2015 pre-bar lecture on customs

7/26/2019 2015 Pre-Bar Lecture on Customs

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A member firm of Ernst & Young Global Limited

PRE-BAR REVIEWTariff and Customs Code of 1978,

as amendedAtty. Stephanie G. Vicente-Nava

Tax Services / Customs and Global Trade


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Outline

Tariff and Duties

General Rule on Importation Purpose of imposition of taxes Flexible tariff clause Importation in general Statutory basis for collection of duties and taxes

Obligations of the Importer Cargo manifest Import entry Declaration of correct weight or value Liability for payment of duties Liquidation of duties Keeping of records

Classification of goods Taxable Prohibited Conditionally-free


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Outline

Classification of Duties

Ordinary/regular duties Ad valorem methods of valuation

Transaction value Transaction value of identical goods Transaction value of similar goods Deductive value Computed value Fallback value

Special duties a. Dumping duties b. Countervailing duties c. Marking duties d. Regulatory/discriminatory duties

e. Safeguard duties

Violations of the TCCP Smuggling Other fraudulent practices


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Outline

Remedies of the Government Administrative/extrajudicial - Search, seizure, forfeiture,

arrest

Judicial appeal

Remedies of the Taxpayer Protest

Abandonment

Abatement and refund


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National Taxes Local Taxes

Philippine Taxes

Income Tax, Value-AddedTax, Donors Tax, Estate Tax,

Capital Gains Tax,Percentage Tax,

Documentary Stamp Tax,Excise Tax, Withholding

Taxes.

BUREAU OF CUSTOMS(BOC)

BUREAU OF INTERNALREVENUE (BIR)

LOCAL GOVERNMENTUNITS (LGUs)

Local Business Tax (LBT),

Real Property Tax (RPT) andSpecial Educational Fund(SEF), Local Transfer Tax,Business Permit and other

Regulatory Fees

Customs Duties, VAT onImportation and ExciseTax, if applicable

Tariff and

Customs Code

of 1978

National Internal

Revenue Code

1997

Local Government

Code of 1991 and

Local Ordinances
http://www.blgf.gov.ph/


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Functions of the Bureau of Customs

Assess and collect lawful revenues from imported articles and all

other fees accruing under the TCCP

Prevent and suppress smuggling and other frauds

Supervise and control vessels/aircrafts doing foreign trade

Enforce the TCCP and all other customs rules and regulations

Control the handling of foreign mails for revenues and

prevention purposes

Supervise and control import and export

cargoes

Exclusive original jurisdiction over

forfeiture and seizure cases

(Section 602 of the TCCP)


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Sources of Customs Laws

Constitution [Article VI, Section 24 and 28 (1)]

Tariff and Customs Code of 1978 National Internal Revenue Code of 1997

Administrative Rules and Regulations

Judicial Decisions

Treaties or International Agreements Executive Orders

Flexible Tariff Clause (Section 401, TCCP)

In the interest of national economy,

general welfare and/or national security,

the President is empowered to change the

level and form of import duties, impose an

import quota or ban imports, levy an additional duty

on all imports.


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Definitions

Tariff Duties

Listor schedule ofcommodities drawn

usually in alphabeticalorder, containing thenames of several kinds ofmerchandise, with thecorresponding duties orcustoms to be paid for thesame.

Taxlevied on acommodity when it is

imported from orexported to a foreigncountry.


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Legal Basis for the Collection of Duties

All articles, when imported from any foreign country

into the Philippines, shall be subject to duty upon eachimportation, even though previously exported from thePhilippines, except as otherwise specifically providedfor in this Code or in other laws. (Sec. 101, TCCP)

All importations by the government for its own use orthat of its subordinate branches on instrumentalities, orcorporations, agencies or instrumentalities owned orcontrolled by the government, shall be subject to the

duties, taxes, fees and other charges except asotherwise specifically provided. (Sec. 1205, TCCP)

Customs updates


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Purpose for Imposing Duties

Increase governmental revenues.

Lifeblood Doctrine: Taxes are the lifeblood of thenation. Their primary purpose is to generate funds forthe state to finance the needs of the citizenry and

advance common veal (Napocor vs. Province of Albay,G.R. No. 87479, June 4, 1990)

Regulate the inflow of imported goods to protect local

industries where such industries actually exist and areproducing comparable goods. (Garcia v. ExecutiveSecretary, G.R. No. 101273, July 3, 1992.)

