Tariff and Customs Law Notes: Atty.

Cabaneiro
2016

TARIFF AND CUSTOMS CODE:

Tariff may be understood in many senses, it may be synonymous to customs duties. This
is the bond imposed on importation and sometimes in exportation. So the basic items here to
remember is the transaction on importation, against the coming in of goods coming from
foreign countries. Thats importation. Sometimes, tariff is understood to be the book of rates,
because in the Tariff Code, in fact if you read the PD 1464, that is the Tariff and Customs Code,
about 70 percent of that Code are not taken up in the Bar because they are list of commodities,
together with the fixed rate and ad valorem rate. So thats not taken in the Bar. But you must
be familiar with that. In the law, in the Bar examination, only about 30 percent of that Code is
taken in the Bar, the other things on Tariff are book of rates. So these are commodities,
together with the fixed rate and ad valorem rate. Okay.

You distinguish TARIFF from TAX. Which is broader? Tariff or tax? Tax, because tax is
imposable on all kinds of transactions. Tariff on the other hand, is only imposable on
importations. Okay. That is why one of the most important items that you should be aware of in
this PD 1464 is, when does importation begin and when does importation end? Because these
are ones that are being subjected to duties ha.

Tariff is unique, in a sense that it partakes in the nature of exercise of revenue-raising,

and also, police power at the same time. So in the aspect of police power, because tariff is
imposable on those coming in foreign countries in order to protect our local products. Because
many of these imported goods, they are also domestic products that are synonymous, same as
that no. Therefore, we want to protect our products are domestically-produced and therefore
entry of foreign goods are imposed tariff. Thats police power no. Okay. On the other, revenue
because these are duties imposable on goods. Especially if they are dutiable goods. Remember
that ha?

So at the outset, first of all lets go to the regulatory body in charge of collecting duties,
and that is the Bureau of Customs. And the Bureau of Customs is under the Department of
Finance, together with the BIR. One of the revenue-generating body of the government is the
Bureau of Customs, headed by the Commissioner of Customs and also seven (7) Deputy
Commissioners and just like the Internal Revenue Code, it is also national tax by nature because
it is being collected nationwide. So on the other parts of the country, there are what we call,
District Collectors. So the District Collectors could be synonymous to the Regional Director in
case of the Bureau of Internal Revenue. So import on national taxes, to impose collection
nationwide basis, there are District Collectors except that in case of tariff, unlike the internal
revenue tax where there are revenue regions divided into various districts, you have the District
Collectors only in the port of entry. This is one item that you have to remember. There are so
many technical terms here to remember ha, in case of the Tariff and Customs Code ha. Many
definitions to remember, and to memorize ha.

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

1
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

Why am I talking about the port of entry? Because I am talking about goods coming
from foreign countries. The legal way of bringing goods into the country is through the port of
entry. Because any goods that is surreptitiously brought in any place other than the port of
entry is what we call smuggling. Smuggling is a crime and that is strictly punishable by law.

So there are two types of cases here in the Tariffs and Customs Code. One is the seizure
(seashore? Haha) cases and the other one is the protest cases. Okay. Now, seizure is the any
penalty in the violation is always seizure or confiscation. In other words, the offenses in the
Tariff and Customs Code are all malum prohibitum, and therefore the intention doesnt matter,
the act by itself is already proscribed and is actionable. The act by itself, no? So in other words,
in the absence of anything you can show as proof of compliance with the law, then there is an
offense, and the penalty is confiscation. So anyway, if you look at the Philippines, the
Philippines is an island surrounded by water, thats why the common entry of goods coming
from foreign countries will be by air or by sea. Okay. But considering that the items that can be
carried by air, by plane, are very limited, most of the restrictions and the rules are applied to
the goods that are brought by vessels, so in other words these are the ones that ah.. Even by air
there are what we call compliance that should be given.

So at the outset, remember the meaning, when does importation begin and when does
importation end? Kasi ang transaction dito that is being imposed upon, is importation, and
when you say importation, we the goods, coming from foreign countries. So basically these are
goods that are tangible, goods that can be ah.. goods that can be sold. Okay. So we cannot
smuggle real property no, definitely. You cannot bring a real property from Japan, from Tokyo
and smuggle it here no. Otherwise youll bring Hiroshima here no. So we can only bring goods
no? Okay.

So importation begins, the moment an aircraft, remember this ha? Tandaan niyo tong
meaning nito ah. Importation begins the moment an aircraft or a vessel enters the jurisdiction
of the Philippines, with intention to unload. The definition is very vague, no? With intention to
unload. Intention is something that is very hard to decipher. Okay. Thats why you can always
conclude that the moment you enter the jurisdiction of the Philippines and you have goods that
are supposed to be dutiable, and you are not armed with the proper documents, then you
have.. the conclusion is you have the intention to unload it. Is that clear? Kapag ikaw ay
pumasok ng Pilipinas, at yung vessel mo ay may mga dutiable goods and you cannot show a
manifest, that is already a conclusion that there is intention to unload unlawfully and then
therefore such goods are subject to confiscation, automatic. Thats why it is malum prohibitum,
ah. Ganyan ang pag-take dyan. Hindi pwedeng nakalimutan mo yung manifest, I am not aware
of the law, walang ganon-ganon ah. Kahit kay may manifest and the Customs Agent found your
manifest defective, the goods are subject to seizure. Okay? Thats why if you look at Republic
Act 9282, one of the jurisdiction of the Court of Tax Appeals is that they have exclusive
appellate jurisdiction on matters coming from the Bureau of Customs involving the following:
liability to customs duties, seizure, detention, release. So what can you seize? Goods. What can
you detain? Goods. What will you release? Goods.

