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VITAL NOTES ON TARIFF AND CUSTOM CODE MARCH 2011

I - DUTY AND TAX DRAWBACK

It has been the policy of the government to help our export industries

toward giving them aid and incentives by reducing if not totally eliminating the burdens of taxation in the form of duties and taxes levied on the imported materials used in the manufacture of their products that add to the cost of their total exports. It is on this area where the Bureau of Customs is tasked to implement Sec. 106 of the Tariff and Customs Code of the Philippines, as

amended, which provides for the mechanism wherein a refund of taxes is made on certain goods affected by import duties after compliance with all conditions and documentary requirements provided for by law and the rules and regulations issued pursuant thereto.

Purposes of Drawback

One of the purpose of the drawback provision is to make duty-free imported materials which are manufactured here and then returned to the country from which they came or to some other foreign country. The object of this provision is not only to build up an export trade, but to encourage manufacturers in this country, where such manufacturers are intended for

exportation, by granting a rebate of duties on the raw or prepared materials imported, thus enabling the manufacturer to compete in foreign markets with the same articles manufactured in other countries.

Drawback, defined

An allowance made by the government upon the duties on imported merchandise when the importer, instead of selling it here, re-exports it; or the refunding of such duties if already paid. This allowance amounts in some cases, to the whole of the original duties; in others, to a part only.

Is a device whereby goods affected by taxes are re-exported as if they are not taxed at all. Drawback is a refund of Customs duties, certain Internal Revenue taxes and certain fees that have been lawfully collected at importation.

The term Drawback, which literally means to draw back or refund, is a device or a special form of relief and benefit mechanism given to a person to draw back or to claim a refund of import duties, and if warranted includes

internal revenue taxes, he previously paid for importing raw materials used for manufacturing of his export products or importing goods devoted to particular purposes or uses, after compliance with all the conditions and documentary requirements under the law and regulations issued pursuant thereto.

Drawback strictly construed

Since statutes granting exemptions from their general operations must be strictly construed and any doubt must be resolved against one asserting the exemption, a drawback is to be construed in favor of the government and against the party claiming the grant, as in other cases of a government grant of a privilege or benefit.

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Is Internal Revenue Tax Subject of Drawback?

Ans: Yes. If as a result of the refund or tax credit by way of drawback of

customs duties, there would necessarily result a corresponding refund or credit of internal revenue taxes on the same importation, the Collector shall, after the

regular processing of the drawback claim, certify to this effect to the Commissioner of Customs who shall cause the said refund or tax in favor of the importer, with advice to the Commissioner of Internal Revenue. Payment of Drawback Claims

Claims for refund or tax credit shall be paid or granted by the Bureau of

Customs to claimants within sixty (60) days after receipt of properly accomplished claims, together with all the forms and documents required by the rules issued thereto.

II LIQUIDATION OF DUTIES (Entries) Background

Liquidation of entries comes after the examination and appraisal process but the law is silent on whether it shall be before or after release of an importation. It is referred to as post-liquidation if done after release and pre-liquidation if done before release. In the case of formal consumption entries, post-liquidation is the established norm. In the case of informal entries, the situation is quite fluid until CMO 20-2002 was issued declaring a NO LIQUIDATION-NO RELEASE policy. It provides that no release of importations declared on an informal entry shall be released unless the entry has undergone liquidation and the assessed amount of duties, taxes and other charges paid. Liquidation of Entry

If the Collector shall approve the returns of the appraiser and the report of the weights, gauge or quantity, the liquidation shall be made on the face of

the entry showing the particulars thereof, initiated by the customs assessor, approved by the chief customs assessor, and recorded in the record of liquidations. Liquidation, defined

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. Is the final computation or ascertainment of the duties accruing on

merchandise. Liquidated, when stamped by a collector of customs on the entry of goods at a customhouse, meant that the entry had been passed regularly

through the various divisions of the collectors office, and the duties thereon had been finally ascertained and fixed by the customs officials. Purpose and Function of Liquidation

From a reading of Sec. 1601 of the Code, it is evident that liquidation of entries (tentative or final) is the only function and duty of customs assessors,

the sole purpose of which is to determine the exact amount due under the law, no more, no less.

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In essence, it is merely to correct errors in the computation of duties, taxes, fees and other charges on the face of the entry which may include errors on the application of the conversion rate of exchange, freight and arrastre

charges, imposition of surcharge under Sec. 2503 of the Code, and the like. Reason why called Liquidation and Billing Division

If additional duties, taxes, fees and other charges are found upon liquidation, i.e., there is short-payment, the law mandates that a notice (billing) shall promptly be sent to the interest parties, the reason why the unit is called

Liquidation and Billing Division. Customs assessors must and should not on their own usurp the functions of customs officers (examiners and/or appraisers) whose duties are

expressly mandated under Sec. 1403 of the Code, as amended by R.A. 7650, which further states that it is to be under pain of penalties prescribed under Sec. 3604 if they fail in their duties. Tentative Liquidation

SEC. 1602. Tentative Liquidation. 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 a period of six (6) months from date of tentative liquidation. The entry in such case shall be stamped Tentative liquidation. While the Code has not defined what the term liquidation means, we can deduce from a reading of Sec. 1602 aforequoted that it is to determine the exact amount due under the law from imported articles, either in whole or in part. The law further provides that if some future action is required, the liquidation shall be deemed tentative and the entry shall be stamped Tentative Liquidation. What specific examples of importations which may fall under tentative

liquidation?

Ans: For obvious reasons, the law did not mention or enumerate what the

required future action is or are but it mostly refer to importations which under the law may be authorized for release under bond (cash or surety). Specific examples are:

1. Importations which fall under sub-section d, of Sec. 105 (Conditionally-Free Importations) of the Code on articles brought in for repair, processing or reconditioning.

2. Those which fall under sub-section I, on 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.

3. Duty and/or tax exempt importations which may be released under bond conditioned on submission of an endorsement from the Department of

Finance (DOF) that the importation is qualified for duty and/or tax free release. Thus, if some future action is still required before the exact amount due

under the law can be determined, its only in such case that an entry shall be deemed under tentative liquidation. Conversely, if no future action is required and the exact amount due is determined upon liquidation of the entry, and full payment already tendered, it would logically follow that the entry is finally

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liquidated and no longer under tentative liquidation. If short payment is found upon liquidation and the additional duties, taxes and other charges assessed have been paid, the same is likewise true. This view finds support in the law

which further mandates that A daily record of all entries liquidated shall be posted in the public corridor of the customhouse (I express doubts whether this mandate of law is still being followed.)

When is a liquidation considered made on the entry?

Ans: Liquidation is considered to have been made when the entry is officially

stamped liquidated, and is dated in accordance with a customs regulation, although as appears, where there is a discrepancy between the date so stamped and the date given in the public bulletin of liquidation, for purposes of filing a protest, the latter date governs.

Liquidation- A mandatory process

From the above-quoted provision of law, it is obvious that liquidation is a mandatory process required for every entry of imported articles. For it is through this legal process that a determination is made of the exact amount of

duty, tax and other charge due under the law for which the importer is liable (Sec. 1602, TCC). Section 2308 of the Code presupposes that a ruling or decision of the Collector has been made whereby liability for duties, taxes, fees or other charges is determined. Precisely, such liability is ascertained or determined through liquidation or final adjustment of the entry. Until this is

done there is no ruling or decision against which a protest may be presented. What is the purpose of the duty of the collector to make liquidation?

Ans: The duty is imposed on the collector so that the importer may, if he sees

fit, protest the liquidation within the time prescribed by statute. What is the effect of the filing of protest by the importer?

Ans: The filing of the protest suspends the running of the statutory period of

limitation, and when the protest has been decided and a reliquidation in conformity with such decision is made, the statute of limitations begins to run again.

Reliquidation, defined

A reliquidation is a new liquidation, made for the purpose of correcting mistakes or errors of fact or law. It constitutes an abandonment of all prior liquidations and becomes in their stead the final decision of the collector, having all the validity of the original liquidation.

Is the reliquidation of import entry for additional duty even after the statutory period, a no bar to governments right to collect taxes?

