q and a in tariff and customs law (final 7.11.14) (1)

8/10/2019 Q and a in Tariff and Customs Law (Final 7.11.14) (1)

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Q and A in Tariff and Customs Law

References:

a)

Handbook on the Tariff and Customs Code of the Philippines (TCCP)by Atty. Ferdinand

A. Nague, C.B. 2004 ed. (Nague);

b)

www.wto.org (WTO); and,

c)

Answers to Bar Examination QuestionsUP Law Center (UP Law Center).

1. What is a Tariff?

A Tariff is a list or schedule of articles on which a duty is imposed upon their importation into a

country, with the rates at which they are severally taxed. It is also derivatively referred to as the

system of imposing duties or taxes on the importation of foreign merchandise. (Blacks Law

Dictionary 6th

Ed.)

2.

What are Customs Duties?

"Customs duties" is the name given to taxes on the importation and exportation of

commodities, the tariff or tax assessed upon merchandise imported from, or exported to, a

foreign country. (Nestle Philippines, Inc. vs. CA, GR No. 134114 dated July 6, 2001)

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

All articles, when imported from any foreign country into the Philippines, shall be subject to

duty upon each importation, even though previously exported from the Philippines, except as

otherwise specifically provided for in the TCCP and in other laws. (Sec. 100 of the TCCP)

4.

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

Yes, except those provided for in Section 105 of the TCCP, all importations of the government

for its own use or that of its subordinate branches or instrumentalities, or corporations,

agencies or instrumentalities owned or controlled by the government, shall be subject to the

duties, taxes, fees and other charges provided for in the TCCP. (Sec. 1205 of the TCCP)

5.

What is the purpose for the imposition of customs duties?

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

6. What is the flexible tariff clause?

It refers to the authority given to the President to adjust tariff rates under Section 401 of the

TCCP. (Nague)


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7.

When may the power under the flexible tariff clause be exercised by the President?

Upon recommendation of the National Economic and Development Authority (NEDA) and in

the interest of national economy, general welfare and/or national security. (Sec. 401a of the

TCCP)

8.

What may the Presidentdo in the exercise of his power under the flexible tariff clause?

a)

Increase, reduce or remove existing protective rates of import duty (including any necessary

change in classification). Limitation: rate of increase shall not be higher than a maximum of

100% ad valorem;

b)

Establish import quota or to ban imports of any commodity;

c)

Impose an additional duty on all imports not exceeding 10% ad valorem; and,

d)

Modify the form of duty.

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

hearings, hearing of views and recommendations of government offices by the Tariff

Commission is necessary except under letter c); (Sec. 401 of the TCCP)

9.

When shall the Order issued by the President pursuant to the exercise of his powers under the

flexible tariff clause take effect?

Any Order issued by the President pursuant to the provisions of Sec. 401 of the TCCP shall take

effect thirty (30) days after promulgation, except in the imposition of additional duty not

exceeding 10% ad valorem which shall take effect at the discretion of the President. (Sec. 401

of the TCCP)

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

Importation beginswhen the carrying vessel or aircraft enters the jurisdiction of the Philippines

with intention to unload therein.

It is clear from the provision of the law that mere intent to unload is sufficient to commence an

importation. (Feeder International Line, Pte., Ltd. vs. CA, GR No. 94262 dated May 31, 1991)

Importation is deemed terminatedupon the payment of duties, taxes and other charges due

upon the articles, or secured to be paid, at a port of entry and the legal permit for withdrawal

shall have been granted, or in case said articles are free of duties, taxes and other charges, until

they have legally left the jurisdiction of the customs. (Sec. 1202 of the TCCP)

As long as the importation has not been terminated, the imported goods remain under the

jurisdiction of the Bureau of Customs. Importation is deemed terminated only upon the

payment of the duties, taxes and other charges upon the articles, or secured to be paid, at the

port of entry and the legal permit for withdrawal shall have been granted. The payment of the

duties, taxes, fees and other charges must be in full. (Papa vs. Mago, GR No. L-27360 dated

February 28, 1968)


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11.

Will mere possession of merchandise on board a vessel in Philippine waters constitute

importation of the said merchandise?

No, the mere possession of merchandise on board a vessel in the Philippine waters is not of

itself sufficient to amount to an importation of the same. There must be proof of an intent to

import. (U. S. vs. Jose, 34 Phil. Rep., 840; U. S. vs. Ah Sing, 36 Phil. Rep., 978. cited in US vs. Chu

Loy, GR No. L-12594 dated January 31, 1918)

12.Glory Shipping Lines (GSL) imported one (1) unit of shipping vessel which was authorized by

the Department of Finance subject to the posting of a re-export bond. After expiration of the

re-export bond, GSL, however, refused to pay the correct amount of taxes after demand and

thereafter sold the same to Oro Maura Shipping Lines (OMSL). OMSL separately filed for the

importation of the same vessel.

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

No, with the knowledge that the vessel was released under a re-export bond,OMSLshould have

known that this original entry was subject to specific conditions, among them, the obligation toguarantee the re-export of the vessel within a given period, or otherwise to pay the customs

duties on the vessel. It should have known, too, of the conditions of the vessels release under

the re-export bond and of the state of GSLs status of compliance.

There was an original but incomplete importation by GSL that OMSL could not have simply

disregarded proceeds from knowledge of the vessels history and the application of the relevant

law. In this respect, Section 1202 of the TCCP provides:

Importation begins when the carrying vessel or aircraft enters the jurisdiction

of the Philippines with intention to unlade therein. Importation is deemed

terminated upon payment of the duties, taxes and other charges due upon thearticles, or secured to be paid, at a port of entry and the legal permit for

withdrawal shall have been granted, or in case said articles are free of duties,

taxes and other charges, until they have legally left the jurisdiction of the

customs.

In order for an importation to be deemed terminated, the payment of the duties, taxes, fees and

other charges of the item brought into the country must be in full. For as long as the

importation has not been completed, the imported item remains under the jurisdiction of the

BOC. From the perspective of process, the importation that originally started with GSL was

therefore never completed and terminated, so that the OMSLs present importation is merely

a continuation of that original process.(Secretary of Finance vs. Oro Maura Shipping Lines, GRNo. 156946, July 15, 2009).

13.

What is a cargo manifest?

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

cargo, with other particulars, for the facility of the customs officers. (Black laws Dictionary 5th

Ed.)


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14.

What is the purpose of a cargo manifest?

The object of a manifest is to furnish the customs officers with a list to check against, to inform

our revenue officers what goods are being brought into the country, and to provide a safeguard

against goods being brought into this country on a vessel and then smuggled ashore. It is also

designed to defeat any attempt to make use of vessels to secure the unlawful entry of persons

or things into the country. (Macondray vs. Acting Commissioner of Customs, GR No. L-25783

dated February 25, 1975)

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

a)

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

declaration of a specific part of the cargo and is a matter of business

convenience based exclusively on a contract; and,

b)

A bill of lading is ordinarily merely a convenient commercial instrument

designed to protect the importer or consignee while a manifestof the cargo is

absolutely essential to the exportation or importation of property in all vessels.(Macondray vs. Acting Commissioner of Customs, GR No. L-25783 dated

February 25, 1975)

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

Every vessel from a foreign port must have on board a complete manifest of all her cargo. All of

the cargo intended to be landed at a port in the Philippines must be described in separate

manifests for each port of call therein. Each manifest shall include:

a)

Port of departure and port of delivery;

b)

Marks, numbers, quantity and description of the packages; and,c)

Names of the consignees of the packages.(Sec. 1005 of the TCC)

17.

