreover, on grounds of public policy, it is more reasonable to
conclude that the legislators intended to divest the Court of First Instance of the prerogative to
replevin a property which is a subject of a seizure and forfeiture proceedings for violation of the
Tariff and Customs Code. Otherwise, actions for forfeiture of property for violation of Customs
laws could easily be undermined by the simple devise of replevin." This excerpt from the
opinion is likewise relevant: "Furthermore, Section 2303 of the Tariff and Customs Code
requires the Collector of Customs to give to the owner of the property sought to be forfeited
written notice of the seizure and to give him the opportunity to be heard in his defense. This
provision clearly indicates the intention of the law to confine in the Bureau of Customs the
determination of all questions affecting the disposal of property proceeded against in a seizure
and forfeiture case. The judicial recourse of the property owner is not in the Court of First
Instance but in the Court of Tax Appeals, and only after exhausting administrative remedies in
the Bureau of Customs."

Papa v. Mago likewise deserves to be cited. The opinion of Justice Zaldivar for the Court
emphatically asserted the doctrine anew in the following language: "It is the settled rule,
therefore, that the Bureau of Customs acquires exclusive jurisdiction over imported goods, for
the purposes of enforcement of the customs laws, from the moment the goods are actually in its
possession or control, even if no warrant of seizure or detention had previously been issued by
the Collector of Customs in connection with seizure and forfeiture proceedings. In the present
case, the Bureau of Customs actually seized the goods in question on November 4, 1966, and so
from that date the Bureau of Customs acquired jurisdiction over the goods for the purposes of the
enforcement of the Tariff and Customs Laws, to the exclusion of the regular courts. Much less
than would the Court of First Instance of Manila has jurisdiction over the goods in question after
the Collector of Customs had issued the warrant of seizure and detention on January 12, 1967.
And so, it cannot be said, as respondents contend, that the issuance of said warrant was only an
attempt to divest the respondent Judge of jurisdiction over the subject matter of the case. The
court presided by respondent Judge did not acquire jurisdiction over the goods in question when
the petition for mandamus was filed before it, and so there was no need of divesting it of
jurisdiction. Not having acquired jurisdiction over the goods, it follows that the Court of First
Instance of Manila had no jurisdiction to issue the questioned order of March 7, 1967 releasing
said goods."
2. Respondents, however, notwithstanding the compelling force of the above doctrines,
would assert that respondent Judge could entertain the replevin suit as the seizure is illegal,
allegedly because the warrant issued is invalid and the seizing officer likewise was devoid of
authority. This is to lose sight of the distinction, as earlier made mention of, between the
existence of the power and the regularity of the proceeding taken under it. The governmental
agency concerned, the Bureau of Customs, is vested with exclusive authority. Even if it be
assumed that in the exercise of such exclusive competence a taint of illegality may be correctly
imputed, the most that can be said is that under certain circumstances the grave abuse of
discretion conferred may oust it of such jurisdiction. It does not mean however that
correspondingly a Court of First Instance is vested with competence when clearly in the light of
the above decisions the law has not seen fit to do so. The proceeding before the Collector of
Customs is not final. An appeal lies to the Commissioner of Customs and thereafter to the Court
of Tax Appeals. It may even reach this Court through the appropriate petition for review. The
proper ventilation of the legal issues raised is thus indicated. Certainly a Court of First Instance
is not therein included. It is devoid of jurisdiction.

4. G.R. No. L-24348; July 30, 1968; FELIClDAD VIERNEZA, petitioner, vs.THE
COMMISSIONER OF CUSTOMS, respondent; REYES, J.B.L., J; EN BANC.

Facts:

Collector of Customs of Jolo received a tip that there were smuggled items on board MV
Legaspi. The smuggled items were650 cartons of Chesterfield cigarettes & 110 cartons of Camel
cigarettes without the required Internal Revenue strips.

Believing that there was strong evidence of violation of Customs laws, the Collector of Customs
seized the merchandise & instituted the forfeiture proceedings in violation of the TCCP & the
Internal Revenue Code.

Issues:

Powers and jurisdiction of the Collector of Customs.

Ruling: All three assigned errors are untenable.

1. Petitioner argues that the Collector of Customs of Jolo, who has "jurisdiction over all matters
arising from the enforcement of tariff and customs laws within his collection district", as
provided for in Section 703 of the Tariff and Customs Code, is exclusively authorized to proceed
against the cigarettes in question inasmuch as the smuggling was allegedly perpetrated in his
collection district. Hence, petitioner concludes that the seizure and forfeiture thereof by the
Collector of Customs of Cebu is irregular and illegal for lack of jurisdiction.
The Court do not agree. First, because Section 703, on which petitioner's conclusion is premised,
is legally non-existent, the same having been vetoed by the President.1 Secondly, the Tariff and
Customs Code clearly empowers the Bureau of Customs to prevent and suppress smuggling and
other frauds upon the Customs [Sec. 602 (b)] over all seas within the jurisdiction of the
Philippines and over all coasts, ports, airports, harbors, bays, rivers and inland waters navigable
from the sea and, in case of "hot pursuit", even beyond the maritime zone (Sec. 603). For the due
enforcement of this function, a Collector, among others, is authorized to search and seize (Sec.
2203), at any place within the jurisdiction of the said Bureau (Sec. 2204, sec. par.), any vessel,
aircraft, cargo, article, animal or other movable property when the same is subject to forfeiture or
liable for any fine imposed under customs and tariff laws (Sec. 2205). It is of no moment where
the introduction of the property subject to forfeiture took place. For, to the Courts mind, "(i)t is
the right of an officer of the customs to seize goods which are suspected to have been introduced
into the country in violation of the revenue laws not only in his own district, but also in any other
district than his own". [Taylor vs. U.S., 44 U.S. (3 How.) 197, 11 L. ed. 559]. Any other
construction of the Tariff and Customs Code, such as the one proposed by petitioner, would
virtually place the Collector of Customs in a straitjacket and render inutile his police power of
search and seizure, thereby frustrating effective enforcement of the measures provided in the
Code to prevent and suppress smuggling and other frauds upon the Customs. This the Court can
not sanction by subscribing to petitioner's conclusion. The Code, as a revenue law, is to be
construed to carry out the intention of Congress in enacting it and as would most effectually
accomplish its objects (15 Am. Jur. 304).

Petitioner also attacks the jurisdiction of the Collector of Customs of Cebu on the ground that the
forfeiture of the cigarettes is not in accordance with Section 2531 of the Code, as the same were,
at the time of seizure, no longer in the custody and control of the Bureau of Customs nor in the
hands, or subject to control, of the importer, original owner, consignee, agent or person with
knowledge that the same were imported contrary to law.

Again, the Court disagrees. The forfeiture is effected precisely in accordance with Section 2531
afore-cited, which plainly provides "that forfeiture shall be effected when and while the article is
in the custody or within the jurisdiction of the customs authority ... or in the hands or subject to
the control of ... some person who shall receive, conceal, buy, sell or transport the same ... with
knowledge that the article was imported ... contrary to law". There can be no question that the
cigarettes involved were seized and forfeited at the port of Cebu which is within the jurisdiction
of the Bureau of Customs and, as will be shown later, while the cigarettes were subject to the
control of petitioner, who bought, concealed, and transported the same aboard the M/V
"Legaspi" with knowledge that they were imported contrary to law. Besides, it is a settled
jurisprudence that forfeiture proceedings are in the nature of proceedings in rem wherein the
jurisdiction to proceed against the res is vested in the court of the district where the same is
found or seized (25 C.J.S. 572). Therefore, the Collector of Customs of Cebu, who has the
authority under the Tariff and Customs Code to institute forfeiture proceedings, lawfully
assumed jurisdiction to forfeit, in favor of the Government, the smuggled cigarettes found and
seized within his collection district.

2. Petitioner next argues that the cigarettes in question are not merchandise of prohibited
importation inasmuch as she had purchased the same in the open market in Jolo; which goes to
show that she is not the importer, original owner, consignee, agent or person who effected the
importation thereof; and that in the absence of evidence that she bought the same with
knowledge that they were imported contrary to law in accordance with Section 2531, as the lack
of internal revenue stamps is not evidence of illegal importation much less her knowledge
thereof, the said cigarettes are not subject to forfeiture under Section 2530 (f) of the Code.