Customs updates


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ForeignSupplier

Importer(Philippines)

Importation in general

When does importation begin and

end?

Importation begins from the timethe carrying vessel or aircraftenters Philippine territorialjurisdiction with the intention tounload therein,and ends at thetime the goods are released orwithdrawn from customs house

upon payment of customs dutiesand with legal permit to withdraw(Viduya vs. Berdiago, 73 SCRA

553).

Customs

Customs updates


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Owner of Imported Articles

Section 1203 of the TCCP considers the following persons the owners

of imported articles:

1. Consignee refer to the client of shippers of goods or those forwhose account or benefit the shipment is made;

2. Holder of the bill of lading or air waybill

3. Consignor the shipper of the imported articles from abroad

4. Underwriters of the abandoned articles insurance companiesfrom whom the imported articles are insured

5. Salvor those who saves imperiled property on navigable watersfor the benefit of the owner and with the expectation of receivingan appropriate salvage award.


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Nature of the liability for duties and taxes

Unless relieved by laws or regulations, the liability for

duties, taxes, fees and other charges attaching onimportation constitute:

A personal debt due from the importer to thegovernment which can be discharged only by paymentin full.

A lien upon the articles imported which may beenforced while such articles are in custody or subject to

the control of the government. (Sec. 1204 of TCCP)

Customs updates


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General Duties of an Importer

Customs updates

SecureBIR-ICC

and BOC-

IA (DO No.12-2014)

and importpermits

ACCREDIT

BEFORE

ENTRYUPON ENTRY AFTER

ENTRY

PRESENT

MANIFEST

FILE SAD &

PAYLIQUIDATE

ENTRY

KEEP

RECORDS

CLAIM

GOODS

Presentmanifestand other

shippingdocuments

uponarrival atany port(Section

1005,TCCP)

FileIEIRD/SADwithin 30

daysfromdischarge of

the lastpackagefrom thevessel or

aircraft(Section1210, TCCP)

and payduties and

taxes

Claimimported

goodswithin 15

days fromthe BOCs

Notice ofClaim.

Finality ofliquidation3 yearsfrom finalpaymentof duties(Section1603,TCCP)

A penaltyof 20% advaloremshall beimposedon the

value ofthe

imported

goods forwhich norecords

were kept.


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Manifest

All vessels or aircrafts are required by law to present a cargo

manifest to customs authorities upon arrival at any port ofentry in the Philippines (Section 1005, TCCP).

A manifest is a statement in official form showing whatmerchandise a vessel carries

The purpose of which is to furnish the customs officers withinformation on what goods are being imported.

Generally contains information on the following:

Bill of Lading or Airway Bill number

Marks and numbers of the packages

Port of departure and destination

Name and address of the importer or consignee

Description, value and weight of the shipments

Customs updates


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Entry

All articles imported into the Philippines, whether subject

to duty or not, shall be entered through a customhouse ata port of entry (Section 1201, TCCP)

Making entry has a triple meaning:

1. The document filed at customhouse,

2. The submission and acceptance of the documents, and

3. The procedure of passing through customhouse.

Imported articles must be entered in the customhouse at

the port of entry within 30 days, which shall not beextendible, from the date of discharge of the last packagefrom the vessel or aircraft (Section 1201, TCCP).

Customs updates


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Claim Imported Goods

Imported goods should be claimed by the importerwithin 15 days from posting of the Notice of Claim bythe BOC (Section 1210, TCCP)

The period to claim imported goods may not beextended.

Imported goods which are not claimed within the 15-day period shall be deemed ipso facto abandoned in

favor of the Government (Section 1801, TCCP).

Customs updates


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Abandonment

An imported article is deemed abandoned under thefollowing circumstances:

The importer expressly signifies in writing to theBOC his intention to abandon

The importer after due notice fails to file an entrywithin 30 days from the discharge of the lastpackage from the vessel or aircraft, or having filedsuch entry, fails to claim his importation within 15days from the date of posting of the BOCs notice to

claim.

Customs updates


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Liquidation of Importation

Liquidation means that an entry has been reviewed bythe BOC and a final computation of duties has beenascertained.