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

A cargo manifest shall in no case be changed or altered after entry of the vessel except by

means of an amendment by the master, consignee or agent thereof, under oath, and attached

to the original manifest: Provided, however, that after the invoice and/or entry covering an

importation have been received and recorded in the office of the appraiser, no amendment of

the Manifest shall be allowed, except when it is obvious that a clerical error or any other

discrepancy has been committed in the preparation of the manifest without any fraudulent

intent, discovery of which could not have been made until after examination of the importation

has been completed. (Sec. 1005 of the TCCP)

18.

Who are those considered as owners of imported articles?

a)

The consignee;

b)

Holder of a bill of lading duly endorsed by the consignee therein named;

c)

The consignor, if consigned to order;

d)

The underwriters of abandoned articles; and,


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e)

Salvors of articles saved from wreck at sea, along a coast or in any area of the

Philippines. (Sec. 1203 of the TCCP)

19.

What does the term entry mean under customs law?

The term "entry" in customs law has a triple meaning. It means (1) the documents filed at the

customs house; (2) the submission and acceptance of the documents and (3) the procedure of

passing goods through the customs house. (Chevron Philippines, Inc. vs. Commissioner of the

Bureau of Customs, GR No. 178759 dated August 11, 2008)

20.When is there entry under customs law?

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

TCCP:

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

Imported articles shall be deemed "entered" in the Philippines for

consumption when the specified entry form is properly filed andaccepted,together with any related documents regained by the provisions of

this Code and/or regulations to be filed with such form at the time of entry, at

the port or station by the customs official designated to receive such entry

papers and any duties, taxes, fees and/or other lawful charges required to be

paid at the time of making such entry have been paid or secured to be paid with

the customs official designated to receive such monies, provided that the article

has previously arrived within the limits of the port of entry.

Clearly, the operative act that constitutes "entry" of the imported articles at the port of entry is

the filing and acceptance of the "specified entry form" together with the other documents

required by law and regulations. (Chevron Philippines, Inc. vs. Commissioner of the Bureau ofCustoms, GR No. 178759 dated August 11, 2008)

21.

Where must an entryof imported articles be made?

All articles imported into the Philippines, whether subject to duty or not shall be entered

through a customhouse at a port of entry. (Sec. 1201 of the TCCP)

22.When must an entry be made?

Under Section 1301 of the TCCP, imported articles must be entered within a non-extendible

period of thirty (30) days from the date of discharge of the last package from a vessel.

Otherwise, the BOC will deem the imported goods impliedly abandoned under Section 1801.

(Chevron Philippines, Inc. vs. Commissioner of the Bureau of Customs, GR No. 178759 dated

August 11, 2008)

23.

What is the distinction between an Import Entry Declaration (IED) and an Import Entry and

Internal Revenue Declaration (IEIRD)?

The IEDserves as basis for the payment of advance duties on importations whereas the IEIRD


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evidences the final payment of duties and taxes. (Chevron Philippines, Inc. vs. Commissioner of

Bureau of Customs, GR No. 178759 dated August 11, 2008)

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

Entry under Sections 1301 and 1801 of theTCCP refers to both the filing of the IEDand the

IEIRD.

The filing of the IEIRDs has several important purposes: to ascertain the value of the imported

articles, collect the correct and final amount of customs duties and avoid smuggling of goods

into the country. Petitioners interpretation would have an absurd implication: the 30-day

period (for filing of an entry) applies only to the IED while no deadline is specified for the

submission of the IEIRD. Strong issues of public policy militate against petitioners

interpretation. It is the IEIRDwhich accompanies the final payment of duties and taxes. These

duties and taxes must be paid in full before the BOC can allow the release of the imported

articles from its custody.

Taxes are the lifeblood of the nation. Tariff and customs duties are taxes constituting asignificant portion of the public revenue which enables the government to carry out the

functions it has been ordained to perform for the welfare of its constituents. Hence, their

prompt and certain availability is an imperative need and they must be collected without

unnecessary hindrance. Clearly, and perhaps for that reason alone, the submission of the IEIRD

cannot be left to the exclusive discretion or whim of the importer.

We hold, therefore, that under the relevant provisions of the TCCP, both the IEDand IEIRD

should be filed within 30 days from the date of discharge of the last package from the vessel

or aircraft.As a result, the position of petitioner, that the import entry to be filed within the 30-

day period refers to the IEDand not the IEIRD, has no legal basis. (Chevron Philippines, Inc. vs.

Commissioner of Bureau of Customs, GR No. 178759 dated August 11, 2008)

25.

Who are the persons required to make an import entry?

a)

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

b)

a customs broker;

If the entry is filed by a party other than the importer, said importer shall himself be required to

declare under oath and under the penalties of falsification or perjury that the declarations and

statements contained in the entry are true and correct. Such statements under oath shall

constitute prima facie evidence of knowledge and consent of the importer of violation against

applicable provisions of this Code when the importation is found to be unlawful. (Sec. 1301 of

the TCCP)

26.

Which imported articles are subject to entry?

All imported articles, except articles considered importations for the official use of foreign

embassies, legations, and other agencies of foreign governments (subject to reciprocity) shall be

subject to a formal or informal entry. (Sec. 1302 of the TCCP)


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27.

When is an informal entry allowed?

a)

Articles of a commercial nature intended for sale, barter or hire, the dutiable

value of which is Two thousand pesos (PhP2,000.00) or less;

b)

Personal and household effects or articles, not in commercial quantity; and,

c)

Articles imported in passengers baggage, mail or otherwise, for personal use.

(Sec. 1302 of the TCCP)

28.Who are required to sign an Import Entry?

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

a)

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

licensed customs broker; or,

b)

If a corporation, firm or association by its general manager or licensed

customs broker duly authorized. (Sec. 1305 of the TCCP)

29.

What are the contents of an Import Entry?

a)

Name of the importing vessel or aircraft;

b)

Port of departure and date of arrival;

c)

Number and mark of packages or the quantity, if in bulk; and,

d)

The nature and correct commodity description of the articles contained herein and its

transaction value. (Sec. 1306 of the TCCP)

30.

Who is liable for the payment of import duties?

Unless relieved by laws or regulations, the liability for duties, taxes, fess, and other charges

attaching on importation constitute a personal debt due from the importer to the governmentwhich can be discharged only by payment in full of all duties, taxes, fees and other charges

legally accruing. It also constitutes a lien upon the articles imported which may be enforced

while such articles are in custody or subject to the control of the government. (Sec. 1204 of the

TCCP)

31.Glory Shipping Lines (GSL) imported one (1) unit of shipping vessel which was authorized by

the Department of Finance subject to the posting of a re-export bond. After expiration of the

re-export bond, GSL, however, refused to pay the correct amount of taxes after demand and

thereafter sold the same to Oro Maura Shipping Lines (OMSL). OMSL separately filed for the

importation of the same vessel.

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

No, an important factual circumstance that the CTA and the CA appear to have completely

overlooked is that the vessel first entered the Philippines through the Port of Mactan and it was

the Collector of the Port of Mactan who first acquired jurisdiction over the vessel when he

approved the vessels temporary release from the custody of the BOC, after GSLfiled Ordinary

Re-Export Bond No. C(9) 121818.


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When this re-export bond expired on March 22, 1994, GSL filed a letter dated May 10, 1994

guaranteeing the renewal of the re-export bond on or before May 20, 1994, otherwise the

duties, taxes and other charges on the vessel would be paid. Therefore, when May 20, 1994

came and went without the renewal of the vessels re-export bond, the obligation to pay

customs duties, taxes and other charges on the importation in the amount of P1,296,710.00

arose and attached to the vessel. Undoubtedly, this lien was never paid by GSL, thus it

continued to exist even after the vessel was sold to the respondent. Section 1204 of the TCCP in

this regard states:

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

regulations, the liability for duties, taxes, fees and other charges attaching on

importation constitutes a personal debt due from the importer to the

government which can be discharged only by payment in full of all duties, taxes,

fees and other charges legally accruing. It also constitutes a lien upon the

articles imported which may be enforced while such articles are in custody or

subject to the control of the government.

