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VITAL NOTES ON TARIFF AND CUSTOM CODE

MARCH 2011

I - DUTY AND TAX DRAWBACK

It has been the policy of the government to help our export industries
toward giving them aid and incentives by reducing if not totally eliminating the
burdens of taxation in the form of duties and taxes levied on the imported
materials used in the manufacture of their products that add to the cost of
their total exports. It is on this area where the Bureau of Customs is tasked to
implement Sec. 106 of the Tariff and Customs Code of the Philippines, as
amended, which provides for the mechanism wherein a refund of taxes is made
on certain goods affected by import duties after compliance with all conditions
and documentary requirements provided for by law and the rules and
regulations issued pursuant thereto.
Purposes of Drawback
One of the purpose of the drawback provision is to make duty-free
imported materials which are manufactured here and then returned to the
country from which they came or to some other foreign country. The object of
this provision is not only to build up an export trade, but to encourage
manufacturers in this country, where such manufacturers are intended for
exportation, by granting a rebate of duties on the raw or prepared materials
imported, thus enabling the manufacturer to compete in foreign markets with
the same articles manufactured in other countries.
Drawback, defined
An allowance made by the government upon the duties on imported
merchandise when the importer, instead of selling it here, re-exports it; or the
refunding of such duties if already paid. This allowance amounts in some
cases, to the whole of the original duties; in others, to a part only.
Is a device whereby goods affected by taxes are re-exported as if they are
not taxed at all.
Drawback is a refund of Customs duties, certain Internal Revenue taxes
and certain fees that have been lawfully collected at importation.
The term Drawback, which literally means to draw back or refund, is
a device or a special form of relief and benefit mechanism given to a person to
draw back or to claim a refund of import duties, and if warranted includes
internal revenue taxes, he previously paid for importing raw materials used for
manufacturing of his export products or importing goods devoted to particular
purposes or uses, after compliance with all the conditions and documentary
requirements under the law and regulations issued pursuant thereto.

Drawback strictly construed

Since statutes granting exemptions from their general operations must be
strictly construed and any doubt must be resolved against one asserting the
exemption, a drawback is to be construed in favor of the government and
against the party claiming the grant, as in other cases of a government grant of
a privilege or benefit.

Is Internal Revenue Tax Subject of Drawback?

Ans: Yes. If as a result of the refund or tax credit by way of drawback of
customs duties, there would necessarily result a corresponding refund or credit
of internal revenue taxes on the same importation, the Collector shall, after the
regular processing of the drawback claim, certify to this effect to the
Commissioner of Customs who shall cause the said refund or tax in favor of the
importer, with advice to the Commissioner of Internal Revenue.
Payment of Drawback Claims
Claims for refund or tax credit shall be paid or granted by the Bureau of
Customs to claimants within sixty (60) days after receipt of properly
accomplished claims, together with all the forms and documents required by
the rules issued thereto.
II LIQUIDATION OF DUTIES (Entries)
Background
Liquidation of entries comes after the examination and appraisal process
but the law is silent on whether it shall be before or after release of an
importation. It is referred to as post-liquidation if done after release and preliquidation if done before release. In the case of formal consumption entries,
post-liquidation is the established norm. In the case of informal entries, the
situation is quite fluid until CMO 20-2002 was issued declaring a NO
LIQUIDATION-NO RELEASE policy. It provides that no release of importations
declared on an informal entry shall be released unless the entry has undergone
liquidation and the assessed amount of duties, taxes and other charges paid.
Liquidation of Entry
If the Collector shall approve the returns of the appraiser and the report
of the weights, gauge or quantity, the liquidation shall be made on the face of
the entry showing the particulars thereof, initiated by the customs assessor,
approved by the chief customs assessor, and recorded in the record of
liquidations.
Liquidation, defined
Liquidation is the final computation and ascertainment by the
Collector of the duties due on imported merchandise, based on official

reports as to the quantity, character, and value thereof, and the

Collectors own finding as to the applicable rate of duty.
Is the final computation or ascertainment by the customs assessors of
the duties accruing on imported merchandise.
Liquidated, when stamped by a collector of customs on the entry of
goods at a customhouse, meant that the entry had been passed regularly
through the various divisions of the collectors office, and the duties thereon
had been finally ascertained and fixed by the customs officials.
Purpose and Function of Liquidation
From a reading of Sec. 1601 of the Code, it is evident that liquidation of
entries (tentative or final) is the only function and duty of customs assessors,
the sole purpose of which is to determine the exact amount due under the law,
no more, no less.
In essence, it is merely to correct errors in the computation of duties,
taxes, fees and other charges on the face of the entry which may include errors
on the application of the conversion rate of exchange, freight and arrastre
charges, imposition of surcharge under Sec. 2503 of the Code, and the like.
Reason why called Liquidation and Billing Division
If additional duties, taxes, fees and other charges are found upon
liquidation, i.e., there is short-payment, the law mandates that a notice (billing)
shall promptly be sent to the interest parties, the reason why the unit is called
Liquidation and Billing Division.
Customs assessors must and should not on their own usurp the
functions of customs officers (examiners and/or appraisers) whose duties are
expressly mandated under Sec. 1403 of the Code, as amended by R.A. 7650,
which further states that it is to be under pain of penalties prescribed under
Sec. 3604 if they fail in their duties.
Tentative Liquidation
SEC. 1602. Tentative Liquidation. If to determine the exact amount due
under the law in whole or in part some future action is required, the liquidation
shall be deemed to be tentative as to the item or items affected and shall to that
extent be subject to future and final readjustment and settlement within a period
of six (6) months from date of tentative liquidation. The entry in such case shall
be stamped Tentative liquidation.
While the Code has not defined what the term liquidation means, we can
deduce from a reading of Sec. 1602 aforequoted that it is to determine the
exact amount due under the law from imported articles, either in whole or in
part. The law further provides that if some future action is required, the

liquidation shall be deemed tentative and the entry shall be stamped Tentative
Liquidation.
What specific examples of importations which may fall under tentative
liquidation?
Ans: For obvious reasons, the law did not mention or enumerate what the
required future action is or are but it mostly refer to importations which under
the law may be authorized for release under bond (cash or surety). Specific
examples are:
1. Importations which fall under sub-section d, of Sec. 105 (ConditionallyFree Importations) of the Code on articles brought in for repair,
processing or reconditioning.
2. Those which fall under sub-section I, on articles used exclusively for
public entertainment, and for display in public expositions, or for
exhibition or competition for prizes, and devices for projecting pictures
and parts and appurtenances thereof.
3. Duty and/or tax exempt importations which may be released under bond
conditioned on submission of an endorsement from the Department of
Finance (DOF) that the importation is qualified for duty and/or tax free
release.
Thus, if some future action is still required before the exact amount due
under the law can be determined, its only in such case that an entry shall be
deemed under tentative liquidation. Conversely, if no future action is required
and the exact amount due is determined upon liquidation of the entry, and full
payment already tendered, it would logically follow that the entry is finally
liquidated and no longer under tentative liquidation. If short payment is found
upon liquidation and the additional duties, taxes and other charges assessed
have been paid, the same is likewise true. This view finds support in the law
which further mandates that A daily record of all entries liquidated shall be
posted in the public corridor of the customhouse (I express doubts whether
this mandate of law is still being followed.)
When is a liquidation considered made on the entry?
Ans: Liquidation is considered to have been made when the entry is officially
stamped liquidated, and is dated in accordance with a customs regulation,
although as appears, where there is a discrepancy between the date so
stamped and the date given in the public bulletin of liquidation, for purposes of
filing a protest, the latter date governs.
Liquidation- A mandatory process
From the above-quoted provision of law, it is obvious that liquidation is a
mandatory process required for every entry of imported articles. For it is
through this legal process that a determination is made of the exact amount of
duty, tax and other charge due under the law for which the importer is liable
(Sec. 1602, TCC). Section 2308 of the Code presupposes that a ruling or
decision of the Collector has been made whereby liability for duties, taxes,

fees or other charges is determined. Precisely, such liability is ascertained or

determined through liquidation or final adjustment of the entry. Until this is
done there is no ruling or decision against which a protest may be presented.
What is the purpose of the duty of the collector to make liquidation?
Ans: The duty is imposed on the collector so that the importer may, if he sees
fit, protest the liquidation within the time prescribed by statute.
What is the effect of the filing of protest by the importer?
Ans: The filing of the protest suspends the running of the statutory period of
limitation, and when the protest has been decided and a reliquidation in
conformity with such decision is made, the statute of limitations begins to run
again.
Reliquidation, defined
A reliquidation is a new liquidation, made for the purpose of correcting
mistakes or errors of fact or law. It constitutes an abandonment of all prior
liquidations and becomes in their stead the final decision of the collector,
having all the validity of the original liquidation.
taxes? Is the reliquidation of import entry for additional duty even after
the statutory period, a no bar to governments right to collect
Ans: Even if the entries of the importations were reliquidated after one year
(now three years) from the date of final payment of duties as prescribed in Sec.
1603 of the Tariff and Customs Code, as amended, there would still be no
question as to the right of the Government to collect the 5% ad valorem
additional duty under Republic Act No. 6060, under the off-repeated statutory
principle that the Government is never estopped or barred from collecting the
duties and taxes due because of the negligence and errors committed by its
servants.