Finality of Liquidation. The duties paid after the

imported goods have been declared for tax purposes,reviewed by the BOC and delivered to the importer shallbe deemed final and conclusive upon all parties after 3years from the date of final payment of duties [except

in cases of fraud, protest or compliance audit andunless the liquidation of the import entry was merelytentative (Section 1603, TCCP)].

Customs updates


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Record Keeping

All importers are required to keep at their principalplace of business all the records of their importationsand/or books of accounts for a period 10 years(previously 3 years) from the date of importation[Section 3513, TCCP as amended by Department Order

(DO) No. 011-2014 dated February 5, 2014]

Penalties for failure to keep records (CAO No. 2-2015)

Administrative fine of 20% ad valorem on the importedgoods for which no records were kept and maintained;

Hold delivery or release of the subsequent importedarticles to answer for any revised assessment and/or anypenalty for failure to keep records.

Customs updates


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Classification of Goods

All articles, when imported from any foreign country into thePhilippines, shall be subject to duty upon each importation, eventhough previously exported from the Philippines, except asotherwise specifically provided for in this Code or in other laws(Sec. 101, TCCP).

General Rule: No exemption from customs duties


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Prohibited Importations

Importation of the following articles is prohibited:

a. Dynamite, gunpowder, ammunitions and other explosives,firearms and weapons of war, and parts thereof, except whenauthorized by law;

b. Articles advocating or inciting treason, or rebellion, orinsurrection, sedition or subversion against the Government, or

forcible resistance to Philippine laws, or containing any threat toinflict bodily harm upon any person in the Philippines;

c. Articles of obscene or immoral character;

d. Articles, designed, intended or adapted for producing unlawfulabortion, or any printed matter which advertises or describes or

gives directly or indirectly information on unlawful abortion;

e. Articles used in gambling, or parts thereof;

f. Lottery and sweepstakes tickets except those authorized by thePhilippine Government.


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Prohibited Importations

Importation of the following articles is prohibited (cont.):

g. Any article manufactured in whole or in part of gold, silver orother precious metals or alloys thereof, the stamps, brands ormarks or which do not indicate the actual fineness of quality ofsaid metals or alloys.

h. Any adulterated or misbranded articles of food or any adulteratedor misbranded drug in violation of the provisions of the "Food andDrugs Act";

i. Dangerous drugs or derivatives thereof, except when imported bythe Government of the Philippines or any person duly authorizedby the Dangerous Drugs Board, for medicinal purposes only;

j. Opium pipes and parts thereof;

k. All other articles and parts thereof, the importation of whichprohibited by law or rules and regulations issued by competentauthority. (Section 101 of TCCP, as amended.)


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Conditionally-free Importations

Refers to articles which are exempt from import duties uponcompliance with the formalities prescribed or with regulationspromulgated by the Commissioner of Customs with the approval ofthe Secretary of Finance (Section 1207, TCCP).

The following are considered as conditionally-free importations underthe TCCP.

a. Aquatic products;b. Equipment for use in the salvage of vessels or aircrafts, not

available locally;

c. Cost of repairs made in foreign countries upon vessels or aircraftregistered in the Philippines;

d. Articles brought into the Philippines for repair, processing to bere-exported upon completion thereof;

e. Medals, badges and small articles bestowed as trophies or prizes;


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Conditionally-free Importations (cont.)

f. Personal and household effects of residents of the Philippinesreturning from abroad including jewelry, and other articles of luxury

declared before departure;Personal and household effects, articles of personal adornment (exceptluxury items), and similar personal effects, excluding vehicles, purchasedin foreign countries used abroad for more than six (6) months; provided,That the articles shall not be commercial quantities; provided further,that the returning residents have not previously received the benefit

under this section within one year from and after the last exemptiongranted;

g. Wearing apparel, articles of personal adornment, of travelers andtourist; Personal and household effects and vehicles belonging toforeign consultants and experts hired by, and/or rendering service to, thegovernment, and their staff or personnel and families;

h. Professional instruments and implements belonging to personscoming to settle in the Philippines or Filipinos and/or their familiesand descendants who are now residents or citizens of othercountries;


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i. Articles used for public entertainment, and for display in publicexpositions, or for exhibition or competition for prizes;

j. Articles brought by foreign film producers used for making orrecording motion picture films on location in the Philippines;

k. Importations for the official use of foreign embassies, legations, andother agencies of foreign governments: Provided, that those foreigncountries accord like privileges to corresponding agencies of the

