TARIFF AND CUSTOMS LAWS

Substantive Aspect of Tariff and Customs Las

Meaning and Scope

Section 3514 (TCC)

Provides that Tariff and Customs Laws include not only the provisions of the code itself and
reulations pursuant thereto !ut all other laws and reulation which are su!"ect to enforcement !y the
#ureau of Customs or otherwise within its "urisdiction$ %t e&tend not only to the provisions of the Tariff
Customs Code !ut to all other laws as well' li(e Central #an( Circulars) the enforcement of which is
entrusted to the #ureau of Customs$


Nature of Customs Duties and Tariff

!" Custom duties#

*re duties which are one chared upon commodities on their !ein imported into or e&ported
out of a country$

$" Tariff#

+eans a !oo( of rates) a ta!le or cataloue drawn usually in alpha!etical order containin the
names of several (inds of merchandise with the duties to !e paid for the same as settled or
areed upon !etween several states that holds commerce toether$



Concept of %oods for Customs dut& purposes#

As to Imported Articles:

*ll articles when imported from any forein country into the Philippines shall !e su!"ect to duty upon
each importation even thouht previously e&ported from the Philippines$ ,&cept as otherwise
specifically provided for in the code or other laws-

As to Exported Articles

Certain articles li(e specific types of wood) mineral plant) veeta!le and animal products are
su!"ect to tariff and premium duties$

.ote- *rticles- /hen used with reference to importation or e&portation includes oods) wares and
merchandise and) in eneral anythin that may!e made the su!"ect of e&portation and importation$

'ertinent Case#

4 0S dollars) havin ceased to !e leal tender in the Philippines) fall within the meanin of the term
1merchandise2 (#astida vs$ *ctin Commissioner of Customs) et al) L344511) 6ct$ 44) 1785)

Artic(es ) %oods Covered under t*e Tariff and Customs Code#

!"Artic(es sub+ect to dut&

General Rule: *ll articles when imported from a forein country includin those previously
e&ported from the Philippines one su!"ect to duty unless otherwise specifically provided for in
the Tariff and Customs Code or other laws$ (Sec$ 155) TCS)

$"'ro*ibited Importations

Classifications:

*$ *rticles which are a!solutely prohi!ited-

1$ weapons of war

4$ am!lin devices

3$ narcotics or prohi!ited drus

4$ immoral) o!scene or insidious articles

5$ those prohi!ited under special laws

#$ *rticles 9ualifiedly Prohi!ited-

:efers to those which may!e imported !ut su!"ect to) and after compliance with) certain
conditions$

Pertinent Cases-

1$ /here such conditions as to warrant lawful importation neither do nor e&ist) the
leal effects of the importation of ;ualifiedly prohi!ited articles are the same as those of
a!solutely prohi!ited articles$ (*uyon <ian vs CT*) 57 SC:* 115)

4$ Prohi!ited importations one su!"ect to forfeiture whether the shipper and the
consinee are one and the same person$ (0T, P*T,:6: vs$ #ureau of Customs) 173
S 134)


3$ Conditionally3free importations-

These are articles which are e&empt from import duties upon compliance with the
formalities prescri!ed with reulations promulated !y the Commission of Customs with
the approval of the Secretary of =inance$ (Sec$ 155) TCC)

This article includes-

1$ Those prohi!ited for in Sec$ 155 of the Tariff and Customs Code'

4$ Those ranted to overnment aencies) overnment3owned or controlled
corporations with areement with forein countries'

3$ Those iven to international institutions) entitled to e&emption !y areement
or special laws' and

4$ Those that may!e ranted !y the President upon .,>*?s recommendation$

Liabi(it& for Custom Duties

General Rule: *ll importations @ e&portation of articles @ oods are su!"ect to customs duties$

Exceptions:

1$,&empt under the TCC$

4$,&emption ranted to overnment aencies) instrumentalities with e&istin contracts)
commitment) areements or o!liations with forein countries$

3$,&empt international oraniAations pursuant to areements or special laws' and

4$,&empt !y the President upon recommendation of .,>*$


Liabi(it& of Importer for Custom Duties#

1$* personal de!t which can !e dischared only !y payment in full thereof'

4$* lien upon the imported article while they are in custody or su!"ect to the control of the
overnment$

,a(uation of t*e %oods#

%nvoice value of the oods plus-

1$ freiht

4$ insurance

3$ cost

4$ e&penses) and

5$ other necessary e&penses$

.ote- %mported oods must !e entered into a custom house at their port of entry otherwise they shall
!e considered as contra!and and the importer is lia!le for smulin$

Import entr&

%t is a declaration in the #ureau of Customs showin particulars of the imported article that
will ena!le the customs authorities to determine the correct duties$

!"W*en importation does be-in.

%mportation !eins when the carryin vessel or aircraft enters the "urisdiction of the Philippines
with the intention to unlade therein$

$"W*en is it terminated ) ended.

%mportation is deemed terminated upon payment of duties) ta&es and other chares due upon
the articles pr secured to !e paid at a port of entry and the leal permit for withdrawal shall
ave !een ranted or in case said articles are free of duties) ta&es and other chares) until
they have leally left the "urisdiction of the customs (Sec$ 1454) TCC)

.ote- *ll imported articles into the Philippines) whether su!"ect to duty or not) shall !e entered throuh
a customs house at a port of entry$

!" 'ort of /ntr&

+eans a domestic open to !oth forein and continuous trade includin airport of entry$

$" /0portation

%t is the !rinin out of oods from the Philippines territorial "urisdiction$

3$ 0nder ,&ecutive 6rder B 4C) Series of 17DC) ,&port ta&es) e&cept on los) have !een
suspended

1inds of Custom Duties

*$:eular @ 6rdinary >uties

These are duties imposed on imported articles that enter the country of the Philippines in
avoidance with the schedules and classifications provided under the Tariff and Customs Code$

C(assification#

!" Adva(orem Dut&

>uty !ased on the value of the imported article$

$" Specific Dut&

>uty !ased on the dutia!le weiht of oods num!er or measurement$

#$Special >uties

%mposed in addition to reular or ordinary duties principally in order to protect local industries
aainst unfair competition from forein manufacturers or procedures' consumer aainst
possi!le deceptions' and national interest$

C(assifications#

!" Dumpin- Dut&

%mposed !y the secretary of =inance upon the recommendation of the Tariff Commission
when-

a$ The price of the imported article is deli!erately or continually fi&ed at less than
the fair mar(et value or cost of production' and

!$ %mportation would cause or li(ely cause and in"ury to local industries enaed in
the manufacture or production of the same or similar articles or prevent their
esta!lishment$

*mount of special duty- e&tent of the under pricin$

$" Countervai(in- dut&

Special duty imposed on imported articles which are ranted any (ind or form of su!sidy !y
the overnment in the country or oriin or e&portation) the importation of which has caused
or threatens to cause material in"ury to a domestic industry or has materially relaided the
rowth or) prevents the esta!lishment of a domestic industry$ (:* BD851)

Re2uisites#

1$ The levy of an e&cise ta& or inland ta& or local oods of the same or similar class
as the article imported or the rant of su!sidy to the forein e&porter !y his
overnment' and

4$ The importation is li(ely to insure materially esta!lished local industries or
prevent their esta!lishments$

*mount of special duty- ,;ual to the !ounty or su!sidy or su!vention$

3" Mar4in- Dut&

Special duty of five percent (5E) advalorem imposed or articles properly mar(ed) collected
!y the commissioner) e&cept when such article is e&ported or destroyed under the customs
supervision and prior to final li;uidation of the correspondin entry$

Purpose- To prevent possi!le deception of the consumers$

5" Discriminator&)Reta(iator& dut&

%mposed on imported oods whenever it is found as a fact that the country of oriin
discriminates aainst the commerce of the Philippines in such a manner as to place the
commerce of the Philippines at a disadvantae compared with the commerce of any
forein country$