Is there a time within which the Collector is required to make

liquidation?
Ans: In the absence of any provision to the contrary in the statute, there is no
limit as to the time when the original liquidation may be made, and a collector
may ordinarily delay such liquidation as he pleases, even for many years.
Notice of Liquidation
A daily record of all entries liquidated shall be posted in public corridor
of the customhouse, stating the name of the vessel or aircraft, the port from
which she arrived, the date of her arrival, the name of the importer, and the
serial number and the date of the entry. A daily record must also be kept by the
Collector of all additional duties, taxes, and other charges found upon
liquidation, and notice shall promptly be sent to the interested parties.

Is a notice essential to the validity of liquidation?

Ans: Yes. Posting a notice of liquidation in the prescribed form and manner is
essential to the validity of the liquidation.
A mandatory duty is imposed on the collectors of customs by statute to
give notice of liquidation in the form and manner prescribed by the secretary
xxx. No discretion is given to the collectors by the statute either as to the form
or manner of the notice, xxx. Whether the requirements as to the notice have
been complied with is a question to be determined in each particular case, but
in the absence of evidence to the contrary, the regulation is presumed to have
been complied with.
Failure to give the notice as prescribed renders the liquidation invalid
and ineffective, and a bulletin notice of liquidation not posted in a conspicuous
place in the prescribed form and manner is a nullity. The importer is bound to
take notice of the liquidation bulletin and accordingly is deemed to have at
least constructive notice of the liquidation on the day of its completion.
Is a notice to IOR sufficient?
Ans: Yes. The bulletin notice to be given under the regulation is for the
information of the importer. Posting thereof in the name of the Importer of
record (IOR) is considered sufficient, although he is not the owner, and where a
notice is duly posted in the name of the importer in a case where no additional
or increased duties are involved, a reposting in the name of the owner is not
necessary even though the owners declaration has been filed.
What is the effect of the refusal to post notice?
Ans: The refusal of the collector to post the required legal notice of the
liquidation was not cured by importer paying the additional duties claimed, in
response to a Notice of Duties Due served merely to inform the importer of
increased duties due xxx. It was not intended to be, nor was it in fact, an
attempted compliance with the mandatory provisions of the statute.
Statute of Limitations
Finality of Liquidation
When articles have been entered and passed free of duty or final
adjustments of duties made with subsequent delivery, such entry and passage
free of duty or settlements of duties will, after the expiration of three (3) years
from the date of final payment of duties, in the absence of fraud or protest or
compliance audit pursuant to the provisions of the TCCP, be final and
conclusive upon all parties, unless the liquidation of the import entry was
merely tentative.
When will the liquidation becomes final?

Ans: Generally, liquidation becomes final and conclusive after 3 years from the
date of the final payment of duties in the absence of fraud, protest, and
compliance audit unless the liquidation of the import entry was merely
tentative.
If there is no fraud, protest or in the absence of non-compliance audit
under Sec. 3515 of the TCCP as amended, liquidation on the expiration of three
(3) years from the date of the final payment of duties, becomes final and
conclusive on all persons including the Philippine government or any of its
officer.
Exception to the general rule: When the liquidation made on the entry in the
first place is merely tentative.
Note: The implementing rules further clarify the finality of liquidation of import
entries as follows:
The liquidation of an import entry shall be deemed final and conclusive
upon all parties after the expiration of three (3) years from the date of the final
payment of the duties due, except where:
1. Fraud as defined in Section VI.C.1.c hereof as committed;
2. A protest has been filed under the provision of Section 2308 of the
Customs Code;
3. Where the import entry is selected for post audit within the three (3)
year period required for record-keeping provided that once started, the
audit can be completed beyond said period;
4. The liquidation of the import entry was merely tentative.
The first exception speaks of fraud. Fraud is a broad term, not just the
acts or omissions mentioned in Sec. 3611 of the Code relative to compliance
audit, and the Philippine Law Dictionary is replete with citations on what is
meant by fraud or what constitutes fraud. The bottom line is that fraud is and
illegal act under any law, to be condemn.
The second exception covers protests. Sec. 2308 of the Code on protests
provides that it shall be presented at the time when payment of the amount
claimed to be due the government is made or within fifteen (15) days thereafter.
It further provides that no protest shall be considered unless there is payment
of the amount due after final liquidation. In reference to protests, final
liquidation as contemplated in Sec. 1601 and Sec. 1407 of the Code is not the
same as finality of liquidation contemplated in Sec. 1603 of the same Code.
This is easily discernible if one reads closely the provisions of Sec. 1407 in
comparison with the provisions of Sec. 1603. The exceptions mentioned in Sec.
1407 cannot be interpreted to mean the some future action is required
contemplated under Sec. 1602. The exception enumerated are only
contingencies which may later arise after final liquidation which is evident from
a close reading of Sec. 1407 which states to read: Such appraisal,
classification or return as finally passed upon and approved or modified by the

Collector shall not be altered or modified in any manner, followed by the

exceptions enumerated. It would be stretching ones imagination if such
contingencies will b e misconstrued as referring to the some future action
stated in Sec. 1602. Such interpretation which is distorted serves no legitimate
or valid purpose.
The third exception refers to the so-called post audit of selected entries.
The fourth exception which will stay the period for finality of liquidation
is when the liquidation of an import entry is merely tentative.
Fraud, defined
It comprises all acts, omissions, and concealments involving a breach of
a legal or equitable duty and resulting in damage to another. And includes
anything calculated to deceive, whether it be a single acts or combination of
circumstances, whether the suppression of truth or the suggestion of what is
false, whether it be direct falsehood or by innuendo by speech or by silence, by
word of mouth, or by look or gesture.
Prescriptive period applies only in the absence of fraud
Held: Prescinding from what has been said, we hold that the forfeiture of the
illegally released equipment was proper under Sec. 2530, pars. (f) and (l), subparagraphs 3, 4 and 5 of the Tariff and Customs Code, as amended. Contrary
to private respondents contention, the forfeiture proceedings were not barred
by prescription as the one year (now three years) prescriptive period under Sec.
1603 of the Tariff and Customs Code, as amended, applies only in the absence
of fraud. In this case, PCOCs importations were released by the Bureau of
Customs free of tax by virtue of endorsements issued by the Department of
Finance. These, in turn, were issued on certain misrepresentations of
Constancio Francisco, an interlocking officer of PCOC and PIRC, to the effect
that the importation were exempt from taxes and duties.
Is the above statute of limitation applicable in penal offices?
Ans: No. The Tariff and Customs Code of the Philippines does not provide for
the statute of limitation on penal offenses. It applies only to civil cases. The
prescriptive period in general shall apply for penal offenses.
What is the effect of the filing of protest by the importer?
Ans: The filing of the protests suspends the running of the statutory period of
limitation, and when the protest has been decided and a reliquidation in
conformity with such decision is made, the statute of limitations begins to run
again.
Computation of Time
The statutory provision fixing the liquidation as the time when the period
for protest commences to run means a final rather than a tentative liquidation,