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

2
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

Okay. So explain ko sa inyo one by one. Ill walk you through how these happen. Para
pag binasa niyo yung Tariff Code, yung libro ni Aban, then youll read PD 1464 and you read our
memory aid, you have already a view of the transaction how this happens. So I think it was
providential that I forgot the questionnaire. Para ma-explain ko muna itong Tariff Code para
pag binasa ninyo alam niyo na kung ano yung.. how to understand the law instead of you
reading it from the book.

Okay, so at the outset, malum prohibitum, walang tanong-tanong. Okay. So lets look
first, on an importer, which complies with the law. So in other words, if you are an importer
that complies with the law, this is how you will have to do your action plan. You are the captain
of the vessel, or the representative of the importer, coming from Malaysia, and in your vessel
you are carrying dutiable goods. Various cartons of imported cigarettes, imported wines,
imported perfumes, anything of value. Okay. Pag alis mo palang dun, dapat may dala-dala kang
manifest. And therefore, how do you define a manifest? Under the Tariff Code, manifest is a
sworn declaration in English, or if not in English, there must be a translation into English, ha,
stating therein the cargo that the vessel carries. Okay. Alis ka na sa Malaysia, alam mo na may
dala kang 100 cartons of imported cigarettes, nakasulat sa manifest yun. Because that qualifies
as cargo. Okay. So, the next item, so how do you define a cargo? Tinatanong sa Bar yan. What is
a cargo under the Tariff Code. Cargo are all items of value, wares, (Chaptel? Chaplains? Hahaha!
Di ko marinig), merchandise, goods, and other personal piece or anything of value, except those
are considered as part of the sea stores. There is a definition of a sea store there ah. So what
are the sea stores? Yun yung mga goods that are displayed for sale inside the vessel. Kasi
sometimes inside the vessel, there are also stores because there is a long voyage in the sea, no?
It takes time. So there is a store inside the vessel, there are goods displayed inside the vessel
that will not form part of the manifest. Okay. That is not cargo. But at least the captain of the
vessel must show a sea store inventory, okay. Pakita mo yung listahan ng laman ng sea store na
yun. Okay. Pag wala doon, the goods will be confiscated. And, also, it will exclude provision. Ang
provision naman, these are goods or items that are needed by the crew of the vessel. They
need food, they need canned goods, they need everything for them to sustain the long voyage
in the sea. So that will not form part of cargo. Naintindihan niyo?

So yun, pag alis sa Malaysia dapat meron ka nang manifest. Okay. Sworn declaration yun
ah, that is under the penalty of perjury, because under the Tariff Code, unmanifested cargo, is
automatically can be subject to confiscation. Okay. Minsan ang tinatanong, what is the penalty
under the Tariff Code, for any goods that are not in the manifest? They can be apprehended by
the Customs Agent in the Philippine jurisdiction. Okay. So yun. Pag naka-cross na ng Philippines
yun, ang mga representatives ng Commissioner of Customs will enforce these laws in
apprehending people who will violate the law. And the Customs Commissioner is only one, so it
must have deputies. And the deputies are because the Commissioner is not sufficient enough to
be able to monitor offenses under the Tariff Code, because there are offenses that can easily be
evaded by any offender, because they can ride on vessels that are moving very fast. Okay.

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

3
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

So, nakalusot ka na sa manifest mo, kumpleto. Regular to, yung regular na nagcocomply
sa law. Next rule, the vessel must enter the port of entry. Okay. What is a port of entry? That is
the authorized embarkation point for any cargo coming from foreign countries. So, marami
tayong port of entries the Pilipinas. Lahat ng international airport, port of entry yan. Lahat ng
harbor, port of entry yan. Kaya lahat ng mga port of entries, meron diyang tinatawag na Local
District Collectors. Yan ang mga kolektor.

Now the Philippines have a very long coastline. Kaya medaling mag-smuggle ditto sa
Philippines, kasi long coastline. You cannot place a port of entry on every place no. meron lang
nun sa mga strategic place no, halimbawa meron niyan sa Cebu, sa Davao meron niyan. Lahat
ng pinupuntahan ng mga galling abroad, port of entry yun. Okay so, port of entry is the
authorized disembarkation point of any goods coming from foreign countries, and therefore if
there are people who will disembark on any place other than the port of entry, that is what we
call smuggling. And all the goods that he carries is contraband. And then if it is contraband,
under the Tariff Code, everything is subject to seizure. Not only the contraband goods but even
the means of transportation, ha. The vessel, can always be subject to confiscation. The goods
kapag isinakay mo sa truck, pagdating ng overland habulin yun ng mga police kaya, the truck is
also subject to confiscation.