Philippines;Articles imported for the personal or family use of the members andattaches of foreign embassies, legations, consular officers and otherrepresentatives of foreign governments;

l. Articles donated to a relief organization, not operated for profit;

m. Containers, holders and other similar receptacles to be used forexport;

n. Supplies which are necessary for the voyage of vessel or aircraft;


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o. Articles and salvage from vessels;

p. Coffins or urns containing human remains, personal and householdeffects of the deceased person, except vehicles;

q. Samples of the kind for the purpose of introducing a new article inthe Philippine market;

r. Animals (except race horses), and plants for scientific, experimental,

propagation, botanical, breeding, zoological and national defensepurposes;

s. Economic, technical, vocational, scientific, philosophical, historical,and cultural books and/or publications;

t. Philippine articles previously exported from the Philippines and

returned without having been advanced in value or improved incondition, and upon which no drawback or bounty has been allowed,used abroad by Filipino citizens in the pursuit of their business, orprofession;


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u. Aircraft, equipment and machinery imported by and forthe use of scheduled airlines operating under franchise;

v. Machineries and equipment imported by and for the useof new mines and old mines which resume operations;

w. Spare parts of vessels or aircraft of foreign registryengaged in foreign trade when brought into thePhilippine exclusively as replacements or for theemergency repair thereof;

x. Articles of easy identification exported from thePhilippines for repair and subsequently reimported;

y. Trailer chassis when imported by shipping companies.

l t t t


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Classification of Customs Duties

Specific Duty Levied on imports based on theweight, volume or other measure ofquantity.

Ad valorem Duty Literally means according to value

Levied on a certain percentage ofvalue of the imported goods.

Special Duties Levied for a special purpose

protecting domestic industries


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Valuation of Imported Goods

In determining the value of the imported goods, the importer

may use one of the 6 valuation methods, in order of preference.

Determination of Valuation Method

Step 1 If there is a sale, use the transaction value of theimported goods (Method 1) being valued (unless arestriction to the application of transaction value ispresent). If Method 1 applies, consider requiredadditions and deductions.

Step 2 If the transaction is not a sale, or if transaction value isprecluded from being applied for some other reason,then apply the alternative methods of valuation(Method 2 -6), in their sequential order.


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Method 1 Transaction Value (TV) of ImportedGoods

The Philippines, being a signatory to the General Agreement onTariffs and Trade (GATT) and a member of the World TradeOrganization (WTO), follows the Transaction Value System underArticle VII of the GATT, as a basis for the assessment of import dutiesand taxes on imported goods.

TV is the price actually paid or payable for goods when sold for

export to the Philippines. It is the total payment that the buyermakes, directly or indirectly, to the seller.

Indirect payments include situations in which a third party (e.g. bank)is paid, but the payment benefits the seller, or situations where abenefit is received but no cash changes hands.

Examples of indirect payments include: a buyer settling all or part of a debt owed by the seller or a seller reducing the price on a current importation to settle a debt

he owes the buyer.


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Method 1 Transaction Value (cont.)

To apply Method 1, the importer must satisfy thefollowing conditions :

There must be no restrictions as to the disposition oruse of the goods by the importer;

The sale or price must not be subject to some

conditions or considerations for which a value cannotbe determined with respect to the goods beingvalued; and

The importer and the seller are not related, or ifrelated, such relationship did not influence the price

of the imported goods. The BOC requires that the price between related

companies be consistent with the price betweenunrelated companies under similar circumstances.

M th d 1 T ti V l ( t )


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Related Parties

The importer shall be deemed related to the seller (foreignsupplier) only if :

Both entities have overlapping officers and directors; Both entities are business partners;

Both entities are employer and employee; One entity direct or indirect owns, controls, holds 5% or more of

the outstanding voting stock or shares of both entities; One directly or indirectly controls the other; Both entities are directly or indirectly controlled by a 3rdentity;

Both entities directly or indirectly controls a third entity; or Both entities are related by affinity or consanguinity up to thefourth civil degree.



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Additions to TV Selling Commissions Royalties Assists

Packing and container costs Proceeds of any subsequent resale, disposal, or use ofthe imported goods that accrues, directly or indirectly,to the seller.