6" Duties imposed under t*e F(e0ib(e Tariff C(ause 7Sec" 58!9 TCC:

%mport duties which are modified !y the President upon investiation of the Tariff
Commissions and recommendation of the .ational ,conomic >evelopment *uthority in the
interest of national economy) eneral welfare and national security$



The President is iven !y the Tariff and Customs Code ample powers to ad"ust tariff rates Sec$ 451 of
TCC' empowers the president to-

1$ %ncrease) reduce) or remove e&istin protective rates of import duty'

4$ ,sta!lish import ;uota or to !an imports of any commodity'

3$ %mpose and additional duty on all imports not e&ceedin 15E advalorem whenever
necessary$

Limitations imposed re-ardin- t*e F(e0ib(e Tariff C(ause#

1$Conduct !y the Tariff Commission of an investiation in which a pu!lic hearin shall !e hold
wherein interested parties shall !e afforded reasona!le opportunity to !e present) produce
evidence and to !e heard'

4$The commission shall also hear the views and recommendations of any overnment office)
aency or instrumentality concerned'

3$The commission shall su!mit their findins and recommendations to the .,>* within 35
days after the termination of the pu!lic hearins$ The .,>* thereafter) su!mits its
recommendation to the President$




Administrative Aspect of
Tariff and Customs Las

*encies directly concerned with Tariff and Customs *dministration-

TARIFF COMMISSION

6fficials of the Tariff Commission are the chairman and 4 mem!er Commissioners) all appointed !y
the President$

Functions:

A"Investi-ative 'oers#

1$ *dministration and the fiscal and industrial effect of the Tariff and Customs laws of
this country now in force or when hereafter !e enacted'

4$ :elations !etween the rates of duty on raw materials and the finished or partly
finished products'

3$ ,ffects of ad valorem and specific duties and of compound) specific and ad valorem
duties'

4$ *ll ;uestions relative to the arranement of schedules and classification of articles in
several sections of the tariff law'

5$ Tariff relations !etween the Philippines and the =orein countries) commercial
treaties) preferential provisions) economic alliances) the effect of e&port !ounties and
preferential transportation rate'

C$ Folume of importations compared with domestic production and consumption'

8$ Conditions) causes and effects relatin to completion of forein industries with those
of the Philippines) includin dumpin and cost of production'

D$ %n eneral) to investiate the operation of customs and tariff laws) includin their
relations to the national revenues) their effect upon the industries or la!or of the country
and to su!mit reports of its investiation'

7$ .ature and composition and the classification and headin num!er for customs
revenue and other related purposes$

;"Administrative Assistance to t*e 'resident and Con-ress

1$ *scertain conversion costs and costs of production-

a$ %n the principal rowin) producin or manufacturin-

1$ Centers in the Philippines whenever possi!le'

4$ Centers in forein countries' whenever necessary'

!$ %ncludin effects of tariff modifications or import restriction or prices$

4$ Select and descri!e representative articles imported to the Philippines similar to or
compara!le with those locally produced

3$ *scertain imposts costs of such representative articles so selected$

4$ *scertain the rower?s producers or manufacturer?s sellin prices$

5$ Su!mit annual reports of these to the President of the Philippines) copies of which
shall !e furnished to the .,>*) #SP) >ept$ of =inance and the #ureau of %nvestments$

;UR/AU OF CUSTOMS

Composed of one chief and 4 assistant chiefs (nown as commissioner of customs)
appointed !y the President respectively$

Functions of the Bureau of Customs (CASE

1$Control smulin and related frauds$

4$*ssessment and collection of :evenues from imported articles and all other impositions
under the tariff and customs laws$

3$Supervision and control over due entrance and clearance of vessels and aircraft enaed in
forein commerce$

4$,nforcement of Tariff and Custom Code and related laws$

5$Supervision on control over the handlin of forein mails arrivin in the Philippines$

C$Supervise and control all import and e&port caros for the protection of the overnment
revenue$

8$,&clusive oriinal "urisdiction over seiAure and forfeiture cases under the tariff and customs
laws$

!ther "o#ers:

1$Supervision of collection districts and ports of entry) coast ruse trade) vessels an aircrafts
used in forein trade'

4$*scertainment) collection and recovery of import duty'



3$/arehousin of imported articles' and

4$ *dministrative proceedins li(e search ) seiAure and arrest) includin forfeitures$


Commissioner of Customs is vested with authority to-

*$ *ssess

#$ Collect


1$ *ll lawful revenues from imported articles'

4$ *ll other dues) fees) chares) fines and penalties$






'rocedura( Aspect of
t*e Tariff and Customs Las


Nature of Customs 'rotest< Sei=ures and Forfeiture cases

There are two (inds of proceedins in the #ureau of Customs) these are-

a$Customs protest cases3 deal safely with lia!ility for customs) duties) fees and other chares$

!$SeiAure and forfeiture cases3 refer to matters involvin smulin or the act of any person
who fraudulently imports or !rins into the Philippines) or assists in so doin) any article
contrary to law) or shall receive) conceal) !uy) sell or in any manner facilitate the importation)
concealment) or sale of such auricles after importation) (nowin the same to have !een
imported contrary to law smulin includes the e&portation act of articles in a manner contrary
to law$ (Sec$ 3154) TCC)$

'rocedure in Custom 'rotest Cases

These are the steps-

1$ The collector of customs shall cause all the articles enterin the "urisdiction of his district
and destined for importation throuh his port to !e entered at the customs house$ <e shall
appraise and classify such articles) and shall assess and collect the duties) ta&es and other
chares thereon$ <e shall also hold possession of all imported articles upon which duties)
ta&es) and other chares have not !een paid of secured to !e paid$

4$ The importer @ owner ma(es the payment after the final li;uidation$

3$ The importer @ owner adversely affected !y the collector?s rulin 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 hearin within 15 days from receipt of the
protest and renders his decision within 35 days from the termination of hearin$

5$ %n case an adverse decision is rendered within the 353day 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 353day period to decide$ The importer@ owner may ive
written notice to the collector and one copy furnished to the Commissioner of his desire to have
the matter reviewed !y the Commissioner$ The Collector shall forthwith transmit all the
seconds of the proceedins to the Commissioner$

C$ %n case an adverse decision is rendered) the importer@ owner may appeal to the Court of
Ta& *ppeals within 35 days from receipt of the decision' and

8$ %n case an adverse decision is still rendered) the importer@ owner may appeal to the
Court of *ppeals and the Supreme Court$

Automatic Revie in Customs 'roceedin-s

/henever 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 !y the
commissioner) the same shall !e automatically elevated to and finally received !y the Secretary of
=inance$

Rationa(e- %t is intended to protect the interest of the Government in the collection of ta&es
and custom duties in seiAures and protest cases$ +oreover) a favora!le decision will no !e
appealed !y the ta&payer and certainly a collector will not appeal his own decision (See Hao(asin
vs$ Commissioner of Customs) et al$ G$:$ .o$ D4111' >ec$ 44) 17D7$)

*utomatic :eview *pplies to-

1) Custom Protest Cases

4) SeiAures and =orfeiture Cases


Custom Sei=ures and Forfeiture Cases

#asic Concepts-

a: >urisdiction of Customs in Sei=ures and Forfeiture

Related "ro$isions:

The territorial "urisdiction of the #ureau of Customs em!races 1all seas within the "urisdiction of
the Philippines) and over all coasts) ports) har!ors) !ays) rivers and inland waters whether
navia!le or not from the sea$2 (Sec$ C53) TCC)

/0tra?Territoria( +urisdiction

(:iht of <ot Pursuit)-

1/hether a vessel !ecomes a su!"ect to a seiAure !y reason of an act done in the Philippine
waters) in violation of the Tariff and Customs Laws) a pursuit of such vessel) !eins with the
"urisdictional waters may contain !eyond the maritime Aone) and the vessel may !e seiAed in
the hih seas$ (Sec$ C53) TCC)$

