REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE
BUREAU OF CUSTOMS
MANILA 1099

[DATE]

CUSTOMS ADMINISTRATIVE ORDER (CAO)

NO. ________________________

SUBJECT: CLEARANCE PROCESS FOR GOODS ENTERED UNDER CUSTOMS

BONDED WAREHOUSING (CBW) SYSTEM

____________________________________________________________________

Introduction. This CAO implements Section 410, Chapter 1; Section 434, Chapter 3,
Title IV, and Sections 801 to 813, Chapter 3, Title VIII, and other relevant sections of
Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff
Act (CMTA).

Section 1. Scope. This Order covers all shipments bound for customs bonded
warehouses, providing guidelines for the following:

(i) Declaration of goods to be entered to CBWs;

(ii) Assessment of duties and taxes, and the corresponding bonds;
(iii) Delivery of goods to CBW;
(iv) Requisition and withdrawal of bonded materials;
(v) Transfer of goods from CBW to other CBWs and Free Zone
Locators;
(vi) Exportation of finished products;
(vii) Treatment of unused raw materials and wastages;
(viii) Liquidation of bonded materials and cancellation of the
corresponding bonds;
Section 2. Objectives.

2.1. To expedite the entry and clearance of bonded warehousing goods.

2.2. To enable the Bureau of Customs (BOC) to effectively monitor and

control the operations of CBWs from lodgement of goods
declaration to liquidation of warehousing entry and cancellation of
covering security.

2.3. To ensure the proper and timely liquidation of bonded materials

and covering security.

2.4. To maximize the use of information and communication technology

in the warehousing system and processes.
 2.5. To align the customs bonded warehousing system with
international customs standards and best practices.

Section 3. Definition of Terms. For purposes of this CAO, the following terms are
defined accordingly:

3.1. Airway Bill (AWB) shall refer to a transport document for

airfreight used by airlines and international freight forwarders
which specifies the holder or consignee of the bill who has the
right to claim delivery of the goods when they arrive at the port
of destination. It is a contract of carriage that includes carrier
conditions, such as limits of liability and claims procedures. In
addition, it contains transport instructions to airlines and carriers,
a description of the goods, and applicable transportation
charges.1

3.2. Bill of Lading (BL) shall refer to a transport document issued

by shipping lines, carriers and international freight forwarders or
non-vessel operating common carrier for water-borne freight. The
holder or consignee of the bill has the right to claim delivery of
the goods at the port of destination. It is a contract of carriage
that includes carrier conditions, such as limits of liability and
claims procedures. In addition, it contains transport instructions
to shipping lines and carriers, a description of the goods, and
applicable transportation charges.2

3.3. Bonds Charge Slip shall refer to an accountable form (BC form
no. 232) issued by the Bonds Division for every bond charge
against a general bond. 3
3.4. Bonds to Enter Goods for Storing in Customs Bonded
Warehouse shall refer to a written undertaking of the CBW
Operator that the goods to be stored in Customs Bonded
Warehouse are covered by a general bond which the CBW
operator and its heirs bind themselves to be jointly and severally
liable thereto.

3.5. Customs Documentary Stamps (CDS) is a tax on documents,

instruments, loan agreements and papers evidencing the
acceptance, assignments, sale or transfer of an obligation, right
or property incident thereto.4

3.6. Customs Common Bonded Warehouse (CCBW) shall

refer to a warehouse facility established and duly authorized by
the Bureau alone and jointly with Garments and Textiles Industry
Development Office (GTIDO) or equivalent office, in case of

1
cf. Customs Modernization and Tariff Act (CMTA), Title I, Chapter 2, Section 102(d).
2
CMTA, Title I, Chapter 2, Section 102(h).
3
cf. CMO 1-1985
4
cf. BIR Tax information.
 garments industry, to import, receive, and store, duty free and
under bond, raw materials, spare parts, supplies, accessories,
packaging and packing materials for the account of its accredited
members for manufacture into finished products for export 5

