IV. TARIFF AND CUSTOMS CODE OF THE PHILIPPINES (P.D. NO.

1464) AS AMENDED BY
THE CUSTOMS MODERNIZATION AND TARIFF ACT (REPUBLIC ACT NO. 10863,
WHICH TOOK EFFECT ON JUNE 16, 2016)

TARIFF AND DUTIES

Definitions

Tariff – a list or schedule of articles on which a duty is imposed upon the importation
into the country, with the rates at which they are severally taxed.

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)

Kinds or classification of Duties

a) Ordinary/regular duties

(1) Ad valorem - it is a duty levied which is equal to a certain percentage of the

value of the imported articles. (Nague, 2016)

(2) Specific duties – it is a duty levied on imports that is proportional to the

number of items or units without regard to its value (Nague, 2016)

b) Special duties

Anti-Dumping duties Countervailing duties Marking duties Retaliatory/ Safeguard

discriminatory duties Measures
Definition Refers to a special Refers to a special An additional duty This is a duty imposed These are remedies
duty imposed on the duty levied for the imposed for by the President resorted by the
importation of a purpose of offsetting improper marking allowed under Sec. government to
product, commodity or any kind or form of of imported 304 of the Tariff and provide relief to
article of commerce specific subsidy articles and their Customs Code of the affected domestic
into the Philippines at bestowed directly or containers for the Philippines. It is industries against
less than its normal indirectly upon the purpose of designed in order to imports
value when destined exportation or preventing offset any foreign
for domestic manufacture of any deception of discrimination against
consumption in the product. The consumers. (Lim, Philippine commerce
exporting country, countervailing duty 2015) provided that it is in an
which is the difference shall be in addition to amount not exceeding
between the export any ordinary duties, 100% ad valorem.
price and the normal taxes and charges This is in fact an
value of such product, imposed by law on addition to the regular
commodity or article. such imported product. customs duties.
Amount of Duty is equivalent to The duty is the 5% ad valorem of Not exceeding 100%
Duty the difference between equivalent of the the articles which ad valorem upon the
the actual purchase ascertained or shall be deemed to goods
price and the fair value estimated amount of have accrued at
of the article as the bounty or subsidy the time of
determined in the given. importation
dumping decision of
the Secretary of Trade
and Industry.
When imposed/ Whenever any Whenever any In order to protect When the President When a product is
Purpose product, commodity or product, commodity or consumers from shall find articles of being imported into
article of commerce article of commerce is the deceptive the foreign country the country in
imported into the granted directly or practice of passing discriminates the increased quantities,
Philippines at an indirectly by the of imported commerce of the whether absolute or
 export price less than government in the articles, as coming Philippines. It is also relative to the
its normal value in the country or origin or from a particular imposed when any of domestic
ordinary course of exportation, any kind country other than the Philippine articles production, as to be
trade for the like or form of specific its actual country are unreasonably a substantial cause
product, commodity or subsidy upon the of origin. charged, exacted, of serious injury or
article destined for production, regulated and limited threat thereof to the
consumption in the manufacture or differently compared domestic industry.
exporting country is exportation of such to like articles of a
causing or is product, commodity or foreign country. If the
threatening to cause article, and the discrimination
material injury to a importation of such continues, the articles
domestic industry, or subsidized product, from the foreign
materially retarding commodity or article country may be
the establishment of a has caused or threatens banned
domestic industry to cause material
producing the like injury to a domestic
product. industry or has
materially retarded the
growth or prevents the
establishment of a
domestic industry as
determined by the
Tariff Commission.
Imposing 1.Secretary of Trade 1.Secretary of Trade Commissioner of President through a 1.Secretary of Trade
Authority and Industry- non- and Industry- non- Customs proclamation and Industry for
agricultural products agricultural products non-agricultural
products or
2.Secretary of 2. Secretary of
Agriculture- Agriculture- 2.Secretary of
agricultural products agricultural products Agriculture for
agricultural products
3.Tariff commission- 3.Prerogative of the
when it is proven that: Tariff commission

a) the imported
articles’ price is
deliberately or
continually fixed at
less than the fair
market value or cost of
the production

b.) Injury to local

industries engaged in
the manufacture or
production of the same
or similar articles
would possibly cause
due to the importation
of such.