Okay so, pumasok na yung vessel. So pag-usapan naman natin ngayon, sabi sa Tariff
Code, what are the crimes of importation under the Tariff Code? Ano-ano daw ang mga goods
that will be.. how are they classified under the Tariff Code? Those coming from foreign
countries. There are four (4). The first one is prohibited importation, ha. Prohibited. So
remember all of these ha? Okay. Prohibited importation, second one is conditionally-free
importation, third one is duty-free and the last one is dutiable. Okay. Now, naturally the bulk of
importation coming in into the Philippines are the dutiable ones. These are the source of
revenue. Yan and source of duty. Okay, kaya yan ang classification ng importation duty under
the Tariff Code. The second one is conditionally-free, the third one is duty-free and the fourth
one is dutiable. So in the Bar, sometimes, what prohibited importation. Give at least five (5)
examples. There are many kinds of prohibited importation in the Tariff and Customs Code. So,
you must know at least five of them no. Prohibited importations are those importations
prohibited by law to be entered into the Philippines except if there is proper clearance. Okay.
The word itself speaks for itself, prohibited. If its prohibited, its banned to enter the
Philippines. But it could be allowed if there are proper clearances. Now what are these items
that are prohibited. But you must read the book ha, you must know other items there that are
prohibited from importation. Now the first one is guns, ammunitions, explosives except if there
is clearance from the Department of National Defense (DND). If its the DND importing
ammunitions and guns, that is prohibited importation but it becomes legal if there is a
clearance from the DND. Okay. What are the other types of prohibited importations aside from
guns and explosives. The second one is the.. opium, marijuana, shabu. All drugs are prohibited
importation except if there is a clearance from the Department of Health (DOH) because some
of these drugs are also used as ingredients for medicine. Some antibiotics have drugs that is
why if you.. I go to my pulmonary doctor and I have to buy items that are antiobics. The

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

4
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

pharmacy wont sell it unless the doctor is duly licensed to prescribe. Some of our sickness can
be cured by drugs. Except in the Philippines, even those are not sick, take drugs no. Okay. So
these can be imported with clearance from the government. Now the third one is gambling
paraphernalia like slot machine, lottery machine or any other gambling devices except if there
is proper clearance from the government agencies, probably the PAGCOR. The PAGCOR can
import these slot machines. Not anybody. Okay? Then we have apparatus for abortion, then we
have subversive materials, articles inciting to sedition, subversion, treason. These are
prohibited. Pornographic materials, obscene materials. And also, there are items that are
prohibited by law. Lets say most common is, those prohibited to be imported because of
circulars coming from the Banko Sentral ng Pilipinas (BSP). Why the BSP? Because there are
types of importation that could result in big outflow of foreign exchange. And that is monitored
by the BSP. Because the BSP is trying to stabilize the currency, they will issue circulars to
prevent certain goods from coming to the Philippines. When you study the Tariff Code there
are others there to remember. Now if there clearances, those can be confiscated,
automatically.

Now the second one is conditionally-free. Now these conditionally-free, these goods
can enter freely but subject to a condition. Okay. Lets say for example there is an exposition in
the Philippines, in the Philippine Trade Center of products coming from South East Asia, so they
can expo. Expo there could be products from other countries, hoping that Filipino businessmen
would find samples of these.. that could be entered freely, subject to the condition that after
the expo, that will be returned back from the country where it came from. And then you have
also, like, living animals. Lets say some breeding texas or fighting cocks from Australia, which
you want to cross breed with our local stocks here. That can be brought, but after their
breeding, that will be back to Australia. That is conditionally-free. And then once a upon a time,
when the US bases are here some vessels not part of the navy, that needs to be repaired, and
the vessel is brought to base, and that is repaired, that is conditionally-free. After the repair, it
goes out, that is conditionally-free. Now the most common conditionally-free and sometimes
given in the Bar if an importer, or a manufacturer, in the Philippines imports raw materials and
convert it to finished goods for export. Okay. So I repeat, you can have manufacturer who buys
a raw material from a foreign country with the intention to convert it to finished goods for
export, that is conditionally-free provided that it could show proof of exportation. So like the
problem, here is a manufacturer of shoes, who has imported raw leather from Italy, with the
intention to convert it to shoes, and the moment they are done, it will be exported to Sri Lanka.
So the moment the raw leather comes it, there is a payment called duty. Because the rule
under the Tariff Code is anything, whether it is prohibited, conditionally-free, duty-free,
dutiable, pagpasok niyan naka-stockage muna yan sa Customs Bonded Warehouse ha. Kaya dito
may Customs Bonded Warehouse. Lahat ng goods na pumapasok sa port of entry ay naka-stock
muna dyan sa Customs Bonded Warehouse. Now bakit bonded warehouse? Kasi meron yang
bonding company that guarantees that if there are lost items, then the bonding company will
be liable. Okay. Yun ang legal ha. Lahat dadaan sa port of entry, pagdating sa port of entry,
kahit anong klase yan, prohibited, conditionally-free, duty-free stock muna nila yan. And
importation will end the moment the goods are allowed to be released from Customs custody

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

5
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

because number 1, nabayaran na yung duty. Number 2, napakita na yung clearance, number 3
kung duty-free nakakuha ka na ng certification that it is tax-exempt under the law. Okay. Kapag
nakita na yun, i-aallow na ang release nun by issuing the document of ATRIG. ATRIG is
Authority to Release Imported Goods ha. Kaya kapag yung ATRIG na-issue, ibig sabihin yung
importer naka-comply na sa clearance, nakapag-submit na ng proof exemption, nakabayad na
ng duty. Ha? Kapag nakakita kayo ng mga container rice vans lumalabas dyan sa South Harbor,
North Harbor bayad na ang duties nun. Importation has ended. Do you follow? So importation
begins the moment an aircraft enters the jurisdiction of the country with the intention to
unload and it will end the moment the goods are disposed of Customs custody because the
proper clearances or payment have already been complied.

