Scope of Tariff and Customs Laws

 Regulation of imported goods

Taxes, fees and charges on imported goods including rates
Offenses relating to importations and exportations
Classification of imported goods
others

RGLSALDO-TCC-2019
Governing Laws
BACKGROUND
Republic Act (RA) No. 10863, otherwise known as the Customs
Modernization and Tariff Act (CMTA), was signed into law on 30
May 2016

CMTA amended the Tariff and Customs Code of the Philippines

(TCCP) with the aim of modernizing Customs rules and
procedures for faster trade, reduce opportunities for
corruption, improve Customs service delivery and improve
supply chain. (http://customs.gov.ph/cmta/)

RGLSALDO-TCC-2019
 The Tariff Commission (TC)
Performs governmental and quasi-judicial functions.
The Commission is the principal authority on tariffs and trade remedy measures. It investigates and
recommends/decides on petitions for tariff modification and tariff classification. It is an independent
adjudicatory body on trade remedy cases.
The Commission is a key adviser to the executive and legislative branches of government on tariff and
related matters, promotes trade by providing recommendations on trade negotiating strategies and
participating in policy dialogues and international trade negotiations, and is an advocate of industry
competitiveness and consumer welfare.
The Commission is an attached agency of the National Economic and Development Authority. Under
Republic Act 10863 (s. 2016), known as the “Customs Modernization and Tariff Act”, the Commission’s
functions under Presidential Decree 1464 (s. 1978), also known as the “Tariff and Customs Code of the
Philippines”, were updated and expanded.

RGLSALDO-TCC-2019
Tariff and Customs Duties
Tariff
◦ It is the list or schedule of articles in which a duty is imposed upon the importation into the
country with the rates at which they are severally taxed. It is the system of imposing duties
or taxes on the importation of foreign merchandise.
It includes customs duties, toll or tribute payable upon merchandise to the general
government; rate of customs; or list of articles liable to duties.

Customs Duties
◦ It is the name given to taxes on the importation and exportation of commodities,
the tariff or tax assessed upon merchandise imported from, or exported to, a
foreign country (Garcia v. Executive Secretary, G.R. No. 101273, July 03, 1992).

RGLSALDO-TCC-2019
BUREAU OF CUSTOMS
Agency tasked with enforcement of Tariff and Customs Laws

shall be headed by a Commissioner and shall be assisted by at least four (4) but not more than
six (6) Deputy Commissioners (DC). - All appointed by the President, but at least majority of the
DC shall come from the ranks of the Bureau

Powers and Functions – see CMTA – Title II, chapter 1, sec 201

RGLSALDO-TCC-2019
Purpose for Imposition
Tariff and customs duties are taxes constituting a significant portion of the public revenue
which are the lifeblood that enables the government to carry out functions is has been
instituted to perform (Commissioner of Customs v. Makasiar, 177 SCRA 27, 1969)

The levying of customs duties on imported goods may have in some measure the effect of
protecting local ondusttries – where such local industries actually exist and are producing
comparable goods. Most commonly, customs duties which constitue taxes in the sense of
exactions the proceeds of which become public funds – have either or both the generation
ofrevenue and the regulation of economic or social activity as their moving pruposes (Garcia v.
Executive Sec, 211 SCRA 219, 1992)

RGLSALDO-TCC-2019
 Kinds of Tariff or Customs Duties

1. Regular tariff or customs duties - these are taxes imposed or assessed upon merchandise from, or exported to,
a foreign country for the purpose of raising revenues.

2. Special tariffs or custom duties - these are additional import duties imposed on specific kinds of imported
articles under certain conditions. They are imposed for the protection of consumers and manufacturers, as well as
Philippine products from undue competition posed by foreign made products.

Preferential Tariffs
It is the imposition of high customs duties which results to making the foreign goods more expensive compared
with locally produced articles. This is to protect Philippine manufacturers from competition posed by foreign
manufacturers.

RGLSALDO-TCC-2019
 Other types of fees charged by the Bureau of Customs
1. Arrastre charge
2. Wharfage dues – counterpart of license, charged not for the use of any wharf but for a special fund known as the Port Works
Fund

NOTE: Wharfage dues may be imposed whether or not the wharf is privately owned or owned by the government.

3. Berthing fee
4. Harbor fee
5. Tonnage dues

RGLSALDO-TCC-2019
Flexible Tarrif Clause

Flexible Clause refer to the power of the President under Sec. 102(u) of the CMTA,
which is the enabling law that made effective the delegation of the taxing power to
the President under the Constitution.