or a preliminary estimate of the duty made to allow payment so that the

importer may obtain possession of the merchandise.
The time when the liquidation is made for the purpose of computing the
statutory period is the time when a proper bulletin notice of protest is posted
as prescribed. If the liquidation is not made or the notice thereof is not given in
the form and manner prescribed by law, xxx, there is in effect no liquidation
which will start the statutory period running and a protest made thereto is
properly dismissed as untimely.
In implementation of Sections 2308, 2309 and 2310 of the original Tariff
and Customs Code of the Philippines circa 1957, CAO 226 dated 03 December
1957 (46 years ago) was issued prescribing the rules for filing of protests and
appeals, among others. Notwithstanding the fact that it is already outdated, it
is still in forces and effect as it has not been expressly revoked nor suspended
by another CAO on same subject. Sec. 2308 of the Code, as implemented by
CAO 226, expressly provides the period within which a protest may be filed (15
days) and further provide that a protest shall not be considered (given due
course officially) unless payment of the amount due after final liquidation has
first been made. In other words, there must first be final liquidation of an entry
(as the term is contemplated under Sec. 1601 in conjunction with Sec. 1407)
and payment of the amount due before any protest will be given due course.
What does it mean by the term payment?
Ans: In reference to filing of protests, the term payment used in the law
mean to refer to the date of payment as implemented in CAO 226. Thus, any
advance payment of duties made pursuant to PD 1853 in relation to CB (now
BSP) Circular No. 909, MAAB No. 4, Finance Ministry Order No. 3-83 and
Ministry Circular No. 1-83 (all as implemented by CMO 13-83) or for that
matter any payment of duties made before final liquidation of the entry are
merely estimated duties and deemed just a deposit which does not assume or
partake of the character of payment in the legal sense, for it is only through the
mandatory legal processes of liquidation that the extent or exact amount of an
importers liability that the extent or exact amount of an importers liability for
such duty under the law as well as taxes, and other charges is ascertained or
determined.
When is then the payment of duties or taxes deemed paid?
Ans: To be deemed paid, the duties must have been liquidated. Otherwise, any
protest filed under said circumstances would be premature, i.e., not a timely
protest.
According to American jurisprudence pertinent to the protest provisions
of the U.S. Tariff Act of 1930 after which our law was patterned, if a protest
prematurely filed should not even be received but returned to the party filing it
since Sec. 2310 of the Code states that Every protest shall be filed in
accordance with the prescribed rules and regulations promulgated under this
section. Which is CAO 226 still in force and effect.

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Note: The issue of timeliness of a protest has not been addressed in a

clarificatory and definitive regulation. It is vital since no protest can be
considered if it is not timely filed even if its form and substance complies with
regulations. If no timely protest is filed, it goes without saying that the running
of the period on finality of liquidation will not be stayed. However, a proper and
timely protest may still be presented from the date of final payment. In such
case, the running of the 3-year period will be stayed or interrupted.
Correction of Errors
For the purpose of correcting errors under Sec. 1707 of the TCC, the
Collector is authorized to reliquidate entries and collect additional charges, or
to make refunds on statement of errors within the statutory time limit.

Reliquidation, defined
A reliquidation is a new liquidation, made for the purpose of correcting
mistakes or errors of fact or law. It constitutes an abandonment of all prior
liquidations and becomes in their stead the final decision of the collector,
having all the validity of the original liquidation.
III ABATEMENTS AND REFUNDS
General rule: It is the general rule that customs revenue may be collected only
on the quantity of the taxable subject matter which is actually imported and
received by the importer, so as to come into the consumption of the country.
Duties are not to be estimated on goods, which never arrived in port, merely
because they are included in the invoice, regardless of whether the shortage is
due to theft, evaporation, destruction or other loss on the voyage, or to short
shipment.
Duties assessed on goods entered at customhouse
Duties are required by law to be assessed on the goods, and the
assessment is uniformly made on the quantity entered at customhouse,
without any allowance for ordinary leakage and deterioration during delay in
completing the appraisement.
Except those specially provided for in the Tariff and Customs code of the
Philippines, no abatement of duties shall be made on account of damage
incurred or deterioration suffered during the voyage of importation. Duties will
be assessed on the actual quantity imported, as shown by the return of the
weighers, gauges, measurers, examiners or appraisers, as the case may be.
Abatement, defined

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Diminution or decrease in the amount of tax imposed. Abatement of

taxes relieves property of its share of the burdens of taxation after the
assessment has been made and tax levied. Blacks Law Dictionary, 6tg ed.
Refund, defined
Money received by the government or its officers which, for any cause,
are to be refunded or restored to the parties paying them; such as excessive
duties or taxes, duties paid on goods destroyed by accident, duties received on
goods which are re-exported.
Is there a difference between a tax refund or tax credit?
Ans: it may be that there is no essential difference between a tax refund and a
tax credit since both are modes of recovering taxes erroneously or illegally paid
to the government. Yet, there are unmistakable formal and practical differences
between the two modes.
Formally, a tax refund requires a physical return of the sum erroneously
paid by the taxpayer, while a tax credit involves the application of the
reimbursable amount against any sum that may be due and collectible from
the taxpayer. On the practical side, the tax payer to whom the tax is refunded
would have the option, among others, to invest for profit the returned sum, an
option not proximately available if the taxpayer chooses instead to receive a tax
credit.
Is there a statute of limitations with regard to claims for refund of
customs duties in court?
Ans: None. The Tariff and Customs Code does not provide for the statute of
limitations within which to file a claim or suit in court. As long as a protest and
claim for refund are first filed with the collector of Customs, the importer or
claimant must wait for the latters and Commissioners decision before he may
elevate the matter to the Court of Tax Appeals.
Is the refund of duties carries with it the corresponding refund for the
internal revenue taxes?
Ans: Yes. If a result of the refund of customs duties, there would necessarily
result a corresponding refund of internal revenue taxes on the same
importation, the Collector shall likewise certify the same to the Commissioner
who shall cause the said taxes to be paid, refunded, or tax credited in favor of
the importer, with advice to the Commissioner of Internal Revenue.
It is clear from the foregoing provision of the Tariff and Customs Code
that in all claims for refund of customs duties, the Collector to whom such
customs duties are paid and upon receipt of such claim is mandated to verify
the same by the records of his office. Is such claim is found correct and in
accordance with law, the Collector shall certify the same to the Commissioner
with his recommendation together with all necessary papers and documents.

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Refund of customs duties takes the form of tax exemptions. How

construed
Any claim for refund of customs duties takes the nature of tax
exemptions that must be construed strictissimi juris against the claimants and
liberally in favor of the taxing authority. This power of taxation being a high
prerogative of sovereignty, its relinquishment is never presumed. Any reduction
or diminution thereof with respect to its mode or its rate must be strictly
construed, and the same must be couched in clear and unmistakable terms in
order that it may be applied.
IV SUMMARY OF TAXPAYERS REMEDIES UNDER THE CUSTOMS LAW
A. Administrative/Extrajudicial
1. Claim for refund
Refund of custom duties and/or internal revenue taxes may be availed of
by the taxpayer ____ under Sec. 1701 to 1705 and Sec. 1708 of the Tariff
and Customs Code.
2. Written Protest
Under Sec. 2308 of the TCC, the importer-taxpayer may protest at the
time of payment or within 15 days thereafter, the collection of duties,
taxes or other charges (except fines in seizure cases) whenever he
disagrees to such ruling or decision of the collector.
3. Release under Cash bond of articles under seizure
Under Sec. 2301 of the TCC, the taxpayer-owner may secure for the
immediate release o his seized property for legitimate use under Cash
bond.
4. Settlement of seizure case by payment of fine or redemption of
forfeited property
Taxpayer-importer may offer for the settlement of any seizure case
provided he shall pay the fine or by redemption by payment of the
domestic market value of the seized article as provided for under Sec.
2307 of the TCC.
5. Abandonment of articles imported
Except in criminal liability, the taxpayer-importer may relieve himself for
the burden of paying duties and taxes by simply abandoning his articles
either expressly or impliedly under Secs. 1801 and 1802 of the TCC, as
amended.
B. Judicial
1. Appeal by Certiorari to the CTA
By petition for review within 30 days from the date of receipt of the
adverse decision of the Commissioner of Customs or the Secretary of
Finance as the case maybe.
2. Appeal by Certiorari to the Supreme Court

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By petition for review on certiorari under Rule 45 of the 1997 Rules of

Civil Procedure, within 15 days from the date of receipt of the adverse
decision of the Court of Tax Appeals.
SUMMARY OF GOVERNMENTS REMEDIES UNDER THE CUSTOM LAW
A. Extrajudicial/Administrative
1. By enforcement of tax lien
Tax lien is enforce while the imported articles are in the custody or
subject to the control of the government. Proceeds of the sale of the
forfeited articles are applied to the tax liability of the importer and
other fees and costs of the sale, the excess goes to the
importer/taxpayer.
- Beyond the reach of regular courts.
- Applicable when importation is not prohibited or neither irregular.
2. Seizure of the articles imported
This remedy is applied when the imported articles are subject to
seizure by customs for violation of the Tariff and Customs Code and
all other laws enforced by the Bureau of Customs and the penalty
imposed is either fine or the forfeiture of the goods itself.
- Applied if importation is prohibited or irregular (e.g., smuggle
goods, failure to file import entry)
B. Judicial
1. Can be availed of when the goods are released and the tax lien is lost, in
order to collect the taxes.
2. Smuggling case will be filed if prohibited and irregular and seizure
proceeding is not available.
V PROCEEDINGS IN THE BUREAU OF CUSTOMS
A.