This is not the first time that this question has been posed before the Court. In the case of Gigare
vs. Commissioner of Customs (G.R. No. L-21376, August 29, 1966, 17 S.C.R.A. 1001), the
Court disposed of the same by holding that "(s)ince, admittedly, the internal revenue tax on the
cigarettes indispute has not been paid, it is clear that said cigarettes fall within the category of
"merchandise of prohibited importation," the importation of which is contrary to law and may
justify its forfeiture, as provided in Sections 1363 (f) and 1364 of the Revised Administrative
Code," which correspond to Sections 2530 (f) and 2531, respectively, of the Tariff and Customs
Code. "Moreover, the blue seals affixed on said commodities prove satisfactorily that they are
foreign products. Again, the importation thereof into the Philippines is attested by the presence
of said products within our jurisdiction." And concerning petitioner's knowledge of these facts,
the following disquisition by the Court of Tax Appeals, lengthily quoted in the Gigare case, finds
significant application in the case at bar:

Were the cigarettes in question illegally imported into the Philippines? The Court is of the
opinion that, the Commissioner of Customs should be sustained in his finding that the cigarettes
in question were imported illegally. The absence of Philippine internal revenue strip stamps on
cigarettes indicates that they are either manufactured clandestinely within the Philippines or
imported illegally into the country. In the case at bar, concomitant circumstances militate against
the clandestine manufacture within the Philippines of the cigarettes. The affixture of blue seals
on the packs of the cigarettes, the wrappers, the purchase of the cigarettes in the open market of
Jolo, a place where American and other foreign made cigarettes are, of common knowledge,
frequently smuggled from Borneo ... and the failure of petitioner to show that the cigarettes in
question were locally manufactured rule out the possibility that the cigarettes in question were
manufactured in the Philippines. Consequently, we are constrained to conclude that these
cigarettes were foreign (American) made. They were merchandise of prohibited importation, the
importation of which was contrary to law, and should be forfeited under Section 1363 (f) of the
Revised Administrative Code.

The fact that petitioner is merely a buyer of the cigarettes in the open market of Jolo does not
render the cigarrettes immune from the penalty of forfeiture. This is so because forfeiture
proceedings are instituted against the res (cigarettes) ... and, by express provision of Section
1364 of the Revised Administrative Code, the forfeiture shall occur while the merchandise is in
the hands or subject to control of some person who shall receive, conceal, buy, sell, or transport
the same with knowledge that the merchandise was imported contrary to law. Petitioner cannot
but be charged with the knowledge that the cigarettes in question were imported contrary to law,
for if it were otherwise, why were these cigarettes concealed on board the vessel ... ? Why did
she deny ownership over said cigarettes? For what plausible reason was she afraid of detention?
What impelled her to believe that she would be detained by the customs authorities? To uphold
the claim of petitioner and forego the forfeiture would be giving a chance to accessories after the
fact of smugglers of foreign cigarettes to ply their trade with impunity and with sanction of the
courts. What the executive department could not curb, that is rampant smuggling of foreign
cigarettes, the courts should not tolerate ...

3. Petitioner finally contends that the decision of the Commissioner of Customs libeling and
forfeiting the cigarettes involved in the present case for violation of Section 2530 (m-1) of the
Tariff and Customs Code is unconstitutional, in view of the fact that she was allegedly not
afforded an opportunity to defend the cigarettes against such charge, said section not being one
of the original grounds cited by the Collector of Customs of Cebu in forfeiting the same.

The contention has no merit. Certainly, the appellate power of the Commissioner of Customs to
review seizure and protest cases is not limited to a review of the issues raised on appeal. He may
affirm, modify or reverse the decision of the Collector (Section 2313) on other questions
provided that his findings and conclusions are, as in the case at bar, supported by evidence. It is
of no consequence whatsoever what were the original grounds of the seizure and forfeiture if, in
point of fact, the goods are by law subject to forfeiture [Wood vs. U.S., 16 Pet. (U.S.) 342, 10 L.
ed. 987]. As there is evidence on record showing that the cigarettes in question were imported
and introduced into the country without passing through a customs house, the same may be
forfeited under said Section 2530 (m-1) of the Code, notwithstanding that it is not one of the
original charges. As the Court held in Que Po Lay vs. Central Bank, et al. (104 Phil. 853), what
counts is not the designation of the particular section of the law that has been violated but the
description of the violation in the seizure report.
5. G.R. No. L-33756; October 23, 1982; SABINO RIGOR, RODOLFO AQUINO and SIMEON
ANTICAMARA, Collector of Customs, Legal Officer and Chief of the Port and Water Patrol
Division, Respectively, Bureau of Customs, Port of Davao, Davao City, petitioners, vs.
SPOUSES EDUARDO ROSALES AND FLORA ROSALES and HONORABLE ALFREDO I.
GONZALES (Presiding Judge, Branch II, Court of First Instance of Davao (Sitting at Davao
City), respondents. GUTIERREZ, JR., J; FIRST DIVISION

Facts:

Here, CFI Judge in Davao City issued an order declaring null & void the decision of the
Collector of Customs in an administrative case "Seizure Identification No. 70-027" entitled "RP
vs. LCT-759 Together With 103 Pieces of Logs Aboard Same Vessel".

Instead of appealing the Collectors decision to the Commissioner of Customs, private respondent
filed an original petition for certiorari with the CFI of Davao.

Issue: Whether or not TC has jurisdiction over the BoC under the Tariff & Customs Code?

Ruling: The respondents' arguments have no merit.

The provisions of the Tariff and Customs Code empowering the customs authorities to act as
they did are:

Sec. 2203. Persons Having Police Authority.-For the enforcement of the customs and
tariff laws, the following persons are authorized to effect searches, seizures and arrests
conformably with the provisions of said laws:

a. Officials of the Bureau of Customs, collectors, assistant collectors, deputy collectors,

surveyors, security and secret-service agents, inspectors, port patrol officers and guards
of the Bureau of Customs.
b. Officers of the Philippine Navy when authorized by the Commissioner.
c. Any person especially authorized in writing by the Commissioner.
d. Officers generally empowered by law to effect arrests and execute processes of courts,
when acting under the direction of the Collector.
e. Any person especially authorized by a Collector, subject to the restrictions stated in the
next succeeding section.

Sec. 2530. Property Subject to Forfeiture Under Tariff and Customs Law.Any vessel or
aircraft, cargo, articles and other objects shall, under the following conditions, be subject
to forfeiture:

g. Unmanifested article found on any vessel or aircraft, if manifest therefor is required.

 Sec. 906. Requirement of Manifest in Coastwise Trade.Manifests shall be required for
cargo and passengers transported from one place or port in the Philippines to another only
when one or both of such places is a port of entry.

Sec. 908. Manifests Required Prior to Unloading at Port of Entry.Within twenty- four
hours after the arrival at a port of entry of a vessel engaged in the coastwise trade, and
prior to the unloading of any part of the cargo the master shall deliver to the Collector or
other proper customs official complete manifests of all the cargo and passengers brought
into said port, together with the clearance manifests of cargo and passengers for said port
granted at any port or ports of entry from which said vessel may have cleared during the
voyage.

Contrary to the stand of the private respondents, articles subject to seizure do not have to be
goods imported from a foreign country. The provisions of the Code refer to unmanifested articles
found on vessels or aircraft engaged in the coastwise trade. The customs authorities do not have
to prove to the satisfaction of a court of first instance 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 to continue with the
administrative hearings on whether or not the law may have been violated.

Regarding the nature of the port of origin and the port of destination, it is enough if one of the
ports is a port of entry. In the instant case, Daliao, Toril, Davao City is included in the Davao
port of entry. The respondent court's finding that "port of entry" must be limited to the wharves
of Sta. Ana and Sasa where the customs house is located and not extended "to every inch of the
City of Davao" would unduly hamper if not cripple the effective enforcement of customs and
tariff laws. Customs officials cannot stand by helplessly for want of jurisdiction simply because a
restrictive interpretation of "port of entry" would enable coastwise vessels to load or unload
unmanifested goods with impunity outside of the specific area where the wharves and the
customs house are located.

The records also show that the requirements on cargo manifest were not followed.

But more important than the Courtsustaining the correctness of the findings and conclusions
made by the customs' officials is to state clearly their authority under the law to make the initial
determination on the limits of their administrative jurisdiction, to act speedily and to make
decisions on the basis of that determination, and to have such act or decision reviewable only in
the manner provided by the Customs and Tariff Code.
It is the Courts consistent ruling that the Collector's decisions are appealable to the
Commissioner of Customs, whose decisions, in cases involving seizure, detention or release of
property, may in turn be reviewed only by the Court of Tax Appeals.

The Court ruled in Seeres v. Frias (39 SCRA 536) that:

The collector's decision may be appealed to the commissioner of customs, whose

decision, inter alia, in cases involving seizure, detention or release of property affected,
may in turn be reviewed only by the Court of Tax Appeals under the exclusive appellate
jurisdiction conferred on said court under section 7 of Republic Act 1125.

