TARIFF AND CUSTOMS LAWS

Substantive Aspect of Tariff and Customs Laws

Meaning and Scope

Section 3514 (TCC)

Provides that Tariff and Customs Laws include not only the provisions of the code itself and
regulations pursuant thereto but all other laws and regulation which are subject to enforcement by the
Bureau of Customs or otherwise within its jurisdiction. It extend not only to the provisions of the Tariff
Customs Code but to all other laws as well; like Central Bank Circulars, the enforcement of which is
entrusted to the Bureau of Customs.

Nature of Customs Duties and Tariff

1. Custom duties:

Are duties which are one charged upon commodities on their being imported into or exported out of
a country.

2. Tariff:

Means a book of rates, a table or catalogue drawn usually in alphabetical order containing the
names of several kinds of merchandise with the duties to be paid for the same as settled or agreed
upon between several states that holds commerce together.

Concept of Goods for Customs duty purposes:

As to Imported Articles:

All articles when imported from any foreign country into the Philippines shall be subject to duty
upon each importation even thought previously exported from the Philippines. Except as otherwise
specifically provided for in the code or other laws:

As to Exported Articles

Certain articles like specific types of wood, mineral plant, vegetable and animal products are
subject to tariff and premium duties.
Note: Articles: When used with reference to importation or exportation includes goods, wares and
merchandise and, in general anything that maybe made the subject of exportation and importation.

Pertinent Case:

4 US dollars, having ceased to be legal tender in the Philippines, fall within the meaning of the term
merchandise (Bastida vs. Acting Commissioner of Customs, et al, L-24011, Oct. 24, 1970)

Articles / Goods Covered under the Tariff and Customs Code:

1. Articles subject to duty

General Rule: All articles when imported from a foreign country including those previously exported
from the Philippines one subject to duty unless otherwise specifically provided for in the Tariff and
Customs Code or other laws. (Sec. 100, TCS)

2. Prohibited Importations

Classifications:

A. Articles which are absolutely prohibited:

1. weapons of war

2. gambling devices

3. narcotics or prohibited drugs

4. immoral, obscene or insidious articles

5. those prohibited under special laws

B. Articles Qualifiedly Prohibited:

Refers to those which maybe imported but subject to, and after compliance with, certain
conditions.

Pertinent Cases:

1. Where such conditions as to warrant lawful importation neither do nor exist, the legal
effects of the importation of qualifiedly prohibited articles are the same as those of
absolutely prohibited articles. (Auyong Hian vs CTA, 59 SCRA 110)

2. Prohibited importations one subject to forfeiture whether the shipper and the consignee
are one and the same person. (UTE PATEROR vs. Bureau of Customs, 193 S 132)
 3. Conditionally-free importations:

These are articles which are exempt from import duties upon compliance with the
formalities prescribed with regulations promulgated by the Commission of Customs with
the approval of the Secretary of Finance. (Sec. 105, TCC)

This article includes:

1. Those prohibited for in Sec. 105 of the Tariff and Customs Code;

2. Those granted to government agencies, government-owned or controlled

corporations with agreement with foreign countries;

3. Those given to international institutions, entitled to exemption by agreement or

special laws; and

4. Those that maybe granted by the President upon NEDAs recommendation.

Valuation of the Goods:

Invoice value of the goods plus:

1. freight

2. insurance

3. cost

4. expenses, and

5. other necessary expenses.

Note: Imported goods must be entered into a custom house at their port of entry otherwise they shall be considered as
contraband and the importer is liable for smuggling.

Import entry

It is a declaration in the Bureau of Customs showing particulars of the imported article that will enable the customs
authorities to determine the correct duties.

1. When importation does begin?

Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with the intention to
unlade therein.

2. When is it terminated / ended?

Importation is deemed terminated upon payment of duties, taxes and other charges due upon the articles pr secured to
be paid at a port of entry and the legal permit for withdrawal shall gave been granted or in case said articles are free of
duties, taxes and other charges, until they have legally left the jurisdiction of the customs (Sec. 1202, TCC)
Note: All imported articles into the Philippines, whether subject to duty or not, shall be entered through a customs house at a port
of entry.

1. Port of Entry

Means a domestic open to both foreign and continuous trade including airport of entry.

2. Exportation

It is the bringing out of goods from the Philippines territorial jurisdiction.

3. Under Executive Order # 26, Series of 1986, Export taxes, except on logs, have been suspended

Administrative Aspect of
Tariff and Customs Laws

Agencies directly concerned with Tariff and Customs Administration:

TARIFF COMMISSION

Officials of the Tariff Commission are the chairman and 2 member Commissioners, all appointed by
the President.

BUREAU OF CUSTOMS

Composed of one chief and 2 assistant chiefs known as commissioner of customs, appointed by
the President respectively.