1%mported articles which +ay!e the su!"ect to seiAures for violation of the Tariff and Customs
laws may!e pursued in their transportation in the Philippines !y land) water or air) and such
"urisdiction e&erted over them at any place therein as may !e necessary for the due
enforcement of the law$ (Sec$ C53) TCC)

'ertinent Case#

The Supreme Court upheld the seiAure and forfeiture as valid despite the fact that the
importation had not yet !eun and that the seiAure was affected outside the Philippine waters$
The Supreme Court held that the authority of a nation within its own territory is a!solute and
e&clusive$ The power to secure itself from in"ury may certainly !e e&ercised !eyond the limits
of its territory$ (9iluh *saali) et al$ vs$ Commissioner of Customs) L3 44185) =e!$ 4D) 17C7)$

b: '(ace *ere Searc*ers and Sei=ures ma& be conducted


!: Ri-*t of t*e 'o(ice @ officers to /nter /nc(osure

*ny person e&ercisin police power conferred under such code may at any time enter)
pass throuh) or search any land or enclosure) or any warehouse) store or other !uildin)
not !ein a dwellin house$
* warehouse) store or other !uildin or enclosure used for the (eepin or storae
of article does not !ecome a dwellin house within the meanin hereof merely !y 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$

$: Searc* of De((in- Aouse

* >wellin house may !e entered and searched only upon warrant issued !y a
"uded$

.ote- ,&cept in the case of the search of a dwellin house) persons e&ercisin police
authority under the customs may effect search and seiAure without a search warrant in the
enforcement of custom laws$

3) Ri-*t to searc* vesse(s or Aircraft and 'ersons or Artic(es Conve&ed t*erein


%t is lawful for any person e&ercisin police authority under the TCC to o a!oard any
vessel or aircraft within the limits of any Collection district and to inspect) search and
e&amine said vessel or aircraft and any other trun() pac(ae) !o& as envelope on !oard)
and to search any person on !oard the said vessel or aircraft if underway) to use all
necessary force to compel compliance' and if it shall appear that any !reach or violation of
the customs and tariff laws of the Philippines has !een committed) where!y or in
conse;uence of which such vessel or aircraft) or the article) or any part thereof on) on
!oard of or imported !y such vessel or aircraft is lia!le to forfeiture) to ma(e seiAure of the
same$

.ote- 1) Such power shall e&tend to the removal of any false !ottom) partition)
!ul(head or other o!struction$ 4) .o proceedin herein shall ive rise to any claim fro the
damae caused to the article or vessel or aircraft$

1) :iht to Search Fehicles) #east and Persons

%t shall also !e lawful for a person e&ercisin authority to open and e&amine any !o&) trun()
envelope or other container) wherever found when he has reasona!le cause to suspect the
presence of dutia!le or prohi!ited article or article introduced into the Philippines contrary
to law and li(ewise to stop) search ad e&amine any vehicle) !east or person reasona!ly
suspected of holdin or conveyin such article$

4) Search of Persons *rrivin from =orein Countries

*ll persons comin in the Philippines from the forein countries shall !e lia!le to detention
and search !y the Customs *uthorities under such reulations as may !e prescri!ed
relative thereto$ (Sec$ C53) TCC)

Non?necessit& of Searc* Warrant

%enera( Ru(e# Persons e&ercisin police authority under the customs laws may effect search and
seiAures without a search warrant in the enforcement of customs laws$ (See Sec$ 445D) TCC)

/0ception# %n the case of a dwellin house (Pacis etc$ vs$ Pamaran) +arch 15) 1784)$

Reason# 6n rounds of practicality$

'ertinent Cases on Searc*es and Sei=ures

1) The leality of a search can !e contested only !y the party whose rihts have !een
impaired there!y and that the o!"ection to an unlawful search and seiAure is purely personal
and cannot !e availed of !y third parties$ (.asiad) et al$ vs$ CT*) .ov$ 47) 1774)

4) /arrants of seiAure and detention issued !y the Collector of C coverin the seiAure of
imported oods are not eneral warrants issued in violation of Section 3 (now section 4)) rule
14C of the :ules of Court$ 0pon effectin the seiAure of the oods) the #ureau of Customs
ac;uired e&clusive "urisdiction not only over the case !ut also over the oods seiAed for the
purpose of enforcin the tariff and Customs laws$ (Chia vs$ *ctin Collector of Customs) Sept$
4C) 17D7)


3) The proceedins upon search warrants must !e a!solutely leal) 1for there is not a
description of process (nown to the law) the e&ecution of which is more distressin to the
citiAen$ Perhaps there is none which e&cites such intense feelin in the conse;uence of its
humiliatin and deradin effect$2 The warrants will always !e constured strictly without
however) oin the full lenth of re;uirin technical accuracy$ .o presumptions of reularity are
to !e invo(ed in aid of process when an officer underta(es to "ustify under it$ (0y vs$ #%:) 6ct$
45) 4555)



Customs Forfeiture Actions

!"W*at 4ind of Actions are Customs Forfeiture.

*n action for the forfeiture of seiAed oods in the #ureau of Customs is an action in rem) or
action ta(en aainst the %mported oods themselves independently arisin from any criminal
action or action in personam that may result as a conse;uence of a violation of an e&istin law$
Lac( of (nowlede !y the owner does not enerally render the vessel immune from forfeiture$
<owever) the forfeiture of a private carrier used in the conveyance of illeally imported or
e&ported articles re;uires (nowlede on the part of the carrier3owner or his aent of the
unlawful act$ * prima facie presumption shall e&ist aainst the vessel) vehicle or aircraft under
any of the followin circumstances-

1$ %f the conveyance has !een used for smulin at least twice !efore'

4$ %f the owner is not in the !usiness for which the conveyance is enerally used' and)

3$ %f the owner is not financially in a position to own such conveyance$


'ertinent Cases#

Actin- Commissioner of Customs
vs" CTA

The dismissal of the criminal chare in the =iscal?s office aainst respondent *ndrulis does not
constitute re "udicata in the forfeiture proceedins$ =orfeiture is in rem) whereas a criminal action
is in personam$ Conviction in the criminal action is not a !ar to forfeiture$ :esults of a criminal
proceedin !ein dependent on the evidence therein will not necessarily influence "udment in
the forfeiture proceedins$


L(amado vs" Commissioner of Customs
!$3 SCRA !!B

* Cessna plane carryin persons enaed in the smulin of unta&ed 1!lue seal2 ciarettes)
landed at an airstrip in *la!at) 9ueAon Province$ The plane was also used to !rin in 1de aAa2
(erosene lanterns and (erosene used to liht the airstrip to facilitate the loadin of the
ciarettes$ The plane was su!"ect to forfeiture pursuant to Sec$ 4535 (a) of the Tariff and
Customs Code$ %t is not necessary that the vessel or aircraft must carry the contra!and$ %t is not
li(ewise essential that the vessel or aircraft must come from a forein country$


Commissioner of Customs vs"
CTA and >ose 'ascua(
!3B SCRA 6B!