As held by the Court in the 1966 leading case of Pacis vs. Averia, 18 SCRA 907, - where the
court emphasized the need of the cooperation of all branches of the Government for the success
of the law enforcement agencies in curbing smuggling - by virtue of the enactment of the Tariff
and Customs Code (Rep. Act 1937) as well as the Court of Tax Appeals Law (Rep. Act 1125),
'on grounds of public policy, it is more reasonable to conclude that the legislators intended to
divest the Court of First Instance of the prerogative to replevin a property which is a subject of a
seizure and forfeiture proceedings for violation of the Tariff and Customs Code. Otherwise,
actions for forfeiture of property for violation of Customs laws could easily be undermined by
the simple device of replevin.

'Furthermore, Section 2303 of the Tariff and Customs Code requires the Collector of Customs to
give to the owner of the property sought to be forfeited written notice of the seizure and to give
him the opportunity to be heard in his defense. This provision clearly indicates the intention of
the law to confine in the Bureau of Customs the determination of all questions affecting the
disposal of property proceeded against in a seizure and forfeiture case. The judicial recourse of
the property owner is not in the Court of First Instance but in the Court of Tax Appeals, and only
after exhausting administrative remedies in the Bureau of Customs.'

In the case of Hadji Mohamad Daud v. Collector of Customs of the Port of Zamboanga City (68
SCRA 157) this Court reiterated the doctrine as follows:

As early as June 30, 1955, the Court had already announced in Millarez v. Amparo, 97
Phil. 284-85, that 'Republic Act No. 1125, Section 7, effective June 16, 1954 gave the
Court of Tax Appeals exclusive appellate jurisdiction to review an appeal, decisions of
the Commissioner of Customs, involving seizure, detention or release of property
affected ... or other matter arising under the Customs Law or other law administered by
the Bureau of Customs'. Specifically, in Caltex (Philippines) Inc. v. City of Manila 25
SCRA 840, it was held that the law affords the Collector of Customs sufficient latitude in
determining whether or not a certain article is subject to seizure or forfeiture and his
decision on the matter is appealable to the Commissioner of Customs and then to the
 Court of Tax Appeals, not to the Court of First Instance. The fundamental reason is that
the Collector of Customs constitutes a tribunal when sitting in forfeiture proceedings
(Commissioner of Customs v. Cloribel, 19 SCRA 234) beyond the interference of the
Court of First Instance (Lopez v. Commissioner of Customs, 37 SCRA 33-34). As
expressed in Pacis v. Averia, 18 SCRA 907,'* * * the Court of First Instance should yield
to the jurisdiction of the Collector of Customs is provided for in Republic Act 1937
which took effect on July 1, 1957, much later than the Judiciary Act of 1948. It is
axiomatic that a later law prevails over a prior statute. Moreover, on grounds of public
policy, it is more reasonable to conclude that the legislators intended to divest the Court
of First Instance of the prerogative to replevin a property which is a subject of a seizure
and forfeiture proceedings for violation of the Tariff and Customs Code. Otherwise,
actions for forfeiture of property for violation of Customs laws could easily be
undermined by the simple device of replevin'. The judicial recourse of the owner of a
personal property which has been the subject of a seizure and forfeiture proceedings
before the Collector of Customs is not in the Court of First Instance but in the Court of
Tax Appeals, and only after exhausting administrative remedies in the Bureau of
Customs (Collector of Customs v. Torres, 45 SCRA 281). If the property owner believes
that the Collector's conclusion was erroneous, the remedy is by appeal to the
Commissioner of Customs, and then to the Court of Tax Appeals should the
Commissioner uphold the Collector's decision. The Court of Tax Appeals exercises
exclusive appellate jurisdiction to review the ruling of the Commissioner in seizure and
confiscation cases, and that power is to the exclusion of the Court of First Instance, which
may not interfere with the Commissioner's decisions even in the form of proceedings for
certiorari, prohibition or mandamus which are in reality attempts to review the
Commissioner's actuations (General Travel Service, Ltd. v. David, 18 SCRA 66-67).

Again, in Republic v. Bocar (93 SCRA 78) the Court said:

1. The Congress of the Philippines was vested with 'the power to define, prescribe,
and apportion the jurisdiction of the various courts' of the Philippines. Now it is the
National Assembly. Where the matter involved is a seizure and forfeiture proceeding, a
court of first instance is devoid of power to act. The customs authorities possess such
competence with an appeal to the Court of Tax Appeals. In appropriate cases, there may
be further judicial review by this Court in the exercise of its certiorari jurisdiction. The
jurisdictional limits thus defined and apportioned, according to the Constitution, must be
respected. Respondent judges clearly did not do so. No deference was paid to a host of
cases that left no doubt as to their lack of authority to assume jurisdiction.

2. An excerpt from a recent decision, Commissioner of Customs v. Navarro, 77

SCRA 264, possesses relevance. Thus: 'That such jurisdiction of the customs authorities
is exclusive was made clear in Pacis v. Averia, decided in 1966. This Court, speaking
through Justice J.P. Bengzon, realistically observed: 'This original jurisdiction of the
Court of First Instance, when exercised in an action for recovery of personal property
which is a subject of forfeiture proceeding in the Bureau of Customs, tends to encroach
upon, and to render futile, the jurisdiction of the Collector of Customs in seizure and
forfeiture proceedings.' The court 'should yield to the jurisdiction of the Collector of
Customs,' Such a ruling, as pointed out by Justice Zaldivar in Auyong Hian v. Court of
Tax Appeals, promulgated less than a year later, could be traced to Government v. Gale,
a 1913 decision, where there was a recognition in the opinion of Justice Carson that a
Collector of Customs when sitting in forfeiture proceedings constitutes a tribunal upon
which the law expressly confers jurisdiction to hear and determine all questions touching
the forfeiture and further disposition of the subject matter of such proceedings. The
controlling principle was set forth anew in Ponce Enrile v. Vinuya, decided in 1971.
Thus: 'The prevailing doctrine is that the exclusive jurisdiction in seizure and forfeiture
cases vested in the Collector of Customs precludes a court of first instance from assuming
cognizance over such a matter.' Reference was then made in the opinion to previous
cases.
IMPORTATION
As reported by:
Ramon Miguel Vergel de Dios (Refresher)
 III. IMPORTATION

Sec. 1202. When Importation Begins and Deemed Terminated. 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.

1. When does importation begin?

Importation begins when a vessel or aircraft enters Philippine jurisdiction with the
intention to unload goods.

2. When does importation terminate?

Importation terminates upon payment of duties and taxes. If the imported goods are
duty-free or tax-free, then it terminates upon leaving the custody of the Bureau of
Customs.

Trivia: The word unlade is an archaic British term that means to unload a ship or
cargo

R.V. MARZAN FREIGHT, INC., petitioner, vs. COURT OF APPEALS and SHIELAS
MANUFACTURING, INC., respondents.

FACTS:
RV Marzan Freight, Inc., (Marzan) owned and operated a customs-bonded warehouse. Shielas
Manufacturing, Inc., on the other hand, was a corporation engaged in the garment business.
Philfire issued an insurance policy in favor of Marzan Freight covering its warehouse as well as
"stocks in trade of every kind and description usual to the warehouse operation and/or other
interest.

Raw materials consigned to Shielas Manufaucturing arrived in the Philippines from Taiwan.
The raw materials were subject to ordinary import taxes and were not immediately released.
Moreover, the consignee failed to file the requisite import entry and failed to claim the cargo.

Abandonment proceedings by the District Collector of Customs over the cargo ensued. No
separate notice of the proceedings was sent to Shielas Manufacturing. However, before the
inventory and sale at public auction of the goods could be accomplished, the shipment was
burned. Philfire paid to Shielas Manufacturing the amount of P12,000,000.

Shielas Manufacturing now demands payment of the full value of the goods. Marzan rejected
the demands. Shielas Manufacuting filed a complaint for damages before the RTC against
Marzan. The RTC ruled in favor of Shielas Manufacturing.
Issues:
a. Whether or not at the time of the fire, the goods were already "abandoned goods" so that, at
the time of the fire, Shielas Manufacturing was no longer the owner of said goods.

b. Whether or not the trial court had jurisdiction to review and declare ineffective the
declaration of the District Collector of Customs in abandonment proceedings that the subject
shipment was abandoned cargo and that, thenceforth, the government ipso facto became the
owner thereof.

