TARIFF AND CUSTOMS CODE
Procedural Matters, Seizures and Forfeitures
Kinds of Proceedings in the Bureau of Customs
1. Customs protest cases
these deal with liability for customs, duties, fees and other charges.
2. Seizure and forfeiture cases
these refer to matters involving smuggling or the act of any person who fraudulently imports or brings into the Philippines, or assists in so doing, any article contrary to law, or shall receive, conceal, buy, sell or in any manner facilitate the importation, concealment, or sale of such auricles after importation, knowing the same to have been imported contrary to law smuggling includes the exportation act of articles in a manner contrary to law. (Sec. 3154, TCC).
Procedures in Custom Protest Cases
1. The collector of customs shall cause all the articles entering the jurisdiction of his district and destined for importation through his port to be entered at the customs house. He shall appraise and classify such articles, and shall assess and collect the duties, taxes and other charges thereon. He shall also hold possession of all imported articles upon which duties, taxes, and other charges have not been paid of secured to be paid.
2. The importer / owner makes the payment after the final liquidation.
3. The importer / owner adversely affected by the collector’s ruling may file a written protest with the Collector of custom at the time of payment or within 15 days thereafter.
4. The Collector of Customs issues an order for hearing within 15 days from receipt of the protest and renders his decision within 30 days from the termination of hearing.
5. In case an adverse decision is rendered within the 30-day period from the termination, the importer/owner may appeal to the Commissioner of Customs within 15 days after notification of decision or lapse of the 30-day period to decide. The importer/ owner may give written notice to the collector and one copy furnished to the Commissioner of his desire to have the matter reviewed by the Commissioner. The Collector shall forthwith transmit all the seconds of the proceedings to the Commissioner.
6. In case an adverse decision is rendered, the importer/ owner may appeal to the Court of Tax Appeals within 30 days from receipt of the decision; and
7. In case an adverse decision is still rendered, the importer/ owner may appeal to the Court of Appeals and the Supreme Court.
Automatic Review in Customs Proceedings
Whenever the decision of the Collector is adverse to the Government, said decision 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 received by the Secretary of Finance.
Rationale: It is intended to protect the interest of the Government in the collection of taxes and custom duties in seizures and protest cases. Moreover, a favorable decision will no be appealed by the taxpayer and certainly a collector will not appeal his own decision (See Yaokasin vs. Commissioner of Customs, et al. G.R. No. 84111; Dec. 22, 1989.)
Automatic Review Applies to:
1) Custom Protest Cases
2) Seizures and Forfeiture Cases
Custom Seizures and Forfeiture Cases
Basic Concepts:
a) Jurisdiction of Customs in Seizures and Forfeiture
Related Provisions:
The territorial jurisdiction of the Bureau of Customs embraces “all seas within the jurisdiction of the Philippines, and over all coasts, ports, harbors, bays, rivers and inland waters whether navigable or not from the sea.” (Sec. 603, TCC)
Extra-Territorial jurisdiction
(Right of Hot Pursuit):
“Whether a vessel becomes a subject to a seizure by reason of an act done in the Philippine waters, in violation of the Tariff and Customs Laws, a pursuit of such vessel, begins with the jurisdictional waters may contain beyond the maritime zone, and the vessel may be seized in the high seas. (Sec. 603, TCC).
“Imported articles which Maybe the subject to seizures for violation of the Tariff and Customs laws maybe pursued in their transportation in the Philippines by land, water or air, and such jurisdiction exerted over them at any place therein as may be necessary for the due enforcement of the law. (Sec. 603, TCC)
Pertinent Case:
The Supreme Court upheld the seizure and forfeiture as valid despite the fact that the importation had not yet begun and that the seizure was affected outside the Philippine waters. The Supreme Court held that the authority of a nation within its own territory is absolute and exclusive. The power to secure itself from injury may certainly be exercised beyond the limits of its territory. (Qiluh Asaali, et al. vs. Commissioner of Customs, L- 24170, Feb. 28, 1969).
b) Place where Searchers and Seizures may be conducted
1) Right of the Police \ officers to Enter Enclosure
Any person exercising police power conferred under such code may at any time enter, pass through, or search any land or enclosure, or any warehouse, store or other building, not being a dwelling house.