The Supreme Court ruled that the forfeiture of Pascual?s vessel used in the illeal importation
of unta&ed ciarettes is "ustified$

=orfeiture) accordin to the Citin the case of Fierneya vs$ Commissioner of Customs (Iuly 35)
17CD)) is in the nature of proceedins in rem and is directed aainst the res$ The fact that the
owner of the vessel had no actual (nowlede that the vessel was illeally used does not render
the vessel immune from forfeiture$ This is so !ecause the forfeiture action is aainst the vessel
itself$

.ote- The said vessel was duly authoriAed to enae in coasturse trade !ut has no certificate
of pu!lic convenience$

Trans-(obe Internationa( Inc"
vs" Court of Appea(s
%"R" No" !$CC359
>anuar& $69 !DDD"

=orfeiture of seiAed oods in the #ureau of Customs is a proceedin aainst the oods and
not aainst the owner$ %t is the nature of a proceedin in rem) i$e$ directed aainst the res or
imported article and entails a determination of the leality of their importation$ %n this
proceedin) it is in leal 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 t*e Doctrine 'rimar& >urisdiction

The >octrine of primary "urisdiction provides that the #ureau of Customs ac;uired e&clusive
"urisdiction over imported oods for the purpose of the enforcement of the Customs laws from
the moment the oods are actually in its possession or control even if no warrant of seiAure or
detention had previously !een issued !y the collector of the Customs$ Primary "urisdiction is
vested in seiAures and forfeiture proceedins in the collector and the Commissioner or the
Customs to the e&clusion of the reular courts$ (Commissioner of Customs vs$ .avarro) L3
3314C) +ay 31) 1788)

Rationa(e of t*e doctrine# %t is anchored on the policy of placin no necessary hindrance on
the Government?s drive not only to prevent smulin and other frauds upon Customs !ut also
to render effective the collection of import and e&port duties duet to the State$ (Iao) et) al$ vs$
Court of *ppeals) et al$ G$:$ .os$ 154C54 and 111443) 6ct$ C) 1775)$

'ertinent Cases#

1$ Proceedins for the forfeiture of oods illeally imported are civil and administrative
not criminal in nature since they do not result in the conviction of the wrondoer nor in the
imposition upon him of a penalty (Collector vs$ FillaluA) L33453D) Iune 1D) 178C'
Commissioner vs$ .avarro) supra' :epu!lic vs$ #ocar) supra)$

4$ 1Proof !eyond reasona!le dou!t2 is not re;uired to warrant forfeiture (=eeder
%nternational vs$ C*) 178 SC:* D44)$

3$ The Collector of Customs) when sittin in forfeiture proceedins) constitutes a
tri!unal upon which the law e&pressly confess "urisdiction to hear and determine all
;uestions touchin on the forfeiture and further disposition of the illeal imported
mechanics (Government of the P$%$ vs$ Gale) 44 Phil 75' *uyon <ian vs$ CT*) 17 SC:*
15)$

4$ Iurisprudence is replete with cases which have held that reional trial courts are
devoid of any competence to pass upon the validity of seiAure and forfeiture proceedins
conducted in the #ureau of Customs and to en"oin) or otherwise interfere with these
proceedins$ The Collector of Customs sittin in the seiAure and forfeiture proceedins has
e&clusive "urisdiction to hear and determine all ;uestions touchin on the seiAure and
forfeiture proceedins of dutia!le oods$ The reional trial courts are preclude from
assumin coniAance over such even thouh petition for certiorari) prohi!ition) or
mandamus$

5$ ,ven if a Customs seiAure is illeal) e&clusive "urisdiction still !elons to the #ureau
of Customs (Iao) et$ al vs$ C*) supra)$

C$ To seiAe or not to seiAe is discretionary on Customs) so mandamus does not lie$
<owever) in case of rave a!use !y customs) petitioner can file certiorari proceedins
(Provident Tree =arms) %nc$ vs$ #atario) Ir$ etc et$ al G$:$ .o$ 744D5) +arch 4D) 1774)$

3.'rocedure %overnin- Sei=ure and Forfeiture Cases

The steps are the followin-

1$ The imported articles are seiAed and a warrant for the detention of the property is
issued !y the collector of Customs'

4$ %f the owner or importer desires to secure the release of the property for leitimate)
the Collector may surrender it upon the filin of a sufficient !ond' provided that the articles
the importation of which is prohi!ited !y law shall not !e released under !ond$

3$ The Collector of Customs ma(es a report of the seiAure to the seiAure to the
Commissioner on *udits$

4$ The Collector shall ive the owner or importer of property or his aent a written
notice of the seiAure and shall ive him an opportunity to !e heard'

5$ .otice to an un(nown owner shall !e effected !y postin for fifteen days (15) days in
the pu!lic corridor of the custom3house of the district in which the seiAures was made) and)
in the discretion of the Commissioner !y pu!lication in a newspaper or !y other means a
he shall consider desira!le'

C$ The Collector of Customs schedules the hearin and renders his decision after the
hearin is conducted'

8$ %n case the decision of the Collector of Customs is adverse to the importer@ owner)
within fifteen (15) days after notification in writin !y the collector of his action or decision
the importer@ owner may ive written notice to the Collector and one copy furnished to the
Commissioner of his desire to have the matter reviewed !y the Commissioner$ Thereupon)
the collector shall forthwith transmit all the records of the proceedin to the Commissioner'

D$ %n case the decision of the collector of Customs is affirmed !y 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 *ppeals within 35 days from notice of the decision' and

7$ %n case an adverse decision is still rendered) the importer@ owner may appeal to the
Court of *ppeals and the Supreme Court$

Note# %f the Collector renders a decision adverse to the Government) such decision shall
automatically) !e elevated to and reviewed !y the Commissioner' and if the Collector?s
decision is affirmed !y the Commissioner) such decision shall !e automatically elevated to)
and !e finally !e reviewed !y the secretary of =inance$

%f within 35 days from receipt of the record of the case !y the Commissioner or !y the
Secretary of =inance) as the case may !e) no decision is rendered !y either of them) the
decision under review shall !ecome final and e&ecutory$

Sett(ement of Sei=ures

Su!"ect to the approval of the commissioner of the district collector may while the case is
still pendin e&cept when there is fraud-

a) *ccept the settlement of any seiAure case3 provided that the owner) importer) e&porter
or consinee or his aent shall offer to pay a fine' or

!) In case of forfeiture3 the owner) importer) e&porter) consinee or his shall offer to pay
for the domestic mar(et value of the seiAed article$

Note# The commissioner may accept the settlement of any seiAure case on appeal in the same
manner$

/ffect of Sett(ement# The property shall !e forthwith released and all the lia!ilities which may
or miht attac( to the property !y virtue of the offense which was the occasion of the seiAure
and all the lia!ility which miht have !een incurred under any cash deposit or !ond iven !y
the owner or aent in respect to such property shall !e deemed to !e dischared$

Settlement of any seiAure case shall not !e allowed-

a$ where the importation is a!solutely prohi!ited or)

!$ /here the release of the property could !e contrary to the law$

'ertinent Cases#

1) :edemption of forfeited property is unavailin of three (3) instances-

a) when there is fraud)

!) where the importation is a!solutely prohi!ited) or

c) /here the release of the property would !e contrary to law$ (Translo!e
%nternational) %nc$ vs$ C$*) supra)

4) The fraud contemplated !y law must !e actual and not constructive$ %t must
!e intentional fraud) consistin of deception willfully and deli!erately done or resorted to in
order to induce another to ive up some riht$ (=arolan vs$ CT* and #aon #uhay
Tradin) 418 SC:* 47D)





Remission of Customs9 Duties and Compromise

The Collector of customs has the discretion

a) :emit the assessment and collection of customs duties) ta&es and other chares where
the areate amount is less than ten (15) pesos' and

!) <e may dispense with the seiAure of article of the less than ten ( 15) pesos in value
e&cept-


1) in cases of prohi!ited importation' or)

4) ha!itual or intentional violation of tariff and customs laws$

Su!"ect to the approval of the Secretary of =inance) the Commissioner of Customs may
compromise cases involvin the imposition of fines) surchares and forfeitures unless otherwise
specified !y law$

Administrative 'ena(ties under t*e Tariff and Customs Code

These include-

a$ Surchares

!$ =ines

c$ =orfeitures

a" T*e code imposes surc*ar-es for#

1$ failure to pay li;uidated chares'