Held:
a. No. If the government owned the cargo before it was gutted by fire, then Shielas
Manufacturing had no cause of action against Marzan. In compliance with Sections 1801 and
1802 of the Tariff and Customs Code, the declaration of abandonment of the shipment by the
Bureau of Customs is ineffective. Under the law, notice of the proceedings of abandonment
was not given to Shielas Manufacturing or his agent. The consignee in this case being
known, should have been notified of the abandonment of his property in favor of the
government and that he should have been given a chance at a public hearing to present
evidence and to be heard with respect to the cargo subject of abandonment. This is part of
due process.

b. No. It is within the exclusive competence of the District Collector of Customs, the
Commissioner of Customs and within the appellate jurisdiction of the Court of Tax Appeals.
The District Collector of Customs did not lose jurisdiction over the abandonment
proceedings. The loss of the cargo did not extinguish his incipient jurisdiction in the said
proceedings, nor render functus officio her declaration that the subject shipment had been
abandoned.

The refusal of the Bureau of Customs to intervene in the trial court does not, in any way,
fortify Shielas Manufacturings claim that it is the owner of the cargo. The government had
no legal obligation to intervene in the trial court considering that the latter had no jurisdiction
over the complaint. It was enough that then Bureau of Customs Law Division Chief testified
that the cargo was duly declared by the District Collector of Customs as abandoned property,
that the said declaration had become final, and that the government became ipso facto the
owner of the cargo. The government had every right to expect that the trial court would
dismiss the complaint for lack of jurisdiction over the issue raised therein.

Trivia: The Latin term ipso facto is defined as by the very act itself or by mere act.
Sec. 1301. Persons Authorized to Make Import Entry. Imported articles must be entered in the
customhouse at the port of entry within thirty (30) days, which shall not be extendible, from the date of
discharge of the last package from the vessel or aircraft either (a) by the importer, being holder of the bill
of lading, (b) by a duly licensed customs broker acting under authority from a holder of the bill or (c) by a
person duly empowered to act as agent or attorney-in-fact for each holder: Provided, That where the entry
is filed by a party other than the importer, said importer shall himself be required to declare under oath and
under the penalties
1. When is anofimported
falsification or perjury
article that the declarations
considered and statements
to have entered contained
the port in the entry are
of entry?
true and correct: Provided, further, That such statements under oath shall constitute prima facie evidence
of knowledge and consent of the importer of violations against applicable provisions of this Code when
the importation is found to be unlawful. (as amended by Republic Act No. 7651)
 In the case of Chevron vs. CIR (G.R. No. 178759), the Supreme Court ruled that 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. There is no dispute that the specified entry form refers to the [import entry and
internal revenue declarations].

2. The term entry has a triple meaning in customs law. Entry may be defined as
any of the following:

(a) the documents filed at the customs house;

(b) the submission and acceptance of the documents; and
(c) the procedure of passing goods through the customs house.
(Rodriguez vs. CA, G.R. No. 115218)

Sec. 1302. Import Entries. All imported articles, except importations admitted free of duty under
Subsection k, Sec. one hundred and five of this Code, shall be subject to a formal or informal
entry. Articles of a commercial nature intended for sale, barter or hire, the dutiable value of which is
Two thousand pesos (P2,000.00) or less, land personal and household effects or articles, not in
commercial quantity, imported in passenger's baggage, mail or otherwise, for personal use, shall be
cleared on an informal entry whenever duty, tax or other charges are collectible.

The Commissioner may, upon instruction of the Secretary of Finance, for the protection of domestic
industry or of the revenue, require a formal entry, regardless of value, whatever be the purpose and
nature of the importation.

A formal entry may be for immediate consumption, or under irrevocable domestic letter of credit,
bank guarantee or bond for:
(a) Placing the article in customs bonded warehouse;
(b) Constructive warehousing and immediate transportation to other port of the Philippines upon
proper examination and appraisal; or
(c) Constructive warehousing and immediate exportation.

Import entries under irrevocable domestic letter of credit, bank guarantee or bond shall be subject to
the provisions of Title V, Book II of this Code.

All importations entered under formal entry shall be covered by a letter of credit or any other
verifiable document evidencing payment. (as amended by Republic Act No. 9135)

Section 101. Imported Articles Subject to Duty. All articles, when imported from any foreign
country into the Philippines, shall be subject to duty upon each importation, even though previously
exported from the Philippines, except as otherwise specifically provided for in this Code or in other
laws.
 1. Are all imported articles or goods subject to duty or tax?

Yes, all articles or goods, when imported from any foreign country into the Philippines,
are subject to duties or taxes.

2. Are goods which were exported from the Philippines and imported back subject to
duty or tax?

Yes, all goods are subject to duties and taxes even those goods that were exported from
the Philippines to a foreign country and imported back to the Philippines.

Prohibited Importations (Sec. 102, TCCP)

Dynamite, gunpowder, explosives, firearms, Written or printed articles that incite acts of
and other weapons of war including detached treason, rebellion, insurrection or sedition
parts unless authorized by law against the Government, resistance to any
law, or contains threats to take the life or to
inflict bodily harm on a person
Written or printed articles, photographs, Articles, instruments, drugs and substances
engravings, lithographs, objects, paintings, designed, intended or adapted for preventing
drawings or other representation of an human conception or producing unlawful
obscene or immoral character abortion or any related printed matter that
provides information on how to produce
unlawful abortion
Roulette wheels, gambling outfits, loaded Lottery and sweepstakes tickets except those
dice, marked cards, machines, apparatus or authorized by the Philippine Government
mechanical devices used in gambling
Any article made in whole or in part of gold, Any adulterated or misbranded article of food
silver, or other precious metal, or alloys, or any adulterated or misbranded drug in
which do not indicate the actual fineness or violation of the provisions of the Food and
quality of said metals or alloys Drugs Act

Marihuana, opium poppies, coca leaves, or Opium pipes and parts of whatever material
any other narcotics or synthetic drugs which
are or may hereafter be declared habit
forming

Any compound, manufactured salt, derivative,

or preparation, except when imported by the
government or authorized persons for
medicinal purposes only

All other articles the importation of which is

prohibited by law.

Sec. 105. Conditionally Free Importations. 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 department head:

a. Animals and plants for scientific, experimental, propagation, botanical, breeding, zoological
and national defense purposes: Provided, That no live trees, shoots, plants and moss, and bulbs,
tubers and seeds for propagation purposes may be imported under this section, except by order of
the Government of the Philippines or other duly authorized institutions: Provided, further, That
the free entry of animals for breeding purposes shall be restricted to animals of a recognized
breed, duly registered in the book of record established for that breed: And Provided, finally,
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 identical animal
described in said certificate of record and pedigree.

b. Aquatic products (e.g., fish, crustaceans, mollusks, marine animals, seaweed, fish oil, roe),
including preparations or manufactures thereof, caught or gathered by 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.

c. Samples of the kind, in such quantity and of such dimensions or construction as to render them
unsalable or of no appreciable commercial value, models not adapted for practical use and
samples of medicine properly marked physicians' samples not for sale.

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 or semi-precious stones), the
value of any single importation of which does not exceed ten thousand pesos, upon 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 of said samples within six 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, the importer thereof may select any portion of same not
exceeding in value ten thousand pesos for entry under the provisions of this subsection, and the
excess of the consignment may be entered in bond, or for consumption, as the importer may
elect.

d. Articles, including binnacles, propellers, and the like, the character of which, as imported,
prevents their use for other purposes than the construction, equipment, or repair of vessels and
aircraft, and life-preservers and life buoys, related equipment and parts and accessories thereof,
which are necessary for the take-off and landing and for the safe navigation of vessels and
aircraft.

e. Equipment for use in the salvage of vessels or aircraft, 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 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 months from the expiration of the
original period.

f. Cost of repairs 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 aircraft,
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.

g. 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 may, in his discretion, 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 months from
the date of acceptance of the import entry.

h. Medals, badges, cups and other small articles bestowed as trophies or prizes, or those received
or accepted as honorary distinctions.

i. Wearing apparel and household effects, including those articles provided for under subsections
j and k, and belonging to residents of the Philippines returning from abroad, which were
exported from the Philippines by such returning residents upon their departure therefrom or
during their absence abroad, upon the identity of such articles being established to the
satisfaction of the Collector of Customs; personal and household effects brought into the
Philippines by returning residents, the export value of which does not exceed five hundred pesos,
solely for personal or household use but not imported for the account of any other person nor
intended for barter, sale or hire: Provided, That such returning residents have not received the
benefit of any exemption hereunder within one hundred and eighty days from and after the date
of the last exemption granted: And Provided, further, That in the event the total export value of
the imported article or articles exceeds the amount of five hundred pesos, such article or articles
shall be subject to duty only on the amount in excess of five hundred pesos; articles of the same
kind and class purchased in foreign countries by residents of the Philippines during their absence
abroad and accompanying them upon their return to the Philippines, or arriving within a
reasonable time which in no case shall exceed ninety (90) days before or after the owner's return,
upon proof satisfactory to the Collector of Customs that same have been in their use abroad for
more than one year; articles in any single shipment consigned to any single person when the total
export value of such shipment does not exceed one hundred pesos: Provided, finally, That when
the export value exceeds the amount of one hundred pesos, only the amount in excess of one
hundred pesos shall be subject to duty.

