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 than
Export – goods that leave the Philippine territory for delivery 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 may
o for transit
be imported for a limited purpose
 usually transport of goods from one port of
Ex. guns, gambling devices, gunpowder, narcotics
entry to another. There must be a transit
permit
5. Relief consignment
 GR subject to taxes
 Exc: if its for storage in customs Tax and duty free unless, it is resold for other
warehouse, or for outright purposes other than the purpose for which it was
exportation – no taxes imported
 vs. transshipment – goods are transferred
from one carrier to another  Goods or equipment to be used by calamity
 transshipment is not an import victims coursed through designated agencies
and the president has declared a state of
III. Smuggling national calamity
- 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 other
documents, or goods are disposed without having been purposes other than the purpose for which it
cleared. There is an intent to evade payment of taxes. 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 except
falsified, goods are misclassified, or misdeclared as to
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 – those
- Deemed as heinous crime who have stayed in a FC for a period of at
- Plus, fine of P50M least 6 months
 POEA certified if OFW. Tourists may
IV. Bureau vs Commission
only bring back personal effects
Bureau – Bureau of Customs  Household and personal effects –
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
P150K, and have not used this
privilege for the last 6 months
o 5 years to 10 years – max of
P250K, and have not used this
privilege for the last 5 years
o At least 10 years – max of P350K,
and have not used this privilege
for the last 10 years
o The excess to said amounts are
subject to tax
ii. Balikbayan boxes
 Each box cannot be more than P150K
 Max 3 times per calendar year
 If it involves appliances, it can be
only one of a kind, but total value
cannot exceed P150K per calendar
year
VI. POWERS OF THE COMMISSIONER
1. Power to interpret the law – COC has exclusive
and original jurisdiction to interpret the CMTA
 SOF may review
 Act in collaboration with governmental
entities
2. Power to review and decide on disputed
assessments, and other matters related thereto
 SOF reviews automatically if adverse to the
government
 If not adverse to the government,
appealable to the CTA
3. BOC may exercise and implement customs law
directly and indirectly
4. COC may compromise with respect to
assessments issued in a post-clearance audit
5. Assessment, collection of duties
6. Supervision and control over transport, and
entrance of vessels
7. Original jurisdiction over forfeiture cases
 Reviewable by SOF if adverse to the
government then appeal to CTA
8. Police authority – COC may seek the assistance of
police and armed forces
9. Airport Authority and Philippine Ports Authority
– 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
12. Jurisdiction over all bodies of water navigable or
not, which is part of Philippine territory. And
authority over foreign mail
13. Goods admitted or withdrawn from freezones
must be electronically lodged.
VII. Police Power Authority
- By: officials of the BOC, district collectors and their
deputies; BIR officials
o AFP of national law enforcement agencies upon
authorization by the BIR
- May search and enter
o any land, warehouse etc.
 Exc: dwelling house – there must be a
warrant from a judge
o Vessels and aircrafts
o Persons, animals, travelers, may open boxes,
trunks or containers – upon reasonable cause
- May seize – if subject to forfeiture
o Exc: common carriers
 Exc: chartered for transport of smuggled
goods
 Exc: agent who authorized the
charter has no knowledge it shall be
used for smuggling (vessel cannot be
seized)
Freezones – are deemed as ports of entry, thus subject to
import duties
VIII. Ports of entry
1. Principal – for international and domestic trade
2. Sub-ports – only for domestic trade
o President may close ports of entry upon
recommendation by the SOF
IX. Exports
- Exports are tax-free, but must be cleared.