3.7. Free Zones shall refer to special economic zones registered

with the Philippine Economic Zone Authority (PEZA) under
Republic Act No. 7916, as amended, duly chartered or legislated
special economic zones and freeports such as Clark Freeport
Zone; Poro Point Freeport Zone; John Hay Special Economic Zone
and Subic Bay Freeport Zone under Republic Act No. 7227, as
amended by Republic Act No. 9400; the Aurora Special Economic
Zone under Republic Act No. 9490, as amended; the Cagayan
Special Economic Zone and Freeport under Republic Act No.
7922; the Zamboanga City Special Economic Zone under Republic
Act No. 7903; the Freeport Area of Bataan under Republic Act No.
9728; and such other freeports as established or may be created
by law.6

3.8. List of Importable Goods (LIG) or Statement of Raw

Material Importation Requirement (SRMIR) shall refer to
the document which specifies the goods or raw materials
including the corresponding volume, tariff heading and other
details based on the formula of manufacture, that are authorized
or approved by the Bureau to be imported.

3.9. Multi-Purpose Declaration shall refer to customs single

administrative document (SAD) accomplished by the importer, or
his authorized representative, under oath and submitted to the
BoC for purposes of declaring and identifying among others the
nature of the goods being imported, its value, volume, weight,
and any relevant description thereof, whether entered through
consumption or through warehousing which will assist the BoC in
assessing the duties and taxes due to the imported goods.7

3.10. Provisional Goods shall refer to the lodgment of goods by a

declarant who does not have all the information or supporting
documents required to complete the goods declaration. Provided,
that it substantially contains the necessary information required
by the Bureau and the declarant undertakes to complete the
information or submit the supporting documents within forty five
(45) calendar days from the filling of the Provisional Goods
declaration, which period may extended by the Bureau for
another forty five (45) calendar days for valid reasons.8

5
cf. CAO No. 1-2009, Title III, Section 3.3.3.
6
cf. CMTA, Section 102 (w)
7
cf. CAO 1-2009
8
cf. CMTA, Title IV, Chapter 1, Section 403
 3.11. Raw Materials Liquidation System (RMLS) shall refer to
an automated system to be adopted and utilized by the BOC in
determining the volume and value of the raw material exported
and subject for liquidation, including the duties and taxes due on
the allowable residues, wastages, by-products and other portion
of the imported goods entered through warehousing, no longer
usable for the manufacture of the goods to be exported.9

3.12. Statement of Liquidation shall refer to a report indicating

the summary of bonded materials entered, stored, used,
withdrawn or exported.

3.13. Transit shall refer to the customs procedure under which

goods, in its original form, are transported under customs control
from one customs office to another, or to a Free Zone.10

Section 4. General Provisions.

4.1. Bonded Goods Importation. CBWs may import goods as

authorized by the BoC and/or other government regulatory
agencies.11

4.2. Qualification of Surety Company. The bonds referred to

herein are those issued by surety companies accredited by the BoC
to guarantee the export of goods or manufacture of raw materials
into finished products for export, or the payment of taxes or duties
due thereon.

4.3. Account in Electronic Format. The Bureau of Customs shall

keep an account in electronic form of all goods delivered to and
withdrawn from CBW, and a report shall be made by the CBW
operator containing a detailed statement of all imported goods
entered and withdrawn from the CBW. The Bureau shall specify
the format of the report and shall require electronic submission by
CBW Operator.

4.4. Requisition and Withdrawal of Bonded Goods. The Bureau

shall prescribe the procedures including the specific form to be
used in the requisition of bonded goods from the stores to
production and from CCBW to its members and withdrawal of
goods from the CBW.

4.5. Transfer of Bonded Goods. The Bureau shall prescribe specific

goods declaration for the following:

4.5.1. Transfer of bonded goods from CBW to another CBW.

9
cf. CAO 1-2009
10
cf. CMTA, Title I, Chapter 2, Section 102 (rr)
11
Cf. CAO 1-2009, 4.13
 4.5.2. Transfer of bonded goods from CBW to Free Zone.

4.5.3. Transfer of goods from Free Zone to CBW.

4.6. Bonded Goods Inventory. In order to effectively monitor the

bonded goods inventory of all CBWs, the CBWs shall establish and
utilize an automated bonded goods inventory system with linkage
to BoCs RMLS.12

4.7. Wastages. Wastages, rejects and by-products in the

manufacture of export products shall be properly accounted for
and disposed of in accordance with existing rules and
regulations.13

4.8. Unused Bonded Goods. Unused bonded goods shall be subject

to payment of duties and taxes.

