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H. No. 5525
5. Na, 2968

Republic of the ]ihilippines

Gangress of the Philippines
Metca Manila
Bixteenth Congress
Thick Regular Session

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Begun and held in Metra Manila, on Monday, the twenty-seventh

day of July, two thousand fifteen.

[REPUBLIC AcT No. 10863}

AN ACT MODERNIZING THE CUSTOMS AND TARIFF

ADMENISTRATION

Be it enacted by the Senate and House of Representatives of the

Philippines in Congress assembled:

TITLE I
PRELIMINARY PROVISIONS

CHAPTER 1
SHORT TITLE

SECTION 100. Short Title. - This Act shall be known as

the “Customs Modernization and Tariff Act (CMTA)",

CHAPTER 2
GENERAL AND COMMON PROVISIONS

Suc, 101. Declaration of Policy. — Tt is hereby declared

the policy of the State to protect and enhance government revenue,
institute fair and transparent customs and tariff management
that will efficiently facilitate international trade, prevent and
curtail any form of customs fraud and illegal acts, and modernize
customs and tariff administration. Towards this end, the State

shall:
(@) Develop and implement programs for the continuous
enhancement of customs systems and processes that will
harmonize customs procedures:

(b) Adopt clear and transparent customs rules, regulations,

policies and procedures, consistent with international standards
and customs best practices;

(® Establish a regime of transparency of and accessibility

to customs information, customs laws, rules, regulations,
administrative policies, procedures and practices, in order to
ensure informed and diligent compliance with customs practices
and procedures by stakeholders;

@) Consult, coordinate and cooperate with other government

agencies and the private sector in implementing and developing
customs policy;

) Provide a fair and expeditious administrative and

judicial appellate remedy for customs related grievances and
matters;

@® Employ modern practices in customs administration

and utilize information and communications technology in the
implementation of customs functions; and :

{g) Institute professionalism and meritocracy in customs

tax administration by attracting and retaining competent and
capable customs officers and personnel to enforce the provisions
of this Act.

SEC. 102. Definition of Terms, — As used in this Act:

(@) Abatement refers to the reduction or diminution, in

whole or in part, of duties and taxes where payment has not been
made; .

(b) Actual or Outright Exportation refers to the customs

procedure applicable to goods which, being in free circulation,

leave the Philippine territory and are intended to remain

permanently outside it:

() Admission refers to the act of bringing imported goods

directly or through transitinto a free zone;

(Q) Airway Bill (AWB) refers to a transport document for

airfreight used by airlines and international freight forwarders
which specify 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, tn
addition, it contains transport instructions to airlines and carriers,

a description of the goods, and applicable transportation charges;

{e} Appeal refers to the remedy by which a person whois

aggrieved or adversely affected by any action, decision, order, or
omission of the Bureau, seeks redress before the Bureau, the
Secretary of Finance, or competent court, as the case may be;

@® Assessment refers to the process of determining the

amount of duties and taxes and other charges due on imported
and exported goods; :

(g) Authorized Economic Operator (AEO) refers to the

importer, exporter, custome broker, forwarder, freight forwarder,

' transport provider, and any other entity duly accredited by the

Bureau based on the World Customs Organization (WCO)

Framework of Standards to Secure and Facilitate Global Trade,
the Revised Kyoto Convention (RKC), the WCO Supply Chain
Management Guidelines and the various national best practices
to promote trade facilitation and to provide a seamless movement
of goods across borders through secure international trade supply
chains with the use of risk management and modern technology;

th) Bil of Lading (B/L) refers to a transport document

issued by shipping lines, carriers and international freight
forwarders or non-vessel operating commop.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;
@ Bureau refers to the Bureau of Customs;

G) Carrier refers to the person actually transporting goods

or in charge of or responsible for the operation of the means of
transport such as airlmes, shipping lines, freight forwarders, cargo
consolidators, non-vessel operating common carriers and other
international transport operators;

(k) Clearance refers to the completion of customs and other

government formalities necessary to allow goods to enter for
consumption, warehousing, transit or transshipment, or to be
exported or placed under another customs procedure;

@ Commussion refers to the Tariff Commission;

Gn) Conditional Importation refers to the customs

procedure known under the RKC as temporary admission in
which certain goods can be brought into a customs territery
conditionally relieved, totally or partially, from payment of
import duties and taxes; such goods must be imported for a
specific purpose and must be intended for reexportation within a
specified period and without having undergone any substantial
change except due to normal depreciation;

(n) Customs Broker refers ta any person who is a bona

fide holder of a valid Certificate of Registration/Professional
Identification Card issued by the Professional Regulatory Board
and Professional Regulation Commission pursuant to Republic
Act No. 9280, as amended, otherwise known as the "Customs
Brokers Act of 2004";