4$ unauthoriAed withdrawal of imported articles from !onded warehouses'
3$ failure to supply the consular or invoice when ac;uired'

4$ undervaluation) misclassification or misdeclaration' and)

5$ failure or refusal to ive evidence or su!mit documents for e&amination

b" A fine ma& be imposed in t*e fo((oin- case#

1$ *ny dutia!le article is found in the !aae of an arrivin passener which is not
included in the !aae declaration'

4$ !reach of !ond'

3$ unlawful !oardin as leavin of vessel or aircraft'

4$ unloadin of caro !efore arrival at ports of destination) or at improper time or place
after arrival' and

5$ failure to supply the re;uisite manifest$


c"T*e pena(t& of forfeiture is imposed in t*e cases enumerated in Section $638 of t*e
Tariff and Customs Code"

The re;uisite for forfeiture are-

1$The wronful ma(in !y the owner) importer) e&3porter or consinee of any
declaration or affidavit or the wronful ma(in as delivery !y the same persons of any
invoice) letter or paper touchin on the importation or e&portation of merchandise' and

4$That such declaration) affidavit) invoice) letter or paper % false$








Remedies under t*e
Tariff and Customs Code

A" %overnment Remedies#

a" /0tra+udicia(

!" /nforcement or ta0 (ien

* ta& lien attaches on the oods) reardless of the ownership while still in the custody
or control of the overnment

Proceeds of sale are applied to the ta& due$ *ny deficiency or e&cess is for the account
or credit) respectively of the ta&payer

This is availed of when the importation is neither nor improperly made


$" Sei=ures

Generally applied when the penalty is fine or forfeiture which is imposed when the
importation is unlawful and it may !e e&ercised even where the articles are not or no
loner in Customs Custody) unless the importation is merely attempted$

%n the case of attempted importation) administrative fine or forfeiture may !e
affected only'

a$ while the oods are still within the customs "urisdiction) or

!$ in the hands or under the control of the importer or person who is aware
thereof$

3" Sa(e of 'ropert&

Property in the customs custody shall !e su!"ect to sale under the followin conditions'


a$ a!andoned articles'

!$ articles entered under warehousin entry not withdrawn nor the duties
and ta&es paid thereon within the period provided under Section 175D) TCC'

c$ seiAed property) other than contra!and) after lia!ility to sale shall have !een
esta!lished !y proper administrative or "udicial proceedins in conformity with the
provision of this code- and

d$ *ny articles su!"ect to a valid lien for customs duties) ta&es or other chares
collecti!le !y the #ureau of Customs) after the e&piration of the period allowed for
the satisfaction of the same$

.ote- Goods in the collector?s possession or of Customs authorities pendin payment of
customs duties are !eyond the reach of attachment$

b" >udicia( Action

The ta& lia!ility of the importer constitutes a personal de!t to the overnment) enforcea!le !y
action (Sec$ 1454) TCC)

This is availed of when the ta& lien is lost !y the release of the oods$


;" Ta0pa&erEs Remedies

Administrative Recourse

Claim for refund%a written claim for refund may !e su!mitted !y the importer-


1$ %n a!atement uses such as-

a$ on missin pac(aes'

!$ deficiencies in the contents of pac(aes or shortae !efore arrival of the oods
in the Philippines'

c$ articles lost or destroyed after such arrival)

d$ articles lost or destroyed

e$ dead or in"ured animals' and

f$ for manifest classical errors' (see section 18513185D) TCC)

4$ Iudicial relief

%n draw!ac( cases where the oods are re3e&ported

a$ Protest

see the earlier discussions on 1Customs Protest Cases2

!$ %n seiAure cases

see earlier discussion on the su!"ect

c$Settlement of case !y the payment of fine or redemption of forfeited property

see earlier discussions on the su!"ect

.ote- The owner or importer may a!andon either e&pressly or #y importation in favor of the
Government thus relievin himself of the ta& lia!ility !ut not from the possi!le criminal
lia!ility$

The ta&payer may appeal to the Court of *ppeals which has e&clusive "urisdiction to review
decisions of the Commissioner of Custom in cases involvin-

a) lia!ility for customs duties) fees or other money chares'
!) seiAures) detention or release of property affected'

c) fines forfeitures or other penalties imposed in relation thereto' and

d) other matters arisin under the customs Law or other laws administered !y the
:evenue of Customs$

Remedies of t*e %overnment

,numeration of the :emedies

Administrati$e

1$ >istraint of Personal Property

4$ Levy of :eal Property

3$ Ta& Lien

4$ Compromise

5$ =orfeiture

C$ 6ther *dministrative :emedies

&udicial

8$ Civil *ction

D$ Criminal *ction

Distraint of 'ersona( 'ropert&

Distraint3 SeiAure !y the overnment of personal property) tani!le or intani!le) to enforce the
payment of faces) to !e followed !y its pu!lic sale) if the ta&es are not voluntarily paid$

a$ *ctual J There is ta(in of possession of personal property out of the ta&payer into that
of the overnment$ %n case of intani!le property$ Ta&payer is also diverted of the power of
control over the property'

!$ Constructive J The owner is merely prohi!ited from disposin of his personal
property$

*ctual >istraint$ Constructive >istraint
+ade on the property only of a delin;uent
ta&payer$
+ay !e made on the property of any ta&payer
whether delin;uent or not
There is actual ta(in or possession of the
property$
Ta&payer is merely prohi!ited from disposin of
his property$
,ffected !y havin a list of the distraint property
or !y service or warrant of distraint or
arnishment$
,ffected !y re;uirin the ta&payer to sin a
receipt of the property or !y leavin a list of
same
*n immediate step for collection of ta&es where
amount due is definite$
Such immediate step is not necessary' ta& due
may not !e definite or it is !ein ;uestioned$


Re2uisites#

1$Ta&payer is delin;uent in the payment of ta&$

4$Su!se;uent demand for its payment$

3$Ta&payer must fail to pay delin;uent ta& at time re;uired$

4$Period with in to assess or collect has not yet prescri!ed$ %n case of constructive distraint)
re;uisite no$ 1 is not essential (see Sec$ 45C TC)

W*en remed& not avai(ab(e#

/here amount involved does not e&ceed P155 (Sec$ 455 TC)$ %n (eepin with the provision
on the a!atement of the collection of ta& as the cost of same miht even !e more than P155$

'rocedure#

1$Service of warrant of distraint upon ta&payer or upon person in possession of ta&payer?s
personal property$

4$Postin of notice is not less than two places in the municipality or city and notice to the
ta&payer specifyin time and place of sale and the articles distrained$

3$Sale at pu!lic auction to hihest !idder

4$>isposition of proceeds of the sale$


/ho may effect distraint *mount %nvolved
1$ commissioner or his due authoriAed
representative

4$ :>6
%n e&cess of
P1)555)555$55
P1)555)555$55 or less



Ao Actua( Distraint /ffected

1$%n case of Tani!le Property-

a$Copy of an account of the property distrained) sined !y the officer) left either with the
owner or person from whom property was ta(en) at the dwellin or place of !usiness
and with someone of suita!le ae and discretion

!$Statement of the sum demanded$

c$Time and place of sale$

4$%n case of intani!le property-

a$Stoc(s and other securities

Servin a copy of the warrant upon ta&payer and upon president) manaer) treasurer or
other responsi!le officer of the issuin corporation) company or association$

!$>e!ts and credits

1$ Leavin a copy of the warrant with the person owin the de!ts or havin in
his possession such credits or his aent$

4$ /arrant shall !e sufficient authority for such person to pay C%: his credits or
de!ts$

c$#an( *ccounts J arnishment

1$ Serve warrant upon ta&payer and president) manaer) treasurer or
responsi!le officer of the !an($

4$ #an( shall turn over to C%: so much of the !an( accounts as may !e
sufficient$