j. Wearing apparel, articles of personal adornment, toilet articles, portable tolls and instruments,
theatrical costumes, and similar personal effects, accompanying travelers or tourists in their
baggage or arriving within a reasonable time, in the discretion of the Collector of Customs,
before or after the owners, in use of and necessary and appropriate for the wear or use of such
persons according to their profession or position for the immediate purposes of their journey and
their present comfort and convenience: Provided, That this exemption shall not be held to 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 a bond in an amount equal to one and one-
half times the ascertained duties, taxes and other charges upon articles classified under this
subsection, conditioned for the exportation thereof or payment of the corresponding duties, taxes
and other charges, within six 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 six months from the expiration of the
original period.

k. Vehicles, horses, harness, bed and table linen, table service, furniture, musical instruments and
personal effects of like character, owned and imported by travelers or tourists for their
convenience and comfort, 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
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 months from the expiration of the original period.

l. Professional instruments and implements, tools of trade, occupation or employment, wearing

apparel, domestic animals, and personal and household effects, including those of the kind and
class provided for under subsections j and k and belonging to persons coming to settle in the
Philippines, in quantities and of the class suitable to the profession, rank or position of the person
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, upon the production of evidence satisfactory to the Collector of
Customs that such persons are actually coming to settle in the Philippines, that the articles are
brought from their former place of abode, that change of residence is bona fide, and that the
privilege of free entry under this subsection has never been previously granted to them:
Provided, That neither merchandise of any kind, nor machinery or other articles for use in
manufacture, shall be classified under this subsection.

m. Animals, vehicles, portable theaters, circus and theatrical equipment, including musical
instruments, sceneries, panoramas, properties, saddlery, wax figures and similar objects for
public entertainment, and other articles for display in public expositions, or for exhibition or
competition for prizes, and devices for projecting pictures and parts and appurtenances therefor,
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 exportation thereof or
payment of the corresponding duties, taxes and other charges within six 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 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, 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 three thousand six hundred and
ten of this Code.

n. Articles (e.g., photographic, sound recording, electrical and other equipment, vehicles,
animals, costumes, apparel, properties, supplies, unexposed motion picture films) brought by
foreign producers for making or recording motion pictures on location in the Philippines, 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 exportation thereof or
payment of the corresponding duties, taxes and charges within six months from the date of
acceptance of the import entry. Unexposed motion picture films allowed free entry under bond
for exportation falling within this subsection and subsequently exposed, whether or not
developed, may be reexported free of import duties, taxes and other charges.

Negative 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 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 working the photographic camera or other photographic and
sound recording apparatus by means of which the film is made.

o. Costumes, regalia and other articles, including office supplies and equipment, imported for the
official use of members and attaches of foreign embassies, legations, consular officers and other
representatives of foreign government: Provided, That the country which any such person
represents accords like privileges to corresponding officials 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 Department of Finance in each instance
which will be issued only upon request of the Department of Foreign Affairs.

p. Regalia, gems, statuary, specimens or casts of sculptures imported for the bona fide use and by
the order of any society incorporated or established solely for religious, philosophical,
educational, scientific or literary purposes, or for the encouragement of the fine arts, or for the
use and by the order of any institution of learning, public library, museum, orphan asylum or
hospital, and not for barter, sale or hire: Provided, That the term regalia shall be held to
embrace only such insignia of rank or office or emblems as may be worn upon the person or
borne in the hand during public exercises or ceremonies of the society or institution, and shall
not include articles of furniture or fixtures, or ordinary wearing apparel, nor personal property of
individuals.

q. Musical organs imported for the bona fide use and by the owner of any society incorporated or
established for religious or educational purposes, or, expressly for presentation thereto.
r. Scientific apparatus, instruments and utensils specially imported for the bona fide use and by
the order of any society or institution incorporated or established solely for educational,
scientific, or charitable purposes, or for the encouragement of the fine arts, or for the bona fide
use and by the order of any institution of learning in the Philippines, and not for barter, sale or
hire.

s. Philosophical, historical, economic, scientific, technical and vocational books specially

imported for the bona fide use and by the order of any society or institution, incorporated or
established solely for philosophical, educational, scientific, charitable or literary purposes, or for
the encouragement of the fine arts, or for the bona fide use of and by the order of any institution
of learning in the Philippines: Provided, That the provisions of this subsection shall apply to
books not exceeding two copies of any one work when imported by any individual for his own
use, and not for barter, sale or hire.

Bibles, missals, prayerbooks, koran, ahadith and other religious books of similar nature and
extracts therefrom, hymnal and hymns for religious uses, specially prepared books, music and
other instrumental aids for the deaf, mute or blind, and textbooks prescribed for use in any school
in the Philippines: Provided, That complete books published in parts in periodical form shall not
be classified herein.

t. Newsprint, whenever imported by or for publishers for the exclusive use in the publication of
newspapers.

u. Articles donated to public or private institutions established solely for educational, scientific,
cultural, charitable, health, relief, philanthropic or religious purposes, for free distribution
among, or exclusive use of, the needy.

v. Food, clothing, house-building and sanitary-construction materials, and medical, surgical and
other supplies for use in emergency relief work, when imported by or directly for the account of
any victim, sufferer, refugee, survivor or any other person affected thereby, or by or for the
account of any relief organization, not operated for profit, for distribution among the distressed
individuals, whenever the President shall, by proclamation, declare an emergency to exist by
reason of a state of war, pestilence, cholera, plague, famine, drought, typhoon, earthquake, fire,
flood and similar conditions: Provided, That the importation free of duty of articles described in
this herein subsection shall continue only during the existence of such emergency, or within such
limits and subject to such conditions as the President may, by his proclamation, deem necessary
to meet the emergency.

w. 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, and foreign articles when returned after
having been loaned and exported for use temporarily abroad solely for exhibition, examination or
experimentation, for scientific or educational purposes, and foreign containers packed with
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, 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.

x. Large containers (e.g., demijohns, cylinders, drums, casks and other similar receptacles of
metal, glass or other material) which are, in the opinion of the Collector of Customs, of such a
character as to be readily identifiable may be delivered to the importer thereof 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 on
payment of the corresponding duties, taxes and other charges within one year from the date of
acceptance of the import entry.

y. Supplies or ship stores listed as such for the use of the vessel; supplies which are intended for
the reasonable requirements of the vessel in her voyage outside the Philippines, including such
articles transferred from a bonded warehouse in any collection district to any vessel engaged in
foreign trade, for use or consumption of the passengers or its crew on board such vessel as sea
stores; or articles purchased abroad for sale on board a vessel as saloon stores or supplies:
Provided, That any surplus or excess of such ship, sea or saloon stores arriving from foreign
ports shall be dutiable according to the corresponding heading or subheading.

z. Articles and salvage from vessels recovered after the period of two years from the date of
filing the marine protest or the time when the vessel was wrecked or abandoned as determined by
the Collector of Customs, or such part of Philippine vessel or her equipment, wrecked or
abandoned in Philippine waters or elsewhere: Provided, That articles and salvage recovered
within the said period of two years shall be dutiable according to the corresponding heading or
subheading.

aa. Articles of easy identification exported from the Philippines for repairs abroad and
subsequently reimported: Provided, That the cost of the repairs made to any such article shall pay
a rate of duty of twenty-five per cent ad valorem.

bb. Coffins or urns containing human remains, bones or ashes, and all articles for ornamenting
said coffins or urns and accompanying same; used personal and household effects, not
merchandise, of deceased persons, upon identification as such, satisfactory to the Collector of
Customs.

Sec. 1801. Abandonment, Kinds and Effect of Abandonment is express when it is made
direct to the Collector by the interested party in writing, and it is implied when, from the
action or omission of the interested party, an intention to abandon can be clearly inferred.
The failure of any interested party to file the import entry within fifteen days or any
extension thereof from the discharge of the vessel or aircraft, shall be implied
abandonment. An implied abandonment shall not be effective until the article is declared
by the Collector to have been abandoned after notice thereof is given to the interested
party as in seizure cases.
 1. When are imported goods deemed abandoned?