4.9. Raw Materials Liquidation System (RMLS). The BOC shall

adopt and utilize an ICT-enabled system of liquidating raw
materials to effectively monitor the liquidation of raw materials
used in the manufacture of imported goods and the wastages
derived therefrom. Also, a Wastage Value database shall be
established for wastages, rejects and by-products.14

4.10. Automated Bonds Management System (ABMS). The BOC

shall adopt and utilize an ICT-enabled system of managing bonds
transactions to assist in the posting, charging, ageing, monitoring
and cancellation of bonds.15

4.11. Warehousing Information Database. The BOC shall establish

and maintain a comprehensive database of information related to
warehousing activities and its support operations.

4.12. Performance of the Obligation. The performance of the

obligation by the importer may take the form of any of the
following:

4.12.1. Exportation, within the prescribed period, of imported

goods or finished products manufactured from raw
materials imported under bond as herein provided;

4.12.2. Payment of duties and taxes on goods imported under

bond, in accordance with existing or applicable laws, rules
and regulations.16

12
cf. CAO 1-2009, 4.14
13
cf. CAO 1-2009, 4.18
14
cf. CAO 1-2009, 4.19
15
cf. CAO 1-2009, 4.20
16
cf. CAO 12-2003, Section 3.3
Section 5. Operational Provisions.

5.1. Goods Declaration for CBW. Goods declaration under customs

warehousing system must be lodged with the BOCs automated
cargo clearance system within fifteen (15) calendar days from the
date of discharge of the last package from the vessel or aircraft.

The following supporting documents shall be filed as part of the

goods declaration:

a) Bill of Lading (BL) or Airway Bill (AWB)

b) Invoice
c) Packing List
d) Bonds to Enter Goods for Storing in Customs Bonded
Warehouse (with CDS)
e) Bonds Charged Slip Form (with CDS)
f) Permits, licenses and clearances from regulatory agencies if
applicable.

5.1.1. A goods declaration for warehousing shall be filed at the

port where the goods for warehouse are discharged. In
cases where the goods to be entered for warehousing are
under the jurisdiction of another port of entry, a Transit
declaration shall be used for the transfer of the goods from
the port of discharge to the other port of entry and shall be
transformed into warehousing entry declaration within forty
eight (48) hours upon receipt of the goods at the
warehouse.

Pending implementation of the use of Multi-Purpose

Declaration, existing procedures on the filing of goods
declaration shall govern the clearance procedures for goods
entered under warehousing.

5.1.2. The Bureau may allow the lodgement of a Provisional Goods

declaration for goods entered under warehousing in
accordance with the rules and regulations on the filing of a
Provisional Goods declaration.

5.2. Posting of Security for Bonded Goods. For goods declared and
entered under the CBW scheme, the District Collector shall require
the importer to post sufficient security equivalent to the assessed
duties, taxes and other charges, as a condition for the storage and
withdrawal of the bonded goods within the period prescribed by
Section 811, Chapter 2, Title VIII of the CMTA, or the payment of
duties, taxes and other charges upon compliance with all
importation requirements.17

17
cf. CMTA, Section 808
 5.3. Examination and Assessment of Goods Declaration for
Warehousing. The concerned BOC office shall conduct
assessment of duties and taxes based on the lodged goods
declaration and the results of risk management system of the BOCs
automated cargo clearance system.

If the covering goods declaration is placed under Alert Order or

selected Red, the District Collector shall allow immediate transfer
of bonded goods to the CBW where the examination shall be
conducted. The Bureau shall establish a mechanism to ensure the
integrity of the bonded goods during the transfer of shipment from
the port of entry to the CBW.

5.4. Treatment of Goods in CBW. Treatment of goods in CBW shall

be covered by the following rules:

5.4.1. Goods duly entered for warehousing in CBWs shall be

conditionally free from payment of duties and taxes within
the allowed period for storage unless withdrawn for
consumption. Withdrawal for exportation or Transit to a Free
Zone or another CBW shall be subject to applicable rules and
regulation on the liquidation of the warehousing entry.18

5.4.2. Goods duly entered for warehousing in CBWs which are not
included in the BOC approved LIG or SRMIR shall be subject
to payment of duties and taxes.

5.5. Delivery of Imported Goods to CBW. Imported goods shall be

delivered to CBW when the goods declaration is already
electronically lodged and cleared with the BoCs automated cargo
clearance system.

