Customs and Tariff Duties

2008

Unfortunately, there are no questions that fall in the category of customs and tariff duties in the 2008 Bar Examinations.

2009

Jessie brought into the Philippines a foreign-made luxury car, and paid less than the actual taxes and duties due. Due to the discrepancy, the Bureau of Customs instituted seizure proceedings and issued a warrant of seizure and detention. The car, then parked inside a pay parking garage, was seized and brought by government agents to a government impounding facility. The Collector of Customs denied Jessie's request for the withdrawal of the warrant.

Aggrieved, Jessie filed against the Collector a criminal complaint for usurpation of judicial functions on the ground that only a judge may issue a warrant of search and seizure.

(A)Resolve with reasons Jessie's criminal complaint.

(B) Would your answer be the same if the luxury car was seized while parked inside the garage of Jessie’s residence. Why or why not?

SUGGESTED ANSWER:

(A) The issuance of a warrant of seizure and detention by the Collector of Customs for goods released contrary to law, as when there is underpayment of taxes and duties, is his primary and exclusive jurisdiction and precludes the judge of regular courts form taking cognizance of the subject matter. Accordingly, what was done by the Collector could not be a basis of a prosecution for the usurpation of judicial functions (Commissioner v. Navarro, G.R. No. L-33146, May 31, 1977).

(B) NO. A dwelling house may be entered and searched only upon warrant issued by a Judge of the Court or such other responsible officers as may be authorized by law upon sworn application showing probable cause and particularly the place to be searched and person or thing to be seized (Section 2209, TCCP). In this case, the luxury car cannot be seized while it is found in the garage of Jessie’s residence.

ALTERNATIVE ANSWER:

(A) The criminal complaint is bereft of merit. It is settled law and jurisprudence in this jurisdiction that the customs authorities acquire exclusive jurisdiction over goods sought to be imported into the Philippines, for the purpose of enforcement of Philippine customs laws, from the moment the goods are actually under their possession and control, even if no warrant of seizure or detention thereof has previously been issued by the port of collector of customs (Señeres v. Frias, G.R. No. 32921-40, June 10, 1971).

2010

Unfortunately, there are no questions that fall in the category of customs and tariff duties in the 2010 Bar Examinations.

2011

Amaretto, Inc., imported 100 cases of Marula wine from South Africa. The shipment was assessed duties and value-added taxes of P300,000 which Amaretto, Inc. immediately paid. The Bureau of Customs did not, however, issue the release papers of the shipment yet since the Food and Drug Administration (FDA) needed to test the suitability of the wine for human consumption. Is the Bureau of Customs at fault for refusing to release the shipment just as yet?

A. Yes, because the importation was already terminated as a result of the payment of the taxes due.
B. Yes, the Bureau of Customs is estopped from holding the release of the shipment after receiving the payment.
C. No, if the amount paid as duties and value-added taxes due on the importation was insufficient.
D. No, because the Bureau of Customs has not yet issued the legal permit for withdrawal pending the FDA's findings.

SUGGESTED ANSWER:

D. No, because the Bureau of Customs has not yet issued the legal permit for withdrawal pending the FDA's findings.

Section 1202 of the Tariff and Customs Code of the Philippines (TCCP) importation is deemed terminated upon payment of duties, taxes, and other charges due upon the articles or secured to be paid at a port of entry and the legal permit for the withdrawal shall have been granted or in case of said articles are free of duties, taxes, and other charges, until they have left the jurisdiction of the Customs. Since the legal permit for the withdrawal was not yet granted by the proper authority, the FDA in this problem, the Bureau is not at fault.

A violation of the tariff and customs laws is the failure to
A. pay the customs duties and taxes and to comply with the rules on customs procedures.
B. pay the customs duties and taxes or to comply with the rules on customs procedures.
C. pay the customs duties and taxes.
D. comply with the rules on customs procedures.

SUGGESTED ANSWER:

B. pay the customs duties and taxes or to comply with the rules on customs procedures.

Section 3514 of the Tariff and Customs Code of the Philippines (TCCP) provides that the Tariff and Customs Law include not only the provisions of the Code itself and regulations pursuant thereto but all other laws and regulation which are subject to enforcement by the Bureau of Customs or otherwise within its jurisdiction. This includes payment of customs duties and taxes or to comply with the rules on customs procedure.

Is an article previously exported from the Philippines subject to the payment of customs duties?
A. Yes, because all articles that are imported from any foreign country are subject to duty.
B. No, because there is no basis for imposing duties on articles previously exported from the Philippines.
C. Yes, because exemptions are strictly construed against the importer who is the taxpayer.
D. No, if it is covered by a certificate of identification and has not been improved in value.