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

imported goods, regardless of ownership.

Consequently, when the respondent bought the vessel from Glory Shipping Lines on December

2, 1994, the obligation to pay the BOC P1,296,710.00 as customs duties had already attached to

the vessel and the non-renewal of the re-export bond made this liability due and demandable.

The subsequent transfer of ownership of the vessel from Glory Shipping Lines to the

respondent did not extinguish this liability. (Brion, J., Secretary of Finance vs. Oro Maura

Shipping Lines, GR No. 156946, July 15, 2009).

32.

What is liquidation under the TCCP?

Liquidation is the final computation and ascertainment by the Collector of the duties due on

imported merchandise, based on official reports as to the quantity, character, and value thereof,

and the Collectors own finding as to the applicable rate of duty.

Assessments inform taxpayers of their tax liabilities. Under the TCCP, the assessment is in the

form of a liquidation made on the face of the import entry return and approved by the Collector

of Customs. Liquidation is the final computation and ascertainment by the Collector of

Customs of the duties due on imported merchandisebased on official reports as to the

quantity, character and value thereof, and the Collector of Customs' own finding as to the

applicable rate of duty. A liquidation is considered to have been made when the entry is

officially stamped "liquidated." (Pilipinas Shell Petroleum Corporation vs. Republic, GR No.

161953 dated March 6, 2008)

A liquidation is the final computation and ascertainment by the collector of the duties on

imported merchandise, based on official reports as to the quantity, character, and value thereof,

and the collectors own finding as to the applicable rate of duty; it is akin to an assessment of

internal revenue taxes under the National Internal Revenue Code where the tax liability of the

taxpayer is definitely determined. (Pilipinas Shell Petroleum Corporation vs. Commissioner of


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Customs, G.R. No. 176380 dated June 18, 2009)

33.

When can there be a tentative liquidation under the TCCP?

If to determine the exact amount due under the law in whole or in part some future action is

required, the liquidation shall be deemed to be tentative as to the item or items affected and

shall to that extent be subject to future and final readjustment and settlement within six (6)

months from date of Tentative liquidation. The entry in such case shall be stamped "Tentative

liquidation". (Sec. 1602 of the TCCP)

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

When articles have been entered and passed free of duty or final adjustments of duties made,

with subsequent delivery, such entry and passage free of duty or settlements of duties will, after

the expiration of three (3) years from the date of the final payment of duties, in the absence of

fraud or protest or compliance audit pursuant to the provisions of this Code, be final and

conclusive upon all parties, unless the liquidation of the import entry was merely tentative. (Sec.

1603 of the TCCP)

The liquidation of an import entry shall be deemed final and conclusive upon all parties after the

expiration of three (3) years from the date of final payment of the duties due, except where:

a)

Fraud has been committed; or

b)

A protest has been filed under the provision of Section 2308 of the TCCP; or

c)

Where the import entry is selected for post audit within the three (3) year

period required for record-keeping provided that once started, the audit can be

completed beyond said period; or

d)

The liquidation of import entry was merely tentative. (CAO No. 4-2004 dated

November 8, 2004)

35.

Within what period must importers keep their records?

All importers are required to keep at their principal place of business, in the manner prescribed

by regulations to be issued by the Commissioner of Customs and for a period three (3) years

from the date of importation, all the records of their importations and/or books of accounts,

business and computer systems and all customs commercial data including payment records

relevant for the verification of the accuracy of the transaction value declared by the

importers/customs brokers on the import entry. (Sec. 3514 of the TCCP)

36.

Within what period must brokers keep their records?

All brokers are required to keep at their principal place of business, in the manner prescribed by

regulations to be issued by the Commissioner of Customs and for a period of three (3) years

from the date of importation copies of the above mentioned records covering transactions that

they handle. (Sec. 3514 of the TCCP)

Note that under RMO No. 10-2014 dated February 10, 2014 issued by the BIR, importers and


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brokers are required to execute an undertaking to comply with the duty to preserve and

maintain records for a period of ten (10) years and to allow access to examination by the BIR,

BOC and the Fiscal Intelligence Unit of the Department of Finance (DOF-FIU) as a condition

precedent for approval of accreditation as importer or broker.

37.

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

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

shall allow any customs officer authorized by the Bureau of Customs to enter during office hours

any premises or place where the records referred to in the preceding section are kept to

conduct audit examination, inspection, verification and/or investigation of those records either

in relation to specific transactions or to the adequacy and integrity of the manual or electronic

system or systems by which such records are created and stored. For this purpose, a duty

authorized customs officer shall be full and free access to all books, records, and documents

necessary or relevant for the purpose of collecting the proper duties and taxes.

In addition, the authorized customs officer may make copies of, or take extracts from any such

documents. The records or documents must, as soon as practicable after copies of such havebeen 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 underexisting laws and regulations including the authority to hold delivery or release of their imported

articles."

38.How is the offense of Unlawful Importation or Smugglingcommitted?

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


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transportation, concealment, or sale of such article after importation, knowing the same to have

been imported contrary to law. (Sec. 3601 of the TCCP)

39.

What are the requisites of smuggling or illegal importation?

a)

that the merchandise must have been fraudulently or knowingly imported

contrary to law;

b)

that the defendant, if he is not the importer himself, must have received,

concealed, bought, sold or in any manner facilitated the transportation,

concealment or sale of the merchandise; and,

c)

that the defendant must be shown to have knowledge that the merchandise

had been illegally imported. If the defendant, however, is shown to have had

possession of the illegally imported merchandise, without satisfactory

explanation, such possession shall be deemed sufficient to authorize conviction.

(Rieta vs. People, GR No. 147817 dated August 12, 2004)

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

When, upon trial for a violation of Sec. 3601 of the TCCP, the defendant is shown to have or to

have had possession of the article in question, such possession shall be deemed sufficient

evidence to authorize conviction, unless the defendant shall explain the possession to the

satisfaction of the court. (Sec. 3601 of the TCCP)

41.

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

Payment of the tax due after apprehension shall not constitute a valid defense in any

prosecution under Sec. 3601 of the TCCP. (Sec. 3601 of the TCCP)

42.

What are the other fraudulent practices under the TCCP?

a)

Any person who makes or attempts to make any entry of imported or exported

article:

by means of any false or fraudulent invoice, declaration, affidavit, letter,

paper, or

by means of any false statement, written or verbal, or

by means of any false or fraudulent practice whatsoever, or

b)

Any person guilty of any willful act or omission by means of whereof the

Government might be deprived of the lawful duties, taxes and other charges, or any

portion thereof, accruing from the article or any portion thereof, embraced or

referred to in such invoice, declaration, affidavit, letter, paper, or statement, oraffected by such act or omission; (Sec. 3602 of the TCCP)

43.

Which articles are subject to customs duties and taxes?

All articles, when imported from any foreign country into the Philippines, shall be subject to

duty upon each importation, even though previously exported from the Philippines, except as

otherwise specifically provided for in the TCCP in other laws. (Sec. 100 of the TCCP)


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44.