Thats why you call customs duties as ad valorem tax, why ad valorem tax? Because you
need the intervention of a third party in order to pay the tax. Who is the third party? The
Customs Appraiser. Kapag real property tax, bakit ad valorem ang real property tax? You need
the assessor to validate the validation and that is ad valorem, ha? Kapag sinabing ad valorem,
third value, pag sinabing third value, merong third party na nag-vavalidate nung value. Gaya sa
real property, Assessor, kapag sa customs, Customs Appraiser. Follow that? Okay. So, merong
tanong sa Bar noon, here is a manufacturer, of shoes which imports raw leather from Italy, so
pagpasok nung raw leather na yun, meron na siyang duties. Sabi nung Customs, o sige kapag
bumalik ka, na-export mo na yan na shoes or previous goods, I will return to you the duties that
you pay. And tawag dun sa duties na yun, that is the duty drawback. The duty drawback is like
a rebate of a duty that has been paid, because anything for export is always given incentives
under the law, kaya nga yung raw, in-import ng manufacturer, i-coconvert sa shoes, i-eexport
niya, conditionally-free yun. Kaya nga yung tawag dyan that VAT Law, that is automatically zero-
rated sale yan. Walang VAT yan. Zero-rated yan, because export. Okay, got my point ha? Okay.
That is conditionally-free, subject to a condition.

Yun namang pangatlo, yun ang duty-free. And duty-free is.. we go to tax exemption no?
Because before you can avail of duty-free importation, kelangan meron kang back up ng law,
because tax exemption can be availed of only if there is a clear legal basis. Kaya sino makaka-
avail nito? E basta may proof of exemption ka, kagaya halimbawa ng mga Asian Development
Bank (ADB) Executives, meron sa charter ng ADB na ang mga executive niya, which are being
transposed in the Philippines, and thereby being assigned to the Philippines, yung iba galling
pang Sweden, India. Part of their benefits are that they can bring imported cars without
payment of duty, duty-free yun, because of their being an executive of ADB. For this purpose,
ADB although located in Ortigas, is like located in a foreign country. The bank law ganyan ah.
Okay, so yung mga enterprises that are for investors to invest money in the Philippines is also
under the Executive Order (EO) 226, the Omnibus Investment Code, if there are investors or
businessmen coming from foreign countries who wants to set up a factory in the Philippines
and invest their money, or there are we say, computer companies, or manufacturing, yan kapag
vinalidate ng Board of Investments (BOI) ng Bureau under EO 226 as registered pioneer
industry, the importation meron yang priority plan, kapag may mga papasok na mga investors
that is good for the economy, qualified ka na pioneer industry, registered. Ibig sabihin ng

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

6
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

pioneer, walang pang ganyang business dito sa Philippines. Meron na bang naggagawa ng
computer dito? Like yung Silicon Valley? Yan registered pioneer yan. Based the EO 226, the
incentives given there are substantial ah. They are given income tax holiday, income tax holiday
gives them incentive not to pay income tax for the next 7 years, or 4 years as the case may be.
And one of the incentives given to them are the duty-free importation. So kapag yang mga
import mo are machineries, or items that are needed for setting up a factory here in the
Philippines, makikita din yan sa Customs, so youll need a clearance. Kapag mayroon, i-rerelease
ng Customs yan, iisuehan yan ng ATRIG. Do you follow? Ha?

So ngayon, yung bulk ng goods na pumapasok ang karamihan dyan ay yung mga
dutiable. Yun yung mga pumapasok dito. Karamihan talaga yung mga machineries, being used
for business. And to uh, advance your knowledge, under Section 185 of the Internal Revenue
Code the tax and tariff is given for importation even that is for personal or business purposes so
kaya lahat pumasok dyan, dutiable. Ano ang kailangan ipakita sa Appraiser? Kapag sinundan mo
yung legal na process, kelangan yung importer, meron siyang import entry.

What is an import entry? Import entry is like a return, it is a self-assessment return, a

form--it is a sole declaration of the importer describing the items or goods that it carries.
Gagawa ka ng isang import entry bawat importation na iniimport mo. Pag nag-import ka ng
camera, nag-import ka ng appliances, nag-import ka ng mga garments, tigi-tig-isang import
entry yun, ha. And then ililista mo dun sa import entry yung tinatawag na transaction value.

Pag tinanong sayo, what is a transaction value under the Tariff Code? Noong araw,
before year 2000, you call that the "home consumption value", HCV. But pursuant to Republic
Act 8181, there was a shift from HCD to TV--Transaction Value. Now, if you look at our memory
aid, ang transaction value maraming computation, but in a generic sense, transaction value
consists of the following: the invoice value of the imported items from the place of origin, plus
freight, plus insurance, plus excise tax, plus cost of accessories, plus all handling charges to
bring it to Manila. Kaya kung galing ka sa Vietnam, eh magkano invoice value nya sa Germany?
Kung magkano yung freight, insurance, excise tax, cost of accessories, all of those partake a part
of the transaction value. Ngayon anong kaimportantehan ng transaction value? Yun yung
pinaka-tax base. Doon iniimpose yung mga tariff rate. Ang tariff rate natin ngayon
computerized na. When I started practicing in the Bureau of Customs, when I was at SGV, that
was in 1975, wala pang computer noon, kaya ang tinitingnan pa namin red book and blue book.
Of course wala na ngayon nun. The red book and blue book are basically very thick books
containing the list of commodities that are being brought from the foreign country to the
Philippines. Makikita mo, may listahan, mga cameras, wire. Ang fixed rate, 10% tapos iba iba rin
yung ad valorem rate, ha, merong 10%, 20%, may 25%, may 40%, merong 100% 200%. Kaya pag
mga luxury items, umaabot ng mga 500 yun. Malalaki because luxury items like imported cars
are being discouraged from being brought in. Unless youre willing to pay the price. So if you
want to buy a brand new BMW from Sweden, tapos dalhin mo dito, anlaki ng tariff non. If
you're willing to pay the price, then so be it. Kaya ang pinakamadali, i-smuggle mo, di mo idaan