Ao constructive Distraint /ffected

1$:e;uire ta&payer or person in possession to

a$ Sin a receipt coverin property distrained

!$ 6!liate him to preserve the same properties$

c$ Prohi!it him from disposin the property from disposin the property in any manner)
with out the authority of the C%:$

4$/here Ta&payer or person in possession refuses to sin-

a$ 6fficer shall prepare list of the property distrained$

!$ %n the presence of two witnesses of sufficient ae and discretion) leave a copy in the
premises where property is located$

%rounds of Constructive Distraint

1$Ta&payer is retirin from any !usiness su!"ect to ta&$

4$Ta&payer is intendin to leave the Philippines' or

3$To remove his property there from$

4$Ta&payer hides or conceals his property$

5$Ta&payer acts tendin to o!struct collection proceedins$

.ote-

1$#an( accounts may !e distrained with out violatin the confidential nature of !an( accounts
for no in;uiry is made$ #%: simply seiAes so much of the deposit with out havin to (now how
much the deposits are or where the money or any part of it came from$

4$%f at any time prior to the consummation of the sale) all proper chares are paid to the officer
conductin the same) the oods distrained shall !e restored to the owner$

3$/hen the amount of the !id for the property under distraint is not e;ual to the amount of the
ta& or is very much less than the actual mar(et value of articles) the C%: or his deputy may
purchase the distrained property on !ehalf of the national overnment$

Lev& of Rea( 'ropert&

Levy J *ct of seiAure of real property in order to enforce the payment of ta&es$ The property may !e
sold at pu!lic sale) if after seiAure' the ta&es are not voluntarily paid$ The re;uisites are the same as
that of distraint$

'rocedure#

1$%nternational :evenue officer shall prepare a duly authenticated certificate showin

a$.ame of ta&payer

!$*mount of ta& and

c$Penalty due$


3 enforcea!le throuh out the Philippines

4$6fficer shall write upon the certificate a description of the property upon which levy is made$

3$Service of written notice to-

a$ The ta&payer) and

!$ :> where property is located$

4$*dvertisement of the time and place of sale$

5$Sale at pu!lic auction to hihest !idder$

C$>isposition of proceeds of sale$

The e&cess shall !e turned over to owner$

Redemption of propert& so(d or forfeited

a$Person entitled- Ta&payer or anyone for him

!$Time to redeem- one year from date of sale or forfeiture

3 #eins from reistration of the deed of sale or declaration of forfeiture$

3 Cannot !e e&tended !y the courts$

c$Possession pendin redemption J owner not deprived of possession

d$Price- *mount of ta&es) penalties and interest thereon from date of delin;uency to the date of
sale toether with interest on said purchase price at 15E per annum from date of purchase to
date of redemption$


Distraint and Lev& compared

1$#oth are summary remedies for collection of ta&es$

4$#oth cannot !e availed of where amount involved is not more than P155$

3$>istraint J personal property

Levy J real property

4$>istraint J forfeiture !y overnment) not provided

Levy J forfeiture !y overnment authoriAed where there is no !idder or the hihest !id is not
sufficient to pay the ta&es) penalties and costs$

5$>istraint J Ta&payer no iven the riht of redemption

Levy J Ta&payer can redeem properties levied upon and sold@forfeited to the overnment$

.ote-

1$%t is the duty of the :eister of >eeds concerned upon reistration of the declaration of
forfeiture) to transfer the title to the property with out of an order from a competent court
4$The remedy of distraint or levy may !e repeated if necessary until the full amount) includin
all e&penses) is collected$

/nforcement of Ta0 Lien

Ta0 LienFa leal claim or chare on property) either real or personal) esta!lished !y law as a security
in default of the payment of ta&es$

!"Nature#

* lien in favor of the overnment of the Philippines when a person lia!le to pay a ta& nelects
or fails to do so upon demand$K

$"Duration#

,&ists from time assessment is made !y the C%: until paid) with interests) penalties and costs$

3"/0tent#

0pon all property and rihts to property !elonin to the ta&payer$

5"/ffectivit& a-ainst t*ird persons#

6nly when notice of such lien is filed !y the C%: in the :eister of >eeds concerned$

/0tin-uis*ment of Ta0 Lien

1$Payment or remission of the ta&

4$Prescription of the riht of the overnment to assess or collect$
3$=ailure to file notice of such lien in the office of reister of >eeds) purchases or "udment
creditor$

4$>estruction of the property su!"ect to the lien$

%n case .os$ 1 and 4) there is no more ta& lia!ility$ 0nder nos$ 3 and 4) the ta&payer is still
lia!le$

/nforcement of Ta0 Lien vs" Distraint

* ta& lien is distinuished from disttraint in that) in distraint the property seiAed must !e that
of the ta&payer) althouh it need not !e the property in respect to the ta& is assessed$ Ta& lien is
directed to the property su!"ect to the ta&) reardless of its owner$

.ote-

1$This is superior to "udment claim of private individuals or parties

4$*ttaches not only from time the warrant was served !ut from the time the ta& was due and
demanda!le$

Compromise

CompromiseLa contract where!y the parties) !y reciprocal concessions) avoid litiation or put an end
to one already commenced$

Re2uisites#

1$Ta&payer must have a ta& lia!ility$

4$There must !e an offer !y ta&payer or C%:) of an amount to !e paid !y ta&payer$

3$There must !e acceptance of the offer in settlement of the oriinal claim$

W*en ta0es ma& be compromised#

1$* reasona!le dou!t as to the validity if the claim aainst the ta&payer e&ists'

4$The financial position of the ta&payer demonstrates a clear ina!ility to pay the assessed ta&$

3$Criminal violations) e&cept-

a$ Those already filed in court

!$ Those involvin fraud$


Limitations#

1$+inimum compromise rate-

a$15E of the !asic ta& assessed J in case of financial incapacity$

!$45E of !asic ta& assessed J other cases$

4$Su!"ect to approval of ,valuation #oard

a$ /hen !asic ta& involved e&ceeds P1)555)555$55 or

!$ /here settlement offered is less than the prescri!ed minimum rates$

De(e-ation of 'oer to Compromise

General Rule- The power to compromise or a!ate shall not !e deleated !y the commissioner$

Exception- The :eional ,valuation #oard may compromise the assessment issued !y the reional
offices involvin !asic ta&es of P 555 M or less$

Remed& in case of fai(ure to comp(&#

The C%: may either-

1$enforce the compromise) or

4$:eard it as rescinded and insists upon the oriinal demand$

Compromise 'ena(t&

1$%t is a certain amount of money which the ta&payer pays to compromise a ta& violation$

4$%t is pain in lieu of a criminal prosecution$

3$Since it is voluntary in character) the same may !e collected only if the ta&payer is willin to
pay them$

/nforcement of forfeiture

=orfeitureLimplies a divestiture of property with out compensation) in conse;uence of a default or
offense$ %t includes the idea of not only losin !ut also havin the property transferred to another with
out the consent of the owner and wrondoer$

1$,ffect- Transfer the title to the specific thin from the owner to the overnment$

4$/hen availa!le-
a$.o !idder for the real property e&posed for sale$

!$%f hihest !id is for an amount insufficient to pay the ta&es) penalties and costs$

3 /ith in two days thereafter) a return of the proceedin is duly made$

3$<ow enforced-

a$ %n case of personal property J !y seiAure and sale or destruction of the specific
forfeited property$

!$ %n case of real property J !y a "udment of condemnation and sale in a leal
action or proceedin) civil or criminal) as the case may re;uire$


4$/hen forfeited property to !e destroyed or sold-

a$ To !e destroyed J !y order of the C%: when the sale for consumption or use of
the followin would !e in"urious to the pu!lic health or pre"udicial to the enforcement of
the law- (at least 45 days after seiAure)