SEIZURE/FORFEITURE PROCEEDINGS

When and how customs seizures be initiated

Seizures of imported articles for violation of the tariff and customs laws
may be initiated thru and by the following:
1. Upon discovery of unmanifested cargo under Sec. 1005 of the TCCP in
relation to Sec. 2530 of the same Code;
2. Upon examinations and findings of undervaluation, misclassification
and misdeclaration of imported articles when prima facie of fraud is
presumed under Sec. 2503 of the TCCP and those under Sec. 2530 of
the same Code;
3. Upon abandonment of articles under Sec. 1801 of the TCCP;
4. Under the visitorial power of the Bureau of Customs on imported
articles openly offered for sale at under Sec. 2536 of the TCCP;

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5. Upon failure to withdraw articles from the Customs Bonded

Warehouse under Sec. 1908 of the TCCP and thru those audit reports
and violations of Customs Bonded Warehouses;
6. Violation of Intellectual Property Rights under the Intellectual
Property law and pursuant to CA0 6-2002;
7. Derogatory information and alerts from the Intelligence and
Enforcement group of the Bureau of Customs; and
8. Other violation of the tariff and customs laws and the rules and
regulations issued thereto.
Seizure Proceedings, How construe
CA0 9-93 provides that the Rules and Regulations governing the
issuance of Warrants of Seizure and Detention, the conduct of seizure
proceedings and the procedure of administrative appeals shall be liberally
construed to carry out the objectives of the Tariff and Customs Code of the
Philippines, as amended, and to assist the parties in obtaining just and
expeditious disposition of seizure cases.
Nature of Seizure/Forfeiture Proceedings
It is quite clear that seizure and forfeiture proceedings under the tariff
and customs laws are not criminal in nature as they do not result in the
conviction of the offender nor in the imposition of penalty provided for in
Section 3601 of the Code. As can be gleaned from Section 2533 of the Code,
seizure proceedings, such as those instituted in this case, are purely civil and
administrative in character, the main purpose of which is to enforce the
administrative fines or forfeiture incident to unlawful importation of goods or
their deliberate possession. The penalty in seizure cases is distinct and
separate from the criminal liability that might be imposed against the indicted
importer or possessor and both kinds of penalties may be imposed.
Nature of forfeiture proceedings
Forfeiture proceedings are proceedings in rem, (Commissioner of Customs
v. Court of Tax Appeals, 138 SCRA 581 [1985] citing Vierneza v. Commisioner
of Customs, 24 SCRA 394 [1968] and are directed against the res.
Since forfeiture proceeding is in rem, the imported article under
seizure/forfeiture proceeding is considered the offender and not the importer or
any interested party therein. However, this will not excuse the person who
appears to have violated the law from being charged in a separate criminal or
administrative case.
Lack of knowledge of the owner of the seized property not a valid
defense
It is no defense that the owner of the vessel sought to be forfeited had no actual
knowledge that his property was used illegally. The absence or lack of actual
knowledge of such use is a defense personal to the owner himself which cannot
in any way absolve the vessel from the liability of forfeiture.

15

When shall forfeiture be effected?

Ans: Forfeiture shall be effected when and while the article is in the custody or
within the jurisdiction of the customs authority or in the hands or subject to
the control of some person who shall receive, conceal, buy, sell or transport the
same with knowledge that the article was imported contrary to law.
Is an acquittal in criminal action a bar to forfeiture proceedings?
Note: It is a settled rule that acquittal in a criminal case is not a bar against
the forfeiture of articles imported, or attempted to be imported, illegally or used
in the unlawful importation of such articles.
Parties who may initiate customs seizures proceedings
1. Persons having police authority under Sec. 2203 of the TCCP;
2. Examiners/appraisers;
3. Customs Police and other enforcement groups of the Bureau of
Customs;
4. Duly deputized group by the authorities (National Anti-Smuggling
Task Force)
Procedure:
A.

Issuance of Warrant

Upon making any seizure, the Collector shall issue a warrant for the
detention of the property.
Upon probable cause, that the articles were imported or attempted to be
exported contrary to tariff and customs laws, the Collector of Customs shall
issue a Warrant of Seizure and Detention (WSD) in customs form W7651.
Who has the burden of proof in seizure and/or forfeiture case?
Ans: In all proceedings taken for the seizure and/or forfeiture of any vessel,
vehicle, aircraft, beast or articles under the provisions of the tariff and customs
laws, the burden of proof shall lie upon the claimant. However, the government
must first show probable cause before seizure/forfeiture proceedings may be
instituted.
Has the Bureau of Customs jurisdiction even if no WSD was issued?
Ans: It is the settled rule, therefore, that the Bureau of Customs acquires
exclusive jurisdiction over imported goods, for the purposes of enforcement of
the customs laws, from the moment the goods are actually in its possession or
control, even if no warrant of seizure or detention had previously been issued by
the collector of Customs in connection with seizure and forfeiture proceedings.
Note: Despite the above pronouncement by the Supreme Court in the above
case, the following C.T.A. Case explains the necessity of the issuance of the

16

WSD for purposes of validity of the seizure/forfeiture proceedings conducted by

customs:
What is the remedy of the owner/importer to secure immediate release of
his seized property?
Ans: Upon showing of a reasonable ground for legitimate use, by posting a
sufficient cash bond, subject to the following conditions:
1. That the amount of the cash bond shall not in any case be less than
the appraised value of the article plus fine, expenses and costs that
may be adjudged in the case;
2. That there is no prima facie evidence of fraud attendant to the
importation;
3. That the importation of the article is not prohibited by law; and
4. That the release under cash bond has been approved by the
Commissioner.
Note: In one CTA and CA case, the posting of a surety bond was allowed
instead of a cash bond. Also, under R.A. 9135, posting of surety bond and
other sufficient instrument is permitted.
Give examples of reasonable grounds for the provisional release under
cash bond of the seized property.
Ans: 1. Articles are perishable;
2. Immediate installation of the articles to the consignees premises and
the engineer- installer from abroad has already arrived, and the company has
incurring expenses for his prolonged stay; and
3. Government or any of its agency requires that the article be released
for practical and lawful reasons as provided for in the government contract.
Prohibited Importation not be released under Bond
The importer of the subject tobacco, the importation of which is
prohibited by law, has no right that the tobacco be released to him even if he
puts up a bond to be determined by the Collector.
Appraised value, defined
Shall mean the dutiable value of the article plus duties, taxes and other
customs charges.
Is the release of the property relieves the owner of any liability?
Ans: No. The release of the property under cash bond shall not relieve the
owner or importer of the goods from criminal liability arising from the
importation/exportation of the shipment.
Application and Return of Warrants of Seizure and Detention

17

CMO 8-1984 provides for the guidelines in the application and return of
warrants of seizure and detention to be strictly complied with by the person
empowered under the law to effect customs searches, seizures and arrests.
What is the difference between a warrant of seizure and detention (WSD)
issued by the Collector of Customs and a search warrant issued by the
court?
Ans: A warrant of seizure and detention issued by the collector of Customs is
directed to any person authorized under the customs law to effect search and
seizure of any merchandise upon which duties have not been paid, or which
have been imported contrary to law or released irregularly from the customs
custody.
On the other hand, a judicial search warrant is nothing more than an
order in writing issued in the name of the People of the Philippines, signed by a
judge or a justice of the peace (Municipal Judge) and directed to a peace officer,
commanding him to search for personal property and bring it before the Court.
May the WSD issued by the Collector of Customs be enforced outside the
Customs Zone?
Ans: From the following authorities, it would seem that this question would
call for an affirmative answer:
Any officer of the Customs is authorized by statute to go on board any
vessel or vehicle at any time and at any place in the United States or within the
customs waters, or as he may be authorized, within a custom-enforcement are
established by law, or at any other authorized place, without as well as within
his district, and examine the manifest and other documents and papers and
examine, inspect, and search the vessel or vehicle and every part thereof and
any person, trunk, package, or cargo on board, and to this end to hail and stop
such vessel or vehicle, and to use all necessary force to compel compliance.
Return of WSD by Customs Agents
The officer directed to serve the WSD shall, within ten (10) days after
receipt thereof, make a return of service to the Collector concerned in the form
of endorsement to the warrant. It shall state the relevant details of the service,
inventory and turn over of the seized articles.
Description, Appraisal and Classification of Seized Articles
The collector shall prepare a list and description, clarification and/or
appraisal of the property seized in accordance with the existing customs
valuation.
Notification of the Seizure
a. Known owner/importer