(©) Customs Office refers to any customs administrative

unit thatis competent and authorized to perform all or any of the
functions enumerated under customs and tarifflaws;

(p) Customs Officer, as distinguished from a clerk or

employee, refers to a person whose duty, not being clerical or
manual in nature, involves the exercise of discretionin performing
the function of the Bureau. It may also refer to an employee

authorized to perform a specific function of the Bureau as provided

in this Act;

(gq) Customs Territery refers to areas in the Philippines

where customis and tarifflaws may be enforced;

(1) Eniry refers to the act, documentation and process of

bringing imported goods into the customs territory, including
goods coming from free zones;

(3) Exportation refers to the act, documentation, and

process of bringing goods out of Philippine territory;

(f) Export Declaration refers to a statement made in the

tanner prescribed by the Bureau and other appropriate agencies, -
by which the persons concerned indicate the procedure to be
observed for taking out or causing to be taken out any exported
goods and the particulars of which the custoras administration
shall require;

(u) Mlesxible Clause refer tothe power of the President upon

recommendation of the National Economic and Development
Authority (NEDA): (1) to increase, reduce or remove existing
protective tariff rates ofimport duty, butinno case shall be higher
than one hundred perceni, (100%) ad valorem; (2) to establish
import quota or te ban importation of any commodity as may be
necessary; and (3) to impose additional duty on all import not
exceeding ten percent (10%) ad valorem, whenever necessary;

(%) Foreign Exporter refers to one whose name appears on

documentation attesting to the export of the product to the
Philippines regardless of the manufacturer's name in the invoice;

(w) Free Zone refers 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 Republie 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;

, (x) Goods refer to articles, wares, merchandise and any

other items which are subject of importation or exportation:

y) Goods Declaration refers to a statement made in the

manner prescribed by the Bureau and other appropriate agencies,
by which the persons concerned indicate the procedure to be
observed in the application for the entry or admission of imported
goods and the particulars of which the customs administration
shall require: ,

@) Importation refers to the act of bringing in of goods

from a foreign territory into Philippine territory, whether for
consumption, warehousing, or admission as defined in this Act:

(aa) Freight Forwarder refers to a local entity that acts

as a cargo intermediary and facilitates transport of goods on behalf
of its client without assuming the role of a carrier, which can
also perform other forwarding services, such as booking cargo
space, negotiating freight rates, preparing documents, advancing
freight payments, providing packing/crating, trucking and
warehousing, engaging as an agent/representative ofa foreign
non-vessel operating as a common carrier/cargo consolidator
named in a master bill of lading as consignee of a consolidated
shipment, and other related undertakings:

(bb) International Freight Forwarder refers to persons

responsible for the assembly and consolidation of shipments into
single lot, and assuming, in most cases, the full re sponsibility for
the international transport of such shipment from point of receipt
to the point of destination;

(cc) Jurisdictional Control refers to the power and rights

of the Bureau in exercising supervision and police authority
over all seas within the jurisdiction of the Philippine territory

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and over all coasts, ports, airports, harbors, bays, rivers and inland
waters whether navigable or not from the sea;

(dd) Lodgement refers to the registration of a goods

declaration with the Bureau;
(ee) Non-Vessel Operating Common Carrier (NVOCC)
refers to an entity, which may or may not own or operate a vessel
that provides a point-to-point service which tay include several
modes of transport and/or undertakes group age of less container

load (LCL) shipments and issues the corresponding transport

document;

() Qutright Smuggling refers to an act of importing goods

into the country without complete customs prescribed importation.
documents, or without being cleared by customs or other
regulatory government agencies, for the purpose of evading
payment of prescribed taxes, duties and other government charges:

(gg) Perishable Good vefers to goods liable to perish or

goods that depreciate greatly in value while stored or which cannot
be kept without great disproportionate expense, which may be
proceeded to, advertised and sold at auction upon notice if deemed
reasonable;

(hh) Port of Entry refers to a domestic port open to both

domestic and international trade, including principal ports of entry
and subports of entry. A principal port of entry is the chief: port
of entry of the Customs District wherein it is situated and is
the permanent station of the District Collector of such port.
Subports of entry are under the administrative jurisdiction of the
District. Collector of the principal port of entry of the Customs

District. Port of entry as used in this Act shall include airport of

entry;

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Gi) Port of Discharge, also called Port of Unloading,

refers to a place where a vessel, ship, aircraft or train unloads its

shipments, from where they will be dispatched to their respective

consignees; ,
8

Gi) Reexportation means exportation of goods which have

been imported;