- “export clearance”
X. Advanced Rulings
o For classifications – Tariff Commission (binding to
the BOC)
o For valuation or origin – BOC
o Must be at least 90 days before the actual
importation
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 COC has 30 days to decide
- Exc: perishable, period is 15 days
Lodgement of GD (may be formal or informal)
- within 15 days from the date of the discharge of the (1) Adverse to the government; Adverse to the importer
last package from the carrier Or (2) COC did not make a
o may be extended for 15 days on valid grounds Decision; or
- may be amended before assessment (3) Value of imports is at least
- Deemed abandoned : failure to file LGD P10M

Examination of the goods by the District Collector or Customs

officer Automatic review by SOF
- after the lodgement of goods declaration  Documents are forwarded
- must be in the presence of the declarant (consignee to the SOF Within 5 days
or person with right to dispose of the goods)  SOF has 30 days to decide
- GR: non-intrusive means If perishable, 10 days
o EXC: physical examination if there is an alert
order (tip based on probable cause); derogatory
information; issues in the GD; electronically
selected; request by declarant or imported
CTA
Assessment of goods by District Collector Within 30 days from receipt of the ruling
- If there is a dispute as regards the assessment, the
assessment is deemed tentative
- Deemed final – 15 days after the receipt of the notice Refund
of assessment1 - In case of overcharge or error in the assessment or GD
o Exc: amount of taxes involved is less than P5000
After assessment, importer has 2 options: to pay, or to pay – no refund
under protest - Must be filed within 12 months from the date of
payment of taxes; claim must be in writing
A. Payment of taxes and duties
- Within 15 days from notice of final assessment (so
payment must be within 30 days from receipt of
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  another 15 days is given from finality of assessment, for
importer receives it 15 days from receipt it becomes final the importer to pay 
XII. Abandonment
1. Express – importer or owner or consignee
signifies in writing his intent to abandon the
goods
 Ipso facto property of the government
2. Implied
 Non-lodgment of GD
 Non-payment of duties within the
prescribed period (15 days from finality of
notice of assessment)
 Or in case there was payment, failure to
claim the same within 30 days from payment
Remedies of the Importer for impliedly abandoned goods
1. If BOC has not yet sold or disposed of the goods
 Importer may redeem the goods within 30
days after the lapse of the period for
lodgement of GD, payment of fees, or
claiming of the goods
 Must pay all fees, taxes and expenses
2. If BOC has already disposed of the goods
 BOC can retain part of the proceeds for taxes
and expenses
 The excess must be turned over to the
owner/ importer/ consignee
 If the excess was not claimed within
the prescribed period, it is also
deemed abandoned
XIII. Judicial Proceedings
- Before the taxpayer can appeal to the CTA, all
administrative remedies must be exhausted
- Before a civil or criminal case is instituted:
o It must be approved by the COC
o Referred to the Department of Justice
 Note that DOJ has exclusive jurisdiction to
determine probable cause and Courts
cannot interfere exc: GADALEJ (which may
be appealed to the CTA)
- Lien by Customs on the goods subsists while the
goods are with customs
o Goods can be withheld from release until the lien
is satisfied or payment of duties was made
- Debt owing to the Customs are personal. Thus,
importer is still liable even if he had already sold the
goods
- Sec. 709 Government’s Right of Compulsory
Acquisition
o In case of undervaluation
o COC may motu proprio or upon recommendation
by the District Collector
o Acquire the goods for the price equal to the
declared value plus duties already paid
o Importer may appeal to the SOF within 20 days
from notice of the decision
o If still adverse, petrev with CTA within 30 days
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
 24 hours if perishable Automatic review by the COC Protest to the COC w/in
 Records are transmitted 15 days; perishable 5 days
Results of Examination:  COC decides within 48 hrs - COC has 30 days to
1. Examination is negative 24 hours if perishable decide
 Costs borne by BOC  If no decision is made, it -
 Subject to automatic review by SOF Is deemed released
2. If positive
 Costs borne by the importer
Adverse to the government Adverse to the importer
XVI. Seizure and Forfeiture
- Covers carriers and cargoes
Automatic review by SOF
o EXC: common carriers cannot be seized
 EXC: common carrier is chartered for the
conveyance of smuggled goods CTA
 EXC: owner or agent who allowed Within 30 days from receipt of the ruling
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 taxes Audit Committee
o Note that if there was no post-clearance audit
within the 3 year period, the final assessment Protest to the COC within 15 days
becomes conclusive COC has 30 days to decide
- Importer and broker must give the officer access to
the records
Failure to: Adverse to the government Adverse to the importer
- Keep records at the principal place of business –
deemed as a waiver to the right to contest the results
of the audit Automatic review by SOF
o Keeping of records must be for 3 years (period of
post-audit clearance)
CTA
- Permit access to the documents or premises
Within 30 days from receipt of the ruling
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