18

The Collector shall give the owner or importer of the property or his agent
a written notice of the seizure and shall give him an opportunity to be heard in
reference to the delinquency which was the occasion of such seizure.
Importer, consignee, person holding the bill of lading or his agent
whether in fact or otherwise shall be deemed to be the owner of the article
seized for the purpose of giving above notice.
b. Unknown owner
1. By posting for fifteen (15) days in the public corridor of the
customhouse of the district in which the seizure was made; and
2. By publication in a newspaper; or
3. By such other means in the discretion of the Commissioner of
Customs.
Elementary rule of due process requires notice and hearing
This Court need not emphasize the constitutionally enshrined right to
procedural due process of any person under investigation especially if it will
cause the person his life or property. Sections 2301 and 2303 clearly lay down
the procedure to be observed in as seizure case, that is, a WSD must be issued
upon making any seizure and that written notice of such seizure be served
upon the owner or importer or his agent.
We agree with the petitioner that a notice of hearing posted on the
bulletin board of the public respondent in a forfeiture proceeding where owner
of the alleged prohibited article is known does not constitute sufficient
compliance with proper service of notice and procedural due process.
Time and again, the Court has emphasized the imperative necessity for
administrative agencies to observe the elementary rules of due process. And no
rule is better established under the due process clause of the Constitution that
that which requires notice and opportunity to be heard before any person can
lawfully deprived of his rights.
May a party be declared in default in administrative proceedings?
Ans: We hold that if the party duly summoned, or duly notified, to appear at an
administrative investigation, refuses to appear, he may be declared in default,
and the investigation may proceed without his presence.
Notice not necessary on claimant whose interest on goods seized is not
brought to Collectors cognizance
Where the Collector of Customs had no way of knowing about the alleged
claim of a party who claims interest over the goods seized, said Collector could
not be expected to give him notice of said seizure proceedings.
Regular court has jurisdiction over question of due process in the
imposition of fine

19

Where the question involved is not whether the imposition of the fine by
the Collector of Customs on the operator of the ship is correct or not, but
whether he acted properly in imposing said fine without first giving the
operator an opportunity to be heard, it is held that the Court of First Instance
(now Regional Trial Court) acted correctly in assuming jurisdiction over the
case.
Formal Proceedings (SEIZURE/FORFEITURE)
Hearing for Unknown Parties
If within fifteen 915) days after the notification prescribed in Sec. 2304
above, no owner or agent can be found or appear before the Collector, the latter
shall declare the property forfeited to the Government to be sold at auction in
accordance with law. Sec. 2306, TCCP.
a.

Hearing for Known Parties

In the formal hearing, uncontroverted facts shall be stipulated on and
issues to be heard shall be agreed upon in order to abbreviate the proceedings.
The determination shall be made whether or not there is a violation of law from
the facts and evidence presented.
b.

1.

Collector schedules and conducts hearing

In this stage, there shall be presentation of evidence and witnesses of

both the claimant of the seized property and on the part o f the Customs officer
tasked to prosecute the case.
May the authority of an attorney to appear for and on behalf of a party
be assumed?
Ans: the appearance of Atty. Armando S. Padilla as counsel for two claimants
would not suffice. Generally, a lawyer is presumed to be properly authorized to
represent any cause in which he appears, and no written power of attorney is
required to authorize him to appear in court for his client. Nevertheless,
although the authority of an attorney to appear for and on behalf of a party
may be assumed, it can still be questioned or challenged by the adverse party
or party concerned. The presumption established under the provision of
Section 21, Rule 138 of the Revised Rules of Court is disputable. The
requirement for the production of authority is essential because the client will
be bound by his acquiescence resulting from his knowledge that he was being
represented by said attorney.
Settlement of seizure case by payment of fine or redemption of forfeited
property
What is the remedy of the claimant pending the hearing of the seizure
case?

20

Ans: Pending hearing, in the absence of fraud and subject to the approval of
the Commissioner, the seizure case may be settled by payment of fine or
redemption of forfeited property.
In case of settlement, depending upon the gravity of the offense, the fine
to be imposed shall be in an amount not less than 20% nor more than 80% of
the landed cost of the seized imported article or the F.O.B. value of the seized
article for export.
In case of redemption, by payment of the domestic market value of the
seized article.
1.0

Decision adverse to the claimant

The Collector after hearing, shall in writing make a declaration of

forfeiture or fix the amount of the fine or take such action as may be proper.
1.1

Aggrieved party appeal to the Commissioner of Customs

The party aggrieved by the decision or action of the Collector may within
fifteen (15) days after receipt of the notice of the decision of the Collector, file a
motion for reconsideration (MR) to the Collector or a written notice to the
Collector with a copy furnished to the Commissioner of his intention to appeal
the decision or action of the Collector to the Commissioner.
Note: If the claimant did not appeal or file an MR, the decision becomes final.
1.2 If the Commissioner decides in favor of the claimant or reverses the
appealed decision of the Collector, his decision becomes final and
executory.
1.3 If the Commissioner affirms the appealed decision of the Collector,
the claimant has 30 days from receipt of the decision within which to file
an MR to the Commissioner or a petition for review to the Court of Tax
Appeals (CTA).
Note: If no decision from the Commissioner, the decision of the Collector is
deemed affirmed. So that the claimant should file a petition for review to the
CTA.
Mandatory Service of Notices of Orders, Decision and other Proceedings
In all adversarial proceedings, to comply with the mandate and
requirements of due process of law, particularly in seizure cases, which required
submission of controverting evidence by the parties therein and pending
resolution and decision by the Collector of Customs, it shall be the mandatory
duty of the District Collector or the concerned Law Division to furnish/notify
all parties affected by such proceedings, including but not limited to, the
government prosecutors, claimants/importers, or intervenors, with copies of all
Decisions, Orders, interlocutory or otherwise, and other proceedings take in

21

the case. Such notices shall preferably be by personal service or, if not
practicable by registered mail.
Is the Commissioner required to conduct a formal hearing before
rendering his decision?
Ans: Sec. 2313 of the Tariff and Customs Code does not require the
Commissioner of Customs to hold a formal hearing. His duty is to approve,
modify or reverse the decision of the Collector of Customs on the basis of the
records, papers and evidence presented before the latter.
What is a motion for reconsideration?
Ans: A request that the decision or ruling of the Collector or Commissioner of
Customs be reconsidered and set aside by himself on that basis of error or
some justifiable grounds in favor of the claimant.
What are some of the grounds for filing a motion for reconsideration?
Ans: 1. The decision of the Collector or of the Commissioner of Customs is
manifestly against the weight of evidence or contrary to law; and
2. Newly discovered evidence, not cumulative or corroborative but
material to the party making the request, which he could not, with
the exercise of reasonable diligence, have discovered or produced at
the original hearing and which if presented will have the effect of
altering the original decision.
What is the effect of filing a motion for reconsideration?
Ans: the filing of the motion for reconsideration interrupts the running of the
period for appeal. A second motion for reconsideration shall not be entertained
and shall not interrupt the period of appeal if it is a reiteration of the first, or is
founded on ground that was available at the time of the filing of the first
motion.
2.0

Decision adverse to the government

2.1

Automatic review by the Commissioner

If the Collector renders a decision adverse to the Government and the

decision involves imported articles whose customs value is less than
Php5,000,000.00, shall be automatically reviewed by the Commissioner and the
records of the case elevated within five (15) days from the promulgation of the
decision of the Collector. The Commissioner shall render a decision on the
automatic appeal within thirty (30) days from receipt of the records of the case.
What do you mean by an adverse decision of the collector of Customs?
Ans: It is a decision on the merits, which fully or partially releases the property
under seizure/forfeiture proceedings.