A warehouse, store or other building or enclosure used for the keeping or storage of article does not become a dwelling house within the meaning hereof merely by reason of the fact that a person employed as a watchman lives in the place, nor will the fact that his family stays there with him alter the case.
2) Search of Dwelling House
A Dwelling house may be entered and searched only upon warrant issued by a judged.
Note: Except in the case of the search of a dwelling house, persons exercising police authority under the customs may effect search and seizure without a search warrant in the enforcement of custom laws.
3) Right to search vessels or Aircraft and Persons or Articles Conveyed therein
It is lawful for any person exercising police authority under the TCC to go aboard any vessel or aircraft within the limits of any Collection district and to inspect, search and examine said vessel or aircraft and any other trunk, package, box as envelope on board, and to search any person on board the said vessel or aircraft if underway, to use all necessary force to compel compliance; and if it shall appear that any breach or violation of the customs and tariff laws of the Philippines has been committed, whereby or in consequence of which such vessel or aircraft, or the article, or any part thereof on, on board of or imported by such vessel or aircraft is liable to forfeiture, to make seizure of the same.
Note: 1) Such power shall extend to the removal of any false bottom, partition, bulkhead or other obstruction. 2) No proceeding herein shall give rise to any claim fro the damage caused to the article or vessel or aircraft.
1) Right to Search Vehicles, Beast and Persons
It shall also be lawful for a person exercising authority to open and examine any box, trunk, envelope or other container, wherever found when he has reasonable cause to suspect the presence of dutiable or prohibited article or article introduced into the Philippines contrary to law and likewise to stop, search ad examine any vehicle, beast or person reasonably suspected of holding or conveying such article.
2) Search of Persons Arriving from Foreign Countries
All persons coming in the Philippines from the foreign countries shall be liable to detention and search by the Customs Authorities under such regulations as may be prescribed relative thereto. (Sec. 603, TCC)
Non-necessity of Search Warrant
General Rule: Persons exercising police authority under the customs laws may effect search and seizures without a search warrant in the enforcement of customs laws. (See Sec. 2208, TCC)
Exception: In the case of a dwelling house (Pacis etc. vs. Pamaran, March 15, 1974).
Reason: On grounds of practicality.
Pertinent Cases on Searches and Seizures
1) The legality of a search can be contested only by the party whose rights have been impaired thereby and that the objection to an unlawful search and seizure is purely personal and cannot be availed of by third parties. (Nasiad, et al. vs. CTA, Nov. 29, 1994)
2) Warrants of seizure and detention issued by the Collector of C covering the seizure of imported goods are not general warrants issued in violation of Section 3 (now section 4), rule 126 of the Rules of Court. Upon effecting the seizure of the goods, the Bureau of Customs acquired exclusive jurisdiction not only over the case but also over the goods seized for the purpose of enforcing the tariff and Customs laws. (Chia vs. Acting Collector of Customs, Sept. 26, 1989)
3) The proceedings upon search warrants must be absolutely legal, “for there is not a description of process known to the law, the execution of which is more distressing to the citizen. Perhaps there is none which excites such intense feeling in the consequence of its humiliating and degrading effect.” The warrants will always be constured strictly without however, going the full length of requiring technical accuracy. No presumptions of regularity are to be invoked in aid of process when an officer undertakes to justify under it. (Uy vs. BIR, Oct. 20, 2000)
Customs Forfeiture Actions
What kind of Actions are Customs Forfeiture?