Ans: Even if the entries of the importations were reliquidated after one year

(now three years) from the date of final payment of duties as prescribed in Sec. 1603 of the Tariff and Customs Code, as amended, there would still be no

question as to the right of the Government to collect the 5% ad valorem additional duty under Republic Act No. 6060, under the off-repeated statutory principle that the Government is never stopped or barred from collecting the duties and taxes due because of the negligence and errors committed by its

servants.

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Is there a time within which the Collector is required to make liquidation?

Ans: In the absence of any provision to the contrary in the statute, there is no

limit as to the time when the original liquidation may be made, and a collector

may ordinarily delay such liquidation as he pleases, even for many years. Notice of Liquidation

A daily record of all entries liquidated shall be posted in public corridor of the customhouse, stating the name of the vessel or aircraft, the port from which she arrived, the date of her arrival, the name of the importer, and the

serial number and the date of the entry. A daily record must also be kept by the Collector of all additional duties, taxes, and other charges found upon liquidation, and notice shall promptly be sent to the interested parties. Is a notice essential to the validity of liquidation?

Ans: Yes. Posting a notice of liquidation in the prescribed form and manner is

essential to the validity of the liquidation. A mandatory duty is imposed on the collectors of customs by statute to give notice of liquidation in the form and manner prescribed by the secretary

xxx. No discretion is given to the collectors by the statute either as to the form or manner of the notice, xxx. Whether the requirements as to the notice have been complied with is a question to be determined in each particular case, but in the absence of evidence to the contrary, the regulation is presumed to have been complied with.

Failure to give the notice as prescribed renders the liquidation invalid and ineffective, and a bulletin notice of liquidation not posted in a conspicuous place in the prescribed form and manner is a nullity. The importer is bound to take notice of the liquidation bulletin and accordingly is deemed to have at

least constructive notice of the liquidation on the day of its completion. Is a notice to IOR sufficient?

Ans: Yes. The bulletin notice to be given under the regulation is for the

information of the importer. Posting thereof in the name of the Importer of

record (IOR) is considered sufficient, although he is not the owner, and where a notice is duly posted in the name of the importer in a case where no additional or increased duties are involved, a reposting in the name of the owner is not necessary even though the owners declaration has been filed. What is the effect of the refusal to post notice?

Ans: The refusal of the collector to post the required legal notice of the

liquidation was not cured by importer paying the additional duties claimed, in response to a Notice of Duties Due served merely to inform the importer of increased duties due xxx. It was not intended to be, nor was it in fact, an attempted compliance with the mandatory provisions of the statute.

Statute of Limitations Finality of Liquidation

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 final payment of duties, in the absence of fraud or protest or

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compliance audit pursuant to the provisions of the TCCP, be final and conclusive upon all parties, unless the liquidation of the import entry was merely tentative.

When will the liquidation becomes final?

Ans: Generally, liquidation becomes final and conclusive after 3 years from the

date of the final payment of duties in the absence of fraud, protest, and compliance audit unless the liquidation of the import entry was merely tentative.

If there is no fraud, protest or in the absence of non-compliance audit under Sec. 3515 of the TCCP as amended, liquidation on the expiration of three (3) years from the date of the final payment of duties, becomes final and

conclusive on all persons including the Philippine government or any of its officer. Exception to the general rule: When the liquidation made on the entry in the

first place is merely tentative. Note: The implementing rules further clarify the finality of liquidation of import entries as follows:

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 the final payment of the duties due, except where:

1. Fraud as defined in Section VI.C.1.c hereof as committed; 2. A protest has been filed under the provision of Section 2308 of the

Customs Code; 3. 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; 4. The liquidation of the import entry was merely tentative.

The first exception speaks of fraud. Fraud is abroad term, not just the acts or omissions mentioned in Sec. 3611 of the Code relative to compliance

audit, and the Philippine Law Dictionary is replete with citations on what is meant by fraud or what constitutes fraud. The bottom line is that fraud is and illegal act under any law, to be condemn.

The second exception covers protests. Sec. 2308 of the Code on protests provides that it shall be presented at the time when payment of the amount claimed to be due the government is made or within fifteen (15) days thereafter. It further provides that no protest shall be considered unless there is payment of the amount due after final liquidation. In reference to protests, final

liquidation as contemplated in Sec. 1601 and Sec. 1407 of the Code is not the same as finality of liquidation contemplated in Sec. 1603 of the same Code. This is easily discernible if one reads closely the provisions of Sec. 1407 in comparison with the provisions of Sec. 1603. The exceptions mentioned in Sec. 1407 cannot be interpreted to mean the some future action is required contemplated under Sec. 1602. The exception enumerated are only contingencies which may later arise after final liquidation which is evident from a close reading of Sec. 1407 which states to read: Such appraisal, classification or return as finally passed upon and approved or modified by the

Collector shall not be altered or modified in any manner, followed by the

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exceptions enumerated. It would be stretching ones imagination if such contingencies will b e misconstrued as referring to the some future action stated in Sec. 1602. Such interpretation which is distorted serves no legitimate

or valid purpose. The third exception refers to the so-called post audit of selected entries.

The fourth exception which will stay the period for finality of liquidation is when the liquidation of an import entry is merely tentative. Fraud, defined

It comprises all acts, omissions, and concealments involving a breach of a legal or equitable duty and resulting in damage to another. And includes

anything calculated to deceive, whether it be a single acts or combination of circumstances, whether the suppression of truth or the suggestion of what is false, whether it be direct falsehood or by innuendo by speech or by silence, by word of mouth, or by look or gesture. Prescriptive period applies only in the absence of fraud

Held: Prescinding from what has been said, we hold that the forfeiture of the illegally released equipment was proper under Sec. 2530, pars. (f) and (l), sub-paragraphs 3, 4 and 5 of the Tariff and Customs Code, as amended. Contrary to private respondents contention, the forfeiture proceedings were not barred by prescription as the one year (now three years) prescriptive period under Sec.

1603 of the Tariff and Customs Code, as amended, applies only in the absence of fraud. In this case, PCOCs importations were released by the Bureau of Customs free of tax by virtue of endorsements issued by the Department of Finance. These, in turn, were issued on certain misrepresentations of

Constancio Francisco, an interlocking officer of PCOC and PIRC, to the effect that the importation were exempt from taxes and duties. Is the above statute of limitation applicable in penal offices?

Ans: No. The Tariff and Customs Code of the Philippines does not provide for

the statute of limitation on penal offenses. It applies only to civil cases. The

prescriptive period in general shall apply for penal offenses. What is the effect of the filing of protest by the importer?

Ans: The filing of the protests suspends the running of the statutory period of

limitation, and when the protest has been decided and a reliquidation in conformity with such decision is made, the statute of limitations begins to run

again. Computation of Time

The statutory provision fixing the liquidation as the time when the period for protest commences to run means a final rather than a tentative liquidation, or a preliminary estimate of the duty made to allow payment so that the

importer may obtain possession of the merchandise. The time when the liquidation is made for the purpose of computing the statutory period is the time when a proper bulletin notice of protest is posted

as prescribed. If the liquidation is not made or the notice thereof is not given in the form and manner prescribed by law, xxx, there is in effect no liquidation which will start the statutory period running and a protest made thereto is properly dismissed as untimely.

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In implementation of Sections 2308, 2309 and 2310 of the original Tariff and Customs Code of the Philippines circa 1957, CAO 226 dated 03 December

1957 (46 years ago) was issued prescribing the rules for filing of protests and appeals, among others. Notwithstanding the fact that it is already outdated, it is still in forces and effect as it has not been expressly revoked nor suspended by another CAO on same subject. Sec. 2308 of the Code, as implemented by

CAO 226, expressly provides the period within which a protest may be filed (15 days) and further provide that a protest shall not be considered (given due course officially) unless payment of the amount due after final liquidation has first been made. In other words, there must first be final liquidation of an entry (as the term is contemplated under Sec. 1601 in conjunction with Sec. 1407)

and payment of the amount due before any protest will be given due course. What does it mean by the term payment?