22

What is the statutory period within which the Commissioner of Customs

must decide on automatic review a seizure case?
Ans: The Commissioner must decide within 30 days period from receipt of the
records of the case.
2.1.1
If the Commissioner reverses the decision of the Collector,
(therefore adverse already to the claimant) the claimant has 30 days from
receipt of the decision within which to file an MR to the Commissioner or
a petition for review to the Court of Tax Appeals, otherwise the decision
of the Commissioner becomes final and executory.
2.1.2 If no decision is rendered by the Commissioner or affirms the
adverse decision of the Collector, the decision shall be automatically
appealed to the Secretary of Finance.
Note: Pending decision on appeal, the Commissioner may likewise accept the
settlement of any seizure case on appeal in the same manner as that of the
Collector of Customs.
2.2

Automatic review by the Secretary of Finance

If no decision is rendered by the Commissioner or if he affirms the

adverse decision of the Collector or the adverse decision of the Collector in the
first place involves imported articles whose customs value is Php5,000,000.00
or more, such decision shall be deemed automatically appealed to the
Secretary of Finance and the records of the proceedings shall be elevated
within five (5) days from the promulgation of the decision of the Commissioner
or of the Collector under appeal, as the case may be.
2.2.1
If the Secretary reverses the decision of the Collector or
Commissioner, the claimant has 30 days from receipt of the decision to
file an MR to the Secretary or a petition for review to the Court of Tax
Appeals, otherwise the decision of the Secretary becomes final and
executory.
2.2.2 If no decision is rendered by the Secretary within 30 days from
receipt of the records of the proceedings, or affirms the decision of the
Commissioner, the adverse decision of the Commissioner becomes final
and executory.
Purpose of the Automatic Review by the Commissioner or the Secretary of
Finance
Without the automatic review by the Commissioner of Customs and the
Secretary of Finance, a Collector in any of our countrys far-flung ports, would
have absolute and unbridled discretion to determine whether goods seized by

23

him are locally produced, hence not dutiable, or of foreign origin, and therefore
subject to payment of customs duties and taxes. A decision that is favorable to
the taxpayer would correspondingly be unfavorable to the government, but who
will appeal the collectors decision in that case? Certainly not the collector.
Evidently, it was to cure this anomalous situation (which may have
already defrauded our government of huge amounts of uncollected taxes), that
the provision for automatic review by the Commissioner of Customs and the
Secretary of Finance of unappealed seizure and protest cases was conceived to
protect the government against corrupt and conniving customs collectors.
B.

PROTEST PROCEEDINGS

When and how customs protest be initiated

Protest may be initiated thru and by the following:
1. Findings by the examiner/appraisers of the erroneous value and
classification of the imported articles; and
2. Unfavorable decision of the Value and Classification Review Committee
(VCRC);
Protest Proceedings, defined
Although a protest is in the nature of a pleading, in a strict sense it is not
a pleading as known to the xxx law or to the courts of this country. It is
provided for in the tariff law and is a document by which the pleader sets forth
the wrong done and the relief he asks, and in a way conforms to a plea or
pleading; but it is not verified and does not state a cause of action which would
entitle the protestant to judgment if not answered or controverted.
In all cases subject to protest, the interested party who desires to have
the action of the Collector reviewed, shall make a protest, otherwise, the action
of the Collector shall be final and conclusive against him, except as to matters
collectible for manifest error in the manner prescribed in Sec. 1707 of the
TCCP.
CM0 3-2002 which amended CM0 27-99, provides for the procedures in
protest cases on the determination of the customs value and tariff
classification of imported goods under the valuation regime.
Twofold purpose of Protest
Its purpose is said to be twofold:
1. To apprise the collector of the objections urged by the importer before
it should be too late to remove them, if capable of being removed; and
2. To hold the importer to the objections he then contemplated, on which
he really acted, and to prevent him, or others in his behalf, from
seeking out defects after the business was closed.
Protest, liberally construed

24

Statutes requiring protest were not designed for men learned in the law
and trained to the niceties in pleading, but for men engaged in commercial
pursuits. Protests are commercial rather than legal documents, and the trend of
decision with respect to them is that they are not required to conform to the
technical precision of legal documents as to either phraseology or formality of
execution. No special form is required.
Protests are liberally construed and strict rules of construction are
inapplicable.
Parties who may initiate customs protest cases
1. Owner/Importer/Consignee of the subject imported articles;
2. Customhouse Broker; and
3. Lawyer of the protestant
Procedure
A.

Formal Protest by the Adverse Party

When a ruling or decision of the Collector is made whereby liability for

duties, fees or other charges are determined (except the fixing of fine in seizure
cases), the party adversely affected may protest such ruling or decision by
presenting to the collector at the time when payment of the amount claimed to
be due to the government is made, or within 15 days thereafter, a written
protest setting forth his objection to the ruling or decision in question, together
with the reasons therefore.
Meaning of Ruling or Decision of the Collector
Where the Commissioner of Customs, upon request for opinion by a
Collector of Customs, concurs in the decision of the latter, such concurrence
cannot be considered a decision from which appeal to the Court of Tax Appeals
may be interposed, because any action taken by the Commissioner of Customs
on matters referred to him by the Collector is only supervisory in nature, and
his conformity or disagreement with the decision of the latter will not transform
said decision into that of the Commissioner.
A decision of the Collector of Customs pursuant to and based upon
instructions or rulings of the Commissioner of Customs is not considered a
decision of the latter official for purposes of giving jurisdiction to the Court of
Tax Appeals.
Under the statute a right of protest exists as to all decision of the
Collector of Customs, including the legality of all orders and findings entering
into the same, as to the rate and amount of duties chargeable, and as to all
exactions of whatever character within the jurisdiction of the Secretary xxx.
While, to the be subject of a protest, an exaction must come within the
meaning of the statute, it may take the form of a negative decision, order, or
finding. However, fees, exactions, or charges which bear no relation to the

25

importation of merchandise and the rate of duty resulting from classification

thereof are not protestable as exactions within the jurisdiction of the secretary.
Such right of protest must necessarily be confined to the decision of the
collector, and does not exist as to the action of the secretary xxx in directing
the action of the collector. The right to protest a decision assessing the rate of
duty does not include the right to protest the rate as being too low.
May an opinion or directive of the Commissioner of Customs be
considered a ruling or decision contemplated by law?
Ans: No. A mere opinion or directive by the Commissioner of Customs
addressed to the Collector of Customs in answer to a request of the latter which
in turn was prompted by a previous letter from the tax payer complaining
against the collection of wharfage dues, is not a final decision of the
Commissioner which may be appealed to the Court of Tax Appeals.

Decision, defined
A decision must be in writing, personally and directly prepared by the
judge (or person or body lawfully authorized to issue the same) signed by him,
stating clearly and distinctly the facts and the law on which it is based.
Three Parts of Decision
1. Opinion is that portion of the decision containing the findings of
facts and conclusions of law;
2. Disposition is that part containing the final and actual disposition
and adjudication of the rights litigated; and
3. Signature.
May the Collector of Customs be held liable for any decision or ruling in
customs cases?
Ans: No Collector or other official of customs shall be in any way personally
liable for on account of any official ruling or decision as to which the person
claiming to be aggrieved has the right to obtain either an administrative or
judicial review, and except for misdelivery or articles, a Collector shall not, in
the absence of abuse of authority, be liable to any person for a loss occasioned
either by his own act or the acts of his subordinates.
Form and Scope of Protest
Every protest shall be filed in accordance with the prescribed rules and
regulations promulgated under this section and shall point out the particular
decision or ruling of the Collector to which exception is taken or objection
made, and shall indicate with reasonable precision the particular ground or
grounds upon which the protesting party bases his claim for relief. The scope of
a protest shall be limited to the subject matter of a single adjustment or other
independent transaction, but any number of issue may be raised in a protest

26

with reference to the particular item or items constituting the subject matter of
the protest.
Multifariousness;

Alternative Protest[allowed]

It is well settled that a protest of a decision of the Collector of Customs

otherwise sufficient is void if multifarious, and therefore a protest alternative in
form is unobjectionable, and, where one of the claims is correct, the protestant
is entitled to have the erroneous classification corrected.
In the case of an alternative protest, the fact of the protest on one ground
does not estopped the protestant to insist on the other ground of protest.
Nevertheless, so-called blanket protests, enumerating a long list of
paragraphs, many of which are entirely remote, with the purpose of veering
everything, do not comply with the law.
Assignment of Grounds or Reasons
It has been uniformly prescribed that the importers protest of the
collectors decision should set forth distinctly and specifically his objections to
the decision in question and his reasons for such objections.
Although there is lack of uniformity found in the expressions of the
courts with respect to the sufficiency of protests, it is agreed that no technical
precision in form or statement is necessary.
Issues not raised by the protest may not be considered or in other words,
since the protest is in the nature of a pleading, the protestant will be confined
to the claims made therein. If the protest is lacking specificness the decision
complained of must stand, even though incorrect, but without approval, and
the fact that another protest contained claims not made in the one under
consideration has no influence on the construction of the latter.
The rule provides that the importer shall state in his formal protest the
reasons therefore, and shall pay the corresponding docket fee.