Which commodities are not allowed to be imported in the Philippines?

a)

Dynamite, gunpowder, ammunitions and other explosives, firearms and

weapons of war, and parts thereof, except when authorized by law;

b)

Written or printed articles in any form containing any matter advocating or

inciting treason, or rebellion, or insurrection, sedition or subversion against

the Government of the Philippines, or forcible resistance to any law of the

Philippines, or containing any threat to take the life of, or inflict bodily harm

upon any personin the Philippines;

c)

Written or printed articles, negatives or cinematographic film, photographs,

engravings, lithographs, objects, paintings, drawings or other representation of

an obscene or immoral character;

d)

Articles, instruments, drugs and substances designed, intended or adapted for

producing unlawful abortion, or any printed matter which advertises or

describes or gives directly or indirectly information where, how, or by whom

unlawful abortion is produced;

e)

Roulette wheels, gambling outfits, loaded dice, marked cards, machines,

apparatus or mechanical devices used in gamblingor the distribution of money,cigars, cigarettes or other articles when such distribution is dependent on

chance, including jackpot and pinball machines or similar contrivances, or parts

thereof;

f)

Lottery and sweepstakes tickets except those authorized by the Philippine

Government, advertisements thereof, and lists of drawings therein;

g)

Any article manufactured in whole or in part of gold, silver or other precious

metals or alloys thereof, the stamps, brands or marks or which do not indicate

the actual fineness of quality of said metals or alloys;

h)

Any adulterated or misbranded articles of food or any adulterated or

misbranded drug in violation of the provisions of the "Food and Drugs Act";

i)

Marijuana, opium, pipes, coca leaves, heroin or any other narcotics or syntheticdrugs which are or may hereafter be declared habit forming by the President of

the Philippines, or any compound, manufactured salt, derivative, or preparation

thereof, except when imported by the Government of the Philippines or any

person duly authorized by the Dangerous Drugs Board, for medicinal purposes

only;

j)

Opium pipes and parts thereof, of whatever material; and,

k)

All other articles and parts thereof, the importation of which prohibited by law

or rules and regulations issued by competent authority. (Sec. 101 of the TCCP)

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

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

importation only upon conditions prescribed by law, it shall be the duty of the Collector to

exercise such jurisdiction in respect thereto as will prevent importation or otherwise secure

compliance with all legal requirements. (Sec. 1207 of the TCCP)


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46.

Which commodities are allowed exemption from payment of import duties subject to certain

conditions?

The following articles shall be exempt from the payment of import duties upon compliance

with the formalities prescribed in, or with, the regulations which shall be promulgated by the

Commissioner of Customs with the approval of the Secretary of Finance; Provided, That any

article sold, bartered, hired or used for purposes other than that they were intended for without

prior payment of the duty, tax or other charges which would have been due and payable at the

time of entry if the article had been entered without the benefit of this section, shall be subject

to forfeiture and the importation shall constitute a fraudulent practice against customs

revenue punishable under Section Thirty-six hundred and two, as amended of the TCCP:

Provided, further, That a sale pursuant to a judicial order or in liquidation of the estate of a

deceased person shall be subject to the preceding proviso, without prejudice to the payment of

duties, taxes and other charges: Provided, finally, That the President may upon

recommendation of the Secretary of Finance, suspend, disallow or completely withdraw, in

whole or in part, any of the conditionally-free importation under this section:

a)

Aquatic products(e.g., fishes, crustaceans, mollusks, marine animals, seaweeds, fish oil,roe), caught or gathered by fishing vessels of Philippine registry: Provided, That they

are imported in such vessels or in crafts attached thereto: And provided, further, That

they have not been landed in any foreign territory or, if so landed, they have been

landed solely for transshipment without having been advanced in condition;

b)

Equipment for use in the salvage of vessels or aircrafts , not available locally, upon

identification and the giving of a bond in an amount equal to one and one-half times

the ascertained duties, taxes and other charges thereon, conditioned for the

exportation thereof or payment of the corresponding duties, taxes and other charges

within six (6) months from the date of acceptance of the import entry: Provided, That

the Collector of Customs may extend the time for exportation or payment of duties,taxes and other charges for a term not exceeding six (6) months from the expiration of

the original period;

c)

Cost of repairs, excluding the value of the article used,made in foreign countries upon

vessels or aircraft documented, registered or licensed in the Philippines, upon proof

satisfactory to the Collector of Customs: (1) that adequate facilities for such repairs are

not afforded in the Philippines, or (2) that such vessels or aircrafts, while in the regular

course of her voyage or flight was compelled by stress of weather or other casualtyto

put into a foreign port to make such repairs in order to secure the safety, seaworthiness

or airworthiness of the vessel or aircraft to enable her to reach her port of destination;

d)

Articles brought into the Philippines for repair, processing or reconditioning to be re-

exported upon completion of the repair, processing or reconditioning: Provided, That the

Collector of Customs shall require the giving of a bond in an amount equal to one and

one-half times the ascertained duties, taxes and other charges thereon, conditioned for

the exportation thereof or payment of the corresponding duties, taxes and other

charges within six (6) months from the date of acceptance of the import entry;

e)

Medals, badges, cups and other small articles bestowed as trophies or prizes, or those


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received or accepted as honorary distinction;

f)

Personal and household effects belonging to residents of the Philippines returning from

abroad including jewelry, precious stones and other articles of luxury which were

formally declared and listed before departure and identified under oath before the

Collector of Customs when exported from the Philippines by such returning residents

upon their departure therefrom or during their stay abroad; personal and household

effects including wearing apparel, articles of personal adornment (except luxury items),

toilet articles, instruments related to one's profession and analogous personal or

household effects, excluding vehicles, watercraft, aircraft and animals purchased in

foreign countries by residents of the Philippines which were necessary, appropriate and

normally used for their comfort and convenience during their stay abroad,

accompanying them on their return, or arriving within a reasonable time which, barring

unforeseen and fortuitous events, in no case shall exceed sixty (60) days after the

owner's return: Provided, That the personal and households effects shall neither be in

commercial quantities nor intended for barter, sale or hire and that the total dutiable

value of which shall not exceed Ten Thousand Pesos (P10,000.00): Provided, further,

That the returning resident has not previously availed of the privilege under this sectionwithin three hundred sixty five (365) days prior to his arrival: Provided, finally, That a

fifty percent (50%) ad valorem duty across the board shall be levied and collected on the

personal and household effects (except luxury items) in excess of Ten Thousand Pesos

(P10,000.00);

The phrase "returning residents" shall refer to nationals who have stayed in a foreign

country for a period of at least six (6) months.

(f-1) In addition to the privilege granted under the immediately preceding paragraph,

Returning overseas contract workers shall have the privilege to bring in, duty and tax free,

used home appliances, limited to one of every kind once in a given calendar yearaccompanying them on their return, or arriving within a reasonable time which, barring

unforeseen and fortuitous events, in no case shall exceed sixty (60) days after the owner's

return upon presentation of their original passport at the Port of Entry: Provided, That any

excess of Ten Thousand Pesos (P10,000.00) for personal and household effects and/or of

the number of duty and tax-free appliances as provided for under this section, shall be

subject to the corresponding duties and taxes provided under this Code.

Overseas Contract Workers shall be understood to mean: holders of valid passports duly

issued by the Department of Foreign Affairs and certified by the Department of Labor and

Employment/Philippine Overseas Employment Agency for overseas employment purposes.