ACCRUAL AND PAYMENT OF TAX AND DUTIES

1. General Rule: Except as otherwise provided, all goods imported into the Philippines
shall be subject to duty upon importation, including goods previously exported from the
Philippines.

When does importation begins and is deemed terminated?

Importation begins when the carrying vessel or aircraft enters the Philippine
territory with the intention to unload therein. Importation is deemed terminated when:
 1. The duties, taxes and other charges due upon the goods have been paid or
secured to be paid at the port of entry unless the goods are free from duties, taxes
and other charges and legal permit for withdrawal has been granted; or
2. In case the goods are deemed free of duties, taxes and other charges, the goods
have legally left the jurisdiction of the Bureau. (Sec. 103, CMTA)

Jurisdiction of BOC
The jurisdiction of the BOC to enforce the provisions of TCC, including seizure
and forfeiture, begins from the commencement of importation. The BOC loses
jurisdiction to enforce the TCC after importation is deemed terminated.

UNLAWFUL IMPORTATION OR EXPORTATION

1. Technical smuggling and outright smuggling

Smuggling

This refers to the fraudulent act of importing any goods into the Philippines, or the act of
assisting in receiving, concealing, buying, selling, disposing or transporting such goods, with
full knowledge that the same has been fraudulently imported, or the fraudulent exportation of
goods. Goods referred to under this definition shall be known as smuggled goods;cr(Sec. 102
(nn), CMTA)

Outright Smuggling

This refers to an act of importing goods into the country without complete customs
prescribed importation documents, or without being cleared by customs or other regulatory
government agencies, for the purpose of evading payment of prescribed taxes, duties and
other government charges;

Technical Smuggling

This refers to the act of importing goods into the country by means of fraudulent, falsified or
erroneous declaration of the goods to its nature, kind, quality, quantity or weight, for the
purpose of reducing or avoiding payment of prescribed taxes, duties and other charges;

Elements of Smuggling/Illegal Importation:

a. That the merchandise must have been fraudulently or knowingly imported against
the law
b. That the defendant (not the importer) received, concealed, bought, sold or in any
manner facilitated the transportation, concealment or sale of the goods
c. That the defendant is aware or has knowledge that the goods has been imported
through illegal means

REMEDIES

1. Government

a) Administrative/extrajudicial
 (1) Enforcement of a tax lien

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. (Sec. 1204. TCC)

(2) Search, seizure, forfeiture, arrest

Doctrine of Exclusive Customs Jurisdiction over customs cases

The exclusive administrative jurisdiction in cases of searches, seizure, and

forfeiture of contrabands lies with the BOC without the interference of courts. A
judicial warrant is not needed except when the search and seizure is to be
conducted in a dwelling place
(3) Authority of the Commissioner to make compromise

Subject to the approval of the Secretary of Finance, the Commissioner may

compromise any administrative case arising under this Act involving the
imposition of fines and surcharges, including those arising from the conduct of a
post clearance audit, unless otherwise specified by law.

Cases involving forfeiture proceedings shall however not be subject to any

compromise. (Sec. 1131, CMTA)

b) Judicial

Civil and criminal actions and proceedings instituted on behalf of the Government
under the authority of this Act or other laws enforced by the Bureau shall be brought
in the name of the government of the Philippines and shall be prosecuted and handled
by the Bureau with the assistance of the Department of Justice (DOJ): Provided, That
the determination of the existence of probable cause and the subsequent filing of any
criminal or civil case with the proper court against violators of this Act shall
exclusively belong to the DOJ: Provided, however, That no civil or criminal action
for the recovery of duties or the enforcement of any fine, penalty or forfeiture under
this Act shall be filed in court without the approval of the Commissioner. (Sec. 1135,
CMTA)

(1) Rules on appeal including jurisdiction

Review by the CTA

Unless otherwise provided in this Act or by any other law, the party
aggrieved by the ruling or decisions of the Commissioner may appeal to the
CTA, in the manner and within the period prescribed by law and regulations.
Decisions of the Secretary of Finance when required by this Act, may
likewise be appealed to the CTA.