Other Additional Parts of the Price Paid or Payable

The importer must pay adjustments to TV within 45 days,from the date of importation or from the time paymenthas been made.



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Exclusions to TV - Post-importation charges/costs :

Constructing, erecting, assembling, maintaining, orproviding technical assistance with respect to the goodsafter importation;

Transporting the goods after importation; and

The amount of any internal tax in the country of export thathas been exempted or will be refunded.

Finance Charges

Currency Conversion

Others, provided that they do not affect the dutiable value ofthe imported articles (Cash or prompt payment discounts,credits from past transactions, quantity discounts)


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Other Methods of Valuation

If the imported goods cannot be appraised on the basis of

transaction value the imported goods will be appraisedusing one of following valuation methods, applied insequential order:

Method 2 - TV of Identical Goods Method 3 TV of Similar Goods

Method 4 Deductive Value

Method 5 Computed Value

Method 6 Fallback Value


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Method 2 - Transaction Value of Identical Goods

The identical goods must comply with the following :

Exported in the Philippines at about the same time as the goods beingvalued which is not more than 45 days before the arrival of the goods;

Same in all respects, including physical characteristics, quality andreputation;

Sold as the same level and in similar quantities;

Produced or manufactured by the same producer in the same country; Established TV, but if more than one TV is found, the lowest value shall be

used.

Minor differences in appearance would not preclude goods which, otherwise,conform to the definition from being regarded as identical .

If there is no sale of identical goods at the same commercial level and insubstantially the same quantity as the goods being valued, the TV of identicalgoods sold at a different commercial level and/or in different quantity may beused provided it shall be adjusted upwards or downwards, as the case may be.


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Method 3 Transaction Value of Similar Goods

Similar goods are defined as goods which, although not alike in all

respects, are as follows:

Have like characteristics and like component materials;

Are capable of performing the same functions as the goods being

valued; Are commercially interchangeable with the goods being valued;

Are produced in the same country of the goods being valued; and

Are produced by the producer of the goods being valued .

If there are no similar goods produced by the same person in thecountry of production, similar goods produced by a different person inthe same country may be taken into account.


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Method 4 - Deductive Value

A deductive value is determined by making a deduction from theestablished price per unit of the imported articles.

In the determination of sales in the Philippines, the following must besatisfied :

The imported goods or identical or similar imported goods have been sold inthe Philippines in the same condition as imported;

Sales of the goods being valued or of identical or similar goods have takenplace at or about the time of importation of the goods being valued; The purchaser must not be related to the importer from whom he buys such

goods; and The purchaser in the Philippines must not have supplied assists, either

directly or indirectly.

Specifiedexpenses

resulting from theimportation andsale of the goods

DutiableValueLess =

Sales in thePhilippines of the

goods beingvalues or identical

or similar

imported goods


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Method 5 Computed Value

Dutiable value is determined based on the cost of

production of the goods being valued, plus profit andgeneral expenses usually reflected in sales from thecountry of exportation to the Philippines of goods of thesame class or kind.

Profit and GeneralExpenses

DutiableValuePlus =

Cost ofProduction of the

Goods beingValued

M th d 6 F llb k V l


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Method 6 - Fallback Value

Dutiable value is determined by using other reasonable means

consistent with the principles and general provisions implementing ofArticle VII of GATT and on the basis of data available in thePhilippines .

The dutiable value shall notbe determined under Method 6 on thebasis of:

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

A system that provides for the acceptance for customs purposes of thehigher of two alternative values;

The price of goods in the domestic market of the country of exportation;

The cost of production, other than computed values, that have been

determined for identical or similar goods in accordance with Method 5; The price of goods for export to a country other than the Philippines;

Minimum customs values; or

Arbitrary or fictitious values.

S i l D ti


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Special Duties

Levied for a special purpose of protecting domestic industries

when the importation of the imported good has caused orthreatens to cause material injury to a domestic industry orhas materially retarded the growth or prevents theestablishment of a domestic industry in the Philippines.

Anti-dumping duty

Imposed to prevent the continuousimportation or dumping of importedarticles into the local market of acountry at a price less than thoseprevailing in its domestic market.

The amount of dumpingduty is the differencebetween the normalprice of the importedgoods less the exportprice.