An action for the forfeiture of seized goods in the Bureau of Customs is an action in rem, or action taken against the Imported goods themselves independently arising from any criminal action or action in personam that may result as a consequence of a violation of an existing law. Lack of knowledge by the owner does not generally render the vessel immune from forfeiture. However, the forfeiture of a private carrier used in the conveyance of illegally imported or exported articles requires knowledge on the part of the carrier-owner or his agent of the unlawful act. A prima facie presumption shall exist against the vessel, vehicle or aircraft under any of the following circumstances:
1. If the conveyance has been used for smuggling at least twice before;
2. If the owner is not in the business for which the conveyance is generally used; and,
3. If the owner is not financially in a position to own such conveyance.
Pertinent Cases:
Acting Commissioner of Customs vs. CTA
Llamado vs. Commissioner of Customs
123 SCRA 118
A Cessna plane carrying persons engaged in the smuggling of untaxed “blue seal” cigarettes, landed at an airstrip in Alabat, Quezon Province. The plane was also used to bring in “de gaza” kerosene lanterns and kerosene used to light the airstrip to facilitate the loading of the cigarettes. The plane was subject to forfeiture pursuant to Sec. 2530 (a) of the Tariff and Customs Code. It is not necessary that the vessel or aircraft must carry the contraband. It is not likewise essential that the vessel or aircraft must come from a foreign country.
Commissioner of Customs vs.
CTA and Jose Pascual
138 SCRA 581
The Supreme Court ruled that the forfeiture of Pascual’s vessel used in the illegal importation of untaxed cigarettes is justified.
Forfeiture, according to the Citing the case of Vierneya vs. Commissioner of Customs (July 30, 1968), is in the nature of proceedings in rem and is directed against the res. The fact that the owner of the vessel had no actual knowledge that the vessel was illegally used does not render the vessel immune from forfeiture. This is so because the forfeiture action is against the vessel itself.
Note: The said vessel was duly authorized to engage in coastal trade but has no certificate of public convenience.
Transglobe International Inc.
vs. Court of Appeals
G.R. No. 126634,
January 25, 1999.
Forfeiture of seized goods in the Bureau of Customs is a proceeding against the goods and not against the owner. It is the nature of a proceeding in rem, i.e. directed against the res or imported article and entails a determination of the legality of their importation. In this proceeding, it is in legal contemplation the property itself which commits the violation and is treated as the offender, without reference whatsoever to the character or conduct of the owner.
Forfeiture Cases and the Doctrine Primary Jurisdiction
The Doctrine of primary jurisdiction provides that the Bureau of Customs acquired exclusive jurisdiction over imported goods for the purpose of the 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 the Customs. Primary jurisdiction is vested in seizures and forfeiture proceedings in the collector and the Commissioner or the Customs to the exclusion of the regular courts. (Commissioner of Customs vs. Navarro, L-33146, May 31, 1977)
Rationale of the doctrine: It is anchored on the policy of placing no necessary hindrance on the Government’s drive not only to prevent smuggling and other frauds upon Customs but also to render effective the collection of import and export duties duet to the State. (Jao, et, al. vs. Court of Appeals, et al. G.R. Nos. 104604 and 111223, Oct. 6, 1995).
Pertinent Cases:
1. Proceedings for the forfeiture of goods illegally imported are civil and administrative not criminal in nature since they do not result in the conviction of the wrongdoer nor in the imposition upon him of a penalty (Collector vs. Villaluz, L-34038, June 18, 1976; Commissioner vs. Navarro, supra; Republic vs. Bocar, supra).
2. “Proof beyond reasonable doubt” is not required to warrant forfeiture (Feeder International vs. CA, 197 SCRA 842).
3. The Collector of Customs, when sitting in forfeiture proceedings, constitutes a tribunal upon which the law expressly confess jurisdiction to hear and determine all questions touching on the forfeiture and further disposition of the illegal imported mechanics (Government of the P.I. vs. Gale, 24 Phil 95; Auyong Hian vs. CTA, 19 SCRA 10).
4. Jurisprudence is replete with cases which have held that regional trial courts are devoid of any competence to pass upon the validity of seizure and forfeiture proceedings conducted in the Bureau of Customs and to enjoin, or otherwise interfere with these proceedings. The Collector of Customs sitting in the seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture proceedings of dutiable goods. The regional trial courts are preclude from assuming cognizance over such even though petition for certiorari, prohibition, or mandamus.
5. Even if a Customs seizure is illegal, exclusive jurisdiction still belongs to the Bureau of Customs (Jao, et. al vs. CA, supra).