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

7
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

sa port of entry, ayun. Kaya yung smuggled, masyadong steep ang penalties jan. It is malum
prohibitum, ha.

Okay. So, anyway, balikan natin yan ha. Balik muna tayo dun sa tinatanong sa bar. Ito
paulit ulit nalang sa bar itong mga ganitong question, ha. A vessel coming from Hong Kong
going to Jakarta one night was apprehended in Manila Bay and when the Customs police
boarded the vessel, they found in the vessel various dutiable goods consisting of various
cartons of cigarettes, imported cigarettes, imported clothes, imported tools, garments, and the
customs agent naturally was looking for the manifest. Okay. Ngayon, tinitingnan yung manifest,
and tinitingnan yung dala, tinitingnan yun, cinocompare if it is manifested what is carried by the
vessel. Pag hindi nag-tally yon, there are discrepancies, and the discrepancy is more than 25%,
those goods are subject to confiscation. Pagka ang discrepancy is less than 25%, therefore they
may settle it by the payment of fine. Yan, dito, syempre ang discretion nasa customs agent, ha.
Okay. Pag sinabi niya, "No, I do not agree. I do not agree." confiscated agad yon. Automatic yon,
bahala ka magexplain pagdating sa pier. Ireklamo mo sa Collector of Custom. In this, ah, PD
1464, babasahin niyong maigi ang remedies ha. Kasi ang remedies ang importante dito.
Because ang rule dito, sa Tariff Code is always to pay under protest. Kaya pag sinisingil ka ng
mahal, bayaran mo muna yung mahal, and then pay it under protest. Parang yung Section 252
sa Real Property Tax Code, pay under protest, ganun din sa Tariff Code, ha. Okay. So. Na-
apprehend. Ngayon, mageexplain yung captain of the vessel, and then sinasabi niya, "Eh bakit
binilang bilang mo? Eh hindi naman yan--" So in other words, there is a controversy. The
captain, or the representative importer, was saying otherwise, but the customs agent was very
firm that there is a big discrepancy. So. Dinala na dun sa pier. Eh ini-stock muna doon, so in
other words, they are confiscated. Seizure, ha. Ngayon, ang ginawa noong importer, kasi nag
eexplain siya, hindi naman ina-admit nung customs agent. Eh naturally, edi naka-confiscate
ngayon yung goods. Notwithstanding the fact that he was able to explain the discrepancy, ayaw
lang tanggapin ng customs agent. So meron silang, ah, tinatawag na dispute. Okay. So
pagdating na dun sa warehouse, eh nagdedebate parin yung dalawa. Eh sinong mananalo sa
dalawa? Syempre yung customs agent. Eh parang ang equivalent nya sa NIRC, the examiner
enjoys the presumption of correctness, pag sa tariff, confiscated agad yan. So pag nangyari
ngayon yun, ang tatanong, what is the remedy? Syempre pag nagkaroon ngayong ng away yung
customs agent at saka yung importer, at ang importer, talagang vehement ang objection nyan,
ang customs agent naman, vehement rin yung kanyang position, anong gagawin nung
importer? Syempre hahanap siya ng, somebody who would help him. Sinong makakatulong sa
kanya? Kayo. Abogado. Eh siyempre, kaya kayo mag aaral kayong maige, ha. I'm a lawyer for
the past 42 years. Jusko. Tumagal pa ako for the next 42 years, although nakakalimutan ko na
ngayon ang questionnaire, ha. Okay. Kagaya din ako ni Derequito, ha. Bata pa ito, eh, maaga
nang nag set-in ang dementia, no. So. The lawyer, naturally, will file a case. Nagfile siya ng case
ngayon. Replevin. Replevin is an action to recover personal property. Yung Judge naman,
naniwala sa position nitong abogado. Nag order, pinaparelease yung confiscated items,
pinresent sa District Collector. District Collector refuses to release. Ang tanong ngayon sa bar,
was the district collector correct in refusing to release? The answer is yes. What is the reason?
Eh sinabi na ng Court ah, na irelease, bakit ayaw mo? Under the Tariff Code, merong tinatawag

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

8
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

na Doctrine of Primary Jurisdiction. Yung Doctrine of Primary Jurisdiction is the doctrine that
says that whenever there is a conflict between the jurisdiction of the customs commissioner
and the regular court, the regular court should yield. And for this purpose, the commissioner of
customs is considered like a tribunal. Follow that, ha? Minsan ang action ng abogado jan is
injunction. Okay, regular court. Sasabihin ng Supreme Court, under the doctrine of primary
jurisdiction, whenever there is a conflict between the commissioner of customs and the regular
court, the regular court should yield, ha. If we look at many many cases, one of the cases is the
case of (inaudible), eh nagkaron ng controversy. Cinonfiscate ang goods. Yung isang abogado,
na hindi naman alam yung doctrine of primary jurisdiction, nagfile ng case in court for replevin.
Ang judge, hindi rin alam. (Some personal experience + jokes).