General Allegation of Error

A protest is not sufficient under the statute which alleges merely that the
amount of duties assessed by the collector is erroneous.

Plural Protest allowed

The practice of filing more than one protest on the same entry has long
been permitted, inasmuch as it permits convenient segregation of issues.
Therefore, a decision sustaining a protest is not a bar to further proceedings

27

under another pending protest against the same liquidation and veering the
same merchandise, but raising a question which was neither expressly nor
necessarily determined in the decision in the former case. It necessarily follows
therefore that an importer who has filed a protest against a liquidation is not
thereby precluded from filing another protest against a later liquidation.
What is Payment under protest?
Ans: Payment under protest has been said to mean a payment is connection
with a protest; that is a payment preceded by, accompanied with, or followed
by, a protest.
What is the mandatory process before filing of protest against the
liability for payment of import taxes?
Ans: Section 1601 of the Code provides:
Sec. 1601. Liquidation and Record of Entries If the Collector shall
approve the returns of the appraiser and the report of the weights, gauge or
quantity, the liquidation shall be made on the face of the entry showing the
particulars thereof, initialed by the liquidating clerk, approved by eh chief
liquidator, and recorded in the record of liquidations.
xxx
From the abovequoted provision of law, it is obvious that

liquidation

is a mandatory process required for every entry of imported articles.

For it si through this legal process that a determination is made of the exact
amount of duty, tax and other charge due under the law for which the importer
is liable (Sec. 1601, TCC). Section 2308 of the Code presupposes that a ruling
or decision of the Collector has been made whereby liability for duties, taxes,
fees or other charges is determined. Precisely, such liability is ascertained or
determined through liquidation or final adjustment of the entry. Until this is
done there is no ruling or decision against which a protest may be presented.
What does it mean by the term date of payment as used in reference to
the filing of protests under Sec. 2308 of the Code?
Ans: The term date of payment as used in reference to the filing of protests
under Section 2308 of the Code, has long been construed as the date of the
final adjustment of the entry, and not the date of deposit of estimated duties.
The date of the voucher showing the final adjustment of the entry as
accomplished by the customs cashier pursuant to Section 2501 of Republic Act
No. 1937 and not the date on which the deposit of estimated duties is made, is
the date of payment.
However, in the case of importations processed under informal entries,
the date of payment as shown on the Informal Entry Receipt is the date of
payment.

28

Liquidation precedes protest

In other words, until the entry has been finally adjusted, any duties for
which a remittance has been made are merely estimated duties and any such
remittance is just a deposit. To be deemed paid the duties must have been
liquidated. Precisely, the law speaks of payment of the amount claimed to be
due the government. Such payment evidently refers to the amount of duty, tax
and other charges found upon liquidation to be due the government, for it is
through the mandatory legal process of liquidation that the extent of an
importers liability for such duty, tax and other charges is ascertained or
determined. This is why the law provides that no protest shall be considered
unless payment of the amount due after final liquidation has first been made
(Sec. 2308, TCC) Otherwise, a protest would be premature, since it is only
when the importers liability has been determined through final liquidation that
a cause of action available to him can rightly be said to have arisen.
What is the effect of filing a protest before final liquidation?
Ans: It is premature and may be dismissed on the ground of failure to state a
cause of action.

What are the requirements for a valid protest

under the Customs Law?
Ans: Below are the requirements for a valid protest:
1. It must be in writing;
2. It must be filed at the time of payment or within 15 days thereafter;
3. It must point out the particular decision or ruling of the Collector to
which objection is made;
4. It must indicate with reasonable precision the basis, grounds or
reasons of the protest;
5. It must be limited to the subject matter of a single adjustment or
other independent transaction;
6. It must only be considered after payment of the amount due after final
liquidation has first been made; and
7. Payment of docket fee
8. Payment of Documentary Customs Stamps of P200 (CA0 2-2001)
Rules on the Computation of Time for Filing a Protest
1. The 15 day reglementary period for filing a protest includes Sundays
and holidays; and
2. If the last day of the period falls on Sunday or legal holiday, protest
may be filed on the next succeeding business day.
Is protest sent by mail allowed by the rules?
Ans: Yes. Provided the Collector of Customs receives it within the time specified
by law. However, in the case of registered mail, the date of deposit is the date of
filing of the protest.

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May the protestant amend his protest?

Ans: Yes. If the amendment is received within the time allowed by law for the
filing of the original protest.
What does it mean by a single adjustment in the scope of protest?
Ans: single adjustment refers to the entire content of one liquidation including
all duties, surcharges, or fines incident thereto.
When is sample of the article required?
Ans: 1. when the protest involves question of fact;
2. when the Collector demands for it; and
3. when the nature of the article permits it.

B.

Collector Schedules Hearing

When a protest in proper form is presented in a case where protest is

required, the Collector shall issue an order for hearing within 15 days from
receipt of the protest and hear the matter thus presented.
C.

Formal Proceedings (Protest)

The Collector shall form a panel of experts to hear the case. The panel
shall be composed of a hearing officer from the Law Division, a COV and a
COIII from the assessment unit. It shall hear the parties of the case, receive
evidence and authorized to issue the necessary notices, subpoenas and other
interlocutory orders. Within 30 days from the first hearing, the panel shall
terminate the proceedings and recommend through the Chief of the Law
Division a decision to the Collector of Customs for approval.
D.

Collector Renders Decision

Upon the termination of the hearing, the Collector shall render a decision
within 30 days (Sec. 2312, TCCP). However, Sec. 8 of the rule provides that the
Collector of Customs shall render a final decision on the Protest within 15 days
from receipt of the recommended decision (from the hearing officer).
1.0

Adverse to the protestant

The person aggrieved by the decision or action of the Collector in any

matter presented upon protest may within 15 days after receipt of the decision
file a notice of appeal with the Collector with a copy furnished to the
Commissioner. Thereupon, the Collector shall immediately transmit all the
records of the protest together with the assailed decision to the Commissioner,
who shall approve, modify or reverse the action or decision of the Collector.
Note: If the protestant did not file a MR or appeal, the adverse decision of the
Collector becomes final and executor.

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1.1

Appeal to the Commissioner

An appeal to the Commissioner of Customs shall only be perfected upon:
a. Filing of Notice of Appeal
b. Payment of Appeal docket fee;
c. Memorandum of Appeal at the option of the appellant within 15 days
from receipt of the notice of decision

The appeal shall be deliberated on by a permanent board of three (3) to

be created by the Commissioner. It shall be chaired by a lawyer from the
Appellate Division, Legal Service and two (2) valuation experts from the Import
and Assessment Service as members. It shall recommend a decision to the
Commissioner who shall render a decision within 30 days from receipt of the
records of the case from the Collector.
1.2 If within thirty (30) days from receipt of the record of the case, no
decision is rendered by the Commissioner, it shall be construed as
affirmation of the Collectors decision under review.
Note: The protestant has to file a petition for review to the CTA, since there is
no decision.)

If the adverse decision of the Collector under review is

reversed by the Commissioner, decision becomes final in favor
of the protestant.
1.3

1.4 If the adverse decision of the Collector under review is affirmed by

the Commissioner, appellant has 30 days from receipt of the decision to
file an MR to the Commissioner or petition for review with the Court of
Tax Appeals, otherwise decision becomes final and executory.
2.0

Adverse to the Government

If any case involving the assessment of duties, the Collector renders a

decision adverse to the Government (makes appropriate action/entry
reliquidated if necessary), such decision together with the entire records of the
case shall be automatically elevated to the Commissioner for automatic review
within 5 days from the promulgation thereof.
2.1

Automatic review by the Commissioner

2.1.1 If the adverse decision of the Collector under review is reversed by

the Commissioner, the appellant has within 30 days to file and MR to the
Commissioner or petition for review to the Court of Tax Appeals,
otherwise the decision of the Commissioner adversed to the appellant
becomes final and executory.

