Customs Modernization and Tariff Act 1.

Free imports/ exports – imported or exported

without the need to present additional
I. Exports vs outright exports
documents or government clearances other
Export – goods that leave the Philippine territory for delivery than import or export documents
abroad Ex. clothing, shoes
2. Regulated Goods – prior permit is necessary
Outright exports – goods that leave the Philippine territory before import or export
permanently Ex. animals, medicine, sugar, rice, corn, ships/
vessels
II. Imports
- act of bringing in goods from foreign territory to the
3. Prohibited goods
Philippine territory
a. Those which are inherently of a destructive
- with intent to unload:
nature
o intended for consumption in the Philippines;
Ex. missiles, abortive devices, pornographic
o to be warehoused either in a customs bonded
materials, seditious materials, or those
warehouse or customs facilities warehouse;
expressly prohibited by law (violated IP law,
o for admission – for goods entered into free
or adulterated goods)
zones; there must be lodgement of goods
declaration; OR
4. Restricted goods – otherwise prohibited, but
o for transit
may be imported for a limited purpose
 usually transport of goods from one port of
Ex. guns, gambling devices, gunpowder,
entry to another. There must be a transit
narcotics
permit
 GR subject to taxes
5. Relief consignment
 Exc: if its for storage in customs  Tax and duty free unless, it is resold for
warehouse, or for outright other purposes other than the purpose for
exportation – no taxes which it was imported
 vs. transshipment – goods are transferred  Goods or equipment to be used by calamity
from one carrier to another victims coursed through designated
 transshipment is not an import agencies and the president has declared a
state of national calamity
III. Smuggling
- Fraudulently importing or exporting goods 6. Conditionally-free imports
Outright smuggling – the importer does not have import  Tax and duty free unless, it is resold for
documents, or goods are disposed without having been other purposes other than the purpose for
cleared. There is an intent to evade payment of taxes. which it was imported

Technical smuggling – goods are entered through a a. Imported for a specific purpose and then
customs house but the documents are fraudulent, exported without substantial changes
falsified, goods are misclassified, or misdeclared as to except for the ordinary wear and tear;
weight, quality, or origin) or there is undervaluation Ex. medals, badges,
If the value is more than P200M
- Deemed as a heinous crime b. Imported for a specific purpose
If the total value of all instances is more than P200M i. Balikbayans – returning residents –
- Deemed as heinous crime those who have stayed in a FC for a
- Plus, fine of P50M period of at least 6 months
 POEA certified if OFW. Tourists may
IV. Bureau vs Commission only bring back personal effects
 Household and personal effects –
Bureau – Bureau of Customs
must not be in commercial quantity;
Commission – Tariff Commission and not for resale, barter, or for
lease
V. Types of Goods  Balikbayan is out of the country for
at least 6 months
 o 6 months to 5 years – max of 12. Jurisdiction over all bodies of water navigable or
P150K, and have not used this not, which is part of Philippine territory. And
privilege for the last 6 months authority over foreign mail
o 5 years to 10 years – max of 13. Goods admitted or withdrawn from freezones
P250K, and have not used this must be electronically lodged.
privilege for the last 5 years
o At least 10 years – max of VII. Police Power Authority
P350K, and have not used this - By: officials of the BOC, district collectors and their
privilege for the last 10 years deputies; BIR officials
o The excess to said amounts are o AFP of national law enforcement agencies upon
subject to tax authorization by the BIR
- May search and enter
ii. Balikbayan boxes o any land, warehouse etc.
 Each box cannot be more than  Exc: dwelling house – there must be a
P150K warrant from a judge
 Max 3 times per calendar year o Vessels and aircrafts
 If it involves appliances, it can be o Persons, animals, travelers, may open boxes,
only one of a kind, but total value trunks or containers – upon reasonable cause
cannot exceed P150K per calendar - May seize – if subject to forfeiture
year o Exc: common carriers
 Exc: chartered for transport of smuggled
VI. POWERS OF THE COMMISSIONER goods
 Exc: agent who authorized the
1. Power to interpret the law – COC has exclusive charter has no knowledge it shall be
and original jurisdiction to interpret the CMTA used for smuggling (vessel cannot
 SOF may review be seized)
 Act in collaboration with governmental
entities
2. Power to review and decide on disputed Freezones – are deemed as ports of entry, thus subject to
assessments, and other matters related thereto import duties
 SOF reviews automatically if adverse to the
government VIII. Ports of entry
 If not adverse to the government, 1. Principal – for international and domestic trade
appealable to the CTA 2. Sub-ports – only for domestic trade
3. BOC may exercise and implement customs law o President may close ports of entry upon
directly and indirectly recommendation by the SOF
4. COC may compromise with respect to
assessments issued in a post-clearance audit IX. Exports
5. Assessment, collection of duties - Exports are tax-free, but must be cleared.
6. Supervision and control over transport, and - “export clearance”
entrance of vessels
7. Original jurisdiction over forfeiture cases X. Advanced Rulings
 Reviewable by SOF if adverse to the o For classifications – Tariff Commission (binding
government then appeal to CTA to the BOC)
8. Police authority – COC may seek the assistance o For valuation or origin – BOC
of police and armed forces o Must be at least 90 days before the actual
9. Airport Authority and Philippine Ports Authority importation
– must give unhampered access to customs
officers
10. May apply for search warrants
Exc: dwelling houses
11. Aircrafts, persons searches – there must be no
damage, negligence or abuse of authority
XI. Imports
- Imports are subject to import clearance
- Owner: importer, consignee, endorsee