Ans: In reference to filing of protests, the term payment used in the law mean to refer to the date of payment as implemented in CAO 226. Thus, any advance payment of duties made pursuant to PD 1853 in relation to CB (now

BSP) Circular No. 909, MAAB No. 4, Finance Ministry Order No. 3-83 and Ministry Circular No. 1-83 (all as implemented by CMO 13-83) or for that matter any payment of duties made before final liquidation of the entry are merely estimated duties and deemed just a deposit which does not assume or partake of the character of payment in the legal sense, for it is only through the

mandatory legal processes of liquidation that the extent or exact amount of an importers liability that the extent or exact amount of an importers liability for such duty under the law as well as taxes, and other charges is ascertained or determined.

When is then the payment of duties or taxes deemed paid?

Ans: To be deemed paid, the duties must have been liquidated. Otherwise, any

protest filed under said circumstances would be premature, i.e., not a timely protest.

According to American jurisprudence pertinent to the protest provisions of the U.S. Tariff Act of 1930 after which our law was patterned, if a protest prematurely filed should not even be received but returned to the party filing it since Sec. 2310 of the Code states that Every protest shall be filed in accordance with the prescribed rules and regulations promulgated under this

section. Which is CAO 226 still in force and effect. Note: The issue of timeliness of a protest has not been addressed in a clarificatory and definitive regulation. It is vital since no protest can be

considered if it is not timely filed even if its form and substance complies with regulations. If no timely protest is filed, it goes without saying that the running of the period on finality of liquidation will not be stayed. However, a proper and timely protest may still be presented from the date of final payment. In such case, the running of the 3-year period will be stayed or interrupted.

Correction of Errors

For the purpose of correcting errors under Sec. 1707 of the TCC, the Collector is authorized to reliquidate entries and collect additional charges, or to make refunds on statement of errors within the statutory time limit.

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Reliquidation, defined

A reliquidation is a new liquidation, made for the purpose of correcting mistakes or errors of fact or law. It constitutes an abandonment of all prior liquidations and becomes in their stead the final decision of the collector,

having all the validity of the original liquidation.

III ABATEMENTS AND REFUNDS General rule: It is the general rule that customs revenue may be collected only

on the quantity of the taxable subject matter which is actually imported and received by the importer, so as to come into the consumption of the country. Duties are not to be estimated on goods, which never arrived in port, merely because they are included in the invoice, regardless of whether the shortage is

due to theft, evaporation, destruction or other loss on the voyage, or to short shipment. Duties assessed on goods entered at customhouse

Duties are required by law to be assessed on the goods, and the assessment is uniformly made on the quantity entered at customhouse,

without any allowance for ordinary leakage and deterioration during delay in completing the appraisement. Except those specially provided for in the Tariff and Customs code of the Philippines, no abatement of duties shall be made on account of damage

incurred or deterioration suffered during the voyage of importation. Duties will be assessed on the actual quantity imported, as shown by the return of the weighers, gauges, measurers, examiners or appraisers, as the case may be.

Abatement, defined

Diminution or decrease in the amount of tax imposed. Abatement of

taxes relieves property of its share of the burdens of taxation after the assessment has been made and tax levied. Blacks Law Dictionary, 6tg ed. Refund, defined

Money received by the government or its officers which, for any cause,

are to be refunded or restored to the parties paying them; such as excessive duties or taxes, duties paid on goods destroyed by accident, duties received on goods which are re-exported. Is there a difference between a tax refund or tax credit?

Ans: it may be that there is no essential difference between a tax refund and a

tax credit since both are modes of recovering taxes erroneously or illegally paid to the government. Yet, there are unmistakable formal and practical differences between the two modes. Formally, a tax refund requires a physical return of the sum erroneously

paid by the taxpayer, while a tax credit involves the application of the reimbursable amount against any sum that may be due and collectible from the taxpayer. On the practical side, the tax payer to whom the tax is refunded would have the option, among others, to invest for profit the returned sum, an option not proximately available if the taxpayer chooses instead to receive a tax

credit.

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Is there a statute of limitations with regard to claims for refund of customs duties in court?

Ans: None. The Tariff and Customs Code does not provide for the statute of

limitations within which to file a claim or suit in court. As long as a protest and

claim for refund are first filed with the collector of Customs, the importer or claimant must wait for the latters and Commissioners decision before he may elevate the matter to the Court of Tax Appeals. Is the refund of duties carries with it the corresponding refund for the

internal revenue taxes?

Ans: Yes. If a result of the refund of customs duties, there would necessarily

result a corresponding refund of internal revenue taxes on the same importation, the Collector shall likewise certify the same to the Commissioner who shall cause the said taxes to be paid, refunded, or tax credited in favor of the importer, with advice to the Commissioner of Internal Revenue.

It is clear from the foregoing provision of the Tariff and Customs Code that in all claims for refund of customs duties, the Collector to whom such customs duties are paid and upon receipt of such claim is mandated to verify

the same by the records of his office. Is such claim is found correct and in accordance with law, the Collector shall certify the same to the Commissioner with his recommendation together with all necessary papers and documents. Refund of customs duties takes the form of tax exemptions. How

construed

Any claim for refund of customs duties takes the nature of tax exemptions that must be construed strictissimi juris against the claimants and liberally in favor of the taxing authority. This power of taxation being a high prerogative of sovereignty, its relinquishment is never presumed. Any reduction or diminution thereof with respect to its mode or its rate must be strictly

construed, and the same must be couched in clear and unmistakable terms in order that it may be applied. IV SUMMARY OF TAXPAYERS REMEDIES UNDER THE CUSTOMS LAW

A. Administrative/Extrajudicial 1. Claim for refund

Refund of custom duties and/or internal revenue taxes may be availed of by the taxpayer ____ under Sec. 1701 to 1705 and Sec. 1708 of the Tariff

and Customs Code.

2. Written Protest Under Sec. 2308 of the TCC, the importer-taxpayer may protest at the time of payment or within 15 days thereafter, the collection of duties, taxes or other charges (except fines in seizure cases) whenever he disagrees to such ruling or decision of the collector.

3. Release under Cash bond of articles under seizure

Under Sec. 2301 of the TCC, the taxpayer-owner may secure for the immediate release o his seized property for legitimate use under Cash bond.

4. Settlement of seizure case by payment of fine or redemption of forfeited property Taxpayer-importer may offer for the settlement of any seizure case

provided he shall pay the fine or by redemption by payment of the

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domestic market value of the seized article as provided for under Sec. 2307 of the TCC.

5. Abandonment of articles imported Except in criminal liability, the taxpayer-importer may relieve himself for

the burden of paying duties and taxes by simply abandoning his articles either expressly or impliedly under Secs. 1801 and 1802 of the TCC, as amended.

B. Judicial 1. Appeal by Certiorari to the CTA

By petition for review within 30 days from the date of receipt of the adverse decision of the Commissioner of Customs or the Secretary of

Finance as the case maybe.

2. Appeal by Certiorari to the Supreme Court By petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, within 15 days from the date of receipt of the adverse decision of the Court of Tax Appeals.

SUMMARY OF GOVERNMENTS REMEDIES UNDER THE CUSTOM LAW

A. Extrajudicial/Administrative

1. By enforcement of tax lien Tax lien is enforce while the imported articles are in the custody or

subject to the control of the government. Proceeds of the sale of the forfeited articles are applied to the tax liability of the importer and other fees and costs of the sale, the excess goes to the importer/taxpayer.

- Beyond the reach of regular courts. - Applicable when importation is not prohibited or neither irregular.