Imported articles must be entered within a non-extendible period of 30 days from the date
of discharge of the last package from a vessel. Otherwise, the BOC will deem the
imported goods impliedly abandoned under Section 1801. (Chevron vs. CIR)

2. What is an implied abandonment?

An implied abandonment occurs when the importer fails to file the import entry within
fifteen days or any extension thereof from the unloading of the goods from the vessel or
aircraft.

HON. RICARDO G. PAPA, as Chief of Police of Manila; HON. JUAN PONCE ENRILE, as
Commissioner of Customs; PEDRO PACIS, as Collector of Customs of the Port of Manila; and
MARTIN ALAGAO, as Patrolman of the Manila Police Department, petitioners, vs.
REMEDIOS MAGO and HILARION U. JARENCIO, as Presiding Judge of Branch 23, Court
of First Instance of Manila, respondents.

Facts:
Claiming to have been prejudiced by the seizure and detention of the two trucks and their cargo,
Remedios Mago and Valentin B. Lanopa filed with the CFI a petition "for mandamus with
restraining order or preliminary injunction against petitioners. That even assuming that the goods
have been misdeclared and undervalued, the same were not subject to seizure under Section 2531
of the Tariff and Customs Code because Remedios Mago had bought them from another person
without knowledge that they were imported illegally; that the bales had not yet been opened,
although Chief of Police Papa had arranged with the Commissioner of Customs regarding the
disposition of the goods, and that unless restrained their constitutional rights would be violated
and they would truly suffer irreparable injury. Judge Jarencio authorized the release under bond
of certain goods which were seized and held by petitioners.

Issue:
a. Whether or not the Customs bureau has jurisdiction to seize the goods and institute forfeiture
proceedings against respondents
b. Whether or not the CFI has jurisdiction to entertain the petition for mandamus to compel the
Customs authorities to release the goods

Held:
a. Yes. The Bureau of Customs has the duties, powers and jurisdiction, among others, (1) to
assess and collect all lawful revenues from imported articles, and all other dues, fees,
charges, fines and penalties, accruing under the tariff and customs laws; (2) to prevent
and suppress smuggling and other frauds upon the customs; and (3) to enforce tariff and
customs laws. 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.
 Even if it be granted, arguendo, that after the goods in question had been brought out of
the customs area the Bureau of Customs had lost jurisdiction over the same, nevertheless,
when said goods were intercepted by members of the Manila Police Department, who had
been formally deputized by the Commissioner of Customs, the Bureau of Customs had
regained jurisdiction and custody of the goods. Section 1206 of the Tariff and Customs
Code imposes upon the Collector of Customs the duty to hold possession of all imported
articles upon which duties, taxes, and other charges have not been paid or secured to be
paid, and to dispose of the same according to law. The goods in question, therefore, were
under the custody and at the disposal of the Bureau of Customs at the time the petition for
mandamus was filed in the CFI. The CFI, therefore, could not exercise jurisdiction over
said goods even if the warrant of seizure and detention of the goods for the purposes of
the seizure and forfeiture proceedings had not yet been issued by the Collector of
Customs.

b. No. It is the settled rule, therefore, that the Bureau of Customs acquires exclusive
jurisdiction over imported goods, for the purposes of enforcement of the customs laws,
from the moment the goods are actually in its possession or control, even if no warrant of
seizure or detention had previously been issued by the Collector of Customs in
connection with seizure and forfeiture proceedings. In the present case, the Bureau of
Customs actually seized the goods in question, and so from that date the Bureau of
Customs acquired jurisdiction over the goods for the purposes of the enforcement of the
tariff and customs laws, to the exclusion of the regular courts. Much less then would the
CFI have jurisdiction over the goods in question after the Collector of Customs had
issued the warrant of seizure and detention. And so, it cannot be said, as respondents
contend, that the issuance of said warrant was only an attempt to divest the respondent
Judge of jurisdiction over the subject matter of the case. The court presided by
respondent Judge did not acquire jurisdiction over the goods in question when the
petition for mandamus was filed before it, and so there was no need of divesting it of
jurisdiction. Not having acquired jurisdiction over the goods, it follows that the CFI had
no jurisdiction to issue the questioned order releasing said goods.

Petitioner Martin Alagao and his companion policemen had authority to effect the seizure
without any search warrant issued by a competent court. The Tariff and Customs Code
does not require said warrant in the instant case. The Code authorizes persons having
police authority under Section 2203 of the Tariff and Customs Code to enter, pass
through or search any land, inclosure, warehouse, store or building, not being a dwelling
house; and also to inspect, search and examine any vessel or aircraft and any trunk,
package, or envelope or any person on board, or to stop and search and examine any
vehicle, beast or person suspected of holding or conveying any dutiable or prohibited
article introduced into the Philippines contrary to law, without mentioning the need of a
search warrant in said cases. But in the search of a dwelling house, the Code provides that
said "dwelling house may be entered and searched only upon warrant issued by a judge or
justice of the peace. . . ." It is our considered view, therefor, that except in the case of the
search of a dwelling house, persons exercising police authority under the customs law
 may effect search and seizure without a search warrant in the enforcement of customs
laws.

Sec. 1802. Abandonment of Imported Articles. The owner or importer of any articles may,
within ten days after filing of the import entry, abandon to the Government all or a part of the
articles included in an invoice, and, thereupon, he shall be relieved from the payment of duties,
taxes and all other charges and expenses due thereon: Provided, That the portion so abandoned
is not less than ten per cent of the total invoice and is not less than one package, except in cases
of articles imported for personal or family use. The article so abandoned shall be delivered by the
owner or importer at such place within the port of arrival as the Collector shall designate, and
upon his failure to so comply, the owner or importer shall be liable for all expenses that may be
incurred in connection with the disposition of the articles.

Nothing in this section shall be construed as relieving such 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. 1803. Right to Reclaim Article. The owner or importer of an article impliedly abandoned
may, at any time before it is sold or otherwise disposed of, reclaim such article provided all legal
requirements regarding its importation are complied with and the corresponding duties, taxes
and other charges as well as all expenses incurred as a consequence of the abandonment, are
paid.
1. Is the importer liable for duties and taxes if the imported goods are abandoned to
the government?

No, the importer shall be relieved from payment of duties and taxes and other charges
and expenses on the abandoned goods if (a) the abandonment is done within ten (10) days
from the filing of the import entry; (b) is not less than ten (10) percent of the total
invoice; and (c) is not less than one (1) package except in cases of articles imported for
personal or family use.

2. Is the importer absolved of criminal liability if the abandoned goods are included in
the list of prohibited importations?

No, the importer is not absolved of criminal liability.

3. May the importer reclaim goods previously abandoned?

Yes, the importer may reclaim goods previously abandoned provided that (a) the
abandonment was an implied abandonment; (b) all legal requirements are complied with;
and (c) all duties, taxes, charges, and other expenses incurred during the abandonment are
paid by the importer.
CUSTOMS DUTIES
As reported by:
Sharon Vestidas-Punzalan (Refresher)
IV. CUSTOMSDUTIES

A. KindsofCustomsDuties
(a) OrdinaryImportDuties
-Tariff duties are levied on imported goods either as a revenue generating
measure or a protective scheme to artificially or temporarily inflate prices to
support the local industries of a particular country and protect its domestic output
from their foreign counterparts. In the Philippines, import duties are imposed,
generally in ad valorem form, on articles entering the country in accordance with
their corresponding schedules and classifications as provided under Section 104
of the Tariff and Customs Code of the Philippines (TCCP) of 1978, as amended.
With the exception of certain articles which can be imported duty-free, upon
compliance with certain prescribed conditions or formalities317, goods are
levied import duties depending on the trade agreements, regional groupings,
among others. These are: (i) Ad valorem; (ii) Specific duty; (iii) Alternating
duty; (iv) Compound duty

(b) Special-These are levied in addition to the ordinary import duties, taxes and
charges imposed by law on the imported product under the following
circumstances:
o Anti-Dumping
-The anti-dumping duty is a trade remedy measure adopted by the
government to protect a domestic industry against the unfair trade
practice of dumping.It is a special duty imposed in the event that a
specific kind or class (any product, commodity, or article of commerce)
of foreign article, is being imported into, sold or is likely to be sold in the
Philippines, at an export price less than its normal value in the ordinary
course of trade for a like product, commodity or article destined for
consumption in the exporting country which is causing or threatening to
cause material injury to a domestic industry, or materially retarding the
establishment of a domestic industry producing similar product.