1$ distilled spirits

4$ li;uors

3$ ciars

4$ ciarettes) and other manufactured products of to!acco

5$ playin cards

C$ *ll apparatus used in or a!out the illicit production of such articles$


!$ To !e sold or destroyed J depends upon the discretion of C%:

1$ *ll other articles su!"ect to e&ercise ta&) (wine) automo!ile) mineral products)
manufactured oils) miscellaneous products) non3essential items a petroleum
products) manufactured or removed in violation of the Ta& Code$
4$ >ies for printin or ma(in %: stamps) la!els and tas) in imitation of or
purport to !e lawful stamps) la!els or tas$


5$/here to !e sold-

a$ Pu!lic sale- provided) there is notice of not less than 45 days$

!$ Private sale- provided) it is with the approval of the Secretary of =inance$

C$:iht of :edemption-

a$ Personal entitled J ta&payer or anyone for him

!$ Time to redeem J with in one (1) year from forfeiture

c$ *mount to !e paid J full amount of the ta&es and penalties) plus interest and
cost of the sale

d$ To whom paid J Commissioner or the :evenue Collection 6fficer

e$ ,ffect of failure to redeem J forfeiture shall !ecome a!solute$


.ote- The :eister of >eeds is duty !ound to transfer the title of property forfeited to the overnment
with our necessity of an order from a competent court$

Ot*er Administrative Remedies

1$ :e;uirin filin of !onds J in the followin instances-

a$ ,state and donor?s ta&

!$ ,&cise ta&es

c$ ,&porter?s !ond

d$ +anufacturer?s and importer?s !ond

4$ :e;uirin proof of filin income ta& returns

#efore a license to enae in trade) !usiness or occupation or to practice a profession can !e
issued$

3$ Givin reward to informers J Sum e;uivalent to 15E of revenues) surchares or fees
recovered and@or fine or penalty imposed and collected or P1) 555)555$55 per case) whichever
is lower$

4$ %mposition of surchare and interest$

5$ +a(in arrest) search and seiAure

Limited to violations of any penal law or reulation administered !y the #%:) committed with in
the view of the %nternal :evenue 6fficer or ,,$

C$ >eportation in case of aliens J on the followin rounds

a$ Mnowinly and fraudulently evades payment of %: ta&es$

!$ /illfully refuses to pay such ta& and its accessory penalties) after decision on his ta&
lia!ility shall have !ecome final and e&ecutory$

8$ %nspection of !oo(s

#oo(s of accounts and other accountin records of ta&payer must !e preserved) enerally
within three years after date the ta& return was due or was filed whichever is later$

D$ 0se of .ational Ta& :eister

7$ 6!tainin information on ta& lia!ility of any person


15$ %nventory J Ta(in of stoc(3in3trade and ma(in surveillance$

11$ Prescri!in presumptive ross sales or receipt-


a$ Person failed to issue receipts and invoices

!$ :eason to !elieve that records do not correctly reflect declaration in return$K

14$ Prescri!in real property values

13$ %n;uirin into !an( deposit accounts of

a$ * deceased person to determine ross estate

!$ *ny ta&payer who filed application for compromise !y reasons of financial incapacity
his ta& lia!ility$

14$ :eistration of Ta&payers$

>udicia( Remedies

Ci$il and Criminal Actions:

1$ #rouht in the name of the Government of the Philippines$

4$ Conducted !y Leal 6fficer of #%:

3$ +ust !e with the approval of the C%:) in case of action) for recovery of ta&es) or
enforcement of a fine) penalty or forfeiture$


A"Civi( Action

*ctions instituted !y the overnment to collect internal revenue ta&es in reular courts (:TC or
+TCs) dependin on the amount involved)

/hen assessment made has !ecome final and e&ecutory for failure or ta&payer to-

a$ >ispute same !y filin protest with C%:

!$ *ppeal adverse decision of C%: to CT*

;"Crimina( Action

* direct mode of collection of ta&es) the "udment of which shall not only impose the penalty
!ut also order payment of ta&es$

*n assessment of a ta& deficiency is not necessary to a criminal prosecution for ta& evasion)
provided there is a prima facie showin of willful attempt to evade$

/ffect of Ac2uitta( on Ta0 Liabi(it&#

>oes not e&onerate ta&payer his civil lia!ility to pay the ta& due$ Thus) the overnment may
still collect the ta& in the same action$
:eason- Ta& is an o!liation) does not arise from a criminal act$

/ffect of Satisfaction of Ta0 Liabi(it& on Crimina( Liabi(it&

/ill not operate to e&tinuish ta&payer?s criminal lia!ility since the duty to pay the ta& is
imposed !y statute) independent of any attempt on past of ta&payers to evade payment$

This is true in case the criminal action is !ased on the act to ta&payer of filin a false and fraudulent
ta& return and failure to pay the ta&$

.ote- The satisfaction of civil lia!ility is not one of the rounds for the e&tinction of criminal action$





'rescriptive 'eriods )
Statute Of Limitation

'urpose#

=or purposes of Ta&ation) statue of limitation is primarily desined to protect the rihts of the
ta&payer?s aainst unreasona!le investiation of the ta&in authority with respect to assessment and
collection of %nternal :evenue Ta&es$

'rescription of %overnmentEs Ri-*t to Assess Ta0es#

General Rule: %nternal :evenue Ta&es shall !e assessed within three (3) years after the last day
prescri!ed !y law for the filin of the return or from the day the return was filed) in case it is filed
!eyond the period prescri!ed thereof$ (Section 453 of the Ta& Code)

.ote-

1$ * return filed !efore the last day prescri!ed !y law for the filin thereof shall !e
considered as filed on such last day$

4$ %n case a return is su!stantially amended) the overnment riht to assess the ta& shall
commence from the filin of the amended return (C%: vs$ Phoeni&) +ay 45) 17C5' Mei N Co$ vs$
Collector) 4 SC:* D84)

3$ %n computin the prescriptive period for assessment) the latter is deemed made when
notice to this effect is released) mailed or sent !y the Commissioner to the correct address of
the ta&payer$ <owever) the law does not re;uire that the demand@notice !e received within the
prescriptive period$ (#asilan ,states) %nc$ vs$ Commissioner 41) SC:* 18' :epu!lic vs$ C*
*pril 35) 17D8)

4$ *n affidavit e&ecuted !y a revenue office indicatin the ta& lia!ilities of a ta&payer and
attached to a criminal complaint for ta& evasion) cannot !e deemed an assessment$ ( C%: vs$
Pascoi :ealty Corp$ Iune 47) 1777)

5$ * transcript sheets are not returns) !ecause they do not contain information necessary
and re;uired to permit the computation and assessment of ta&es (Sinforo *lca vs$
Commissioner) >ec$ 47) 17C4)



/0ceptions# 7Sec" $$$ ic:

1$/here no return was filed 3 within ten (15) years after the date of discovery of the omission$

4$/here a return was filed !ut the same was false or fraudulent J within ten (15) years from
the discovery of falsity or fraud$

Nature of Fraud#

a$ =raud is never presumed and the circumstances consistin it must !e alleed and
proved to e&ist !y clear N convincin evidence (:epu!lic vs$ Meir) Sept$ 35) 17CC)

!$ The fraud contemplated !y law is actual and not constructive$ %t must amount to
intentional wrondoin with the sole o!"ect of avoidin the ta&$ * mere mista(e is not a
fraudulent intent$ (*Anar case) *u$ 43) 1784)

c$ * fraud assessment which has !ecome final and e&ecutory) the fact of fraud shall !e
"udicially ta(en coniAance of in the civil or criminal action for the collection thereof$ (Sec$
444 pararaph (a))


Fraud ma& be estab(is*ed b& t*e fo((oin- # 7;ad-es of Fraud:

a$ %ntentional and su!stantial understatement of ta& lia!ility of the ta&payer$

!$ %ntentional and su!stantial overstatement of deductions of e&emption

c$ :ecurrence of the foreoin circumstances$

Instances)Circumstances ne-atin- fraud#

a$ /hen the Commissioner fails impute fraud in the assessment notice@demand for
payment$