It covers all nationals working in a foreign country under employment contracts, including

Middle East Contract Workers, entertainers, domestic helpers, regardless of their

employment status in the foreign country.

g)

Wearing apparel, articles of personal adornment, toilet articles, portable tools and

instruments, theatrical costumes and similar effects accompanying travelers, or tourists

or arriving within a reasonable time before and after their arrival in the Philippines,

which are necessary and appropriate for the wear and use of such persons according to

the nature of the journey, their comfort and convenience: Provided, That this


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exemption shall not apply to articles intended for other persons or for barter, sale or

hire: Provided, further, That the Collector of Customs may, in his discretion, require

either a written commitment or a bondin an amount equal to one and one-half times

the ascertained duties, taxes and other charges conditioned for the exportation thereof

or payment of the corresponding duties, taxes and other charges within three (3)

months from the date of acceptance of the import entry: And Provided finally, That the

Collector of Customs may extend the timefor exportation or payment of duties, taxes

and other charges for a term not exceeding three (3) months from the expiration of the

original period;

(g-1) Personal and household effects and vehicles belonging to foreign consultants and

experts hired by, and/or rendering service to, the government, and their staff or personnel

and families, accompanying them or arriving within a reasonable time before or after their

arrival in the Philippines, in quantities and of the kind necessary and suitable to the

profession, rank or position of the person importing them, for their own use and not for

barter, sale or hire provided that, the Collector of Customs may in his discretion require

either a written commitment or a bondin an amount equal to one and one-half times the

ascertained duties, taxes and other charges upon the articles classified under thissubsection; conditioned for the exportation thereof or payment of the corresponding duties,

taxes and other charges within six (6) months after the expiration of their term or contract;

And Provided, finally, That the Collector of Customs may extend the timefor exportation or

payment of duties, taxes and other charges for term not exceeding six (6) months from the

expiration of the original period;

h)

Professional instruments and implements, tools of trade, occupation or employment,

wearing apparel, domestic animals, and personal and household effects belonging to

persons coming to settle in the Philippines or Filipinos and/or their families and

descendants who are now residents or citizens of other countries, such parties

hereinafter referred to as Overseas Filipinos, in quantities and of the class suitable to theprofession, rank or position of the persons importing them, for their own use and not

for barter or sale, accompanying such persons, or arriving within a reasonable time, in

the discretion of the Collector of Customs, before or after the arrival of their owners,

which shall not be later than February 28, 1979 upon the production of evidence

satisfactory to the Collector of Customs that such persons are actually coming to settle

in the Philippines, that change of residence was bona fide and that the privilege of free

entry was never granted to them before or that such person qualifies under the

provisions of Letters of Instructions 105, 163 and 210, and that the articles are brought

from their former place of abode, shall be exempt from the payment of customs duties

and taxes: Provided, That vehicles, vessels, aircrafts, machineries and other similar

articles for use in manufacture, shall not be classified hereunder;

i)

Articles used exclusively for public entertainment, and for display in public expositions, or

for exhibition or competition for prizes, and devices for projecting pictures and parts and

appurtenances thereof, upon identification, examination, and appraisal and the giving of

a bondin an amount equal to one and one-half times the ascertained duties, taxes and

other charges thereon, conditioned for exportation thereof or payment of the

corresponding duties, taxes and other charges within six (6) months from the date of

acceptance of the import entry; Provided, That the Collector of Customs may extend the


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time for exportation or payment of duties, taxes and other charges for a term not

exceeding six (6) months from the expiration of the original period; and technical and

scientific films when imported by technical, cultural and scientific institutions, and not

to be exhibited for profit: Provided, further, That if any of the said films is exhibited for

profit, the proceeds therefrom shall be subject to confiscation, in addition to the

penalty provided under Section Thirty-six hundred and ten as amended, of the TCCP;

j)

Articles brought by foreign film producers directly and exclusively used for making or

recording motion picture films on location in the Philippines, upon their identification,

examination and appraisal and the giving of a bondin an amount equal to one and one-

half times the ascertained duties, taxes and other charges thereon, conditioned for

exportation thereof or payment of the corresponding duties, taxes and other charges

within six (6) months from the date of acceptance of the import entry, unless extended

by the Collector of Customs for another six (6) months; photographic and

cinematographic films, undeveloped, exposed outside the Philippines by resident Filipino

citizens or by producing companies of Philippine registry where the principal actors and

artists employed for the production are Filipinos, upon affidavit by the importer and

identification that such exposed films are the same films previously exported from thePhilippines. As used in this paragraph, the terms "actors" and "artists" include the

persons operating the photographic cameras or other photographic and sound

recording apparatus by which the film is made;

k)

Importations for the official use of foreign embassies, legations, and other agencies of

foreign governments: Provided, That those foreign countries accord like privileges to

corresponding agencies of the Philippines;

Articles imported for the personal or family use of the members and attaches of foreign

embassies, legations, consular officers and other representatives of foreign

governments:Provided, That such privilege shall be accorded under special agreementsbetween the Philippines and the countries which they represent: And Provided, further,

That the privilege may be granted only upon specific instructions of the Secretary of

Finance in each instance which will be issued only upon request of the Department of

Foreign Affairs;

Note:All imported articles, except articles considered importations for the official use of

foreign embassies, legations, and other agencies of foreign governments (subject to

reciprocity) shall be subject to a formal or informal entry. (Sec. 1302 of the TCCP)

l)

Imported articles donated to, or for the account of, any duly registered relief

organization, not operated for profit, for free distribution among the needy, upon

certification by the Department of Social Welfare and Development or the

Department of Education, as the case may be;

m)

Containers, holders and other similar receptacles of any material including kraft paper

bags for locally manufactured cement for export, including corrugated boxes for

bananas, mangoes, pineapples and other fresh fruits for export, except other containers

made of paper, paperboard and textile fabrics, which are of such character as to be

readily identifiable and/or reusable for shipment or transportation of goodsshall be


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delivered to the importer thereof upon identification, examination and appraisal and

the giving of a bond in an amount equal to one and one-half times the ascertained

duties, taxes and other charges within six (6) months from the date of acceptance of the

import entry;

n)

Supplies which are necessary for the reasonable requirements of the vessel or aircraft in

her voyage or flight outside the Philippines, including articles transferred from a bonded

warehouse in any collection district to any vessel or aircraft engaged in foreign trade, for

use or consumption of the passengers or its crew on board such vessel or aircrafts as sea

or air stores; or articles purchased abroad for sale on board a vessel or aircraft as saloon

stores or air store supplies: Provided, That any surplus or excess of such vessel or aircraft

supplies arriving from foreign ports or airports shall be dutiable;

o)

Articles and salvage from vessels recovered after a period of two (2) years from the

date of filing the marine protest or the time when the vessel was wrecked or

abandoned, or parts of a foreign vessel or her equipment, wrecked, abandoned in

Philippine waters or elsewhere: Provided, That articles and salvage recovered within the

said period of two (2) years shall be dutiable;

p)

Coffins or urns containing human remains, bones or ashes, used personal and household

effects (not merchandise) of the deceased person, except vehicles, the value of which

does not exceed ten thousand pesos (P10,000.00), upon identification as such;

q)

Samples of the kind, in such quantity and of such dimension or construction as to render

them unsalable or of no appreciable commercial value; models not adapted for practical

use; and samples of medicines, properly marked "sample-sale punishable by law," for

the purpose of introducing a new article in the Philippine market and imported only

once in a quantity sufficient for such purpose by a person duly registered and identified

to be engaged in that trade: Provided, That importations under this subsection shall bepreviously authorized by the Secretary of Finance: Provided, however, That importation

of sample medicine shall be previously authorized by the Secretary of Health that such

samples are new medicines not available in the Philippines: Provided, finally, That

samples not previously authorized and/or properly marked in accordance with this

section shall be levied the corresponding tariff duty.