2. Seizure of the articles imported This remedy is applied when the imported articles are subject to seizure by customs for violation of the Tariff and Customs Code and all other laws enforced by the Bureau of Customs and the penalty

imposed is either fine or the forfeiture of the goods itself. - Applied if importation is prohibited or irregular (e.g., smuggle

goods, failure to file import entry)

B. Judicial 1. Can be availed of when the goods are released and the tax lien is lost, in order to collect the taxes.

2. Smuggling case will be filed if prohibited and irregular and seizure proceeding is not available.

V PROCEEDINGS IN THE BUREAU OF CUSTOMS

A. SEIZURE/FORFEITURE PROCEEDINGS When and how customs seizures be initiated

Seizures of imported articles for violation of the tariff and customs laws

may be initiated thru and by the following:

1. Upon discovery of unmanifested cargo under Sec. 1005 of the TCCP in relation to Sec. 2530 of the same Code;

2. Upon examinations and findings of undervaluation, misclassification and misdeclaration of imported articles when prima facie of fraud is

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presumed under Sec. 2503 of the TCCP and those under Sec. 2530 of the same Code;

3. Upon abandonment of articles under Sec. 1801 of the TCCP;

4. Under the visitorial power of the Bureau of Customs on imported articles openly offered for sale at under Sec. 2536 of the TCCP;

5. Upon failure to withdraw articles from the Customs Bonded Warehouse under Sec. 1908 of the TCCP and thru those audit reports

and violations of Customs Bonded Warehouses; 6. Violation of Intellectual Property Rights under the Intellectual

Property law and pursuant to CA0 6-2002; 7. Derogatory information and alerts from the Intelligence and

Enforcement group of the Bureau of Customs; and

8. Other violation of the tariff and customs laws and the rules and regulations issued thereto.

Seizure Proceedings, How construe

CA0 9-93 provides that the Rules and Regulations governing the issuance of Warrants of Seizure and Detention, the conduct of seizure

proceedings and the procedure of administrative appeals shall be liberally construed to carry out the objectives of the Tariff and Customs Code of the Philippines, as amended, and to assist the parties in obtaining just and expeditious disposition of seizure cases.

Nature of Seizure/Forfeiture Proceedings

It is quite clear that seizure and forfeiture proceedings under the tariff and customs laws are not criminal in nature as they do not result in the conviction of the offender nor in the imposition of penalty provided for in Section 3601 of the Code. As can be gleaned from Section 2533 of the Code,

seizure proceedings, such as those instituted in this case, are purely civil and administrative in character, the main purpose of which is to enforce the administrative fines or forfeiture incident to unlawful importation of goods or their deliberate possession. The penalty in seizure cases is distinct and separate from the criminal liability that might be imposed against the indicted

importer or possessor and both kinds of penalties may be imposed. Nature of forfeiture proceedings

Forfeiture proceedings are proceedings in rem, (Commissioner of Customs v. Court of Tax Appeals, 138 SCRA 581 [1985] citing Vierneza v.

Commisioner of Customs, 24 SCRA 394 [1968] and are directed against the res. Since forfeiture proceeding is in rem, the imported article under seizure/forfeiture proceeding is considered the offender and not the importer or

any interested party therein. However, this will not excuse the person who appears to have violated the law from being charged in a separate criminal or administrative case. Lack of knowledge of the owner of the seized property not a valid defense

It is no defense that the owner of the vessel sought to be forfeited had no actual knowledge that his property was used illegally. The absence or lack of actual knowledge of such use is a defense personal to the owner himself which cannot in any was absolve the vessel from the liability of forfeiture.

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When shall forfeiture be effected?

Ans: Forfeiture shall be effected when and while the article is in the custody or

within the jurisdiction of the customs authority or in the hands or subject to the control of some person who shall receive, conceal, buy, sell or transport the

same with knowledge that the article was imported contrary to law. Is an acquittal in criminal action a bar to forfeiture proceedings?

Note: It is a settled rule that acquittal in a criminal case is not a bar against the forfeiture of articles imported, or attempted to be imported, illegally or used in the unlawful importation of such articles.

Parties who may initiate customs seizures proceedings

1. Persons having police authority under Sec. 2203 of the TCCP; 2. Examiners/appraisers; 3. Customs Police and other enforcement groups of the Bureau of

Customs;

4. Duly deputized group by the authorities (National Anti-Smuggling Task Force)

Procedure:

A. Issuance of Warrant

Upon making any seizure, the Collector shall issue a warrant for the detention of the property. Upon probable cause, that the articles were imported or attempted to be

exported contrary to tariff and customs laws, the Collector of Customs shall issue a Warrant of Seizure and Detention (WSD) in customs form W7651. Who has the burden of proof in seizure and/or forfeiture case?

Ans: In all proceedings taken for the seizure and/or forfeiture of any vessel,

vehicle, aircraft, beast or articles under the provisions of the tariff and customs

laws, the burden of proof shall lie upon the claimant. However, the government must first show probable cause before seizure/forfeiture proceedings may be instituted. Has the Bureau of Customs jurisdiction even if no WSD was issued?

Ans: It is the settled rule, therefore, that the Bureau of Customs acquires

exclusive jurisdiction over imported goods, for the purposes of enforcement of the customs laws, from the moment the goods are actually in its possession or control, even if no warrant of seizure or detention had previously been issued by the collector of Customs in connection with seizure and forfeiture proceedings.

Note: Despite the above pronouncement by the Supreme Court in the above case, the following C.T.A. Case explains the necessity of the issuance of the WSD for purposes of validity of the seizure/forfeiture proceedings conducted by customs:

What is the remedy of the owner/importer to secure immediate release of his seized property?

Ans: Upon showing of a reasonable ground for legitimate use, by posting a

sufficient cash bond, subject to the following conditions:

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1. That the amount of the cash bond shall not in any case be less than the appraised value of the article plus fine, expenses and costs that may be adjudged in the case;

2. That there is no prima facie evidence of fraud attendant to the importation;

3. That the importation of the article is not prohibited by law; and 4. That the release under cash bond has been approved by the

Commissioner. Note: In one CTA and CA case, the posting of a surety bond was allowed instead of a cash bond. Also, under R.A. 9135, posting of surety bond and other sufficient instrument is permitted.

Give examples of reasonable grounds for the provisional release under cash bond of the seized property.

Ans: 1. Articles are perishables;

2. Immediate installation of the articles to the consignees premises and the engineer- installer from abroad has already arrived, and the company has

incurring expenses for his prolonged stay; and 3. Government or any of its agency requires that the article be released for practical and lawful reasons as provided for in the government contract. Prohibited Importation not be released under Bond

The importer of the subject tobacco, the importation of which is

prohibited by law, has no right that the tobacco be released to him even if he puts up a bond to be determined by the Collector. Appraised value, defined

Shall mean the dutiable value of the article plus duties, taxes and other customs charges.

Is the release of the property relieves the owner of any liability?

Ans: No. The release of the property under cash bond shall not relieve the

owner or importer of the goods from criminal liability arising from the importation/exportation of the shipment.

Application and Return of Warrants of Seizure and Detention

CMO 8-1984 provides for the guidelines in the application and return of warrants of seizure and detention to be strictly complied with by the person empowered under the law to effect customs searches, seizures and arrests. What is the difference between a warrant of seizure and detention (WSD) issued by the Collector of Customs and a search warrant issued by the court?

Ans: A warrant of seizure and detention issued by the collector of Customs is

directed to any person authorized under the customs law to effect search and seizure of any merchandise upon which duties have not been paid, or which

have been imported contrary to law or released irregularly from the customs custody. On the other hand, a judicial search warrant is nothing more than an order in writing issued in the name of the People of the Philippines, signed by a

judge or a justice of the peace (Municipal Judge) and directed to a peace officer, commanding him to search for personal property and bring it before the Court.

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May the WSD issued by the Collector of Customs be enforced outside the Customs Zone?

Ans: From the following authorities, it would seem that this question would

call for an affirmative answer:

Any officer of the Customs is authorized by statute to go on board any vessel or vehicle at any time and at any place in the United States or within the customs waters, or as he may be authorized, within a custom-enforcement are established by law, or at any other authorized place, without as well as within

his district, and examine the manifest and other documents and papers and examine, inspect, and search the vessel or vehicle and every part thereof and any person, trunk, package, or cargo on board, and to this end to hail and stop such vessel or vehicle, and to use all necessary force to compel compliance. Return of WSD by Customs Agents The officer directed to serve the WSD shall, within ten (10) days after receipt thereof, make a return of service to the Collector concerned in the form

of endorsement to the warrant. It shall state the relevant details of the service, inventory and turn over of the seized articles. Description, Appraisal and Classification of Seized Articles

The collector shall prepare a list and description, clarification and/or appraisal of the property seized in accordance with the existing customs

valuation. Notification of the Seizure

a. Known owner/importer

The Collector shall give the owner or importer of the property or his agent a written notice of the seizure and shall give him an opportunity to be heard in reference to the delinquency which was the occasion of such seizure.