Okay. So, Doctrine of Primary Jurisdiction. Whenever there is a conflict between the
Regular court and the commissioner of customs, the regular courts should yield. Sabi ng
Supreme Court, why, what is the reason for that? In order to avoid multiplicity of suits. Kaya
kung ikaw may reklamo, dun muna sa commissioner ka. Kasi meron diyang procedure eh. Hindi
ka dapat pupunta sa court. Kasi pag pumunta ka sa regular court, eh multiplicity of suits,
magkakagulo gulo yan. The commissioner of customs is the one expert in the tariff. Eh bakit
yung regular court ang pupuntahan mo. Is that clear, ha. I think that is that part is
understandable, no.

So. What are the other things that you have to learn? Pagka prohibited importation,
kailangan ng clearance. Pagka may duty free, ay kelangan pakita mo yung kuwan, proof of
exemption. Pero pagka dutiable, ah, bayad ka, ha. Bayad ka. Mamaya na natin idiscuss yung
pagbabayad.

Now, what is the jurisdiction of the Bureau of Customs? The Bureau of Customs has
jurisdiction over the air (eroplano), over the sea (vessels), and all bodies of water including
inland bodies of water, bays, rivers, or coast, or anything that has connection with the open
sea, may jurisdiction ang Bureau of Customs jan. Okay. Atsaka yung customs bonded
warehouse. Bakit? kasi yung smuggler, pagka nakalusot yung sa dagat, pwedeng lumusot na
yung doon sa mga maliliit na ilog, kaya may jurisdiction jan ang BOC.

What is again smuggling? Smuggling is the disembarkation of cargo in any place in the
Philippines, other than the port of entry. And the moment the offender is caught, eh anong
mangyayari, merong nagpuslit ng mga imported motorcycles from Taiwan, ibinaba yun
surreptitiously sa La Union. Syempre at nighttime. Okay. Nasa vessel yan, ikinarga sa truck, yung
truck, pag nahuli yon, lahat ng ginamit na sasakyan, confiscated yon. Yung vessel, yung truck na
pinagsakyan. confiscated yon. Eh ang tanong, pano kung ikinarga sa common carrier, sa Victory
Liner, is the common carrier vehicle subject to confiscation? Sabi ng Tariff Code, generally, no,
except if the Certificate of Public Convenience of the transporter is expired or if there is proof
of collusion between the smuggler and the owner of the transportation company. So when the
question is, if goods smuggled and loaded in a common carrier, is the common carrier subject

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

9
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

to confiscation? Generally, no. Kasi siyempre, common carrier, maapektuhan din yung mga
passengers kung icoconfiscate mo yun, ha. Now, so there must be proof that there is collusion
between the smuggler and the common carrier, or perhaps if the certificate of public
convenience is expired.

So maganda yung isang kaso jan, basahin niyo yung case ni Julio Llamado. They are
planning to have a smuggling operation and dito nila gagawin sa Alabang island. Yung Alabang
island is overlooking Gumaca, and that time, in the 60s, madilim talaga doon. Madilim, kasi
uninhabited yun. But this flat strip of land, walang tao dun, kaya siguro naisip nila, madaling
mag smuggle, no. So nag hire muna sila ng Cessna plane, nagpababa na sila doon, apat na
smuggler. Eh maaga pa, umalis na yung Cessna plane, so naiwan yung apat doon. Anong
ginagawa nila, eh nagswimming muna sila. Kasi, anong gagawin nila doon, sarap magswimming
doon ha. Mamaya bumalik nanaman yung Cessna plane, bandang alas kwatro. Ang dala dala
naman eh mga Kerosene lamps. Yung ginagamit ng fishermen noong araw. Noong dumating
ang six o'clock, madilim na, sinindihan na nila yon. Nilagay nila sa paligid nung strip of land, kaya
pag tiningnan mo sa taas, parang airport. Okay. Yun pala, nung madilim na, nagbabantay yung
apat, may bababa palang plane, DC3. Yung DC3, yan ang kaunaunahang airplane ng PAL, ha.
Yun pala, nung bababa yung airplane, may darating naman na vessel. Yung vessel, may
daladalang smuggled imported cigarettes. Isasakay dun sa plane. Eh may nag tip pala sa pulis.
Eh kung nakalusot yun hindi naman natin dapat pinag uusapan diba. Edi okay. Nung mahuli, eh
naturally, the contraband items were confiscated. The vessel, confiscated. Ang problema
ngayon, yung Cessna plane na hinire, yung sinakyan nila. Yun palang Cessna plane na yun, hindi
naman alam nung owner ng charteing company na gagamitin sa smuggling. Akala nila,
gagamitin lang for sightseeing, ha. So ngayon, cinoconfiscate din yun. The Supreme Court said,
no, that is malum prohibitum, anything that is used to facilitate smuggling, whether you are
aware or not of that is subject to confiscation. Do you follow that, ha? Anything that is used for
accomplishing a smuggling operation, except if it is a common carrier, is subject to confiscation
regardless if owner knew it or not. That's how strict the implementation of the tariff code is, ha.