Functions of the Bureau of Customs (CASE)

1. Control smuggling and related frauds.

2. Assessment and collection of Revenues from imported articles and all other impositions under the
tariff and customs laws.

3. Supervision and control over due entrance and clearance of vessels and aircraft engaged in
foreign commerce.

4. Enforcement of Tariff and Custom Code and related laws.

5. Supervision on control over the handling of foreign mails arriving in the Philippines.

6. Supervise and control all import and export cargos for the protection of the government revenue.

7. Exclusive original jurisdiction over seizure and forfeiture cases under the tariff and customs laws.
Other Powers:

1. Supervision of collection districts and ports of entry, coast ruse trade, vessels an aircrafts used in
foreign trade;

2. Ascertainment, collection and recovery of import duty;

3. Warehousing of imported articles; and

4. Administrative proceedings like search , seizure and arrest, including forfeitures.

Commissioner of Customs is vested with authority to:

A. Assess

B. Collect

1. All lawful revenues from imported articles;

2. All other dues, fees, charges, fines and penalties.

Import Requirements and

Documentation
Import documents required for shipments to the Philippines include:

Commercial invoice/Pro forma invoice;

Bill of lading (for sea freight) or air waybill (for air freight);

Certificate of origin (if requested);

Packing list;

Applicable special certificates/import clearance/permit depending on the

nature of goods being shipped and/or requested by the
 importer/bank/letter of credit clause, e.g., Food and Drug Administration
(FDA) license; and

Commercial Invoice of Returned Philippine Goods and/or Supplemental

Declaration on Valuation.

For a Letter of Credit (L/C) transaction, a duly accomplished L/C, including a

Pro-forma Invoice and Import Entry Declaration for Advance Customs Import
Duty (ACID) is required. A Pro-forma Invoice is required for a non-L/C
transactions (e.g., Draft Documents against Acceptance (D/A), Documents
against Payment (D/P), Open Account (OA) or self-funded documentation).

EXPORT Requirements and

Documentation

DOCUMENTATION

Exporters should seriously consider having the freight forwarder handle the formidable amount of documentation that
exporting requires; freight forwarders are specialists in this process. The following documents are commonly used in
exporting; which of them are actually used in each case depends on the requirements of both our government and
the government of the importing country.

Commercial invoice. As in a domestic transaction, the commercial invoice is a bill for the goods from the buyer to
the seller. A commercial invoice should include basic information about the transaction, including a description of the
goods, the address of the shipper and seller, and the delivery and payment terms. The buyer needs the invoice to
prove ownership and to arrange payment. Some governments use the commercial invoice to assess customs duties.

* Bill of lading. Bills of lading are contracts between the owner of the goods and the carrier (as with domestic
shipments). There are two types. A straight bill of lading is nonnegotiable. A negotiable or shipper's order bill of lading
can be bought, sold, or traded while goods are in transit and is used for letter-of-credit transactions. The customer
usually needs the original or a copy as proof of ownership to take possession of the goods.

* Consular invoice. Certain nations require a consular invoice, which is used to control and identify goods. The
invoice must be purchased from the consulate of the country to which the goods are being shipped and usually must
be prepared in the language of that country.

* Certificate of origin. Certain nations require a signed statement as to the origin of the export item. Such certificates
are usually obtained through a semiofficial organization such as a local chamber of commerce. A certificate may be
required even though the commercial invoice contains the information.

* Inspection certification. Some purchasers and countries may require a certificate of inspection attesting to the
specifications of the goods shipped, usually performed by a third party. Inspection certificates are often obtained from
independent testing organizations.
* Dock receipt and warehouse receipt. These receipts are used to transfer accountability when the export item is
moved by the domestic carrier to the port of embarkation and left with the international carrier for export.

* Destination control statement. This statement appears on the commercial invoice, ocean or air waybill of lading,
and SED to notify the carrier and all foreign parties that the item may be exported only to certain destinations.

* Insurance certificate. If the seller provides insurance, the insurance certificate states the type and amount of
coverage. This instrument is negotiable.

* Export license. (when needed).

* Export packing list. Considerably more detailed and informative than a standard domestic packing list, an export
packing list itemizes the material in each individual package and indicates the type of package: box, crate, drum,
carton, and so on. It shows the individual net, legal, tare, and gross weights and measurements for each package .
Package markings should be shown along with the shipper's and buyer's references. The packing list should be
attached to the outside of a package in a waterproof envelope marked "packing list enclosed." The list is used by the
shipper or forwarding agent to determine (1) the total shipment weight and volume and (2) whether the correct cargo
is being shipped. In addition, customs officials (both local and foreign) may use the list to check the cargo.