Importer, consignee, person holding the bill of lading or his agent whether in fact or otherwise shall be deemed to be the owner of the article seized for the purpose of giving above notice.

b. Unknown owner

1. By posting for fifteen (15) days in the public corridor of the customhouse of the district in which the seizure was made; and

2. By publication in a newspaper; or 3. By such other means in the discretion of the Commissioner of

Customs. Elementary rule of due process requires notice and hearing

This Court need not emphasize the constitutionally enshrined right to procedural due process of any person under investigation especially if it will cause the person his life or property. Sections 2301 and 2303 clearly lay down

the procedure to be observed in as seizure case, that is, a WSD must be issued upon making any seizure and that written notice of such seizure be served upon the owner or importer or his agent.

We agree with the petitioner that a notice of hearing posted on the bulletin board of the public respondent in a forfeiture proceeding where owner

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of the alleged prohibited article is known does not constitute sufficient compliance with proper service of notice and procedural due process.

Time and again, the Court has emphasized the imperative necessity for administrative agencies to observe the elementary rules of due process. And no rule is better established under the due process clause of the Constitution that

that which requires notice and opportunity to be heard before any person can lawfully deprived of his rights. May a party be declared in default in administrative proceedings?

Ans: We hold that if the party duly summoned, or duly notified, to appear at an

administrative investigation, refuses to appear, he may be declared in default,

and the investigation may proceed without his presence. Notice not necessary on claimant whose interest on goods seized is not brought to Collectors cognizance

Where the Collector of Customs had no way of knowing about the alleged claim of a party who claims interest over the goods seized, said Collector could

not be expected to give him notice of said seizure proceedings. Regular court has jurisdiction over question of due process in the imposition of fine

Where the question involved is not whether the imposition of the fine by the Collector of Customs on the operator of the ship is correct or not, but whether he acted properly in imposing said fine without first giving the

operator an opportunity to be heard, it is held that the Court of First Instance (now Regional Trial Court) acted correctly in assuming jurisdiction over the case. Formal Proceedings (SEIZURE/FORFEITURE)

a. Hearing for Unknown Parties

If within fifteen 915) days after the notification prescribed in Sec. 2304 above, no owner or agent can be found or appear before the Collector, the latter shall declare the property forfeited to the Government to be sold at auction in accordance with law. Sec. 2306, TCCP.

b. Hearing for Known Parties In the formal hearing, uncontroverted facts shall be stipulated on and issues to be heard shall be agreed upon in order to abbreviate the proceedings. The determination shall be made whether or not there is a violation of law from

the facts and evidence presented. 1. Collector schedules and conducts hearing

In this stage, there shall be presentation of evidence and witnesses of both the claimant of the seized property and on the part o f the Customs officer tasked to prosecute the case.

May the authority of an attorney to appear for and on behalf of a party be assumed?

Ans: the appearance of Atty. Armando S. Padilla as counsel for two claimants

would not suffice. Generally, a lawyer is presumed to be properly authorized to represent any cause in which he appears, and no written power of attorney is

required to authorize him to appear in court for his client. Nevertheless, although the authority of an attorney to appear for and on behalf of a party may be assumed, it can still be questioned or challenged by the adverse party

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or party concerned. The presumption established under the provision of Section 21, Rule 138 of the Revised Rules of Court is disputable. The requirement for the production of authority is essential because the client will

be bound by his acquiescence resulting from his knowledge that he was being represented by said attorney. Settlement of seizure case by payment of fine or redemption of forfeited

property What is the remedy of the claimant pending the hearing of the seizure case?

Ans: Pending hearing, in the absence of fraud and subject to the approval of

the Commissioner, the seizure case maybe settled by payment of fine or

redemption of forfeited property. In case of settlement, depending upon the gravity of the offense, the fine to be imposed shall be in an amount not less than 20% nor more than 80% of the landed cost of the seized imported article or the F.O.B. value of the seized

article for export. In case of redemption, by payment of the domestic market value of the seized article.

1.0 Decision adverse to the claimant

The Collector after hearing, shall in writing make a declaration of

forfeiture or fix the amount of the fine or take such action as may be proper. 1.1 Aggrieved party appeal to the Commissioner of Customs

The party aggrieved by the decision or action of the Collector may within fifteen (15) days after receipt of the notice of the decision of the Collector, file a

motion for reconsideration (MR) to the Collector or a written notice to the Collector with a copy furnished to the Commissioner of his intention to appeal the decision or action of the Collector to the Commissioner. Note: If the claimant did not appeal or file an MR, the decision becomes final.

1.2 If the Commissioner decides in favor of the claimant or reverses the appealed decision of the Collector, his decision becomes final and executory.

1.3 If the Commissioner affirms the appealed decision of the Collector, the claimant has 30 days from receipt of the decision within which to file an MR to the Commissioner or a petition for review to the Court of Tax

Appeals (CTA).

Note: If no decision from the Commissioner, the decision of the Collector is deemed affirmed. So that the claimant should file a petition for review to the CTA.

Mandatory Service of Notices of Orders, Decision and other Proceedings

In all adversarial proceedings, to comply with the mandate and

requirements of due process of law, particularly in seizure cases, which required submission of controverting evidence by the parties therein and pending resolution and decision by the Collector of Customs, it shall be the mandatory duty of the District Collector or the concerned Law Division to

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furnish/notify all parties affected by such proceedings, including but not limited to, the government prosecutors, claimants/importers, or intervenors, with copies of all Decisions, Orders, interlocutory or otherwise, and other

proceedings take in the case. Such notices shall preferably be by personal service or, if not practibable by registered mail. Is the Commissioner required to conduct a formal hearing before

rendering his decision?

Ans: Sec. 2313 of the Tariff and Customs Code does not require the

Commissioner of Customs to hold a formal hearing. His duty is to approve, modify or reverse the decision of the Collector of Customs on the basis of the

records, papers and evidence presented before the latter. What is a motion for reconsideration?

Ans: A request that the decision or ruling of the Collector or Commissioner of

Customs be reconsidered and set aside by himself on that basis of error or some justifiable grounds in favor of the claimant. What are some of the grounds for filing a motion for reconsideration?

Ans: 1. The decision of the Collector or of the Commissioner of Customs is

manifestly against the weight of evidence or contrary to law; and 2. Newly discovered evidence, not cumulative or corroborative but

material to the party making the request, which he could not, with the exercise of reasonable diligence, have discovered or produced at the original hearing and which if presented will have the effect of altering

the original decision. What is the effect of filing a motion for reconsideration?

Ans: the filing of the motion for reconsideration interrupts the running of the

period for appeal. A second motion for reconsideration shall not be entertained and shall not interrupt the period of appeal if it is a reiteration of the first, or is

founded on ground that was available at the time of the filing of the first motion. 2.0 Decision adverse to the government

2.1 Automatic review by the Commissioner

If the Collector renders a decision adverse to the Government and the decision involves imported articles whose customs value is less than Php5,000,000.00, shall be automatically reviewed by the Commissioner and the records of the case elevated within five (5) days from the promulgation of the

decision of the Collector. The Commissioner shall render a decision on the automatic appeal within thirty (30) days from receipt of the records of the case. What do you mean by an adverse decision of the collector of Customs?

Ans: It is a decision on the merits, which fully or partially releases the property

under seizure/forfeiture proceedings.

What is the statutory period within which the Commissioner of Customs must decide on automatic review a seizure case?

Ans: The Commissioner must decide within 30 days period from receipt of the

records of the case.

