IN the past few months, the Bureau of Customs (BOC) has been under fire and the consistent subject of netizens’ ire on social media due to the bureau’s tactical move on balikbayan boxes. While some corrective measures have been recently issued and hopefully implemented to the satisfaction of the concerned overseas Filipino workers and their families, one begins to wonder why the government agency concerned seems to be focusing only on the smaller fishes in the big pond.
Before I digress any further, it is worth noting that, the general duties, powers and jurisdiction of the BOC shall include, among others, the prevention and suppression of smuggling and other frauds upon the Customs.
Smuggling can be defined and classified based on the manner it is committed. Outright smuggling arises when goods and articles of commerce are brought into the country without the required importation documents, or are disposed of in the local market without having been cleared by the BOC or other authorized government agencies, to evade the payment of correct taxes, duties and other charges. Such goods and articles do not undergo the processing and clearing procedures at the BOC, and are not declared through submission of import documents, such as the import entry and internal revenue declaration. This crime is referred to as unlawful importation under Section 3601 of the Tariff and Customs Code of the Philippines (TCCP).
On the other hand, technical smuggling takes place when the goods and articles are brought into the country through fraudulent, falsified or erroneous declarations, to substantially reduce, if not totally avoid, the payment of correct taxes, duties and other charges. Unlike in outright smuggling, the goods and articles in technical smuggling pass through the BOC, but the processing and clearing procedures are attended by fraudulent acts in order to evade the payment of correct taxes, duties, and other charges.
This is often committed by means of misclassification of the nature, quality or value of goods and articles, undervaluation in terms of their price, quality or weight, and misdeclaration of their kind.
Unfortunately, such form of smuggling is made possible through the involvement and or collusion among the importers, the brokers and even some Customs officials and personnel. Section 3602 of the TCCP pertains to this crime as various fraudulent practices against Customs revenue.
The Supreme Court (SC) en banc made a clear-cut discussion on smuggling in G.R. 193253 promulgated on September 8, 2015. This case arose from the complaint affidavit filed by the Anti-Oil Smuggling Coordinating Committee that investigated the alleged illegal withdrawal by Unioil of oil products consigned to Oilink, valued at P181,988,627 with corresponding duties and taxes in the amount of P35,507,597, invoking violations of Sections 3601 and 3602, in relation to Sections 2503 and 2530, paragraphs f and l (3), (4) and (5) of the of the TCCP.
In determining whether the private respondents committed a violation of the TCCP, the SC followed the earlier pronouncement laid down in the 2006 case of Jardeleza v. People. It was clarified therein that the crime of unlawful importation under Section 3601 of the TCCP is complete, in the absence of a bona fide intent to make entry and pay duties when the prohibited article enters Philippine territory. Importation, which consists of bringing an article into the country from the outside, is complete when the taxable, dutiable commodity is brought within the limits of the port of entry. Entry through a Customs house is not the essence of the act.
On the other hand, in Section 3602 of the TCCP, which particularly deals with the making or attempting to make a fraudulent entry of imported or exported articles, the term “entry” in Customs law has a triple meaning, namely: (1) the documents filed at the Customs house; (2) the submission and acceptance of the documents; and (3) the procedure of passing goods through the Customs house. Thus, it is only for charges for unlawful importation under Section 3601 that the BOC must first prove that the subject articles were imported. For violation of Section 3602, in contrast, what must be proved is the act of making or attempting to make such entry of articles.
In the instant case, the SC declared that the charges against private respondents are without merit as the allegations of the BOC fell short of the acts or omissions constituting the crime contemplated under either Section 3601 or 3602 of the TCCP.
In fact, it was clearly established that Oilink was the one that filed the import entries and that Unioil locally purchased from Oilink such products as indicated in the sales invoices, hence for Unioil there can be no importation to speak of.
For guidance, the BOC and all concerned must be apprised of this latest jurisprudence.
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The author is a senior associate of Du-Baladad and Associates Law Offices, a member-firm of World Tax Services Alliance.
The article is for general information only and is not intended, nor should be construed, as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at filamer.miguel@bdblaw.com.ph, or call 403-2001, local 360.