S i l D ti


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Special Duties

Countervailing duty

Imposed to offset the subsidy directly orindirectly granted by the government in thecountry of exportation uponupon the production, manufacture orexportation of such imported good.

The amount ofcountervailing dutyis equivalent to theamount of thesubsidy granted.

Marking duty

Imposed if the imported goods or itscontainer is not marked in any officiallanguage of the Philippines, and in a

conspicuous place as legibly, indelibly andpermanently in such a manner as toindicate to an ultimate purchaser in thePhilippines of the name of the country oforigin of the article.

The amount ofmarking duty is 5%ad valorem of the

imported goods

S i l D ti


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Special Duties

Discriminatory duty

Imposed to prevent discrimination against thecommerce of the Philippines fromunreasonable charges, exactions, regulationsor limitations on imported Philippines products(which is not equally enforced upon the same

goods imported from other foreign countries)

Discriminatory duty shallnot exceed 100% advalorem upon theimported articles atdiscretion of the

President of thePhilippines .

Safeguard duty

Duty imposed upon a positive finaldetermination by the Tariff Commission that a

product being imported in the Philippines hasincreased in quantity (whether absolute orrelative to the domestic production), whichshall be a substantial cause of serious injury orthreat to the domestic industry.

Prescribed rate of the TC

S li


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Smuggling

Smuggling or unlawful importation may be committed by

any person who shall: Fraudulently import or bring into the Philippines; or Assist in so doing, any article, contrary to law; or Receive or conceal, buy or sell; or

In any manner facilitate the transportation,concealment, or sale of such article after importation,knowing the same to have been imported contrary tolaw.

The term smuggling conveys the idea of a secret

introduction of goods with intend to avoid payment ofcustoms taxes and duties and signifies some form ofdeceit to introduce such goods into the country ofdestination.

Smuggling


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Smuggling

Felicisimo Rieta vs. People of the Philippines (436 SCRA 273)

Prerequisites of smuggling or illegal importation:

1. that the merchandise must have been fraudulently or

knowingly imported contrary to law;2. that the defendant, if he is not the importer himself, musthave received, concealed, bought, sold or in any mannerfacilitated the transportation, concealment or sale of themerchandise; and

3. that the defendant must be shown to have knowledge that the

merchandise had been illegally imported. If the defendant,however, is shown to have had possession of the illegallyimported merchandise, without satisfactory explanation, suchpossession shall be deemed sufficient to authorize conviction.

Oth F d l t P ti


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Other Fraudulent Practices

a. Making or attempting to make any entry of imported or exportedarticle by means of:

Any false or fraudulent invoice, declaration, affidavit, letter orpaper; or

Any false statement, written of verbal; or Any false or fraudulent practice whatsoever.

b. Knowingly effecting any entry of goods, wares or merchandise:

At less than true weight or measurements; or Upon a false classification as to quality or value; or Paying of less than the amount legally due.

c. Knowingly or willfully files any false or fraudulent entry or otherdocument, with a view to securing the payment to himself or othersof any drawback, allowance, or refund of duties on the exportation ofmerchandise, greater than that legally due thereon or who shall beguilty of any willful act or omission .



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The term technical smuggling involves the false declaration inthe import entries of the true or correct classification and/or theproper cost of taxes and duties or tariff rate that have to be paidthereon thereby resulting in a lower payment of customs taxesand duties.

The difference between smuggling and technical smuggling isthat oftentimes in smuggling there is no submission of adocuments more particularly, the import entry with respect to thepayment of taxes and duties whereas in the term technicalsmuggling it oftentimes result in the submission or falls orfraudulent documents to the BOC whereby there is amisclassification or misdeclaration of the goods supposed to bethe subject of customs taxes and duties.



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Also, in the case of Jardeleza, the Supreme Court explained how fraud underSection 3602 of the TCCP, as amended, may be committed:

The provision enumerates the various fraudulent practices against customsrevenue, such as the entry of imported or exported articles by means of anyfalse or fraudulent invoice, statement or practice; the entry of goods at lessthan the true weight or measure; or the filing of any false or fraudulent entry

for the payment of drawback or refund of duties.