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2.1.1 If the Commissioner reverses the decision of the Collector, (therefore adverse already to the claimant) the claimant has 30 days from

receipt of the decision within which to file an MR to the Commissioner or a petition for review to the Court of Tax Appeals, otherwise the decision of the Commissioner becomes final and executor.

2.1.2 If no decision is rendered by the Commissioner or affirms the adverse decision of the Collector, the decision shall be automatically appealed to the Secretary of Finance. Note: Pending decision on appeal, the Commissioner may likewise accept the

settlement of any seizure case on appeal in the same manner as that of the Collector of Customs. 2.2 Automatic review by the Secretary of Finance

If no decision is rendered by the Commissioner or if he affirms the adverse decision of the Collector or the adverse decision of the Collector in the

first place involves imported articles whose customs value is Php5,000,000.00 or more, such decision shall be deemed automatically appealed to the Secretary of Finance and the records of the proceedings shall be elevated within five (5) days from the promulgation of the decision of the Commissioner or of the Collector under appeal, as the case may be.

2.2.1 If the Secretary reverses the decision of the Collector or Commissioner, the claimant has 30 days from receipt of the decision to file an MR to the Secretary or a petition for review to the Court of Tax

Appeals, otherwise the deacons of the Secretary becomes final and executor. 2.2.2 If no decision is rendered by the Secretary within 30 days from receipt of the records of the proceedings, or affirms the decision of the

Commissioner, the adverse decision of the Collector becomes final and executor. Purpose of the Automatic Review by the Commissioner or the Secretary of Finance

Without the automatic review by the Commissioner of Customs and the

Secretary of Finance, a Collector in any of our countrys far-flung ports, would have absolute and unbridled discretion to determine whether goods seized by him are locally produced, hence not dutiable, or of foreign origin, and therefore subject to payment of customs duties and taxes. A decision that is favorable to

the taxpayer would correspondingly be unfavorable to the government, but who will appeal the collectors decision in that case? Certainly not the collector. Evidently, it was to cure this anomalous situation (which may have already defrauded our government of huge amounts of uncollected taxes), that

the provision for automatic review by the Commissioner of Customs and the Secretary of Finance of unappealed seizure and protest cases was conceived to protect the government against corrupt and conniving customs collectors. B. PROTEST PROCEEDINGS

When and how customs protest be initiated

Protest may be initiated thru and by the following:

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1. Findings by the examiner/appraisers of the erroneous value and classification of the imported articles; and

2. Unfavorable decision of the Value and Classification Review

Committee (VCRC); Protest Proceedings, defined

Although a protest is in the nature of a pleading, in a strict sense it is not a pleading as known to the xxx law or to the courts of this country. It is

provided for in the tariff law and is a document by which the pleader sets forth the wrong done and the relief he asks, and in a way conforms to a plea or pleading; but it is not verified and does not state a cause of action which would entitle the protestant to judgment of not answered or controverted.

In all cases subject to protest, the interested party who desires to have the action of the Collector reviewed, shall make a protest, otherwise, the action of the Collector shall be final and conclusive against him, except as to matters collectible for manifest error in the manner prescribed in Sec. 1707 of the

TCCP. CM0 3-2002 which amended CM0 27-99, provides for the procedures in protest cases on the determination of the customs value and tariff classification of imported goods under the valuation regime.

Twofold purpose of Protest

Its purpose is said to be twofold: 1. To apprise the collector of the objections urged by the importer before

it should be too late to remove them, if capable of being removed; and 2. To hold the importer to the objections he then contemplated, on which

he really acted, and to prevent him, or others in his behalf, from seeking out defects after the business was closed.

Protest, liberally construed

Statutes requiring protest were not designed for men learned in the law and trained to the niceties in pleading, but for men engaged in commercial

pursuits. Protests are commercial rather than legal documents, and the trend of decision with respect to them is that they are not required to conform to the technical precision of legal documents as to either phraseology or formality of execution. No special form is required.

Protests are liberally construed and strict rules of construction are inapplicable. Parties who may initiate customs protest cases

1. Owner/Importer/Consignee of the subject imported articles;

2. Customhouse Broker; and 3. Lawyer of the protestant

Procedure

A. Formal Protest by the Adverse Party

When a ruling or decision of the Collector is made whereby liability for duties, fees or other charges are determined (except the fixing of fine in seizure cases), the party adversely affected may protest such ruling or decision by presenting to the collector at the time when payment of the amount claimed to

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be due to the government is made, or within 15 days thereafter, a written protest setting forth his objection to the ruling or decision in question, together with the reasons therefore.

Meaning of Ruling or Decision of the Collector

Where the Commissioner of Customs, upon request for opinion by a Collector of Customs, concurs in the decision of the latter, such concurrence cannot be considered a decision from which appeal to the Court of Tax Appeals may be interposed, because any action taken by the Commissioner of Customs

on matters referred to him by the Collector is only supervisory in nature, and his conformity or disagreement with the decision of the latter will not transform said decision into that of the Commissioner.

A decision of the Collector of Customs pursuant to and based upon instructions or rulings of the Commissioner of Customs is not considered a decision of the latter official for purposes of giving jurisdiction to the Court of Tax Appeals.

Under the statute a right of protest exists as to all decision of the Collector of Customs, including the legality of all orders and findings entering into the same, as to the rate and amount of duties chargeable, and as to all exactions of whatever character within the jurisdiction of the Secretary xxx. While, to the be subject of a protest, an exaction must come within the

meaning of the statute, it may take the form of a negative decision, order, or finding. However, fees, exactions, or charges which bear no relation to the importation of merchandise and the rate of duty resulting from classification thereof are not protestable as exactions within the jurisdiction of the secretary.

Such right of protest must necessarily be confined to the decision of the collector, and does not exist as to the action of the secretary xxx in directing the action of the collector. The right to protest a decision assessing the rate of duty does not include the right to protest the rate as being too low. May an opinion or directive of the Commissioner of Customs be considered a ruling or decision contemplated by law?

Ans: No. A mere opinion or directive by the Commissioner of Customs

addressed to the Collector of Customs in answer to a request of the latter which in turn was prompted by a previous letter from the tax payer complaining against the collection of wharfage dues, is not a final decision of

the Commissioner which may be appealed to the Court of Tax Appeals. Decision, defined

A decision must be in writing, personally and directly prepared by the judge (or person or body lawfully authorized to issue the same) signed by him,

stating clearly and distinctly the facts and the law on which it is based. Three Parts of Decision

1. Opinion is that portion of the decision containing the findings of facts and conclusions of law;

2. Disposition is that part containing the final and actual disposition and adjudication of the rights litigated; and

3. Signature.

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May the Collector of Customs be held liable for any decision or ruling in customs cases?

Ans: No Collector or other official of customs shall be in any way personally

liable for on account of any official ruling or decision as to which the person

claiming to be aggrieved has the right to obtain either an administrative or judicial review, and except for misdelivery or articles, a Collector shall not, in the absence of abuse of authority, be liable to any person for a loss occasioned either by his own act or the acts of his subordinates.

Form and Scope of Protest

Every protest shall be filed in accordance with the prescribed rules and regulations promulgated under this section and shall point out the particular decision or ruling of the Collector to which exception is taken or objection made, and shall indicate with reasonable precision the particular ground or grounds upon which the protesting party bases his claim for relief. The scope of

a protest shall be limited to the subject matter of a single adjustment or other independent transaction, but any number of issue may be raised in a protest with reference to the particular item or items constituting the subject matter of the protest.

Multifariousness; Alternative Protest

It is well settled that a protest of a decision of the Collector of Customs otherwise sufficient is void if multifarious, and therefore a protest alternative in form is unobjectionable, and, where one of the claims is correct, the protestant is entitled to have the erroneous classification corrected.

In the case of an alternative protest, the fact of the protest on one ground does not estop the protestant to insist on the other ground of protest. Nevertheless, so-called blanket protests, enumerating a long list of

paragraphs, many of which are entirely remote, with the purpose of veering everything, do not comply with the law. Assignment of Grounds or Reasons

It has been uniformly prescribed that the importers protest of the collectors decision should set forth distinctly and specifically his objections to the decision in question and his reasons for such objections. Although there is lack of uniformity found in the expressions of the courts with respect to the sufficiency of protests, it is agreed that no technical

precision in form or statement is necessary. Issues not raised by the protest may not be considered or in other words, since the protest is in the nature of a pleading, the protestant will be confined to the claims made therein. If the protest is lacking specificness the decision

complained of must stand, even though incorrect, but without approval, and the fact that another protest contained claims not made in the one under consideration has no influence on the construction of the latter.