Commercial samples, except those that are not readily and easily identifiable (e.g.,

precious and semi-precious stones, cut or uncut, and jewelry set with precious stones),

the value of any single importation of which does not exceed ten thousand pesos

(P10,000.00) upon the giving of a bond in an amount equal to twice the ascertained

duties, taxes and other charges thereon, conditioned for the exportation of said samples

within six (6) months from the date of the acceptance of the import entry or in default

thereof, the payment of the corresponding duties, taxes and other charges. If the value

of any single consignment of such commercial samples exceeds ten thousand pesos

(P10,000.00), the importer thereof may select any portion of same not exceeding in

value of ten thousand pesos (P10,000.00) for entry under the provision of this

subsection, and the excess of the consignment may be entered in bond, or for

consumption, as the importer may elect;


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r)

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

botanical, breeding, zoological and national defense purposes: Provided, That no live

trees, shoots, plants, moss, and bulbs, tubers and seeds for propagation purposes may

be imported under this section, except by order of the Government or other duly

authorized institutions: Provided, further, That the free entry of animals for breeding

purposes shall be restricted to animals of recognized breed, duly registered in the book

of record established for that breed, certified as such by the Bureau of Animal Industry:

Provided, furthermore, That certificate of such record, and pedigree of such animal duly

authenticated by the proper custodian of such book of record, shall be produced and

submitted to the Collector of Customs, together with affidavit of the owner or importer,

that such animal is the animal described in said certificate of record and pedigree: And

Provided, finally, That the animals and plants are certified by the National Economic and

Development Authority as necessary for economic development;

s)

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

and/or publications: Provided, That those which may have already been imported but

pending release by the Bureau of Customs at the effectivity of this Decree may still

enjoy the privilege herein provided upon certification by the Department of Education,Culture and Sports that such imported books and/or publications are for economic,

technical, vocational, scientific, philosophical, historical or cultural purposes or that the

same are educational, scientific or cultural materials covered by the International

Agreement on Importation of Educational Scientific and Cultural Materials signed by the

President of the Philippines on August 2, 1952, or other agreements binding upon the

Philippines.

Educational, scientific and cultural materials covered by international agreements or

commitments binding upon the Philippine Government so certified by the Department

of Education, Culture and Sports.

Bibles, missals, prayer books, Koran, Ahadith and other religious booksof similar nature

and extracts therefrom, hymnal and hymns for religious uses;

t)

Philippine articles previously exported from the Philippines and returned without having

been advanced in value or improved in condition by any process of manufacture or

other means, and upon which no drawback or bounty has been allowed, including

instruments and implements, tools of trade, machinery and equipment, used abroadby

Filipino citizens in the pursuit of their business, occupation or profession; and foreign

articles previously imported when returned after having been exported and loaned for

use temporarily abroadsolely for exhibition, testing and experimentation, for scientific

or educational purposes; and foreign containers previously imported which have been

used in packing exported Philippine articlesand returned empty if imported by or for the

account of the person or institution who exported them from the Philippines and not for

sale, barter or hire subject to identification: Provided, That any Philippine article falling

under this subsection upon which drawback or bounty has been allowed shall, upon re-

importation thereof, be subject to a duty under this subsection equal to the amount of

such drawback or bounty.

u)

Aircraft, equipment and machinery, spare parts commissary and catering supplies,


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aviation gas, fuel and oil, whether crude or refined, and such other articles or supplies

imported by and for the use of scheduled airlines operating under Congressional

franchise:Provided, That such articles or supplies are not locally available in reasonable

quantity, quality and price and are necessary or incidental for the proper operation of

the scheduled airline importing the same;

v)

Machineries, equipment, tools for production, plants to convert mineral ores into

saleable form, spare parts, supplies, materials, accessories, explosives, chemicals, and

transportation and communication facilities imported by and for the use of new mines

and old mines which resume operations, when certified to as such by the Secretary of

Environment and Natural Resources upon the recommendation of the Director of Mines

and Geosciences Bureau, for a period ending five (5) years from the first date of actual

commercial production of saleable mineral products: Provided, That such articles are

not locally available in reasonable quantity, quality and price and are necessary or

incidental in the proper operation of the mine; and aircrafts imported by agro-industrial

companies to be used by them in their agriculture and industrial operations or activities,

spare parts and accessoriesthereof;

w)

Spare parts of vessels or aircraft of foreign registry engaged in foreign trade when

brought into the Philippine exclusively as replacements or for the emergency repair

thereof, upon proof satisfactory to the Collector of Customs that such spare parts shall

be utilized to secure the safety, seaworthiness or airworthiness of the vessel or aircraft,

to enable it to continue its voyage or flight;

x)

Articles of easy identification exported from the Philippines for repairand subsequently

reimported upon proof satisfactory to the Collector of Customs that such articles are not

capable of being repaired locally: Provided, That the cost of the repairs made to any

such article shall pay a rate of duty of thirty per cent ad valorem;

y)

Trailer chassis when imported by shipping companies for their exclusive use in handling

containerized cargo, upon posting a bond in an amount equal to one and one-half times

the ascertained duties, taxes and other charges due thereon to cover a period of one

year from the date of acceptance of the entry, which period for meritorious reasons

may be extended by the Commissioner of Customs from year to year, subject to the

following conditions:

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

Office;

2. That they shall be subject to customs supervision fee to be fixed by the Collector of

Customs and subject to the approval of the Commissioner of Customs;

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

4. That upon the expiration of the period prescribed above, duties and taxes shall be

paid, unless otherwise re-exported.

47.What are the privileges granted to an officer or employee of the Department of Finance, Civil


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or Military Attaches or member of his staff assigned to a Philippine Diplomatic Mission?

The provisions of Sec. 105 of Presidential Decree No. 34, dated October 27, 1972, to the

contrary notwithstanding any officer or employee of the Department of Foreign Affairs,

including any attach, civil or military, or member of his staff assigned to a Philippine diplomatic

mission abroad by his Department or any similar officer or employee assigned to a Philippine

consular office abroad, or any personnel of the Reparations Mission in Tokyo or AFP military

personnel detailed with SEATO or any AFP military personnel accorded assimilated diplomatic

rank on duty abroad who is returning from a regular assignment abroad, for reassignment to his

Home office, or who dies, resigns, or is retired from the service, after the approval of this

Decree, shall be exempt from the payment of all duties and taxes on his personal and

household effects, including one motor car which must have been ordered or purchased prior

to the receipt by the mission or consulate of his order of recall, and which must be registered

in his name:Provided, however, That this exemption shall apply only to the value of the motor

car and to aggregate assessed value of said personal and household effects the latter not to

exceed thirty per centum (30%) of the total amount received by such officer or employee in

salary and allowances during his latest assignment abroad but not to exceed four years; And

Provided, finally, That the officer or employee concerned must have served abroad for not lessthan two years. (Sec. 105 of the TCCP)

48.

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

The provisions of general and special laws, including those granting franchises, to the contrary

notwithstanding, there shall be no exemptions whatsoever from the payment of customs duties

except:

a)

those provided for under the TCCP;

b)

those granted to government agencies, instrumentalities or government-owned

or controlled corporations with existing contracts, commitments, agreements,or obligations (requiring such exemption) with foreign countries;

c)

international institutions, associations or organizations entitled to exemption

pursuant to agreements or special laws; and,

d)

those that may be granted by the President upon prior recommendation of the

National Economic and Development Authority in the interest of national

economic development. (Sec. 105 of the TCCP)

49.

What is customs valuation?

Customs valuation is a customs procedure applied to determine the customs value of imported

goods. If the rate of duty is ad valorem, the customs value is essential to determine the duty to

be paid on an imported good. (WTO definition)

50.