Isa pa. Ha. Here is a vessel coming from Zamboanga to Cebu, and then inapprehend din
gn customs commission, ha, in this case, they are not from a foreign country, they are from
Zamboanga going to Cebu. And onboard the vessel are imported items and they were not able
to show proof of payment of duties and compliance with the tariff code. Yun din, still subject to
confiscation even if inside the Philippines. Do you follow? ha?

And isa pa, yung talagang manifestation kung talagang how strict the tariff code is.
Meron daw, based on an unimpeachable information, there is an establishment on unimart
that is on sale of items that are imported. All things that are used for music, amplifiers, drums,
bass guitars, everything. And there is an info that these things were smuggled, and the bureau
of customs searched the place. And after that, not contented, they even went to the house of
the owner in Greenhills and raided the house also. In all these searches, there is no warrant.
Now the question is, were the searches legal? The search in the establishment is legal because
warrantless search is allowed under the tariff code. But the search in the residential house of

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

10
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

the owner is illegal because that is still under the guaranty of privacy. Okay. So warrantless
search is allowed under the tariff code.

By the way, in the Bureau of Customs, there is another body which is called the Tariff
Commission. Yung Bureau of Customs, yung talagang may normal correctional duties. But the
Tariff Commission is like an policy making body. If you still remember the famous exception to
the non-delegation of legislative power, which is the flexible tariff clause, the right given to the
president in times of emergency, where upon the recommendation of the NEDA, the president
can increase, decrease or abrogate tariff rates. Yung information ng NEDA jan, nanggagaling sa
Tariff Commission, ha. Para alam nyo. Kasi ang Tariff Commission is the one that is overseeing
all the effects of Tariff in the Philippines as compared to other countries where our tariff are
imposed. Isusupply nila ang information sa NEDA. NEDA is the economic forecaster of the
country, they will study that. And if they are able to validate that information, they will
recommend to the president a commission executive order in exercise of the flexible tariff
clause. Is that clear, ha?

Okay. So. Balik tayo dito sa kuwan, dutiable, kasi yung dutiable ang kuwan, yung mga
remedies medyo magagamit natin. So ang Dutiable, ito yung mga dividing(?) duties. So ang
SOP, pasok sa point of entry, kasi yung smuggling, icoconfiscate, so ang kailangan para hindi
iconfiscate, point of entry. So. Sa point of entry, ang dutiable, pag prohibited, may endorsement
ng corresponding government agency. Endorsement for those not allowed generally. So.
Dutiable. What do you need, you need an Import entry. Import entry is the sole declaration
where the importer declares what goods it carries under importation. And there is a rule under
the tariff code that the import entry must be done within 30 days from the disembarkation of
the last cargo from the vessel. Take note of that ha. Kasi ibinababa sa vessel yan ha. On the
disembarkation of the last cargo from the vessel, you execute the import entry kasi pag hindi
mo naexecute yan, thr goods are considered abandoned. At pag abandoned ang status ng
goods na yan, that will be sold in a public auction. Kaya yang execution ng import entry is very
important.

Okay, yun namang import entry, ang job naman ng appraiser, the customs appraiser,
because the customs appraiser is also one who is expert in appraising commodities that are
subject to tariff. Pinag aaralan nila yan. Ngayon pagka nakita nya at sinabi niya, kasi alam niya
yung iniimport na items iba, hindi precise yung listing ng tariff sa commodities. Halimbawa,
camera, merong camera na ang fixed rate at ad valorem rate is 10%, pagka mababa lang yung
category. Pero kapag mataas yung category, 10+40 na yun, ha, o 10+50. Kaya pag binabasa yan
ng appraiser, yung import entry, pag may discrepancy between the customs appraiser and the
importer, sinong mananalo sa kanila? Syempre yung customs appraiser. Kasi kung ayaw
bayaran ng importer, hindi irerelease ng customs appraiser. Anong gagawin mo? You appeal
under protest.

What are the remedies of a person who is paying under protest? If you pay under
protest, within 15 days from the payment of the tariff, the importer should make an appeal to

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

11
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

the collector of customs. Appeal to collector of Customs, may hearing jan. Laban nanaman
kayo jan, yan kailangan mo ng lawyer jan. Pag natalo ka sa collector, ang appeal mo, sa
Commissioner of Customs, pag natalo parin sa commissioner of customs, edi punta ka sa CTA.
The CTA has exclusive appellate jurisdiction over matters coming from the Bureau of Customs
and matters involving liability to customs duties.

And note that when you file a protest, it is like a refund claim, you apply the rule for tax
exemptions, so, it must be in writing, specify clearly the basis why you are protesting, show the
facts, the complete data, because any doubt will be resolved against you. You must submit your
protest within 15 calendar days from the final liquidation of the duties.

Ngayon mayroon kayong isang item na babasahin jan. Nag appeal ang importer dahil
ang appraiser (may dispute). Pagdating sa Collector, ang nanalo ay ang importer. Natalo ang
government. Okay. If that happens, what is the rule? Sabi sa Tariff Code, that is subject to
automatic review by the secretary of finance. Ano daw ang reason? To validate that the loss of
the government was legitimate.