The fraud contemplated by law must be intentional fraud, consisting ofdeception, willfully and deliberately dared or resorted to in order to give upsome right. The offender must have acted knowingly and with the specificintent to deceive for the purpose of causing financial loss to another; evenfalse representations or statements or omissions of material facts come

within fraudulent intent. The fraud envisaged in the law includes thesuppression of a material fact which a party is bound in good faith to disclose.Fraudulent nondisclosure and fraudulent concealment are of the same genre.


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Jurisdiction of the BOC

Port of Aparri

Port of

Zamboanga

Port of San Fernando

Port of Davao

Port of CDO

Port of Tacloban

Port of Bacolod

Port of Cebu

Port of Legaspi

Port of Surigao

Port of Batangas

Port of SubicPortof Clark, Pampanga MICP

POMNAIA

The BOC shall have the right of supervisionand police authority over all seas within the

jurisdiction of the Philippines and over allcoasts, ports, airports, harbors, bays, riversand inland waters navigable from the sea(Section 603, TCCP)

Doctrine of Hot Pursuit: When a vessel

becomes subject to seizure by reason of anact done in Philippine waters in violation of theTCCP, a pursuit of such vessel begun withinthe jurisdictional waters may continue beyondthe maritime zone, and the vessel may beseized on the high sea.

Imported articles which may be subject toseizure may be pursued in their transportationin the Philippines by land, water or air (Section604, TCCP)

Search seizure and arrest
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Search, seizure and arrest

The BOC or any authorized person is empowered:

To make seizure of any vessel, aircraft, cargo, articles, animal orother movable property when the same is subject to forfeiture orliable for any fine imposed under the TCCP (Section 2205, TCCP)

To arrest any person for violation of any customs and tariff laws(Section 2205, TCCP)

To enter, pass through, or search any land or inclosure or anywarehouse, store or other building (except dwelling houses)(Section 2208, TCCP)

A dwelling house may be entered and searched only uponwarrant issued (Section 2209, TCCP)

A warehouse, store or other building used for the keeping ofstorage of articles does not become a dwelling house merely byreason of the fact that a person employed as watchman lives inthe place (Section 2208)

Search seizure and arrest


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Search, seizure and arrest

To go abroad any vessel or aircraft within the limits of any

collection district (Section 2210, TCCP) To inspect, search and examine said vessel or aircraft and any

trunk, package, box or envelope on board (Section 2210, TCCP)

To search any person on board the said vessel or aircraft, to hailand stop such vessel or aircraft if under way, to make seizure of

the same if liable to forfeiture (Section 2210, TCCP) To open and examine any box, trunk, envelope or other container,

wherever found where he has reasonable cause to suspect thepresence of dutiable or prohibited article or articles introducedinto the Philippines (Section 2210)

To stop, search and examine any vehicle or person reasonablysuspected of holding or conveying prohibited articles (Section2211, TCCO)

To search and detain, if necessary all persons coming into thePhilippines from foreign countries (Section 2212, TCCP)


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Taxpayers Administrative Remedies

Upon making any seizure, the Collector shall issue a warrant for the

detention of the property (Section 2301) The importer may pay a cash bond to secure the release of the property

for legitimate use, except in cases of fraud.

Collector shall give the owner or importer of the property or his agent awritten notice of the seizure and shall give him an opportunity to beheard (Section 2303)

After due hearing, the Collector issues a decision or ruling.

The concerned importer may file a written protest setting forth hisobjections to the ruling or decision in question at the time of payment orwithin 30 days thereafter (Section 2308, TCCP). Otherwise, the action ofthe Collector shall be final and conclusive against him(Section 2309,

TCCP) The Collector shall reexaminethe matter. In seizure cases, the Collector,

shall in writing make a declaration of forfeiture or fix the amount of thefine or take such other action as may be proper.



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The importer aggrieved by the decision or action of the Collector maywithin 15 days after receipt of the decision of the Collector give written

notice to the Collector of his desire to have the matter reviewed by theCommissioner (Notice of Appeal)

The Collector shall transmit all the records of the proceedings to theCommissioner, who shall approve, modify or reverse the action ordecision of the Collector and take such steps and make such orders asmay be necessary to give effect to his decision.

In any seizure proceedings, when the decision of the Collector is adverseto the Government, such decision shall be automatically reviewed by theCommissioner. The Commissioner shall render a decision on theautomatic appeal within thirty (30) days from receipt of records (Section2313, TCCP)

If the Collectors decision is reversed by the Commissioner, the decision ofthe Commissioner shall be final and executory.