Upon recommendation of the National Economic and Development Authority

(NEDA) the President has the power to:
1. to increase, reduce or remove existing protective tariff rates of import duty, but
in no case shall be higher than one hundred percent (100%) ad valorem;
2. to establish import quota or to ban importation of any commodity as may be
necessary; and
3. to impose additional duty on all import not exceeding ten percent (10%) ad
valorem, whenever necessary (see Definitions-Sec 102u & Sec. 1608, CMTA)

RGLSALDO-TCC-2019
Limitations imposed on the flexible tariff clause

1. Before any recommendation is submitted by NEDA to the President, except

in the imposition of an additional duty not exceeding (10%) ad valorem, the
Commission shall conduct an investigation and hold a public hearing to give
reasonable opportunity for any interested party to be produce evidence and
be heard. The Commission shall also hear the views and recommendations of
any government office, agency or instrumentality concerned. The Commission
shall submit their findings and recommendations to the NEDA within thirty
(30) days after the termination of the public hearings. The NEDA thereafter
submits its recommendation to the President (Sec. 1608(b), CMTA)

RGLSALDO-TCC-2019
LIMITATIONS

2. The power of the President to increase or decrease the rates of

import duty within the abovementioned limits shall include the
modification in the form of duty. In such a case, the corresponding ad
valorem or specific equivalents of the duty with respect to the
imports from the principal competing foreign country for the most
recent representative period shall be used as basis (Sec. 1608(b),
CMTA). 3

RGLSALDO-TCC-2019
 LIMITATIONS

3. Any order of the President pursuant to this section shall take effect 30
days after, except in the imposition of additional duty not exceeding
(10%) ad valorem which shall take effect at the discretion of the
President.

4. The power delegated to the President as provided for in this section

shall be exercised only when Congress is not in session. 5. The power
herein delegated may be withdrawn or terminated by Congress through
a joint resolution

RGLSALDO-TCC-2019
What may be the subject of custom duties
Articles that are subject to customs duty
Sec. 101, TCC. All articles imported from any country into the Philippines, shall be subject to
duty upon each
importation, even though previously exported from the Philippines, except as otherwise
specifically provided for in the Tariff and Customs Code or in other laws
Sec. 104 (CMTA) . When Duty and Tax are Due on Imported Goods. – Except as otherwise
provided for in this Act or in other laws, all goods, when imported into the Philippines, shall be
subject to duty upon importation, including goods previously exported from the Philippines.

RGLSALDO-TCC-2019
Importation refers to the act of bringing in of goods
from a foreign territory into Philippine territory,
whether for consumption, warehousing, or
admission as defined in this Act;

RGLSALDO-TCC-2019
Sec. 105 (CMTA) . Effective Date of Rate of Import Duty. – Imported
goods shall be subject to the import duty rates under the applicable
tariff heading that are effective at the date of importation or upon
withdrawal from the warehouse for consumption. In case of
withdrawal from free zones for introduction to the customs territory,
the duty rate at the time of withdrawal shall be applicable on the
goods originally admitted, whether withdrawn in its original or
advanced form.

In case of goods sold at customs public auction, the duty rates at the
date of the auction, shall apply for purposes of implementing Section
1143(a) of this Act.

RGLSALDO-TCC-2019
 Importations
Sec. 115. Treatment of Importation. – Imported goods shall be
deemed "entered" in the Philippines for consumption when the
goods declaration is electronically lodged, together with any
required supporting documents, with the pertinent customs office.

RGLSALDO-TCC-2019
TYPES OF IMPORTATIONS
Sec. 116. Free Importation and Exportation. – Unless otherwise provided by law or regulation,
all goods may be freely imported into and exported from the Philippines without need for
import and export permits, clearances or licenses.
Sec. 117. Regulated Importation and Exportation. – Goods which are subject to regulation shall
be imported or exported only after securing the necessary goods declaration or export
declaration, clearances, licenses, and any other requirements, prior to importation or
exportation. In case of importation, submission of requirements after arrival of the goods but
prior to release from customs custody shall be allowed but only in cases provided for by
governing laws or regulations.

RGLSALDO-TCC-2019
Sec. 118. Prohibited Importation and Exportation
(a) Written or printed goods in any form containing any matter advocating or inciting treason,
rebellion, insurrection, sedition against the government of the Philippines, or forcible resistance
to any law of the Philippines, or written or printed goods containing any threat to take the life of,
or inflict bodily harm up on any person in the Philippines;

(b) Goods, instruments, drugs and substances designed, intended or adapted for producing
unlawful abortion, or any printed matter which advertises, describes or gives direct or indirect
information where, how or by whom unlawful abortion is committed;

(c) Written or printed goods, negatives or cinematographic films, photographs, engravings,

lithographs, objects, paintings, drawings or other representation of an obscene or immoral
character;

RGLSALDO-TCC-2019
 Sec. 118. Prohibited Importation and Exportation
(d) Any goods manufactured in whole or in part of gold, silver or other precious metals
or alloys and the stamp, brand or mark does not indicate the actual fineness of quality of
the metals or alloys;
(e) Any adulterated or misbranded food or goods for human consumption or any
adulterated or misbranded drug in violation of relevant laws and
(f) Infringing goods as defined under the Intellectual Property Code and related laws; and
(g) All otter goods or parts thereof which importation and exportation are explicitly
prohibited by law or rules and regulations issued by the competent authority.