(kk) Release of Goods refers to the action by the Bureau to

permit goods undergoing clearance to be placed at the disposal of
the party concerned;

fl) Refund refers to the return, in whole or in part, of

duties and taxes paid on goods;

(mm) Security refers to any form of guaranty, such as a

surety bond, cash bond, standby letter of credit or irrevocable
letter of credit, which ensures the satisfaction of an obligation to
the Bureau;

(on) Srmuggling refers to the fraudulent act of importing

any goods into the Philippines, or the act of assisting in receiving,
concealing, buying, selling, disposing or transporting such goods,
with fall knowledge that the same has been fraudulently imported,
or the fraudulent exportation of goods. Goods referred to under
this definition shall be known as smuggled goods;

(co) Taxes refer to all taxes, fees and charges imposed

under this Act and the National Internal Revenue Code (NIRO) of
1997, as amended, and collected by the Bureau;

(pp) Technical Smuggling refers to the act of importing

goods into the country by means of fraudulent, falsified or
erroneous declaration of the goods to its nature, kind, quality,
quantity or weight, for the purpose of reducing or avoiding payment
of prescribed taxes, duties and other charges;

(aq) Tentative Release refers to a case where the

assessment is disputed and pending review, an importer may put
up a cash bond equivalent to the duties and taxes due on goods
before the importer can obtain the release of said goods:

_ @r) Transit refers 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;

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(ss) Transshipment refers to the customs procedure under

which goods are transferred under customs control from the
importing means of transport to the exporting means of transport
within the area of one customs ‘office, which is the office of both
importation and exportation;

(it) Traveler refers to any person who temporarily enters

the territory of a country in which he or she does not. normally
resides (non-resident), or who leaves that territory, and any person
who leaves the territory of a country in which he or she normally
resides (departing resident) or who returns to that territory

(returning resident): and

(uu) Third Party refers to any person who deals directly

with the Bureau, for and on behalf of another person, relating to
the importation, exportation, movement or storage of goods.

SEC. 103. When Importation Begins and Deemed

Terminated. —Importation begins when the carrying vessel or
aircraft enters the Philippine territory with the intention te unload
therein. Importation is deemed terminated when:

{a) The duties, taxes and other charges due upon the goods
have been paid or secured to be paid at the port of entry unless
the goods are free from duties, taxes and other charges and legal
permit for withdrawal has been granted: or

(b) Incase the goods are deemed frea of duties, taxes and

other charges, the goods have legally left the jurisdiction of the
Bureau

SEC. 104. When Duty and Tax are Due on Imporied

Goods. — Except as otherwise provided for in this Act or in other
laws, all goods, when imported into the Philippines, shall be subject
to duty upon importation, including goods previously exported
from the Philippines.

Unpaid duties, taxes and other charges, shall incur legal

interest of twenty percent (20%) per annum computed from the
date of final assessment under Section 429 of this Act, when
10

payment becomes due and demandable. The legal interest shal]

likewise accrue on any fine or penalty imposed.

Upon payment of the duties, taxes and other charges, the

Bureau shall issue the necessary receipt or document as proof of
such payment. ‘

SEC. 105. Effective Date of Rate of Import Duty. ~

Imported goods shall he subject to the import duty rates under
the applicable tariff heading that are effective at the date of
importation or upon withdrawal from the warehouse for
consumption. In case of withdrawal from free zones for
introduction to the customs territory, the duty rate at the time of
withdrawal shall be applicable on the goods originally admitted,
whether withdrawn in its original or advanced form,

Tn ease of goods sold at customs public auction, the duty

rates at the date of the auction shall apply for purposes of
implementing Section 1143(a) of this Act.

SEC. 106. Declarant. — A declarant may be a consignee

ora person who has the right to dispose of the goods. The declarant
shall lodge a goods declaration with the Bureau and may be:

{a) The importer, being the holder of the bill of lading; or

(p) The exporter, being the owner of the goods to be shipped

out; or

{) A customs broker acting under the authority of the

importer or from a holder of the bill; or

(d) A person duly empowered to act as agent or

attorney-in-fact for each holder,

In case the consignee or the person who has the right to

dispose of the goods is a juridical person, it may authorize a
responsible officer of the company to sign the goods declaration as
declarant on its behalf.

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The goods declaration submitted to the Bureau shall be

processed by the declarant or by a licensed customs broker:
Provided, That for importations, a transition period of two (2)
years from the effectivity of this Act is hereby provided during
which subparagraph (d) of this section shall not be implemented
by the Bureau: Provided, further, That after two (2) years from
the effectivity of this Act, subparagraph (d) of this section shall
take mto effect consistent with international standards and
customs best practices.