Unless an appeal is made to the CTA in the manner and within the period
prescribed by law and regulations, the ruling or decision of the
 Commissioner or the Secretary of Finance shall be final and executory. (Sec.
1136, CMTA)

Exclusive Jurisdiction of the Bureau.

Jurisdiction over imported goods and goods for exportation shall be
exclusive to the Bureau, or the Secretary of Finance, when under review by
the latter, subject to the proceedings described in this title.

Except for the CIA, no court may issue any order or decision until all the
remedies for administrative appeal have been exhausted. . (Sec. 1137,
CMTA)

2. Taxpayer

a) Protest
Formal statement in writing challenging the imposition and collection of additional
customs duties and taxes.

Ground:
Legality of the assessment of duties

Elements:
1. In writing
2. Must include the objections to the ruling, decision or order of the Collector of
Customs in question with reasons
3. Filed at the time of payment or 15 days after such
4. Docker fees must be paid

Nature of a tax protest case under the TCCP, in relation to Sec. 426 of the CMTA

A tax protest case, under the TCCP, involves a protest of the liquidation of
import entries. 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 collector’s 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 Customs,
G.R. No. 176380 dated June 18, 2009)

Procedures involving protest cases under the CMTA

a. The Collector or customs officer issues a ruling or decision involving goods

with valuation, rules of origin, and other customs issues is made.
b. File a Protest with the Commissioner within 15 days from payment or receipt
of ruling or decision. (Secs. 1106, 1107, 1126 and 114)
c. In relation to the need for payment under protest, Sec. 1106 of the CMTA
provides that: “Subject to the approval of the Secretary of Finance, the
Commissioner shall provide such rules and regulations as to the requirement
for payment or nonpayment of the disputed amount and in case of
 nonpayment, the release of the importation under protest upon posting of
sufficient security.”

d. The Commissioner a renders decision within 30 days of the protest hearing.

(Sec. 1110)
e. If the ruling is favorable to the government, importer/owner appeals to the
Court of Tax Appeals Division within 30 days from receipt of notice of
decision. (RA 9282)
f. If the ruling is favorable to the importer/owner (protest is sustained), the
appropriate order for reassessment shall be issued. (Sec. 1110)

b) Abandonment

Kinds of abandonment

a) Express abandonment – There is an express abandonment when the owner, importer or

consignee signifies with the Collector of Customs in writing his intention to abandon
his importation in favor of the government; and,
b) Implied abandonment – There is an implied abandonment when:
i. The importer, owner, consignee or interested party after due notice, fails to file a
goods declaration for the importation within a period of fifteen (15) days from the date
of the discharge of the last package from the vessel or aircraft. The period to file the
goods declaration may, upon request, be extended on valid grounds for another fifteen
(15) days;
ii. Having filed an entry for shipment, an interested party fails to pay the assessed
duties, taxes and other charges thereon, or if the regulated goods failed to comply with
Section 117 of the CMTA, within fifteen (15) days from the date of final assessment:
Provided, That if such regulated goods are subject of an alert order and the assessed
duties, taxes and other charges thereof are not paid within fifteen (15) days from
notification by the Bureau of Customs of the resolution of the alert order, the same
shall also be deemed abandoned claim his importation within a non-extendible period
of fifteen (15) days from the date of posting of the notice to claim such importation;
iii. Having paid the assessed duties, taxes and other charges, the owner, importer or
consignee or interested party after due notice, fails to claim the goods within thirty
(30) days from payment; and,
iv. When the owner or importer fails to claim goods in customs bonded warehouses
within the prescribed period. (Sec. 1129 of the CMTA)

c) Abatement and refund

Abatement exists when what was declared and paid was not what was imported, because
of the following:

1. Damage was incurred during voyage

2. Package was missing
3. Contents of the package were deficient
4. Articles were lost or destroyed after arrival
5. Dead or injured animals (Lim, 2015)