6. To seize or not to seize is discretionary on Customs, so mandamus does not lie. However, in case of grave abuse by customs, petitioner can file certiorari proceedings (Provident Tree Farms, Inc. vs. Batario, Jr. etc et. al G.R. No. 92285, March 28, 1994).
Procedures Governing Seizure and Forfeiture Cases
The steps are the following:
1. The imported articles are seized and a warrant for the detention of the property is issued by the collector of Customs;
2. If the owner or importer desires to secure the release of the property for legitimate, the Collector may surrender it upon the filing of a sufficient bond; provided that the articles the importation of which is prohibited by law shall not be released under bond.
3. The Collector of Customs makes a report of the seizure to the seizure to the Commissioner on Audits.
4. The Collector shall give the owner or importer of property or his agent a written notice of the seizure and shall give him an opportunity to be heard;
5. Notice to an unknown owner shall be effected by posting for fifteen days (15) days in the public corridor of the custom-house of the district in which the seizures was made, and, in the discretion of the Commissioner by publication in a newspaper or by other means a he shall consider desirable;
6. The Collector of Customs schedules the hearing and renders his decision after the hearing is conducted;
7. In case the decision of the Collector of Customs is adverse to the importer/ owner, within fifteen (15) days after notification in writing by the collector of his action or decision the importer/ owner may give written notice to the Collector and one copy furnished to the Commissioner of his desire to have the matter reviewed by the Commissioner. Thereupon, the collector shall forthwith transmit all the records of the proceeding to the Commissioner;
8. In case the decision of the collector of Customs is affirmed by the Commissioner of Customs, or in case of inaction on the part of the Commissioner of Customs, the importer/ owner may appeal to the court of Appeals within 30 days from notice of the decision; and
9. In case an adverse decision is still rendered, the importer/ owner may appeal to the Court of Appeals and the Supreme Court.
Note: If the Collector renders a decision adverse to the Government, such decision shall automatically, be elevated to and reviewed by the Commissioner; and if the Collector’s decision is affirmed by the Commissioner, such decision shall be automatically elevated to, and be finally be reviewed by the secretary of Finance.
If within 30 days from receipt of the record of the case by the Commissioner or by the Secretary of Finance, as the case may be, no decision is rendered by either of them, the decision under review shall become final and executory.
Settlement of Seizures
Subject to the approval of the commissioner of the district collector may while the case is still pending except when there is fraud:
a) Accept the settlement of any seizure case- provided that the owner, importer, exporter or consignee or his agent shall offer to pay a fine; or
b) In case of forfeiture- the owner, importer, exporter, consignee or his shall offer to pay for the domestic market value of the seized article.
Note: The commissioner may accept the settlement of any seizure case on appeal in the same manner.
Effect of Settlement: The property shall be forthwith released and all the liabilities which may or might attack to the property by virtue of the offense which was the occasion of the seizure and all the liability which might have been incurred under any cash deposit or bond given by the owner or agent in respect to such property shall be deemed to be discharged.
Settlement of any seizure case shall not be allowed:
a. where the importation is absolutely prohibited or,
b. Where the release of the property could be contrary to the law.
Pertinent Cases:
1) Redemption of forfeited property is unavailing of three (3) instances:
a) when there is fraud,
b) where the importation is absolutely prohibited, or
c) Where the release of the property would be contrary to law. (Transglobe International, Inc. vs. C.A, supra)
2) The fraud contemplated by law must be actual and not constructive. It must be intentional fraud, consisting of deception willfully and deliberately done or resorted to in order to induce another to give up some right. (Farolan vs. CTA and Bagong Buhay Trading, 217 SCRA 298)
Remission of Customs, Duties and Compromise
The Collector of customs has the discretion to:
a) Remit the assessment and collection of customs duties, taxes and other charges where the aggregate amount is less than ten (10) pesos; and
b) He may dispense with the seizure of article of the less than ten ( 10) pesos in value except:
1) in cases of prohibited importation; or,
2) habitual or intentional violation of tariff and customs laws.
Subject to the approval of the Secretary of Finance, the Commissioner of Customs may compromise cases involving the imposition of fines, surcharges and forfeitures unless otherwise specified by law.
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