Unless otherwise provided, the transfer of imported goods from the

customs zone to the warehouse shall be under continuous guarding
by customs guard(s) or other means of control and tracking system
until delivery at the CBW is acknowledged in the covering transfer
note by the customs personnel assigned thereat or by the duly
designated accountable officer of the operator.19

5.6. Period of Storage in CBWs.20

5.6.1. Goods entered for warehousing may remain in a CBW for a

maximum period of one (1) year from the time of its arrival
at the warehouse, unless a longer period is pursuant to
section 811 of the CMTA

18
CMTA, Title VIII, Chapter 2, Section 812.
19
cf. CAO 1-2009, 4.14
20
CMTA, Title VIII, Chapter 2, Section 811.
 5.6.2. For perishable goods, the storage period shall be three (3)
months from the date of arrival at the warehouse,
extendible for valid reasons, and upon written request, for
another three (3) months.

5.6.3. Imported goods shall be withdrawn from the CBWs when

the necessary withdrawal permit has been filed, together
with any related document as may be required by the
Bureau.21 Goods not withdrawn after the expiration of the
prescribed period shall be deemed abandoned, as provided
under paragraph (e), Section 1129, Chapter 6, Title XI of
the CMTA22, unless the CBW operator expressly abandons
the goods prior to the expiration of the period to withdraw
the same within the prescribed storage period.

5.6.4. Bonded raw materials withdrawn within the prescribed

storage period shall be manufactured and exported within
one (1) year from the time of arrival at the CBW. Goods
withdrawn within the prescribed period of one (1) year but
re-exported beyond the said period shall be subject to the
applicable penalties under this CAO.

5.6.5. The Commissioner shall, in consultation with the Secretary

of Trade and Industry, establish a reasonable storage
period limit beyond one (1) year for particular bonded
goods for manufacturing and intended for export, the
processing into finished products of which requires a longer
period based on industry standard and practice, subject to
the approval of the Secretary of Finance.

5.7. Requisition of Goods. Bonded Goods shall be withdrawn for

production or for transfer from Common Bonded Warehouse to its
member only upon approval of the authorized customs officer.

5.8. Withdrawal of Goods from CBWs. Imported goods shall be

withdrawn from the CBWs when the necessary withdrawal permit
has been filed, together with any related document required by any
provision of this Act and other regulations.

Goods entered under sufficient security as provided in Section 1507

of this Act may be withdrawn at any time for consumption, Transit,
or exportation. The withdrawal must be made by the CBW operator
or its duly authorized representative.23

5.9. Transfer of Bonded Goods. The CBW operator may only transfer
bonded goods from CBW to another CBW or Free Zones upon

21
cf. CMTA, Title VIII, Chapter 2, Section 809, 1st par.
22
CMTA, Title VIII, Chapter 2, Section 811, 1st par., last sentence.
23
Chapter 2, Section 809, CMTA
 written request duly approved by the District Collector or his duly
authorized representative.

Any of the foregoing transfers shall be construed as constructive

exportation for purposes of liquidating the bonded goods from
the originating source. Conversely, the transfer and receipt of the
bonded goods by the Free Zone or another CBW shall be deemed
as constructive warehousing importation.

5.10. Exportation of CBW Products. The CBW operator shall lodge

an Export Declaration for finished products which are
manufactured in CBWs.

5.11. Identification of Bonded Goods for Export. All goods for

export shall be stuffed only upon prior examination by customs
authority. For this purpose, it shall be the responsibility of the
CBW operator to inform the BOC two (2) working days in advance
before any actual stuffing shall be done.24

5.12. Liquidation of Warehousing Entry and Cancellation of

Bond. The CBW operator shall cause the liquidation of the
warehousing entry and apply for the cancellation of the bonds
within 30 calendar days after full exportation of the bonded
finished products.