This duty is imposed by the Secretary of Trade and Industry, in the case
of non-agricultural products, commodities or articles, or the Secretary of
Agriculture, in the case of agricultural products, commodities or articles,
after formal investigation and affirmative finding of the Tariff
Commission of the said act. The duty is equal to the margin of dumping
on such product, commodity or article and on like product, commodity or
article thereafter imported into the Philippines under similar
circumstances. However, the duty may be charged less than the margin of
dumping if the said lesser duty is adequate to remove the injury to the
local industry. The decision as to whether or not to impose a definitive
antidumping duty even when the requirements for the imposition are
met/fulfilled will remain the prerogative of the TC. It may take into
consideration, 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-A (RA 8752):
Generally, whenever the Secretary of Finance has reason to
believe, from invoices or other documents or newspapers,
magazines or information made available by any government
agency or interested party, that a specific kind or class of foreign
article, is being imported into, or sold, or is likely to be sold in the
Philippines, at a price less than its fair value, the importation and
sale of which might injure, or retard the establishment of, or is
likely to injure, an industry producing like goods in the
Philippines, he shall so advice the Tariff Commission, and shall
instruct the Collector of Customs to require an anti-dumping bond
of twice the dutiable value of the imported article coming from
the specific country.
Purpose:
To protect local industries from undue competition.
Imposing Authority:
Secretary of Trade and Industry for Non-Agricultural Products
Secretary of Agriculture for Agricultural Products
Amount/Rate:
Export Price Normal = Anti-Dumping Duty-

o Countervailing
-The countervailing duty is a special duty charged whenever any product,
commodity or article of commerce is granted directly or indirectly by the
government in the country of origin or exportation, any kind or form of
specific subsidy upon the production, manufacture or exportation of such
product, commodity or article, and the importation of such subsidized
product, commodity or article has caused or threatens to cause material
injury to a domestic industry or has materially retarded the growth or
prevents the establishment of a domestic industry.

After formal investigation and affirmative finding by the Tariff

Commission of such threat, the countervailing duty which is equal to the
ascertained amount of the subsidy, may be imposed by the Secretary of
Trade and Industry, in the case of non-agricultural products, commodities
or articles, or the Secretary of Agriculture, in the case of agricultural
products, commodities or articles on like product, commodity or article
thereafter imported into the Philippines.

Sec.302-A (RA 8751):

On articles dutiable under this Code, upon the production ,
manufacture or export of which any bounty, subsidy or
subvention is directly or indirectly granted in the country of origin
and/or exportation, and the importation of which has been
 determined by the Secretary, after investigation and report of the
Commission, as likely to materially injure an established industry,
or prevent or considerably retard the establishment of an industry
in the Philippines.
Amount/Rate:
Equal to the ascertained or estimated amount of such bounty,
subsidy or subvention.

o Marking
-The marking of articles (or its containers) is a prerequisite for every
article or container of foreign origin which is imported into the
Philippines in accordance with Section 303 of the TCCP. The marking
shall be done in any official language of the Philippines and in a
conspicuous place as legibly, indelibly and permanently as the nature of
article (or container) may permit to indicate an ultimate purchaser in the
Philippines the country of origin of the article.

In case of failure to mark an article or its container at the time of

importation; unless otherwise excepted from the requirement of marking,
there shall be levied upon such article a marking duty of 5% ad valorem.
Sec.303-A (Tariff and Customs Code of the Philippines):
Every article of foreign origin imported into the Philippines shall
be marked in any official language of the Philippines and in a
conspicuous place as legibly , indelibly and permanently as the
nature of the article will permit in such manner as to indicate to an
ultimate purchaser in the Philippines the name of the country of
origin of the article.

Purpose:
To prevent possible deception.
Imposing Authority:
Commissioner of Customs
Amount/Rate:
5% Ad Valorem of the goods.

o Discriminatory
-As stipulated under Section 304 of the TCCP, the discriminatory duty is
a new or additional duty in an amount not exceeding 100% ad valorem,
imposed by the President by proclamation upon articles of a foreign
country which discriminates against Philippine commerce or against
goods coming from the Philippines in such manner as to place the
commerce of the Philippines at a disadvantage compared with the
commerce of any foreign country.

Section 304 (Tariff and Customs Code of the Philippines)

Nature:
 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.
Purpose:
To protect national interest.
Imposing Authority:
The President of the Philippines.
Amount/Rate:
Not exceeding 100% ad valorem.
Question: How to Calculate Import and Sales Tax in the Philippines?

Answer:

The import taxes and duty will be calculated based on the complete shipping value
(CIF). This also includes the cost of your imported goods, the freight and the
insurance. As well, the imports are subject to Sales Tax.

Duty and Sales tax for the Philippines:

Duty Average Duty

Sales Tax(GST) or VAT Threshold on goods
Rates Rate

ST=12%
No duty if the CIF value wont exceed
to 65% 10.5% VAT = ST * (CIF +
US$15
Duty)

Example 1:Reference: http://emerhub.com/philippines/calculate-import-tax-and-

duty-in-the-philippines/

If the Complete Shipping (CIF) value of the imported goods is USD 1,000, Import Duty is 5%,
and the Sales Tax is 12%. Then, how shall the duty/taxes be calculated?

Answer:
 Computation: Amount:
Import Duty $1,000 * 5% = $ 50
Vat ($1,000 + $50 = $1,050 * 12%= 126

Total Import Duty and Taxes $ 176

Note:

Import Duty Rate may vary depending on the article imported.

Example 2:Reference:
http://www.facebook.com/Philippine.Customs.Duties.and.taxes/posts/

Sample Basic Computation on Imported Items (Apparels)

 Amount:
Dutiable Value (L.C.) 33,900.00
Multiply By: Rate of Duty 15%
Customs Duty 5,085.00

Dutiable Value 33,900.00

Add:
Customs Duty 5,085.00
Customs Duty Stamp (CDS) 265.00
Import Processing Fee (IPF) 250.00
Total EVAT Base 39,500.00

Total EVAT Base 39,500.00

Multiply By: EVAT Rate 12%
EVAT Amount 4,740.00

Summary of Taxes:
---Customs Duty 5,085.00
---EVAT 4,740.00
---CDS 265.00
---IPF 250.00
Total Tax Due 10,340.00

B. TRANSACTION VALUE SYSTEM

Section 201 (RA 9135)-Transaction Value Method

Basis of Dutiable Value: The dutiable value of an imported article

subject to an ad valorem rate of duty shall be the transaction value,
which shall be the price actually paid or payable for the goods when
sold for export to the Philippines, adjusted by adding:

(1) The following to the extent that they are incurred by the buyer but
are not included in the price actually paid or payable for the imported
goods:

(a) Commissions and brokerage fees (except buying commissions);

(b) Cost of containers;

(c) The cost of packing, whether for labour or materials;

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

(e) The amount of royalties and license fees related to the goods
being valued that the buyer must pay, either directly or indirectly,
as a condition of sale of the goods to the buyer;

(2) The value of any part of the proceeds of any subsequent resale,
disposal or use of the imported goods that accrues directly or indirectly
to the seller;

(3) The cost of transport of the imported goods from the port of
exportation to the port of entry in the Philippines;

(4) Loading, unloading and handling charges associated with the

transport of the imported goods from the country of exportation to the
port of entry in the Philippines; and

(5) The cost of insurance.

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

C. POST ENTRY AUDIT

Section 3515 (RA 9135)

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.
SMUGGLING
As reported by:
Abegail Guardian
V. SMUGGLING

A. WHAT IS SMUGGLING?

"Smuggling" is an act of any person who shall fraudulently import or bring into the Philippines,
or assist in so doing, any article, contrary to law or shall receive, conceal, buy, sell or in any
manner facilitate the transportation, concealment, or sale of such article after importation,
knowing the same to have been imported contrary to law. It includes the exportation of
articles in a manner contrary to law. Articles subject to this paragraph shall be known as
smuggled articles. (Sec. 3519 of Part 2, Title VII; TCCP)

Smuggling was also defined using the term Unlawful Importation under Section 3601 of the
Tariff and Customs Code of the Philippines.

Unlawful Importation. 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, shall be punished by a
fine of not less than six hundred pesos nor more than five thousand pesos and imprisonment
for not less than six months nor more than two years and, if the offender is an alien, he shall
be deported after serving the sentence.