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

The general purpose for which an article is used must govern the assessment of duty; any other

rule would lead to confusion and injustice. It is the general use to which articles are chiefly

adopted and for which they are chiefly used that determine their character within the meaning

of the Tariff laws. It is the predominating use to which articles are generally applied or used that


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determines their character for the purpose of fixing the duty, and not the specific or special use

which any particular importer may make of the articles imported (Hartranft v. Langfeld, 125

U.S., 128). (Commissioner of Customs vs. Campos Rueda, GR No. 55020 dated August 20, 1990)

51.

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

a)

Method 1Transaction Value;

b)

Method 2Transaction Value of Identical Goods;

c)

Method 3Transaction Value of Similar Goods;

d)

Method 4Deductive Value;

e)

Method 5Computed Value; and,

f)

Method 6Fall Back Value.

52.

How are the methods applied?

The principal method used is Method 1 or the transaction value. For cases in which there is no

transaction value, or where the transaction value is not acceptable as the customs value

because the price has been distorted as a result of certain conditions, the WTO ValuationAgreement lays down five other methods of customs valuation, to be applied in the prescribed

hierarchical order.

The sequence of Methods 4 and 5 can be switched at the request of the importer (not, however,

at the discretion of the customs officer) except when the Commissioner of Customs finds

difficulty in determining the dutiable value of the imported article under Method 5. (WTO)

53.How is Method 1 Transaction Value determined?

The price actually paid or payable is the total payment made or to be made by the buyer to or

for the benefit of the seller for the imported goods, and includes all payments made as acondition of sale of the imported goods by the buyer to the seller, or by the buyer to a third

party to satisfy an obligation of the seller.

It is the price actually paid or payable of the goods when sold for export to the Philippines

adjusted by adding the following value components not included in the price actually paid or

payable:

a)

Selling Commissions and Brokerage;

b)

Assists;

c)

Royalty and license fees;

d)

Packing and Container Costs;

e)

Proceeds of subsequent resale;

f)

Insurance; and,

g)

Freight.

The following adjustments are excluded:

a)

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

undertaken after importation;


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b)

Cost of transport after importation;

c)

Philippine duties and taxes; and,

d)

Permissible deductions, e.g., trade discounts. (WTO and RA No. 9135)

54.

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

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

present:

a)

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

b)

No restriction as to disposition or use of the goods by the buyer;

c)

Sale of goods must not be subject to conditions or considerations;

d)

No part of the proceeds of subsequent resale, disposition, or use of the goods

by the buyer will accrue to the seller; and,

e)

Prices of goods must not be influenced by relationship between the buyer and

the seller. (WTO and RA No. 9135)

55.

How is Method 2 Transaction Value of identical goods determined?

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

transaction value of identical goods sold for export to the Philippines and exported at or about

the same time as the goods being valued. "Identical goods" shall mean goods which are the

same in all respects, including physical characteristics, quality and reputation. Minor differences

in appearances shall not preclude goods otherwise conforming to the definition from being

regarded as identical.

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

a)

the same in all respects including physical characteristics, quality, andreputation;

b)

produced in the same country as the goods being valued; and,

c)

produced by the producer of the goods being valued.

For this method to be used, the goods must be sold for export to the same country of

importation as the goods being valued. The goods must also be exported at or about the same

time as the goods being valued. (WTO and RA No. 9135)

56.How is Method 3 Transaction Value of similar goods determined?

Where the dutiable value cannot be determined under the preceding method (Method 2), the

dutiable value shall be the transaction value of similar goods sold for export to the Philippines

and exported at or about the same time as the goods being valued. "Similar goods" shall mean

goods which, although not alike in all respects, have like characteristics and like component

materials which enable them to perform the same functions and to be commercially

interchangeable. The quality of the goods, their reputation and the existence of a trademark

shall be among the factors to be considered in determining whether goods are similar.

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


23/44

a)

goods closely resembling the goods being valued in terms of component

materials and characteristics;

b)

goods which are capable of performing the same functions and are

commercially interchangeable with the goods being valued; and,

c)

goods which are produced in the same country as and by the producer of the

goods being valued.

For this method to be used, the goods must be sold to the same country of importation as the

goods being valued. The goods must be exported at or about the same time as the goods being

valued. (WTO and RA No. 9135)

57.

How is Method 4 Deductive Value determined?

The dutiable value of the imported goods under this method shall be the deductive value which

shall be based on the unit price at which the imported goods or identical or similar imported

goods are sold in the Philippines, in the same condition as when imported, in the greatest

aggregate quantity, at or about the time of the importation of the goods being valued (if none,

at the earliest date after importation but before the end of 30 days after importation), topersons not related to the persons from whom they buy such goods, subject to deductions for

the following:

a)

Commission on per unit basis on domestic sales for goods of same kind;

b)

Additions made for expenses and profit;

c)

Transport, Insurance and related costs; and,

d)

Duties and taxes for the importation and sale.

The WTO Customs Valuation Agreement provides that when customs value cannot be

determined on the basis of the transaction value of the imported goods or identical or similar

goods, it will be determined on the basis of the unit price at which the imported goods oridentical or similar goods are sold to an unrelated buyer in the greatest aggregate quantity in

the country of importation. The buyer and the seller in the importing country must not be

related and the sale must take place at or about the time of importation of the goods being

valued. If no sale took place at or about the time of importation, it is permitted to use sales up

to 90 days after importation of the goods being valued. (WTO and RA No. 9135)

58.How is Method 5 Computed Value determined?

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

a)

The cost or the value of materials and fabrication or other processing employed

in producing the imported goods;

b)

The amount for profit and general expenses equal to that usually reflected in

the sale of goods of the same class or kind as the goods being valued which are

made by producers in the country of exportation for export to the Philippines;

c)

The freight, insurance fees and other transportation expenses for the

importation of the goods;

d)

Any assist, if its value is not included under paragraph (a) hereof; and


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e)

The cost of containers and packing, if their values are not included under

paragraph (a) hereof.

The Bureau of Customs shall not require or compel any person not residing in the Philippines to

produce for examination, or to allow access to, any account or other record for the purpose of

determining a computed value. However, information supplied by the producer of the goods for

the purposes of determining the customs value may be verified in another country with the

agreement of the producer and provided they will give sufficient advance notice to the

government of the country in question and the latter does not object to the investigation.

Computed value, the most difficult and rarely used method, determines the customs value on

the basis of the cost of production of the goods being valued, plus an amount for profit and

general expenses usually reflected in sales from the country of exportation to the country of

importation of goods of the same class or kind. (WTO and RA No. 9135)

59.

How is Method 6 Fallback Method determined?

If the dutiable value cannot be determined under the preceding methods (Methods 1 to 5)

described above, it shall be determined by using other reasonable means and on the basis of

data available in the Philippines. If the importer so requests, the importer shall be informed in

writing of the dutiable value determined under Method 6 and the method used to determine

such value. No dutiable value shall be determined under Method 6 on the basis of:

a)

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

b)

A system that provides for the acceptance for customs purposes of the higher of

two alternative values;

c)

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

d)

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

determined for identical or similar goods in accordance with Method Fivehereof;

e)

The price of goods for export to a country other than the Philippines;

f)

Minimum customs values; or

g)

Arbitrary or fictitious values. (WTO and RA No. 9135)

60.

What is the remedy of the importer if there is a delay in the determination of the dutiable

value?

The importer shall nevertheless be able to secure the release of the imported goods upon the

filing of a sufficient guarantee in the form of a surety bond, a deposit, cash or some other

appropriate instrument in an amount equivalent to the imposable duties and taxes on theimported goods in question conditioned upon the payment of customs duties and taxes for

which the imported goods may be liable: Provided, however, That goods, the importation of

which is prohibited by law shall not be released under any circumstance whatsoever. (Sec. 201

of the TCCP)


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61.

When may an Anti-Dumping Duty be imposed?