RGLSALDO-TCC-2019
 Sec. 119. Restricted Importation and Exportation

– Except when authorized by law or regulation, the importation and exportation of the following restricted
goods are prohibited:
(a) Dynamite, gunpowder, ammunitions and other explosives, firearms and weapons of war, or parts thereof;

(b) Roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus or mechanical devices
used in gambling or the distribution of money, cigars, cigarettes or other goods when such distribution is
dependent on chance, including jackpot and pinball machines or similar contrivances, or parts thereof; (c)
Lottery and sweepstakes tickets, except advertisements thereof and lists of drawings therein;

(d) Marijuana, opium, poppies, coca leaves, heroin or other narcotics or synthetic drugs which are or may
hereafter be declared habit forming by the President of the Philippines, or any compound, manufactured salt,
derivative, or preparation thereof, except when imported by the government of the Philippines or any person
duly authorized by the Dangerous Drugs Board, for medicinal purposes;

RGLSALDO-TCC-2019
 Sec. 119. Restricted Importation and Exportation
(e) Opium pipes or parts thereof, of whatever material; and

(f) Any other goods whose importation and exportation are restricted.

The restriction to import or export the above stated goods shall include the restriction on
their transit.

RGLSALDO-TCC-2019
CONDITIONALLY-FREE IMPORTATION (Sec. 800, CMTA)
1. The amount of bond requirement conditioned for the exportation or payment
of the corresponding duties, taxes and other charges (DTO) of certain
importations has been reduced from 1 ½ times the ascertained DTO to 100% of
the ascertained DTO.
2. Returning residents shall refer to nationals who have stayed in a foreign
country for a period of at least six (6) months. (Sec. 800[f], CMTA)
3. Personal and household effects of returning residents or OFWs should arrive
with them or within a reasonable time after their arrival but not to exceed 60
days after the owner’s return (previously 90 days). (Sec. 800[f], CMTA)

RGLSALDO-TCC-2019
CONDITIONALLY-FREE IMPORTATION (Sec. 800, CMTA)
Note: Any amount in excess of the stated thresholds below shall be subject to the
corresponding duties and taxes. (Sec. 800[f], CMTA)

To be free from tax and duty, the FCA or FOB value of the returning residents’ personal and
household effects and other goods expressly allowed to be conditionally free should not
exceed:
a. P350,000 for those who have stayed in the foreign country for at least 10 years and have
not availed of this privilege within10 years prior to arrival (previous amount is P10,000);
b. P250,000 for those who have stayed in the foreign country for at least 5 but not more
than 10 years and have not availed of this privilege within 5 years prior to arrival (previous
amount is P10,000);
c. P150,000 for those who have stayed in a foreign country for a period of less than 5 years
and have not availed of this privilege within 6 months prior to arrival (previous amount is
P10,000);

RGLSALDO-TCC-2019
CONDITIONALLY-FREE IMPORTATION (Sec. 800, CMTA)
5. To be free from tax or duty, the FCA of the household effects or duty-free appliances of a returning OFW
should not exceed P150,000 and this privilege may be availed only once in a given calendar year. (Sec. 800[f],
CMTA)
6. OFWs shall be allowed to bring in balikbayan boxes free of importation, provided the FCA value shall not
exceed P150,000; provided further that the boxes shall only contain personal and household effects and shall
neither be in commercial value nor intended for sale or barter, etc. This privilege can only be availed up to 3
times in a calendar year. (Sec. 800(g), CMTA)
7. To be free of tax and duty, the FCA value of coffins or urns containing human remains, bones or ashes, used
personal and household effects of the deceased should not exceed P150,000. (Sec. 800[q], CMTA)
8. To be free of tax and duty, the FCA value of commercial samples of any kind should not exceed P50,000
(previous amount is P10,000) (Sec. 800[r], CMTA)

RGLSALDO-TCC-2019
BEGINNING AND ENDING OF IMPORTATION
Importation begins when the carrying vessel or aircraft
enters the Philippine territory with the intention to unload
therein.
Importation is deemed terminated when the duties, taxes
and other charges due upon the goods have been paid or
secured to be paid at the port of entry or in case the goods
are deemed free of duties, taxes and other charges, when
the goods have legally left the jurisdiction of the Bureau.
(Sec. 103, CMTA)
RGLSALDO-TCC-2019
RGLSALDO-TCC-2019