The rule provides that the importer shall state in his formal protest the reasons therefore, and shall pay the corresponding docket fee.

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General Allegation of Error

A protest is not sufficient under the statute which alleges merely that the amount of duties assessed by the collector is erroneous. Plural Protest allowed

The practice of filing more than one protest on the same entry has long been permitted, inasmuch as it permits convenient segregation of issues. Therefore, a decision sustaining a protest is not a bar to further proceedings under another pending protest against the same liquidation and veering the same merchandise, but raising a question which was neither expressly nor

necessarily determined in the decision in the former case. It necessarily follows therefore that an importer who has filed a protest against a liquidation is not thereby precluded from filing another protest against a later liquidation. What is Payment under protest?

Ans: Payment under protest has been said to mean a payment is connection

with a protest; that is a payment preceded by, accompanied with, or followed by, a protest. What is the mandatory process before filing of protest against eh

liability for payment of import taxes?

Ans: Section 1601 of the Code provides:

Sec. 1601. Liquidation and Record of Entries If the Collector shall approve the returns of the appraiser and the report of the weights, gauge or quantity, the liquidation shall be made on the face of the entry showing the particulars thereof, initialed by the liquidating clerk, approved by eh chief

liquidator, and recorded in the record of liquidations. xxx From the abovequoted provision of law, it is obvious that liquidation is a mandatory process required for every entry of imported articles. For it si through this legal process that a determination is made of the exact amount of

duty, tax and other charge due under the law for which the importer is liable (Sec. 1601, TCC). Section 2308 of the Code presupposes that a ruling or decision of the Collector has been made whereby liability for duties, taxes, fees or other charges is determined. Precisely, such liability is ascertained or determined through liquidation or final adjustment of the entry. Until this is

done there is no ruling or decision against which a protest may be presented. What does it mean by the term date of payment as used in reference to the filing of protests under Sec. 2308 of the Code?

Ans: The term date of payment as used in reference to the filing of protests

under Section 2308 of the Code, has long been construed as the date of the final adjustment of the entry, and not the date of deposit of estimated duties. The date of the voucher showing the final adjustment of the entry as accomplished by the customs cashier pursuant to Section 2501 of Republic Act

No. 1937 and not the date on which the deposit of estimated duties is made, is the date of payment. However, in the case of importations processed under informal entries, the date of payment as shown on the Informal Entry Receipt is the date of

payment.

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Liquidation precedes protest

In other words, until the entry has been finally adjusted, any duties for which a remittance has been made are merely estimated duties and any such remittance is just a deposit. To be deemed paid the duties must have been liquidated. Precisely, the law speaks of payment of the amount claimed to be due the government. Such payment evidently refers to the amount of duty, tax and other charges found upon liquidation to be due the government, for it is through the mandatory legal process of liquidation that the extent of an importers liability for such duty, tax and other charges is ascertained or determined. This is why the law provides that no protest shall be considered unless payment of the amount due after final liquidation has first been made (Sec. 2308, TCC) Otherwise, a protest would be premature, since it is only when the importers liability has been determined through final liquidation that a cause of action available to him can rightly be said to have arisen. What is the effect of filing a protest before final liquidation?

Ans: It is premature and may be dismissed on the ground of failure to state a

cause of action. What are the requirements for a valid protest under the Customs Law?

Ans: Below are the requirements for a valid protest:

1. It must be in writing; 2. It must be filed at the time of payment or within 15 days thereafter; 3. It must point out the particular decision or ruling of the Collector to

which objection is made;

4. It must indicate with reasonable precision the basis, grounds or reasons of the protest;

5. It must be limited to the subject matter of a single adjustment or other independent transaction;

6. It must only be considered after payment of the amount due after final liquidation has first been made; and

7. Payment of docket fee 8. Payment of Documentary Customs Stamps of P200 (CA0 2-2001)

Rules on the Computation of Time for Filing a Protest

1. The 15 day reglementary period for filing a protest includes Sundays and holidays; and

2. If the last day of the period falls on Sunday or legal holiday, protest may be filed on the next succeeding business day.

Is protest sent by mail allowed by the rules?

Ans: Yes. Provided the Collector of Customs receives it within the time specified

by law. However, in the case of registered mail, the date of deposit is the date of filing of the protest. May the protestant amend his protest?

Ans: Yes. If the amendment is received within the time allowed by law for the

filing of the original protest. What does it mean by a single adjustment in the scope of protest?

Ans: single adjustment refers to the entire content of one liquidation including

all duties, surcharges, or fines incident thereto.

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When is sample of the article required?

Ans: 1. when the protest involves question of fact;

2. when the Collector demands for it; and 3. when the nature of the article permits it.

B. Collector Schedules Hearing

When a protest in proper form is presented in a case where protest is required, the Collector shall issue an order for hearing within 15 days from receipt of the protest and hear the matter thus presented.

C. Formal Proceedings (Protest)

The Collector shall form a panel of experts to hear the case. The panel shall be composed of a hearing officer from the Law Division, a COV and a COIII from the assessment unit. It shall hear the parties of the case, receive evidence and authorized to issue the necessary notices, subpoenas and other interlocutory orders. Within 30 days from the first hearing, the panel shall

terminate the proceedings and recommend through the Chief of the Law Division a decision to the Collector of Customs for approval. D. Collector Renders Decision

Upon the termination of the hearing, the Collector shall render a decision within 30 days (Sec. 2312, TCCP). However, Sec. 8 of the rule provides that the

Collector of Customs shall render a final decision on the Protest within 15 days from receipt of the recommended decision (from the hearing officer). 1.0 Adverse to the protestant

The person aggrieved by the decision or action of the Collector in any matter presented upon protest may within 15 days after receipt of the decision

file a notice of appeal with the Collector with a copy furnished to the Commissioner. Thereupon, the Collector shall immediately transmit all the records of the protest together with the assailed decision to the Commissioner, who shall approve, modify or reverse the action or decision of the Collector.

Note: If the protestant did not file a MR or appeal, the adverse decision of the Collector becomes final and executor. 1.1 Appeal to the Commissioner

An appeal to the Commissioner of Customs shall only be perfected upon:

a. Filing of Notice of Appeal b. Payment of Appeal docket fee; c. Memorandum of Appeal at the option of the appellant within 15 days

from receipt of the notice of decision

The appeal shall be deliberated on by a permanent board of three (3) to be created by the Commissioner. It shall be chaired by a lawyer from the Appellate Division, Legal Service and two (2) valuation experts from the Import and Assessment Service as members. It shall recommend a decision to the

Commissioner who shall render a decision within 30 days from receipt of the records of the case from the Collector. 1.2 If within thirty (30) days from receipt of the record of the case, no decision is rendered by the Commissioner, it shall be construed as

affirmation of the Collectors decision under review.

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Note: The protestant has to file a petition for review to the CTA, since there is no decision.)

1.3 If the adverse decision of the Collector under review is reversed by the Commissioner, decision becomes final in favor of the protestant. 1.4 If the adverse decision of the Collector under review is affirmed by

the Commissioner, appellant has 30 days from receipt of the decision to file an MR to the Commissioner or petition for review with the Court of Tax Appeals, otherwise decision becomes final and executory. 2.0 Adverse to the Government

If any case involving the assessment of duties, the Collector renders a

decision adverse to the Government (makes appropriate action/entry reliquidated if necessary), such decision together with the entire records of the case shall be automatically elevated to the Commissioner for automatic review within 5 days from the promulgation thereof.

