Procedural Aspect of the Customs Laws in the Philippines

Photo Credit: Rosette Adel through Phil. Star.

What agency has the power to collect customs duties in the Philippines?

          The Bureau of Customs (BOC), which is under the control and supervision of the Department of Finance (DOF).

What are Customs Districts?

          For administrative purposes, the Philippines is divided into divisions that are called “customs districts.” Each Customs District is supervised by one District Collector, assisted by as many Deputy District Collectors as necessary. (Sec. 206/CMTA)

All ports of entry are under the supervision and control of a Customs District. District Collectors are assigned to the principal ports of entry while Deputy District Collectors are assigned to other ports of entry. (Sec. 207)

What are the functions of a District Collector?

          The District Collector has the following functions and duties:

(1) Ensure entry of all imported goods at the customs office;

(2) Prevent importation and exportation of prohibited goods;

(3) Ensure legal compliance of regulated goods and facilitate the flow of legitimate trade;

(4) Examine, classify and value imported goods;

(5) Assess and collect duties, taxes and other charges on imported goods;

(6) Hold and dispose imported goods in accordance with this Act;

(7) Prevent smuggling and other customs fraud; and

(8) Perform other necessary duties that may be assigned by the Commissioner for the effective implementation of this Act. Subject to the supervision and control of the District Collector, the duties and functions of the District Collector may be delegated to the Deputy District Collector. The Deputy District Collector assigned to a sub-port shall be under the supervision and control of the District Collector of the corresponding principal port. (Sec. 210)

If the ruling of the District Collector as regards the assessment of customs duties appears to be erroneous, what is the remedy of the importer?

          The importer must file a written protest with the Commissioner of Customs within 15 days from the time the payment was made setting forth the objection to the ruling or decision in question and the reasons therefore. (Sec. 1106)

          Protest is the exclusive remedy in this case, without which, the action of the District Collector shall be final and conclusive. (Sec. 1107)

If the importer is in a hurry or if he wants to prevent unexpected but unavoidable delays, what is his remedy?

          The importer may file a written application for advance ruling. (Secs. 1100-05) Under the CMTA, an application for advance ruling may be lodged with the Tariff Commission (TC) if it involves tariff classification of goods. The application may also be filed with the BOC for goods valuation or origin concerns. (Sarmiento-Sy, “Advance rulings from the Bureau of Customs and the Tariff Commission” available here.)

What are the types of “Advance Ruling”?

1.      Classification Ruling if the application involves the proper tariff classification of the product. (Sec. 1100)

2.      Valuation Ruling if the application involves the proper application of a specific method on customs valuation of specific good (Sec. 1101).

3.      Ruling on Rules of Origin if the application involves the question of whether the goods qualify as originating from a certain country under the rules of origin of the applicable preferential trade agreement. (Sec. 1102)

What are the conditions for the proper filing of an application for “Advance Ruling”?

An application for an advance ruling shall cover only one (1) product or item. The application for advance ruling shall be filed at least ninety (90) days before the importation or exportation of the product or item, as the case may be. (Sec. 1103)

Note: Remember when importation begins.

If the decision of the Tariff Commission or the Commissioner of Customs is adverse to the importer, what is the remedy of the taxpayer?

          They must file an appeal with the Court of Tax Appeals. (Sec. 1104)

What if the decision is adverse to the government? What will be the next step?

          The decision shall be subject to automatic review by the Secretary of Finance. (Sec. 1104)

To effectively implement its functions, what are the remedies available to the Bureau of Customs?

1.      Exercise of Police Authority (Search, Seizure & Arrest)

2.      Forfeiture

3.      Alert Orders

4.      Compromise

5.      Distraint & Levy

6.      Constructive Distraint

7.      Civil and Criminal Actions

8.      Disposition of Goods in Customs Custody

Who are the officers authorized to effect search, seizure and arrest?

(a) Officials of the Bureau, District Collectors, Deputy District Collectors, police officers, agents, inspectors and guards of the Bureau;

(b) Upon authorization of the Commissioner, officers and members of the Armed Forces of the Philippines (AFP) and national law enforcement agencies; and

(c) Officials of the BIR on all cases falling within the regular performance of their duties, when payment of internal revenue taxes is involved. (Sec. 214)

Before the officers may enter a property, do they need to secure search warrants?

          The officers should secure a search warrant from a judge of competent court only if the property to be entered into is a dwelling house. (Sec. 220) In all other cases, a search warrant is not required.

When a security personnel or any other employee lives in the warehouse, store, or any building, structure or enclosure that is used for storage of goods, the property shall not be considered as a dwelling house. (Sec. 219)

What does the search of vessels, aircrafts and other vehicles include?

          The search of vessels and aircrafts includes removal of any false bottom, partition, bulkhead, or any other obstruction for the purpose of uncovering any concealed dutiable or forfeitable goods. (Sec. 221)

          Meanwhile, in the search of vehicles, the officer is authorized to open and examine any box, trunk, envelope, or other container for purposes of determining the presence of dutiable or prohibited goods. (Sec. 222)

          

          For more information regarding the lawful/permissible searches and seizures in the Philippines, you may read this blog article.

What are the properties subject to seizure and forfeiture?