If the Collectors decision is affirmed or no decision is rendered within 30days and the decision involves imported articles whose published value isfive million pesos (P5,000,000.00) or more, the decision shall beautomatically reviewed by the Secretary of Finance(Section 2313,TCCP)

Judicial Remedies


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Judicial Remedies

Jurisdiction of the CTA The Court of Tax Appeals has exclusive jurisdiction to hear appeals

against the decisions of the Commissioner of Customs in casesinvolving liability for customs duties, fees or other money charges,seizure, detention or release of property affected, fines, forfeituresor other penalties in relation thereto, or other matters arising

under the Customs Law or other laws administered by the BOC. The party aggrieved by a ruling of the Commissioner in any matter

brought before him upon protest or by his action or ruling in anycase of seizure may appeal to the Court of Tax Appeals (division),within 30 days from notice of Commissioners decision or decisionof the Secretary of Finance (Section 2402 TCCP, Section 7 of RA

1125, as amended by Section 9 of RA 9282). Otherwise, theaction or ruling of the Commissioner shall be final and conclusive.

Other Laws or Issuances


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Other Laws or Issuances Cabotage

Cabotage - the carriage of passengers or cargo between two

points within a country by a vessel or vehicle registered inanother country.

Under the TCCP, only domestic vessels may serve domesticroutes or engage in the transport of cargoes from onePhilippine port to another Philippine port.

Foreign vessels carrying imported goods into the Philippinesare required to unload their cargo at the port of entry. Thesame cargo will be re-loaded in a vessel operated by a localor domestic carrier for transshipment to their final local

destination. Update: RA No. 10668 lifts the restriction on cabotage

prescribed under the TCCP.

Customs updates

Other Laws or Issuances


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Other Laws or Issuances CabotageRepublic Act (RA) No. 10668

Foreign vessels are now allowed to: carry or transport foreign cargo to its Philippine port of

final destination after being cleared at its port of entry inthe Philippines

carry foreign cargo intended for export from a Philippineport of origin through another Philippine port to itsforeign port of final destination.

enter into co-loading arrangements with other foreignvessels for the carriage or transportation of foreign cargo

within the Philippines. The RA aims to enhance the competitiveness of importers

and exporters in international trade and reduce shippingcosts of imported and exported cargoes.

Customs updates

CMO No. 27-2015 dated September 2, 2015


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CMO No. 27 2015 dated September 2, 2015Importation of Balikbayan Boxes

Objectives: Simplify customs procedure for OFWs sending balikbayan boxes

Protect the legitimate interests of OFWs in sending balikbayanboxes as a tangible sign of their love and concern for theirfamily members, and

Suppress unscrupulous individuals using balikbayan boxesprivilege to smuggle goods.

Applies to all non-commercial inbound consolidatedshipments of OFWs and returning OFWs bringing inpersonal and household effects.

Balikbayan boxes shall not be subject to random andarbitrary physical inspection. Instead, they shall onlyundergo mandatory container X-ray scanning.

Customs updates

CMO No. 27-2015 dated September 2, 2015


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CMO No. 27 2015 dated September 2, 2015Importation of Balikbayan Boxes

If the balikbayan box is tagged as suspect after X-ray

scanning shall be subjected to 100% physical inspectionin the presence of the following:

apprehending officers,

freight forwarder consolidator, and

representatives of the Overseas Workers WelfareAdministration (OWWA).

Customs updates

Executive Order No. 206 dated June 30, 1987


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Executive Order No. 206 dated June 30, 1987TCCP Rules on Balikbayan Boxes

Personal and household effects belonging to returning

residents (nationals who have stayed in a foreign country for aperiod of at least 6 months) are considered conditionally-freeimportations, provided that:

Non-commercial quantities,

Not intended for barter, sale or hire, The total dutiable value shall not exceed P10,000, and

The returning resident has not previously availed of theprivilege within 365 days prior to his arrival.

Returning overseas contract workers shall have the privilege tobring in, duty and tax free, used home appliances, limited toone of every kind once in a given calendar year accompanyingthem on their return, or arriving within a reasonable from theirreturn up to P10,000.

Customs updates


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Thank you

2015 pre-bar lecture on customs

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