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2.1.2
If within 30 days from receipt of the record of the case, no
decision is rendered by the Commissioner, the adverse decision against
the government under review shall be final and executory.
2.1.3 If the adverse decision of the Collector under review is affirmed by
the Commissioner, such decision shall be automatically elevated to and be
finally reviewed by the Secretary of Finance.

What particular decision are subject to automatic

review of the Commissioner of Customs?
Ans: All adverse decision of the Collector of Customs in any protest
proceedings.
What is the extent of the review power of the Commissioner of Customs?
Ans: It is not only limited to the approval, modification or reversal of the action
or decision of the Collector of Customs but the Commissioner may take such
steps and make such orders as may be necessary to give effect to his decision.
2.2

Automatic review by the Secretary of Finance

2.2.1
If within 30 days from receipt of the record of the case no
decision is rendered by the Secretary, or affirms decision of the
Commissioner, the adverse decision under review shall be final and
executory.
2.2.2
If the adverse decision of the Commissioner is reversed by the
Secretary, the appellant has within 30 days to file a MR to the Secretary
or petition for review with the Court of Tax Appeals, otherwise the
decision becomes of the Secretary becomes final and executory.
Secretary of Finance cannot review decisions of Commissioner in matters
appealable to CTA

Note: Limited only to decision of collector adverse to the

government.
What is the extent of the supervisory authority of the Secretary Finance
over the Bureau of Customs?
Ans: Except as provided in Section 2315 of the Tariff and Customs Code, the
supervisory authority of the Secretary of Finance over the Bureau of Customs
shall not extend to the administrative review of the ruling or decision of the
Commissioner in matters appealed to the Court of Tax Appeals.

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Commissioner to control Judicial proceedings; Supervision and Control by

the commissioner over Criminal and Civil Proceedings
Civil and criminal actions and proceeding instituted in behalf of the
government under the authority of this Code (TCCP) or other law enforced by
the Bureau shall be brought in the name of the government of the Philippines
and shall be conducted by customs officers but no civil or criminal action for
the recovery of duties or the enforcement of any fine, penalty or forfeiture
under the Tariff and Customs Code shall be filed in court without the approval
of the Commissioner.
Delegated authority of the Deputy Commissioner (Revenue Collection
Group) and the District Collectors of Customs to initiate, file, sign and
prosecute criminal complaints of smuggling under CM0 30-2004
In order to expedite the filing and prosecution of criminal
complaints/cases of smuggling all over the country, all District Collectors are
authorized under by virtue of CM0 4-2004, to initiate, file, sign and prosecute
criminal cases in behalf of the Bureau of Customs for violation of Secs. 3601,
3602, 3604 and other pertinent provision of the Tariff and Customs Code
committed within their respective areas of jurisdiction.
The prosecution of such complaints shall be conducted under the direct
supervision of the Deputy Commissioner RCMG, who shall be furnished with
all the pleadings, motions and other processes filed and/or issued in
connection with the said cases. All pleadings, including affidavits-of-complaint
must be submitted to the Deputy Commissioner, RCMG for approval but in no
case shall such affidavit be filed before any courts, departments or agencies
without such approval of the Commissioner of Customs. All complaints shall be
filed and prosecuted in the name of the Bureau of Customs.
However, above order shall be understood to cover only criminal cases
filed and initiated by the District Collectors pursuant thereto and shall not
include those initiated by the Commissioner of Customs as the case may be.
The investigation and prosecution of all other cases emanating from the
Internal Inquiry and Prosecution Division and the Investigation and
Prosecution Division of the CIIS, the Enforcement and Security Service and
other divisions and units shall remain to be under the direct supervision of the
Deputy Commissioner, Intelligence and Enforcement Croup.
Is the acquittal of the accused in criminal charge res judicata in seizure
or forfeiture proceedings?
Ans: No. The acquittal of the accused in criminal charge before the City Fiscals
Office does not operate as res judicata in a seizure or forfeiture proceeding. A
distinction exists between the proceedings before the Fiscal which are in
personam since they are directed against the owner or holder of the thing;
whereas, a forfeiture proceeding is one in rem directed against the thing itself.

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Declaration by Customs Collector that goods seized were not illegally

imported does not bar prosecution of importers and other persons concerned
for smuggling.
What is the extent of the power of supervision and control over judicial
proceedings by the Commissioner?
Ans: The Commissioner of Customs may supervise and control the filing of the
pleadings, the conduct of the hearing, the presentation of evidence and even
the taking of an appeal from a decision of the Court xxx adverse to the
Government, to the Supreme Court. But surely he cannot under the guise of
supervision and control of judicial proceedings, modify or later a final decision
of a court, including an appellate court or stay execution of a final judgment in
favor of the Government by receiving for said Government anything less than
what the judgment calls for.
The supervision and control over judicial proceedings given by Section
1368 of the Revised Administrative Code (Now Sec. 2401, TCCP) to the
Commissioner of Customs, does not extend to modifying final decisions of the
Court, in the sense that he may accept on behalf of the Government anything
different or less than what is awarded to said Government in the decision.
Is the appeal taken by the Acting Collector of Customs tantamount to an
appeal by the Republic of the Philippines?
Ans: The dissent answers the question in the affirmative. The answer assumes,
however, that the State is represented by said officer, not by the Commissioner
of Customs. To my mind, the assumption is untenable. The Commissioner of
Customs, not the Collector of Customs for the Port of Manila, is the head of the
Bureau of Customs, and hence, its representative and that of the Government,
as an agency of the State, in the present case. In fact Sec. 1368 (now Sec.
2401, TCCP) specifically provides that:
In the absence of special provision, judicial actions and proceedings
instituted on behalf of the Government under the authority of the customs laws
shall be subject to the supervision and control of the Commissioner.
Statute of Limitations
The statute limiting the time within which period an application for
review may be filed with the customs court is primarily a statute of limitation,
its object being to fix a time beyond which the decision should become final
unless, prior to the expiration of such time, an application for review is filed.
COMPARISON

Comparison of Remedies under the NIRC and TCC:

The taxpayers remedies under the National Internal Revenue Code may
be categorized into remedies

before payment and remedies after

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payment.

The remedy before payment consists of administrative remedy

which is the filing of protest within 30 days from receipt of assessment, and
judicial remedy which is the appeal of the adverse decision of the
Commissioner on the protest with the Court of Tax Appeals, thereafter to the
Court of Appeals (can now be filed directly to CTA under R.A. 9282) and finally
with the Supreme Court.
The remedy after payment is availed of by paying the assessed tax within
30 days from receipt of assessment and the filing of a claim for refund or tax
credit of these taxes on grounds that they are erroneously paid within two
years from date of payment. If there is a denial of the claim, appeal to the CTA
shall be made within thirty days from denial but within two years from date of
payment. If the Commissioner fails to act on the claim for refund or tax credit
and the two year period is about to expire, the taxpayer should consider the
continuous inaction of the Commissioner as a denial and elevate the case to
the CTA before the expiration of the two year period.
Under the Tariff and Customs Code, taxpayers remedies arise

only

after payment of duties. The administrative remedies consists of filing

a claim for refund which may take the form of abatement or drawback. The
taxpayer can also file a protest within 15 days from payment if he disagrees
with the ruling of decision of the Collector of Customs regarding the legality or
correctness of the assessment of customs duties. If the decision of the Collector
is adverse to the taxpayer, he can notify the Collector within 15 days from
receipt of said decision of his desire to have his case reviewed by the
Commissioner. The decision of the Collector on the taxpayers protest, if
adverse to the government, is automatically elevated to the Commissioner for
review; and if such decision is affirmed by the Commissioner, the same shall be
automatically elevated to and finally reviewed by the Secretary of Finance.
Resort to judicial relief can be had by the taxpayer by appealing the
decision of the Commissioner or of the Secretary of Finance (for cases subject
to automatic review) within 30 days from the promulgation of the adverse
decision to the CTA.
Collector of Customs cannot appeal from decision of Commissioner of
Customs
All members of this Court agree that, as an officer of the Bureau of
Customs, the Collector of Customs for the Port of Manila may not appeal from a
decision of his superior officer and head of said Bureau, the Commissioner of
Customs.

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