(a) Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully in the importation or exportation of goods or in conveying or transporting smuggled goods in commercial quantities into or from any Philippine port or place. The mere carrying or holding on board of smuggled goods in commercial quantities shall subject such vehicle, vessel, aircraft, or any other craft to forfeiture: Provided, That the vehicle, vessel, aircraft or any other craft is not used as a common carrier which has been chartered or leased for purposes of conveying or transporting persons or cargo;

(b) Any vessel engaging in the coastwise trade which shaft have on board goods of foreign growth, produce, or manufacture in excess of the amount necessary for sea stores, without such goods having been properly entered or legally imported;

(c) Any vessel or aircraft into which shall be transferred cargo unloaded contrary to law prior to the arrival of the importing vessel or aircraft at the port of destination;

(d) Any part of the cargo, stores, or supplies of a vessel or aircraft arriving from a foreign port which is unloaded before arrival at the vessel’s or aircraft’s port of destination and without authority from the customs officer; but such cargo, ship, or aircraft stores and supplies shall not be forfeited if such unloading was due to accident, stress of weather, or other necessity and is subsequently approved by the District Collector;

(e) Goods which are fraudulently concealed in or removed contrary to law from any public or private warehouse, container yard, or container freight station under customs supervision;

(f) Goods, the importation or exportation of which are effected or attempted contrary to law, or any goods of prohibited importation or exportation, and all other goods which, in the opinion of the District Collector, have been used, are or were entered to be used as instruments in the importation or the exportation of the former;

(g) Unmanifested goods found on any vessel or aircraft if manifest therefor is required;

(h) Sea stores or aircraft stores adjudged by the District Collector to be excessive, when the duties and taxes assessed by the District Collector thereon are not paid or secured forthwith upon assessment of the same;

(i) Any package of imported goods which is found upon examination to contain goods not specified in the invoice or goods declaration including all other packages purportedly containing imported goods similar to those declared in the invoice or goods declaration to be the contents of the misdeclared package;

(j) Boxes, cases, trunks, envelopes, and other containers of whatever character used as receptacle or as device to conceal goods which are subject to forfeiture under this Act or which are so designed as to conceal the character of such goods;

(k) Any conveyance actually used for the transport of goods subject to forfeiture under this Act, with its equipage or trappings, and any vehicle similarly used, together with its equipment and appurtenances. The mere conveyance of smuggled goods by such transport vehicle shall be sufficient cause for the outright seizure and confiscation of such transport vehicle but the forfeiture shall not be effected if it is established that the owner of the means of conveyance used as aforesaid, is engaged as common carrier and not chartered or leased, or that the agent in charge thereof at the time, has no knowledge of the unlawful act; and

(l) Goods sought to be imported or exported:

(1) Without going through a customs office, whether the act was consummated, frustrated, or attempted;

(2) Found in the baggage of a person arriving from abroad and undeclared by such person;

(3) Through a false declaration or affidavit executed by the owner, importer, exporter, or consignee concerning the importation of such goods;

(4) On the strength of a false invoice or other document executed by the owner, importer, exporter, or consignee concerning the importation or exportation of such goods; or

(5) Through any other practice or device contrary to law by means of which such goods entered through a customs office to the prejudice of the government.

~ Sec. 1113

What are the properties not subject to seizure and forfeiture?

The forfeiture of the vehicle, vessel, or aircraft shall not be effected if it is established that the owner thereof or the agent in charge of the meads of conveyance used as aforesaid has no knowledge of or participation in the unlawful act: Provided, That a prima facie presumption shall exist against the vehicle, vessel, or aircraft under any of the following circumstances:

(a) If the conveyance has been used for smuggling before;

(b) If the owner is not in the business for which the conveyance is generally used; and

(c) If the owner is not financially in a position to own such conveyance.

~Sec. 1114.

What is the remedy of the aggrieved party in cases of seizure and forfeiture?

          The aggrieved party may file a written notice of appeal with the District Collector who shall then transmit the records to the Commissioner who has 30 days to decide the controversy. Upon the lapse of the said period without any decision whatsoever, the decision of the District Collector shall be deemed affirmed. (Sec. 1126)

What is the prescriptive period for the filing of the appeal?

          Counted from the day the decision was received, the taxpayer normally has 15 days within which to file the said notice of appeal. However, if the goods are perishable, they only have 5 days to do so.

What are Alert Orders?

Alert orders are written orders issued by customs officers as authorized by the Commissioner on the basis of derogatory information regarding possible noncompliance with the CMTA.

An alert order will result in the suspension of the processing of the goods declaration and the conduct of physical or nonintrusive inspection of the goods within forty-eight (48) hours from issuance of the order.

Within forty-eight (48) hours or, in the case of perishable goods, within twenty-four (24) hours from inspection, the alerting officer shall recommend the continuance of processing of goods in case of a negative finding, or issuance of a warrant of seizure and detention if a discrepancy between the declaration and actual goods is found. (More: Secs. 1111-12)

Does the Commissioner of Customs have the power to compromise?

          Yes, the Commissioner may compromise any administrative case arising under CMTA, subject to the approval of the Secretary of Finance. Cases involving forfeiture proceedings shall however not be subject to compromise. (Sec. 1131)

What remedies are available to the Bureau of Internal Revenue (BIR) that are also available to the Bureau of Customs?

          The BOC has the following remedies similar to that of the BIR’s:

1.      Distraint of Personal Properties

2.      Levy of Real Properties

3.      Constructive Distraint

4.      Civil & Criminal Actions (See more: Secs. 1132-38)

What is the available remedy to the Bureau of Customs when certain goods remain in its custody?

          The Bureau of Customs may dispose these goods. (See Sec. 1139 for the full list of goods that may be disposed) Prohibited goods shall however be destroyed. (Sec. 1146)

What are the modes of disposition?

          The goods subject to disposition may be donated to another government agency or declared for official use of the Bureau, after approval of the Secretary of Finance, or sold at a public auction. (Sec. 1141)