A. Lodgement of goods declaration

Kinds of Entry for Imports:

1. Formal entry – those not falling under informal entry

2. Informal entry
a. Household effects not in commercial quantity
imported through passenger baggage
b. Personal effects of returning residents which are
of commercial quantity
 Not less than P50K, informal entry but still
liable for taxes
 If P10K of below, exempt from taxes
c. Philippine articles previously exported and are
returned
 No change in value or condition
 No refund was claimed on such return
d. Imports declared as tax exempt by law or
presidential directive
e. Imports of international organizations
f. Imports of US Armed Forces and their
dependents

B. Provisional lodgement of goods declaration

o Declarant does not have all the information or
supporting documents required to complete the
declaration
o Importer is given 45 days to complete the
required documents
o Importer can have the goods released by
posting proper security in the amount of the
assessed value, even if documents are still
incomplete

C. Advanced lodgement of goods declaration –

lodgement of GD before arrival of goods
o prior to the assessment and examination, the
goods may be amended
PROCEDURE

Lodgement of GD (may be formal or informal) COC has 30 days to decide

- within 15 days from the date of the discharge of the - Exc: perishable, period is 15 days
last package from the carrier
o may be extended for 15 days on valid grounds (1) Adverse to the government; Adverse to the importer
- may be amended before assessment Or (2) COC did not make a
- Deemed abandoned : failure to file LGD Decision; or
(3) Value of imports is at least
Examination of the goods by the District Collector or Customs P10M
officer
- after the lodgement of goods declaration
- must be in the presence of the declarant (consignee Automatic review by SOF
or person with right to dispose of the goods)  Documents are forwarded
- GR: non-intrusive means to the SOF Within 5 days
o EXC: physical examination if there is an alert  SOF has 30 days to decide
order (tip based on probable cause); derogatory If perishable, 10 days
information; issues in the GD; electronically
selected; request by declarant or imported

Assessment of goods by District Collector

- If there is a dispute as regards the assessment, the CTA
assessment is deemed tentative Within 30 days from receipt of the ruling
- Deemed final – 15 days after the receipt of the notice
of assessment1
Refund
After assessment, importer has 2 options: to pay, or to pay - In case of overcharge or error in the assessment or
under protest GD
o Exc: amount of taxes involved is less than P5000
A. Payment of taxes and duties – no refund
- Within 15 days from notice of final assessment (so - Must be filed within 12 months from the date of
payment must be within 30 days from receipt of payment of taxes; claim must be in writing
notice of assessment)
Deemed abandoned:
o failure to pay within said period
o or, there was payment but failed to claim the
goods within 30 days from payment
a. Payment
- Must always be in Philippine peso

B. Protest
- Filed with the COC within 15 days from receipt of
notice of assessment
- There must be payment. The goods will be released
upon posting of a security in the amount of the
assessed value