5.12.1. Upon performance of obligation by way of exportation,

within the prescribed period, of goods or finished
products made of goods or raw materials imported under
bond, the importer shall, within 30 calendar days from
said exportation, liquidate the covering warehousing
entry up to extent of exportation made by filing a
Statement of Liquidation.25

5.12.2. The Statement of Liquidation shall be filed with the

concerned Operating Division, specifying therein, among
others, the warehousing entry number, including their
quantity, volume and value that are subject of the
liquidation applied for. The Statement of Liquidation shall
be submitted together with other supporting documents
showing the exportation of goods or finished products
made of goods or raw materials covered by subject
warehousing entry.26

5.12.3. If the liquidation of the warehousing entry is complete,

the Operating Division shall, within fifteen (15) calendar
days from the completion of the liquidation, forward to
the Bonds Division the Statement of Liquidation for the

24
cf. CAO 1-2009, 4.15
25
cf. CAO 12-2003, Section 4.1
26
cf. CAO 12-2003, Section 4.2
 cancellation of the corresponding bond and the
warehousing entry, the Statement of Liquidation and
the supporting documents, for the cancellation of the
corresponding bond. 27

5.12.4. Within five (5) calendar days from receipt of the above
documents, the Chief, Bonds Division shall cancel the
corresponding bond, notifying in writing the importer
and the surety company of such cancellation.28

Section 6. Penalties.29 Without prejudice to the criminal liability provided under

the CMTA, the following administrative sanctions shall be imposed on the operator for
the following offenses:

6.1. Diversion or Unauthorized Withdrawal or Repacking.

a) First Offense Duties, taxes and charges due on the goods

withdrawn; and Surcharge of fifty percent (50%) of duties,
taxes, customs fees, and charges, found to be due and
unpaid;30

b) Second Offense Suspension of warehousing privileges for six

(6) months; and

c) Third Offense Closure.

6.2. Late re-exportation and late submission of documents such as proof

of re-exportation or authority to cancel bonds issued by the
Commissioner and such other documents required for reconciliation
or liquidation of raw materials, liquidation of entries or cancellation
of re-export or surety bonds, shall be subject to penalties in
accordance with the existing rules and regulations.31

6.3. The penalties provided in this CAO shall be without prejudice to the
criminal and other liabilities imposed under the CMTA and other
laws.

Section 7. Transitory Provision. Existing systems and procedures intended to be

replaced by the automated CBW process from lodgment of goods declaration to
liquidation of warehousing entry and cancellation of bonds, existing systems and
procedures shall remain in force and effect pending approval and implementation of
such automated system.

Section 8. Periodic Review. Unless otherwise provided, this CAO shall be

reviewed every three (3) years and be amended or revised if necessary.

27
cf. CAO 12-2003, Section 5.1
28
cf. CAO 12-2003, Section 5.2
29
cf. CAO No. 1-2009, Title V, Section 5.4.
30
cf. CMTA, Title XIV, Chapter 1, Section 1422.
31
cf. CAO No. 5-91, Section II, (2a).
Section 9. Repealing Clause. This CAO specifically amends or repeals previously
issued CAOs and CMOs which are inconsistent with the provisions here stated.

Section 10. Separability Clause. If any part of this Order is declared

unconstitutional or contrary to existing laws, the other parts not so declared shall
remain in full force and effect.

Section 11. Effectivity. This CAO shall take effect fifteen (15) calendar days from
publication at the Official Gazette or a newspaper of national circulation.

The Office of National Administrative Register (ONAR) of the UP Law center shall be
provided three (3) certified copies of this CAO.

NICANOR E. FAELDON
Commissioner

Approved:

CARLOS G. DOMINGUEZ III

Secretary

Informational Section. As the title denotes this section only provides information
and does not give rise to any substantive or formal rights or obligations.

1. History. This is the first Customs Administrative Order covering the Clearance
Process for Goods Entered under Customs Bonded Warehousing (CBW) System.

2. The collection, recording, storage maintenance, processing, sharing of data and

information; and maintenance of data information in the CAO shall be secured and
consistent with the principles and policy of Republic Act 10173, also known as The
Data Privacy Act".

Related Policies.

CAO No. 01-2009. Revised Rules and Regulations for the Establishment,
Operation, Supervision and Control of Customs Bonded Warehouses.
CAO No. 12-2003. Performance of Obligation under Warehousing bond and
Liquidation of the Warehousing Entry, Providing Penalties therefore
 CAO No. 05-1991. Amended Rate Schedule on the Imposition of Surcharges for
Breach of Bond; CAO 8-80 dated August 12, 1980 is hereby amended
CMO No. 01-1985. Adoption of a Credit Card System by Operators of Embroidery
Firms and Manufacturing Bonded Warehouses for Bond Charging Purposes
Webpage, Forms, Handbooks and other References.

BIR Tax Information