B. PROPERTIES SUBJECT TO FORFEITURE

SEC. 2530. Property Subject to Forfeiture Under Tariff and Customs Laws. - 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 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 stores,
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, stores or supplies of a vessel or aircraft arriving from a foreign port
which is unladen before arrival at the vessel's or aircraft's port of destination and without
authority from the customs officials; 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 the exportation of the former;
g. Unmanifested 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, cases, trunks, envelopes and other containers of whatever character used as
receptacle or as device to conceal article which is itself subject to forfeiture under the tariff
and customs laws or which is so designed as to conceal the character of such articles;
k. 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;

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 abroad; (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.
 C. PROPERTIES NOT SUBJECT TO FORFEITURE

SEC. 2531. Properties Not Subject to Forfeiture in the Absence of Prima Facie Evidence. The
forfeiture of the vehicle, vessel, or aircraft shall hot 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.

The ruling in the case of Commissioner of Customs vs. Manila Star Ferry, Inc.below
provides a view on the application of the aforementioned provisions and the nature of forfeiture
proceedings.

COMMISSIONER OF CUSTOMS VS. MANILA STAR FERRY, INC.

G.R. Nos. L-31776-78; October 21, 1993

FACTS:

On June 12, 1966, the S/S Argo, the Orestes and the UN-L-106, as well as two wooden bancas of
unknown ownership, were apprehended for smuggling by a patrol boat of the Philippine Navy
along the Explosives Anchorage Area of Manila Bay. The patrol boat caught the crew of the S/S
Argo in the act of unloading foreign-made goods onto the UN-L-106, which was towed by the
Orestes and escorted by the two wooden bancas. The goods consisted of 330 cases of foreign-
made cigarettes, assorted ladies wear, clothing material and plastic bags, all of which were not
manifested and declared by the vessel for discharge in Manila. No proper notice of arrival of the
S/S Argo was given to the local customs authorities.

Thereafter, seizure and forfeiture proceedings were separately instituted before the Collector of
Customs for the Port of Manila against the S/S Argo (Seizure Identification Case No. 10009,
Manila) and its cargo (S.I. No. 10009-C, Manila), the Orestes (S.I. No. 10009-A, Manila), the
UN-L-106 (S.I. No. 10009-B, Manila) and the two bancas (S.I. No. 10009-D, Manila), charging
them with violations of Section 2530 (a), (b) and (c) of the Tariff and Customs Code. Criminal
charges were likewise filed against the officers and crew of said vessels and watercraft.
In the seizure and forfeiture proceedings, the Collector of Customs rendered a consolidated
decision dated and December 27, 1966, declaring the forfeiture of said vessels and watercraft in
favor of the Philippine government by virtue of Section 2530 (a) and (b) of the Tariff and
Customs Code.

All respondents therein, except the owner of the two wooden bancas, separately appealed the
consolidated decision of the Collector of Customs for the Port of Manila to the Commissioner of
Customs. In his Decision dated February 1, 1967, the Acting Commissioner of Customs found
the Collectors decision to be in order and affirmed the same accordingly. The CTA modified the
decision of the Commissioner of Customs, which ordered Manila Star Ferry and United
Navigation and Transport Corporation and Ceaba Agency to pay fine.

ISSUE:

Whether or not the subject vessels and watercraft were engaged in smuggling, and that the S/S
Argo, the barge, and tugboat Orestes should be forfeited.

HELD:

As to the subject vessel -NO

It was only in 1972, after this case was instituted, when the questioned exception (except a port
of entry) in Section 2530 (a) of the Tariff and Customs Code was deleted by P.D. No. 74.

Nevertheless, although the vessel cannot be forfeited, it is subject to a fine of not more than
P10,000.00 for failure to supply the requisite manifest for the unloaded cargo under Section 2521
of the Code, which reads as follows:

Sec. 2521. Failure to Supply Requisite Manifests.If any vessel or aircraft enters or departs
from a port of entry without submitting the proper manifest to the customs authorities, or shall
enter or depart conveying unmanifested cargo other than as stated in the next preceding section
hereof, such vessel or aircraft shall be fined in a sum not exceeding ten thousand pesos.

As to the barge-lighter and tugboat -YES

The barge-lighter UN-L-106 and the tugboat Orestes, on the other hand, are subject to forfeiture
under paragraph (c) of Section 2530 of the Tariff and Customs Code. The barge-lighter and
tugboat fall under the term vessel which includes every sort of boat, craft or other artificial
contrivance used, or capable of being used, as a means of transportation on water (R.A. No.
1937, Sec. 3514). Said section 2530(c) prescribes the forfeiture of any vessel or aircraft into
which shall be transferred cargo unladen contrary to law before the arrival of the vessel or
aircraft at her port of destination. Manila was not
the port of destination, much less a port of call of
the S/S Argo, the importing vessel. The S/S Argo
left Hongkong and was bound for Jesselton, North
Borneo, Djakarta and Surabaja, Indonesia; and yet
it stopped at the Port of Manila to unload the
smuggled goods onto the UN-L-106 and the
Orestes.
Nature of Forfeiture Proceedings:
Forfeiture proceedings are proceedings in
rem (Commissioner of Customs v. Court of
Tax Appeals, 138 SCRA 581 [1985] citing
Vierneza v. Commissioner of Customs, 24
SCRA 394 [1968] and are directed against
the res. It is no defense that the owner of the
vessel sought to be forfeited had no actual
knowledge that his property was used
illegally. The absence or lack of actual
knowledge of such use is a defense personal
to the owner himself which cannot in any
way absolve the vessel from the liability of
forfeiture (Commissioner of Customs v. Court
of Appeals, supra; U.S. v. Steamship Rubi,
Phil. 228, 239 [1915]). Phil. 228, 239 [1915]).

D. RECOVERY OF ILLEGALLY SEIZED GOODS

COMMISSIONER OF CUSTOMS VS. AGHFA, INC.

G.R. No. 197425; March 28, 2011

FACTS:

On December 12, 1993, a shipment containing bales of textile grey cloth arrived at the Manila
International Container Port (MICP). The Commissioner, however, held the subject shipment
because its owner/consignee was allegedly fictitious. AGFHA intervened and alleged that it was
the owner and actual consignee of the subject shipment.

On September 5, 1994, after seizure and forfeiture proceedings took place, the District Collector
of Customs, MICP, rendered a decision ordering the forfeiture of the subject shipment in favor of
the government. Appeal filed by AGHFA was dismissed by the Commissioner. The CTA-
Second Division reversed the Commissioners Decision and ordered the immediate release of the
subject shipment to AGFHA.

In its Resolution, the CTA-Second Division held in abeyance its action on AGFHAs motion for
execution in view of the Commissioners appeal with the Court of Appeals which was denied by
CA for lack of merit.
ISSUE:

Whether or not the Court of Tax Appeals was correct in awarding the respondent the amount of
US$160,348.08, as payment for the value of the subject lost shipment that was in the custody of
the petitioner.

HELD:

Yes.

The Court agrees with the ruling of the CTA that AGFHA is entitled to recover the value of its
lost shipment based on the acquisition cost at the time of payment.

In the case of C.F. Sharp and Co., Inc. v. Northwest Airlines, Inc. the Court ruled that the rate of
exchange for the conversion in the peso equivalent should be the prevailing rate at the time of
payment:

In ruling that the applicable conversion rate of petitioners liability is the rate at the time of
payment, the Court of Appeals cited the case of Zagala v. Jimenez, interpreting the provisions of
Republic Act No. 529, as amended by R.A. No. 4100. Under this law, stipulations on the
satisfaction of obligations in foreign currency are void. Payments of monetary obligations,
subject to certain exceptions, shall be discharged in the currency which is the legal tender in the
Philippines. But since R.A. No. 529 does not provide for the rate of exchange for the payment of
foreign currency obligations incurred after its enactment, the Court held in a number of cases that
the rate of exchange for the conversion in the peso equivalent should be the prevailing rate at the
time of payment.

Likewise, in the case of Republic of the Philippines represented by the Commissioner of

Customs v. UNIMEX Micro-Electronics GmBH, which involved the seizure and detention of a
shipment of computer game items which disappeared while in the custody of the Bureau of
Customs, the Court upheld the decision of the CA holding that petitioners liability may be paid
in Philippine currency, computed at the exchange rate prevailing at the time of actual payment.

The Court cannot turn a blind eye to BOCs ineptitude and gross negligence in the safekeeping
of respondents goods. The Court is not likewise unaware of its lackadaisical attitude in failing
to provide a cogent explanation on the goods disappearance, considering that they were in its
custody and that they were in fact the subject of litigation. The situation does not allow the Court
to reject respondents claim on the mere invocation of the doctrine of state immunity. Succinctly,
the doctrine must be fairly observed and the State should not avail itself of this prerogative to
take undue advantage of parties that may have legitimate claims against it.
The Court agree with the lower courts directive that, upon payment of the necessary customs
duties by respondent, petitioners payment shall be taken from the sale or sales of goods or
properties seized or forfeited by the Bureau of Customs.

###