Ngayon, for purposes of, kuwan naman, convenience, sabi sa customs administrative
order, itong rule applies daw if the importation is about P5 Million. Otherwise, you apply with
the secretary of finance by way of appeal. One of the appellate jurisdiction of the CTA sa
RA9282 is when there is an automatic review when the Secretary of Finance reverses the
decision of the Collector of Customs, ha, yun ang purpose non. Saka isa pang purpose noon,
when the importer wins in the collector of customs, hindi na siya mag aappear sa
commissioner, so pwede nakalusot na siya. Kaya kailangang ireciew ng Secretary of Finance. So
dalawa ang reason doon ha. First, the Secretary of Finance wants to validate that the loss of the
government is legitimate. Second, it is obvious that the government won't be prejudiced (kasi
makakalusot na yung importer pag pumayag yung collector).

Ngayon meron pang isang instance. Yang mga appraiser, napaka wide ng power nyan,
pag nakita nya yung mga import entry at nagduda sya sa value na dineclare mo, meron yang
chance na malaki ang importation, he can communicate with the country of origin kung saan
nanggaling yung item na yun and communicate with the commercial attache of that country.
Kasi ang commercial attache is the representative of the Philippine Government in a foreign
country that has regulatory rules as far as anything which involves commerce of trade. Kaya
sasabihin nung appraiser dun sa commercial attache, "please check itong value nitong goods na
ganito nakalagay sa import entry, ganito ba talaga ang value jan?" Pag sinabi ng commercial
attache, "hindi mas mataas jan", msgpapadala ng notice yun, ang tawag dun, "alert notice".
Yung alert notice na yun, eh susundin ng appraiser yun, magagalit nanaman yung importer, ano
nanaman ang remedy, you pay under protest. Kasi hindi marerelease ang goods if you do not
pay under protest. You get my point, ha? Okay. Yan ang trabaho niyo pag nagpractice kayo sa
customs.

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

12
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

So that is regular duties ha. So another instance, so ang sabi ko ang ADB executive,
entitled sa duty free importations. Okay. Kaya pag papapasukin mo yung kotse, libre sa duty
yan. Eh ang tanong, pag pinagbili ng ADB executive ng second hand yung kotse, and here is a
Filipino national who buys a second hand car of an ADB executive who is about to be
transposed to another position and thus he is selling the car that is assigned to him, tanong,
what is the liability of that Filipino national who is buying that car? That Filipino will be liable for
all the duties that should have been paid by that executive had it been not due to him. Do you
follow? He is considered the importer. Okay is that clear, ha.

And then, ah, of course dito marami kayong pag aaralan, what do you mean by:

* WHARFAGE DUES;

Sec. 2801. Definition. Wharf age due is the amount assessed against the cargo of a
vessel engaged in the foreign trade, based on the quantity, weight or measure received and/or
discharged by such vessel. The owner, consignee, or agent of either, of the article is the person
liable for such charge.

* ARRASTRE CHARGE;

Sec. 3101. Definition. Arrast re charge is the amount which the owner, consignee, or
agent of either, of article or baggage has to pay for the handling, receiving and custody of the
imported or exported article or the baggage of the passengers.

* TONNAGE DUES;

Sec. 3201. Definition. Tonnag e due is the amount paid by the owner, agent,
operator or master of a vessel engaged in foreign trade coming to the Philippines from a foreign
port or going to a foreign port from the Philippines based on the net tonnag e of the vessel or
weight of the articles discharged or laden.

* DOCTRINE OF HOT PURSUIT;

When an offense has in fact just been committed, and the arresting officer or individual
has probable cause to believe based on PERSONAL KNOWLEDGE of facts and circumstances
that the person to be arrested has committed it;

* DOCTRINE OF PRIMARY JURISDICTION;

* MANIFEST

* IMPORT ENTRY

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

13
Tariff and Customs Law Notes: Atty. Cabaneiro
2016

* CARGO

* SMUGGLING

* CONTRABAND

* W/N COMMON CARRIERS ARE SUBJECT TO CONFISCATION

What are the duties under the Tariff Code that are being collected in the exercise of
police power? Kasi yung mga Duty, ay yun talaga ang source of revenue. So they are not
regularly collected. There are five:

1. DUMPING DUTY - it is the duty imposable on goods that are being sold lower than
fair market value in the Philippines to the detriment of similarly manufactured local products.
Halimbawa, may surplusage ng sardines from Japan, malapit na mag expire, hindi nila mauubos.
Eh merong enrterprising businessman from the Philippines, ang sabi, "Hindi, bibilhin ko nalang,
dadalhin ko sa Pilipinas!" P5 pesos lang, buy 1 take 1 pa.

2. COUNTERVAILING DUTY - ito yung mga may subsidy in foreign countries. it is the duty
imposed on goods where in the place of origin there is a subsidy given by them, and the
purpose of that is to counter the subsidy in order to protect similarly locally manufactured
products. So if you distinguish dumping duty from countervailing duty, in both instance, the
goods are being sold lower than the fair market value kaya lang yung countervailing, may
subsidy.

3. DISCRIMINATORY DUTY - it is a duty imposable on goods coming from a foreign

country which discriminates against our products. Ito, presidente ang magdedecide nito. It is
also called as "retaliatory duties". This is more on the President's side. Yung unang dalawa,
pwede yan sa Secretary of Finance. Okay.

4. SMUGGLING DUTY - these are duties imposable on goods that are not properly
marked as to place of origin. ayun, self explanatory yan ano.

5. SAFEGUARD DUTY - these are duties imposable on goods that are being brought in in
big quantities in the Philippines to the detriment of similarly locally manufactured products. To
safeguard our Philippine products.

no guarantee as to accuracy of transcription J, MORADO | MC, DIETA

14