!$ /hen the Commissioner failed to allee in his answer to the ta&payer?s petition for
review when the case is appealed to the CT*$

c$ /hen the Commissioner raised the ;uestion of fraud only for the first time in his
memorandum which was filed the CT* after he had rested his case$

d$ /here the #%: itself appeared) 1not sure2 as to the real amount of the ta&payer?s net
income$

e$ * mere understatement of income does not prove fraud) unless there is a sufficient
evidence shavin fraudulent intent$

3$/here the commissioner and the ta&payer) !efore the e&piration of the three (3) year period
of limitation have areed in writin to the e&tension of said period$

Note# Limitations#

a$ The areement e&tendin the period of prescription should !e in writin and duly
sined !y the ta&payer and the commissioner$

!$ The areement to e&tend the same should !e mode !efore the e&piration of the
period previously areed upon$

4$/here there is a written waiver or renunciation of the oriinal 33year limitation sined !y the
ta&payer$

Note# Limitations#

a$ The waiver to !e valid must !e e&ecuted !y the parties !efore the lapse of the
prescriptive period$

!$ * waiver is inefficient % it is e&ecuted !eyond the oriinal three year$

c$ The commissioner can not valid aree to reduce the prescriptive period to less than
that ranted !y law$


Imprescriptib(e Assessments#

1$/here the law does not provide for any particular period of assessment) the ta& souht to !e
assessed !ecomes imprescripti!le$

4$/here no return is re;uired !y law) the ta& is imprescripti!le$


3$*ssessment of unpaid ta&es) where the !ases of which is not re;uired !y law to !e reported
in a return such as e&cise ta&es$ (Carmen vs$ *yala Securities Corp$) .ov$ 41) 17D5)

4$*ssessment of compensatin and documentary stamp ta&$





'rescription of %overnmentEs
Ri-*t to Co((ect Ta0es

*$General :ule-

1$ /here an assessment was made J *ny internal revenue ta& which has !een
assessed within the period of limitation may !e collected !y distraint or levy or !y
proceedin in court within 5 years followin the date of assessment$

4$ /here no assessment was made and a return was filed and the same is not
fraudulent or false3 the ta& should !e collected within 3 years after the return was due or
was filed) whichever is later$

#$,&ceptions-

1$ /here a fraudulent@false return with intent to evade ta&es was filed a proceedin in
court for the collection of the ta& may !e filed without assessment) at anytime within ten
years after the discovery of the falsity or fraud$

.ote- The 153year prescriptive period for collector thru action does not apply if it appears
that there was an assessment$ %n such case) the ordinary 53year period (now 3 years)
would apply (:ep$ vs$ :et$) +arch 31) 17C4)

4$ /hen the ta&payer omits to file a return J a court proceedin for the collection of
such ta& may !e filed without assessment) at anytime within 15 years after the discovery of
the omission$

3$ /aiver of statute of limitations J any internal revenue ta&) which has !een assessed
within the period areed upon) may !e collected !e distinct or levy of !y a proceedin in
court within the period areed upon in writin !efore the e&piration of 53year period$

4$ /here the overnment ma(es another assessment on the !asis of reinvestiation
re;uested !y the ta&payer J the prescriptive period for collection should !e counted from
the last assessment$ (:ep$ vs$ LopeA) +arch 35) 17C3)

5$ /here the assessment is revised !ecause of an amended return J the period for
collection is counted from the last revised assessment$

C$ /here a ta& o!liation is secured !y a surety !ond J the overnment may proceed
thru a court action to forfeit a !ond and enforce such contractual o!liation within a period
of ten years$

8$ /here the action is !rouht to enforce a compromise entered into !etween the
commission and the ta&payer J the prescriptive period is ten years$

C$ /hen ta& is deemed collected for purposes of the prescriptive period$

1$ Collection !y summary remedies J %t is effected !y summary methods when the
overnment avail of distraint and levy procedure$

4$ Collection !y "udicial action J The collection !eins !y filin the complaint with the
proper court$ (:TC)

3$ /here assessment of the commissioner is protected N appealed to the CT* J the
collection !ein when the overnment file its answer to ta&payer?s petition for review$



Ru(es of 'rescription in Crimina( Cases

:ule- *ll violations of any provision of the ta& code shall prescri!e after five (5) years$

.ote-

W*en it s*ou(d commence.

The five (5) year prescriptive period shall !ein to run from the-

a$ >ay of the commission of the violation) if (now$

!$ %f not (nown) from the time of discovery and the institution of "udicial proceedin for its
investiation and punishment$

W*en it is interrupted#

a$ /hen a proceedin is instituted aainst the uilty person

!$ /hen the offender is a!sent from the Philippines$


W*en it s*ou(d run a-ain#

/hen the proceedin is dismissed for reason not Constitutin "eopardy$

W*en does t*e defense of prescription ma& be raised#

a$ %n civil case J %f not raised in the lower court) it is !ailed permanently' if can not !e
raised for the first time on appeal$

!$ %n criminal case J %t can !e raised even if the case has !een decided !y the lower court
!ut pendin decision on appeal$


Interruption of t*e 'rescriptive 'eriod

1$ /here !efore the e&piration of the time prescri!ed for the assessment of the ta&) !oth
the commissioner and the ta&payer have consented in writin to its assessment after such
time) the ta& may !e assessed prior to the e&piration of the period areed upon$

4$ The runnin of statute of limitations on ma(in an assessment and the !einnin of
distraint@levy or a proceedin in court for collection shall !e suspended for the period$

>urin which the Commissioner is prohi!ited from ma(in the assessment or !einnin
distraint@levy or a proceedin in court and for C5 days thereafter' e$$

a$ =ilin a petition for review in the CT* from the decision of the Commissioner$ The
commissioner is prevented from filin an ordinary action to collect the ta&$

!$ /hen CT* suspends the collection of ta& lia!ility of the ta&payer pursuant to Section
11 of :* 1145 upon proof that its collection may "eopardiAes the overnment and @or the
ta&payer$

c$ /hen the ta&payer re;uests for reinvestiation which is ranted !y
commissioner$

.ote- * mere re;uest for reinvestiation without any action or the part of the
Commissioner does not interrupt the runnin of the prescriptive period$ The re;uest
must not !e a mere pro3former$ Su!stantial issues must !e raised$

d$ /hen the ta&payer cannot !e located in the address iven !y him in the return$

.ote- %f the ta&payer informs the Commissioner of any chane in address the statute
will not !e suspended$

e$ /hen the warrant of distraint or levy is duly served upon any of the followin
person-

1$ ta&payer

4$ his authoriAed representative

3$ +em!er of his household with sufficient discretion and no property could !e
located$

f$ /hen the ta&payer is out of the Philippines$

$ %n criminal cases for violation of ta& code J the period shall not run when the
offender is a!sent from the Philippines$

.ote- * petition for reconsideration of a ta& assessment does not suspend the criminal
action$ :eason- .o re;uirement for assessment of the ta& !efore the criminal action may !e
instituted$

.ota #ene-

1$The law on prescription remedial measure should !e interpreted li!erally in order to protect
the ta&payer$

4$The defense of prescription must !e raised !y the ta&payer on time) otherwise it is deemed
waived$
3$The ;uestion of prescription is not "urisdictional) and as defense it must !e raised reasona!ly
otherwise it is deemed waived$

4$The prescriptive provided in the ta& code over ride the statute of non3claims in the settlement
of the deceased?s estate$

5$%n the event that the collection of the ta& has already prescri!ed) the overnment cannot
invo(e the principle of ,;uita!le recum!ent !y settin3 off the prescri!ed ta& aainst a ta&
refused to which the ta&payer is entitled$