PH Customs issues rules on seizure, forfeiture proceedings

PH Customs issues rules on seizure, forfeiture proceedings

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The Philippine Bureau of Customs (BOC) has issued an order covering seizure and forfeiture proceedings and its appeal process.

Customs Administrative Order (CAO) 10-2020 covers all properties subject to seizure and forfeiture under Section 1113 (Property Subject to Seizure and Forfeiture) found to be in violation of Republic Act No. 10863 or the Customs Modernization and Tariff Act (CMTA).

The order was signed by Customs commissioner Rey Leonardo Guerrero on May 11 and Finance Secretary Carlos Dominguez III on June 5 and takes effect 30 days after publication in the Official Gazette or newspaper of general circulation.

Under CMO 201-2020, properties subject to seizure or forfeiture include imported or exported goods; vehicle, vessel, or aircraft; cargo, stores, or supplies of a vessel; and package and receptacles.

The customs commissioner or any other customs officer who is authorized in writing by the commissioner may demand evidence of payment of duties and taxes on imported goods openly for sale or kept in storage.

Forfeiture may be effected only when the following circumstances exist:

  • The goods are in the custody or within the jurisdiction of customs officers.
  • The goods are in the possession or custody of or subject to the control of the importer, exporter, original owner, consignee, agent of another person effecting the importation, entry or exportation in question.
  • The goods are in the position or custody of or subject to the control of persons who should receive, conceal, buy, sell, transport the same, or aid in any of such acts, with knowledge that the goods were imported or were subject of an attempt to import or export contrary to law.

Seized cargo, stores, or supplies of a vessel or aircraft arriving from a foreign port unloaded before arriving at the port of destination without authority from the customs officer will not be forfeited in case of an accident, weather disturbance, or other similar events and with the later approval of the district collector.

A vehicle, vessel, or aircraft used to carry smuggled goods in commercial quantity will not be forfeited if it is a common carrier, if it has not been chartered to convey or transport persons or cargo, and if the owner or agent at the time of seizure has no knowledge of and participation in the unlawful act.

However, a prima facie presumption against these vehicles, vessels, or aircraft is adopted in any of the following conditions: if they had been used in smuggling before; if the owner is not in the business for which the conveyance is generally used; and if the owner is not in a financial position to own such conveyance.

Within a 15-day period, goods will be placed under constructive customs custody and may be released if any of the following documents are presented and verified:

  • proof of payment of correct duties and taxes or proof of exemption from payment of duties and taxes;
  • proof of local purchase and payment of correct duties and taxes by the original importer; or
  • proof that the goods were locally produced or manufactured.

In the event the interested party fails to produce such evidence within the 15-day period, the goods will be seized and subjected to forfeiture proceedings.

In all cases, the release of the goods seized pursuant to Section 224 (Power to Inspect and Visit) of the CMTA should be subject to the clearance of the commissioner, provided the goods are not prohibited, necessary permits and licenses are presented in case of restricted or regulated goods, and the release of the goods is not contrary to law.

Under CMO 10-2020, the district collector exercising territorial jurisdiction over the location of the seized goods have the original and exclusive authority to issue a warrant of seizure and detention (WSD). A WSD is an order in writing commanding an Enforcement and Security Service officer or any deputized officer of a national law enforcement agency to seize any properties subject to forfeiture pursuant to Section 1113.

If the offense relates only to a part or portion of a shipment, only that part should be seized or detained, provided that the district collector is satisfied that the remainder of the shipment was not used, directly or indirectly, in the commission of the offense.

However, any package of imported goods which is found upon examination to contain goods not specified in the invoice or goods declaration, including all packages purportedly containing imported goods similar to those declared in the invoice or goods declaration to be the contents of the misdeclared package, should be subject to seizure and forfeiture.

The existence of probable cause to warrant the issuance of WSD should be determined by the district collector within five working days, or two working days in case of perishable goods, from receipt of recommendation to issue a WSD.

If, within 15 calendar days after service of warrant and due notice, no owner or agent can be found or appears before the district collector, the seized goods will be forfeited ipso facto in favor of the government to be disposed of in accordance with the CMTA.

The WSD may be quashed under any of the following grounds: in case of goods seized pursuant to the power of the commissioner to inspect and visit, the claimant was able to submit proof as required; the district collector issuing the WSD has no territorial jurisdiction over the seized goods; when the concerned regulatory agency, in the cases of regulated goods, has issued the necessary clearances or licenses.

Subject to the approval of the commissioner, the district collector may also allow the settlement by payment of fine or the redemption of forfeited goods, during the course of the forfeiture proceeding. The commissioner, however, may also accept the settlement by redemption of any forfeiture case on appeal.

Settlement by payment of fine or redemption of forfeited goods is allowed when there is no fraud attributable to the importer, consignee, or owner, or when the goods are not absolutely prohibited and when the release of the goods is not contrary to law.

Settlement is, however, not allowed when the discrepancy in duties and taxes to be paid between what is determined and what is declared amounts to more than 30%.

In case of settlement by payment of fine, the owner, importer, exporter, or consignee or agent should offer to pay a fine equivalent to 30% of the total landed cost of the seized goods. In case of settlement by redemption, the owner, importer, exporter, or consignee or agent should offer to pay the redeemed value equivalent to 100% of the landed cost.

According to the book “Understanding International Trade, Tariff and Customs” authored by former BOC deputy commissioner Atty. Agaton Teodoro Uvero, compared to the old rules under the Tariff and Customs Code of the Philippines, the fine has been fixed at 30%, and redemption will be 100% of the landed cost and not the domestic market value. He added that redemption is now available in the course of the forfeiture proceedings and on appeal, even when there is fraud.

Under CMO 10-2020, the district collector should render a decision within 30 working days from the time the case is submitted for decision.

The aggrieved imported or exporter or any stakeholder directly affected by the adverse decision of the district collector may appeal the decision by filing a Notice of Appeal with a corresponding Memorandum on Appeal within 15 days, or five days in case of perishable goods, from receipt thereof.

Any violations against CAO 10-2020 will be penalized in accordance with the CMTA and other applicable penal laws and provisions.

Pending full implementation of comprehensive docketing and management system that will establish and provide electronic monitoring of seizure and forfeiture cases, BOC should implement the provisions of CAO 10-2020. – Roumina Pablo


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