Anti-dumping duty refers to a special duty imposed on the importation of a product, commodity

or article of commerce into the Philippines at less than its normal value when destined for

domestic consumption in the exporting country, which is the difference between the export

price and the normal value of such product, commodity or article.

Whenever any product, commodity or article of commerce imported into the Philippines at an

export price less than its normal value in the ordinary course of trade for the like product,

commodity or article destined for consumption in the exporting country is causing or is

threatening to cause material injury to a domestic industry, or materially retarding the

establishment of a domestic industry producing the like product. (Sec. 301 of the TCCP)

62.

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

The Secretary of Trade and Industry, in the case of non-agricultural product, commodity or

article, or the Secretary of Agriculture, in the case of agricultural product, commodity or article,

after formal investigation and affirmative finding of the Tariff Commission (hereinafter referredto as the Commission), shall cause the imposition of an anti-dumping duty equal to the margin

of dumping on such product, commodity or article and on like product, commodity or article

thereafter imported to the Philippines under similar circumstances, in addition to ordinary

duties, taxes and charges imposed by law on the imported product, commodity or article.

However, the anti-dumping duty may be less than the margin if such lesser duty will be

adequate to remove the injury to the domestic industry. Even when all the requirements for the

imposition have been fulfilled, the decision on whether or not to impose a definitive anti-

dumping duty remains the prerogative of the Commission. It may consider, among others, the

effect of imposing an anti-dumping duty on the welfare of consumers and/ or the general public,

and other related local industries. (Sec. 301 of the TCCP)

63.

When may a Countervailing Duty be imposed?

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

the government in the country or origin or exportation, any kind or form of specific subsidy

upon the production, manufacture or exportation of such product, commodity or article, and

the importation of such subsidized product, commodity or article has caused or threatens to

cause material injury to a domestic industry or has materially retarded the growth or prevents

the establishment of a domestic industry as determined by the Tariff Commission. (Sec. 302 of

the TCCP)

64.

How much amount of Countervailing Duty may be imposed?

The Secretary of Trade and Industry, in the case of nonagricultural product, commodity or

article, or the Secretary of Agriculture, in the case of agricultural product, commodity or article

shall issue a department order imposing a countervailing duty equal to the ascertained amount

of the subsidy. The same levy shall be imposed on the like product, commodity or article

thereafter imported to the Philippines under similar circumstances. The countervailing duty shall

be in addition to any ordinary duties, taxes and charges imposed by law on such imported

product, commodity or article. (Sec. 302 of the TCCP)


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65.

What is a Marking Duty?

Marking duty refers to a duty on ad valorem basis imposed for improperly marked articles. The

law requires that foreign importations must be marked in any official language of the Philippines

the name of the country of origin of the article. (Nague and UP Law Center)

66.

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

In order to protect consumers from the deceptive practice of passing of imported articles, as

coming from a particular country other than its actual country of origin. (Customs Memorandum

Order 121-88 dated October 13, 1988)

67.

How much Marking Duty may be imposed?

The Commissioner of Customs may impose a Marking Duty not to exceed 5% ad valorem of the

articles subject to marking. (Sec. 303 of the TCCP)

68.

What is a Discriminatory or Retaliatory Duty?

This is a duty imposed on imported goods whenever it is found as a fact that the country of

origin discriminates against the commerce of the Philippines in such a manner as to place the

commerce of the Philippines at a disadvantage compared with the commerce of any foreign

country. (Nague and UP Law Center)

69.When may a Safeguard Duty be imposed?

The Secretary of the Department of Trade and Industry in the case of non-agricultural products

or the Secretary of the Department of Agriculture in the case of agricultural products shall apply

a general safeguard measure upon a positive final determination of the Tariff Commission that aproduct is being imported in to the country in increased quantities, whether absolute or relative

to the domestic production, as to be a substantial cause of serious injury or threat thereof to the

domestic industry; however in the case of non-agricultural products; the Secretary shall first

establish that the application of such safeguard measure will be in the public interest. (Republic

Act No. 8800)

70.May the DTI Secretary impose general safeguard measures in the absence of a positive final

determination by the Tariff Commission?

No, the plain meaning of Section 5 of Republic Act No. 8800 shows that it is the Tariff

Commission that has the power to make a "positive final determination." This power lodged in

the Tariff Commission, must be distinguished from the power to impose the general safeguard

measure which is properly vested on the DTI Secretary.

All in all, there are two condition precedents that must be satisfied before the DTI Secretary may

impose a general safeguard measure on grey Portland cement. First, there must be a positive

final determination by the Tariff Commission that a product is being imported into the country

in increased quantities (whether absolute or relative to domestic production), as to be a

substantial cause of serious injury or threat to the domestic industry. Second, in the case of non-


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agricultural products the Secretary must establish that the application of such safeguard

measures is in the public interest. (Southern Cross Cement Corporation vs. Philippine Cement

Manufacturers Corporation, GR No. 158540 dated July 8, 2004)

71.

Who are the persons having police authority under the TCCP?

For the enforcement of the customs and tariff laws, the following persons are authorized to

effect searches, seizures and arrests comformably with the provisions of said laws:

a)

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

officers, agents, inspectors and guards of the Bureau of Customs;

b)

Officers of the Philippine Navy and other members of the Armed Forces of the

Philippines and national law enforcement agencies when authorized by the

Commissioner;

c)

Official of the Bureau of Internal Revenue on all cases falling within the regular

performance of their duties, when then the payment of internal revenue taxes

are involved; and,

d)

Officers generally empowered by law to effect arrests and execute processes ofcourts, when acting under direction of the Collector. (Sec. 2203 of the TCCP)

72.Raul Boac (Boac) is a member of the Philippine National Police - Criminal Investigation and

Detection Group (PNP-CIDG). He and his team flagged down three (3) container vans with

alleged contraband in violation of Customs Laws. Boac and his members did not have any

written authority from the Commissioner of Customs or District Collector. Is Boac guilty of

violating Sec. 2203 (d) of the TCCP?

No, the act of flagging down the vehicles is not among those proscribed by Sec. 2203 of the

Tariff and Customs Code. Mere flagging down of the container vans is not punishable under the

said law.

In this case, the prosecution failed to show that Boac and his team members committed the acts

prohibited by Sec. 2203 of the Tariff and Customs Code. There is no such evidence, testimonial

or otherwise, that identifies Boacas responsible for the alleged illegal search. Hence, acquittal is

in order.

The jurisdiction of the Commissioner of Customs is clearly with regard to customs duties. Should

the PNP suspect anything, it should coordinate with the BOC and obtain the written authority

from the Collector of Customs in order to conduct searches, seizures, or arrests. Coordination is

emphasized in the laws. While it is an admitted fact that there was no such coordination

initiated by the PNP-CIDG in this instance, nevertheless, Boac and his team members cannot beconvicted under the Tariff and Customs Code since there is no evidence that they did actually

search the container vans. (Boac vs. People, GR No. 180597 dated November 7, 2008)

73.

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

No, a dwelling house may be entered and searched only upon warrant issued by a judge or

justice of the peace, upon sworn application showing probable case and particularly describing


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the place to be searched and person or thing to be seized.

For the more effective discharge of his official duties, any person exercising the powers herein

conferred, may at anytime enter, pass through, or search any land or enclosure or any

warehouse, store or other building, not being a dwelling house.

A warehouse, store or other building or enclosure used for the keeping of storage of articles

does not become a dwelling house within the meaning hereof merely by reason of the fact that

a person employed as watchman lives in the place, nor will the fact that his family stays there

with him alter the case. (Secs. 2208 and

q and a in tariff and customs law (final 7.11.14) (1)

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