SUGGESTED ANSWER:

D. No, if it is covered by a certificate of identification and has not been improved in value.

Sec. 800. Conditionally Tax and/or Duty-Exempt Importation (u) Philippine goods previously exported from the Philippines and returned without having been advanced in value or improved in condition by any process of manufacturing or other means, and upon which no drawback or bounty has been allowed, including instruments and implements, tools of trade, machinery and equipment, used abroad by Filipino citizens in the pursuit of their business, occupation or profession; and foreign goods previously imported when returned after having been exported and loaned for use temporarily abroad solely for exhibition, testing and experimentation, for scientific or educational purposes; and foreign containers previously imported which have been used in packing exported Philippine goods and returned empty if imported by or for the account of the person or institution who exported them from the Philippines and not for sale, barter or hire subject to identification: Provided, That Philippine goods falling under this subsection upon which drawback or bounty have been, allowed shall, upon reimportation thereof, be subject to a duty under this subsection equal to the amount of such drawback or bounty. This is provided under Tariff and Custs Code.

Discriminatory duties may NOT be imposed upon articles
A. wholly manufactured in the discriminating country but carried by vessels of another country.
B. not manufactured in the discriminating country but carried by vessels of such country.
C. partly manufactured in the discriminating country but carried by vessels of another country.
D. not manufactured in the discriminating country and carried by vessels of another country.

SUGGESTED ANSWER:

D. not manufactured in the discriminating country and carried by vessels of another country.

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

It is also provided that whenever the provision of this section shall be applicable to importations into the Philippines of goods wholly or in part the growth or product of any foreign country, it shall be applicable thereto, whether such goods are imported directly or indirectly. (Sec 714 (d) of the LGC).

2012

Importation of goods is deemed terminated:

a) When the customs duties are paid, even if the goods remain within the customs premises;

b) When the goods are released or withdrawn from the customs house upon payment of the customs duties or with legal permit to withdraw;

c) When the goods enter Philippines territory and remain within the customs house within thirty (30) days from date of entry;

d) When there is part payment of duties on the imported goods located in the customs area.

SUGGESTED ANSWER:

b) When the goods are released or withdrawn from the customs house upon payment of the customs duties or with legal permit to withdraw;

Under Section 1202 of the Tariff and Customs Code of the Philippines, when Importation Begins and Deemed Terminated. - Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unlade therein. Importation is deemed terminated upon payment of duties, taxes and other charges due upon the articles, or sec be paid, at a port of entry and the legal permit for withdrawal shall have been granted, or in case said are free of duties, taxes and other charges, until they have legally left the jurisdiction of the customs.

A protest against an assessment issued by the Collector of Customs for unpaid customs duties on imported goods shall be filed with

a) The Commissioner of Customs;

b) The Regional Trial Court;

c) The Court of Tax Appeals;

d) The Collector of Customs.

SUGGESTED ANSWER:

d) The Collector of Customs.

Under Section 2308 of the Tariff and Customs Code of the Philippines, when a ruling or decision of the Collector is made whereby liability for duties, taxes, fees or other charges are determined, except the fixing of fines in seizure cases, the partly adversely affected may protest such ruling or decision by present Collector at the time when payment of the amount claimed to be due the government is made, or wit, (15) days thereafter, a written protest setting forth his objection to the ruling or decision in question with the reason's therefore. No protest shall be considered unless payment of the amount due liquidation has first been made and the corresponding docket fee, as provided for in Section 3301.

The dutiable value of an imported article subject to an ad valorem rate of duty under existing law shall be:

a) The home consumption value;

b) The total value;

c) The total landed cost;

d) The transaction value.

SUGGESTED ANSWER:

d) The transaction value

According to Section 201 of the Tariff and Customs Code, the first method in determining the basis of dutiable value is the transaction value. It provides that the dutiable value of an imported article subject to an ad valorem rate of duty shall be the transaction value, which shall be the price actually paid or payable for the goods when sold for export to the Philippines

The imported articles shall in any case be subject to the regular physical examination when:

a) The importer disagrees with the findings as contained in the government surveyor’s report;

b) The number, weight and nature of packages indicated in the customs entry declaration and supporting documents differ from that in the manifest;

c) The container is not leaking or damaged;

d) The shipment is covered by alert/hold orders issued pursuant to an existing order.

SUGGESTED ANSWER:

c) The container is not leaking or damaged;

d) The shipment is covered by alert/hold orders issued pursuant to an existing order.

Under Section 1401 of the Tariff and Customs Code, for the protection of government revenue and public interest and to prevent the entry into the country of smuggled or contraband goods, the Commissioner shall, in consultation with the Oversight Committee and subject to approval of the Secretary of Finance, promulgate the rules and regulations that shall prescribe the procedure in accordance with which the examination shall be undertaken on the importation and the required quantity or percentage thereof: Provided, That the imported articles shall in any case be subject to the regular physical examination when:

1) The government surveyor's seal on the container has been tampered with or broken or the container shows signs of having been opened or having its identity changed;

(2) The container is leaking or damaged;

(3) The number, weight, and nature of packages indicated in the customs entry declaration and supporting documents differ from that in the manifest;

(4) The shipment is covered by alert/hold order issued pursuant to existing orders;

(5) The importer disagrees with the findings as contained in the government surveyor's report; or

(6) The articles are imported through air freight where the Commissioner or Collector has knowledge that there is a variance between the declared and true quantity, measurement, weight and tariff classification (R.A. 7650, April 06, 1993).