2.1 Automatic review by the Commissioner 2.1.1 If the adverse decision of the Collector under review is reversed by the Commissioner, the appellant has within 30 days to file and MR to the Commissioner or petition for review to the Court of Tax Appeals,

otherwise the decision of the Commissioner adversed to the appellant becomes final and executory. 2.1.2 If within 30 days from receipt of the record of the case, no

decision is rendered by the Commissioner, the adverse decision against the government under review shall be final and executory. 2.1.3 If the adverse decision of the Collector under review is affirmed by the Commissioner, such decision shall be automatically elevated to and

be finally reviewed by the Secretary of Finance. What particular decision are subject to automatic review of the Commissioner of Customs?

Ans: All adverse decision of the Collector of Customs in any protest

proceedings.

What is the extent of the review power of the Commissioner of Customs? Ans: It is not only limited to the approval, modification or reversal of the action

or decision of the Collector of Customs but the Commissioner may take such steps and make such orders as may be necessary to give effect to his decision. 2.2 Automatic review by the Secretary of Finance

2.2.1 If within 30 days from receipt of the record of the case no decision is rendered by the Secretary, or affirms decision of the Commissioner, the adverse decision under review shall be final and executory.

2.2.2 If the adverse decision of the Commissioner is reversed by the Secretary, the appellant has within 30 days to file a MR to the Secretary

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or petition for review with the Court of Tax Appeals, otherwise the decision becomes of the Secretary becomes final and executory.

Secretary of Finance cannot review decisions of Commissioner in matters appealable to CTA Note: Limited only to decision of collector adverse to the government.

What is the extent of the supervisory authority of the Secretary Finance over the Bureau of Customs?

Ans: Except as provided in Section 2315 of the Tariff and Customs Code, the

supervisory authority of the Secretary of Finance over the Bureau of Customs shall not extend to the administrative review of the ruling or decision of the

Commissioner in matters appealed to the Court of Tax Appeals. Commissioner to control Judicial proceedings; Supervision and Control by the commissioner over Criminal and Civil Proceedings

Civil and criminal actions and proceeding instituted in behalf of the government under the authority of this Code (TCCP) or other law enforced by

the Bureau shall be brought in the name of the government of the Philippines and shall be conducted by customs officers but no civil or criminal action for the recovery of duties or the enforcement of any fine, penalty or forfeiture under the Tariff and Customs Code shall be filed in court without the approval of the Commissioner.

Delegated authority of the Deputy Commissioner (Revenue Collection Group) and the District Collectors of Customs to initiate, file, sign and prosecute criminal complaints of smuggling under CM0 30-2004

In order to expedite the filing and prosecution of criminal complaints/cases of smuggling all over the country, all District Collectors are authorized under by virtue of CM0 4-2004, to initiate, file, sign and prosecute criminal cases in behalf of the Bureau of Customs for violation of Secs. 3601,

3602, 3604 and other pertinent provision of the Tariff and Customs Code committed within their respective areas of jurisdiction. The prosecution of such complaints shall be conducted under the direct supervision of the Deputy Commissioner RCMG, who shall be furnished with

all the pleadings, motions and other processes filed and/or issued in connection with the said cases. All pleadings, including affidavits-of-complaint must be submitted to the Deputy Commissioner, RCMG for approval but in no case shall such affidavit be filed before any courts, departments or agencies

without such approval of the Commissioner of Customs. All complaints shall be filed and prosecuted in the name of the Bureau of Customs. However, above order shall be understood to cover only criminal cases filed and initiated by the District Collectors pursuant thereto and shall not

include those initiated by the Commissioner of Customs as the case may be. The investigation and prosecution of all other cases emanating from the Internal Inquiry and Prosecution Division and the Investigation and Prosecution Division of the CIIS, the Enforcement and Security Service and other divisions and units shall remain to be under the direct supervision of the

Deputy Commissioner, Intelligence and Enforcement Croup.

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Is the acquittal of the accused in criminal charge res judicata in seizure or forfeiture proceedings?

Ans: No. The acquittal of the accused in criminal charge before the City Fiscals Office does not operate as res judicata in a seizure or forfeiture proceeding. A

distinction exists between the proceedings before the Fiscal which are in personam since they are directed against the owner or holder of the thing; whereas, a forfeiture proceeding is one in rem directed against the thing itself.

Declaration by Customs Collector that goods seized were not illegally imported does not bar prosecution of importers and other persons concerned for smuggling.

What is the extent of the power of supervision and control over judicial proceedings by the Commissioner?

Ans: The Commissioner of Customs may supervise and control the filing of the

pleadings, the conduct of the hearing, the presentation of evidence and even the taking of an appeal from a decision of the Court xxx adverse to the

Government, to the Supreme Court. But surely he cannot under the guise of supervision and control of judicial proceedings, modify or later a final decision of a court, including an appellate court or stay execution of a final judgment in favor of the Government by receiving for said Government anything less than what the judgment calls for.

The supervision and control over judicial proceedings given by Section 1368 of the Revised Administrative Code (Now Sec. 2401, TCCP) to the Commissioner of Customs, does not extend to modifying final decisions of the

Court, in the sense that he may accept on behalf of the Government anything different or less than what is awarded to said Government in the decision.

Is the appeal taken by the Acting Collector of Customs tantamount to an

appeal by the Republic of the Philippines?

Ans: The dissent answers the question in the affirmative. The answer assumes,

however, that the State is represented by said officer, not by the Commissioner of Customs. To my mind, the assumption is untenable. The Commissioner of Customs, not the Collector of Customs for the Port of Manila, is the head of the

Bureau of Customs, and hence, its representative and that of the Government, as an agency of the State, in the present case. In fact Sec. 1368 (now Sec. 2401, TCCP) specifically provides that:

In the absence of special provision, judicial actions and proceedings instituted on behalf of the Government under the authority of the customs laws shall be subject to the supervision and control of the Commissioner.

Statute of Limitations

The statute limiting the time within which period an application for review may be filed with the customs court is primarily a statute of limitation, its object being to fix a time beyond which the decision should become final unless, prior to the expiration of such time, an application for review is filed.

COMPARISON Comparison of Remedies under the NIRC and TCC:

The taxpayers remedies under the National Internal Revenue Code may be categorized into remedies before payment and remedies after payment. The remedy before payment consists of administrative remedy which is the filing of

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protest within 30 days from receipt of assessment, and judicial remedy which is the appeal of the adverse decision of the Commissioner on the protest with the Court of Tax Appeals, thereafter to the Court of Appeals (can now be filed

directly to CTA under R.A. 9282) and finally with the Supreme Court. The remedy after payment is availed of by paying the assessed tax within

30 days from receipt of assessment and the filing of a claim for refund or tax

credit of these taxes on grounds that they are erroneously paid within two years from date of payment. If there is a denial of the claim, appeal to the CTA shall be made within thirty days from denial but within two years from date of payment. If the Commissioner fails to act on the claim for refund or tax credit and the two year period is about to expire, the taxpayer should consider the

continuous inaction of the Commissioner as a denial and elevate the case to the CTA before the expiration of the two year period.

Under the Tariff and Customs Code, taxpayers remedies arise only after

payment of duties. The administrative remedies consists of filing a claim for

refund which may take the form of abatement or drawback. The taxpayer can also file a protest within 15 days from payment if he disagrees with the ruling of decision of the Collector of Customs regarding the legality or correctness of the assessment of customs duties. If the decision of the Collector is adverse to

the taxpayer, he can notify the Collector within 15 days from receipt of said decision of his desire to have his case reviewed by the Commissioner. The decision of the Collector on the taxpayers protest, if adverse to the government, is automatically elevated to the Commissioner for review; and if such decision is affirmed by the Commissioner, the same shall be automatically elevated to

and finally reviewed by the Secretary of Finance. Resort to judicial relief can be had by the taxpayer by appealing the

decision of the Commissioner or of the Secretary of Finance (for cases subject to automatic review) within 30 days from the promulgation of the adverse

decision to the CTA.

Collector of Customs cannot appeal from decision of Commissioner of Customs

All members of this Court agree that, as an officer of the Bureau of

Customs, the Collector of Customs for the Port of Manila may not appeal from a decision of his superior officer and head of said Bureau, the Commissioner of Customs.