1
Example: examination was made assessment is issued
importer receives it 15 days from receipt it becomes final
 another 15 days is given from finality of assessment, for
the importer to pay 
XII. Abandonment XIII. Judicial Proceedings
1. Express – importer or owner or consignee - Before the taxpayer can appeal to the CTA, all
signifies in writing his intent to abandon the administrative remedies must be exhausted
goods - Before a civil or criminal case is instituted:
 Ipso facto property of the government o It must be approved by the COC
2. Implied o Referred to the Department of Justice
 Non-lodgment of GD  Note that DOJ has exclusive jurisdiction to
 Non-payment of duties within the determine probable cause and Courts
prescribed period (15 days from finality of cannot interfere exc: GADALEJ (which may
notice of assessment) be appealed to the CTA)
 Or in case there was payment, failure to
claim the same within 30 days from - Lien by Customs on the goods subsists while the
payment goods are with customs
o Goods can be withheld from release until the
Remedies of the Importer for impliedly abandoned goods lien is satisfied or payment of duties was made
1. If BOC has not yet sold or disposed of the goods
 Importer may redeem the goods within 30 - Debt owing to the Customs are personal. Thus,
days after the lapse of the period for importer is still liable even if he had already sold the
lodgement of GD, payment of fees, or goods
claiming of the goods - Sec. 709 Government’s Right of Compulsory
 Must pay all fees, taxes and expenses Acquisition
2. If BOC has already disposed of the goods o In case of undervaluation
 BOC can retain part of the proceeds for o COC may motu proprio or upon
taxes and expenses recommendation by the District Collector
 The excess must be turned over to the o Acquire the goods for the price equal to the
owner/ importer/ consignee declared value plus duties already paid
 If the excess was not claimed within o Importer may appeal to the SOF within 20 days
the prescribed period, it is also from notice of the decision
deemed abandoned o If still adverse, petrev with CTA within 30 days
XIV.
XV. Alert Orders Issuance of warrant of seizure by the District Collector
- Written orders by the Customs Officer authorized by
the COC DC orders hearing within 15 days from issuance of warrant (5
- Based on derogatory information, and only upon days if perishable)
probable cause
o General allegations of undervaluation, DC decides within 30 days from hearing (10 days if perishable)
misclassification etc are insufficient

Effects: Adverse to the government Adverse to the importer

1. Processing of GD is suspended (meaning ordered released) (ordered not released)
2. Conduct of physical or non-intrusive
examination
 Within 48 hours from issuance of order Automatic review by the COC Protest to the COC w/in
 24 hours if perishable  Records are transmitted 15 days; perishable 5 days
 COC decides within 48 hrs - COC has 30 days to
Results of Examination: 24 hours if perishable decide
1. Examination is negative  If no decision is made, it -
 Costs borne by BOC Is deemed released
 Subject to automatic review by SOF
2. If positive
 Costs borne by the importer Adverse to the government Adverse to the importer

XVI. Seizure and Forfeiture

Automatic review by SOF
- Covers carriers and cargoes
o EXC: common carriers cannot be seized
 EXC: common carrier is chartered for the CTA
conveyance of smuggled goods Within 30 days from receipt of the ruling
 EXC: owner or agent who allowed
the charter has no knowledge or
participation – carrier cannot be
seized
Prima Facie presumption agent knows It’s being used
for smuggling in case:
1. Conveyance has been used for smuggling
before;
2. Owner is not in the business for which the
conveyance is generally used; or
3. Owner is not financially capable of such
conveyance
 PROCEDURE
XVII. Post-clearance Audit
- Within 3 years from the date of final payment of Audit Committee
taxes
o Note that if there was no post-clearance audit Protest to the COC within 15 days
within the 3 year period, the final assessment COC has 30 days to decide
becomes conclusive
- Importer and broker must give the officer access to
the records Adverse to the government Adverse to the importer
Failure to:
- Keep records at the principal place of business –
deemed as a waiver to the right to contest the Automatic review by SOF
results of the audit
o Keeping of records must be for 3 years (period
CTA
of post-audit clearance) Within 30 days from receipt of the ruling
- Permit access to the documents or premises
o Indirect contempt
o Presumption of inaccuracy of the documents,
thus, COC may conduct reassessment
o Suspension of the release of pending imports
- COC may obtain information from all sources
o Ad testificandum or duces tecum

Deficiency Assessment
1. Negligence – failure to exercise reasonable care and
competence in ensuring the statement is correct
- Fine: 125% of the revenue loss
2. Fraud – material false statement knowingly or
fraudulently made (clear and convincing evidence)
- Fine: 6 times (600%) of the revenue loss
- Imprisonment: 2-8 years

COC Collection Remedies

1. Distraint of PP
2. Levy of RP
3. Civil or criminal suits
o Must be approved by the COC
o Referred to the Department of Justice
4. Garnish bank accounts