2013

Mr. Z made an importation which he declared at the Bureau of Customs (BOC) as "Used Truck Replacement Parts". Upon investigation, the container vans contained 15 units of Porsche and Ferrari cars. Characterize Mr. Z's action. - (1%)

(A) Mr. Z committed smuggling.

(B) Mr. Z did not commit smuggling because he submitted his shipment to BOC examination.

(D) Mr. Z did not commit smuggling because the shipment has not left the customs area.

SUGGESTED ANSWER:

(A) Mr. Z committed smuggling. Under Section 360212 of the Tariff and Customs Code of the Philippines, fraudulent or false declaration of imported or exported articles is smuggling.

2014

Choose the correct answer. Smuggling - (1%)

(A) does not extend to the entry of imported or exported articles by means of any false or fraudulent invoice, statement or practices; the entry of goods at less than the true weight or measure; or the filing of any false or fraudulent entry for the payment of drawback or refund of duties.

(B) is limited to the import of contraband or highly dutiable cargo beyond the reach of customs authorities.

(C) is committed by any person who shall fraudulently import or bring into the Philippines, or assist in so doing, any article, contrary to law, or shall receive, conceal, buy, sell or any manner facilitate the transportation, concealment or sale of such article after importation, knowing the same to have been imported contrary to law.

(D) is punishable by administrative penalty only.

SUGGESTED ANSWER:

(C) Smuggling is committed by any person who shall fraudulently import or bring into the Philippines, or assist in so doing, any article, contrary to law, or shall receive, conceal, buy, sell or any manner facilitate the transportation, concealment or sale of such article after importation, knowing the same to have been imported contrary to law. (Section 3601, Tariff and Customs Code; see also Section 102 (nn) of CMTA)

2015

Under the Tariff and Customs Code, as amended:

(A) When does importation begin and when is it deemed terminated? (2%)

(B) In what easels is the decision of the Collector automatically reviewed by the Commissioner of Customs? In what instance/s is the decision of the Commissioner automatically appealed to the Secretary of Finance? (4%)

SUGGESTED ANSWER:

No, warrant of seizure and detention should not be quashed. It is well settled that the Collector of Customs has exclusive jurisdiction over seizure and forfeiture proceedings, and regular courts cannot interfere with his exercise thereof or stifle or put it at naught. (Agriex Co., Ltd. V. Hon. Titus B. Villanueva, et al., G.R. No. 158150, September 10, 2014) Although Freeports are treated as a separate customs territory it shall not divest the government to intervene in the operations and management of such Freeport, especially when patent violations of the customs and tax laws are discovered. After all, Section 602(j) of the Tariff and Customs Code vests exclusive original jurisdiction in the Bureau of Customs over seizure and forfeiture cases in the enforcement of the tariff and customs laws.

Distinguish outright smuggling from technical smuggling.

SUGGESTED ANSWER:

In outright smuggling, goods and articles of commerce are brought into the country without the required importation documents, or are disposed of in the local market without having been cleared by the Bureau of Customs (BOC) or other authorized government agencies, to evade the payment of correct taxes, duties and other charges, as provided by Sec 102 of the Customs and Tariff Modernization Act.

On the other hand, as held by the Court in the case Bureau of Customs v. The Honorable Agnes VST Devanadera, in technical smuggling, the goods and articles are brought into the country through fraudulent, falsified or erroneous declarations, to substantially reduce, if not totally avoid, the payment of correct taxes, duties and other charges. Such goods and articles pass through the BOC, but the processing and clearing procedures are attended by fraudulent acts in order to evade the payment of correct taxes, duties, and other charges.

2018

The Collector at the Port of Koronadal seized 100 second-hand right-hand drive buses imported from Japan. He issued warrants of distraint and scheduled the vehicles for auction sale. Kamila, the importer of the secondhand buses, filed a replevin suit with the Regional Trial Court (RTC). The RTC granted the replevin upon filing of a d.

Did the RTC err in granting the replevin? (2.5%)

SUGGESTED ANSWER:

Yes. RTC erred in granting the replevin.

Rule 60, Section 2 of the Rules of Court provides that property seized under the custody of the Bureau of Customs may not be a subject of writ of replevin. Also, it is the Collector of Customs, sitting in seizure and forfeiture proceedings, who has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. The RTC is precluded is prevented from assuming cognizance over such matters even through petitions certiorari, prohibition or mandamus.” (Asian Terminals Inc. v. Bautista, 505 SCRA 748, 761, 762)

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