SEC. 107. Rights and Responsibilities of the Declarant.

— The declarant shall be responsible for the accuracy of the goads
declaration and for the payment of all duties, taxes and other
charges due on the imported goods. The licensed customs broker
shall likewise be responsible for the accuracy of the goods
declaration but shall not be responsible for the payment of duties,
taxes and other charges due on the imported goods.

The declarant shall sign the goods declaration, even when

assisted by a licensed customs broker, who shall likewise sign
the goods declaration.

Suc. 108. Penalties for Errors in Goods Declaration. —

The Bureau shall not impose substantial penalties for errors when
such errors are inadvertent and there was no fraudulent intent
or gross negligence in the commission thereof: Provided, That
in order to discourage repetition of such errors, a penalty may be
imposed but shall not be excessive.

SEC. 109. Application of Information and

Communications Technology. — Tn accordance with international
standards, the Bureau shall utilize information and
communications technology to enhance customs control and to
support a cost-effective and efficient customs operations geared
towards 4 paperless customs environment.

The Bureau shall communicate, exchange and process

trade- and logistics-related information in the national and regional
level for the efficient and prompt clearance of goods and
commodities in a technology-neutral and secured infrastructure
for business, industries, and.government.
12

The security of data and communication shall be in a

manner that is consistent with applicable local and internationally
accepted standards on information security.

The Bureau shall likewise include as part of its systems

and processes, a disaster preparedness and recovery plan to ensure
business continuity by maintaining its uptime goal for ite electronic
and online services.

For purposes of customs procedures, electronic documents,

permits, licenses or certificates shall be acceptable and shall
have the legal effect, validity or enforceability as any other
document or legal writing: Provided, That when the prescribed
requirements are duly complied with, the Bureau shall:

(a) Recognize the authenticity and reliability of electronic

documents;

(o) Transmit approval in the form of electronic data

messages or electronic documents: and

(¢} Require and/or accept payments and issue receipts

acknowledging such payments through systems using electronic
data messages or electronic documents.

The introduction and implementation of information and

communications technology shalt be undertaken with due
’ consultation with directly affected parties and stakeholders.

SEC. 110. Relationship Between the Bureau and Third

Parties. — Parties may transact business with the Bureau either
directly or through a designated third party to act on their behalf.

The customs transactions directly transacted bya party

shall not be treated less favorably or be subject:to more stringent
requirements than those transacted through a designated third

party. —

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A designated third party shall have the same rights and
obligations as the designating party when transacting business

. with the Bureau.

Subject to the provisions of existing laws, treaties,

convention and international agreements, the Secretary of Finance
shall make the necessary guidelines for the defined relationship
ofthe Bureau and third parties.

SEC. 111. Information of General Application. ~ Alllaws,

decisions, rulings, circulars, memoranda and orders of the Bureau
shail be published in accordance with law.

‘To foster an informed compliance regime, the Bureau shall

ensure that all relevant and available information of general —
application pertaining to customs operations and procedures which
are not confidential or intended for the Bureau's internal use
only, shall be readily accessible to any interested person.

Any new information, amendment or changes in customs

law, administrative procedures or requirements, shall, as far as
practicable, be made readily available prior to its effective date of
implementation unless advance notice is precluded.

SEC. 112. Information of a Specific Nature, — The Bureau

shall provide information, not otherwise confidential or for the
Bureau's internal use only, relating toa specific matter as may
be requested by an interested party for legitimate use,

The Bureau may require the payment of a reasonable fee

in providing such information. The requested information shall
be released within reasonable time from the filing of the request
and payment of the required fee.

SEC. 118. Decision and Ruling. — The Bureau shall,

consistent with Section 1502 of this Act, issue binding and advance
decision and ruling at the request ofan interested party on matters
pertaining to importation or exportation of goods.
i4

Upon written request of the interested party, the Bureau

shall notify the party ofits decision in writing within the period
specified in this Act or by regulation. Should the decision be
adverse to the requesting interested party, the reasons thereof
shall be indicated and the party shall be advised of the party's
right of appeal.

The ruling and decision shall be issued by the Bureau within

thirty (30) days from the submission of the necessary documents
and information.

SEC. 114. Right of Appeal, Farms and Ground. — Any

party adversely affected by a decision or omission of the Bureau
pertaining to an importation, exportation, or any other legal claim
shall have the right to appeal within fifteen (15) days from receipt
ofthe questioned decision or order.

An appeal in writing shall be filed within the period

prescribed in this Act or by regulation and shall specify the grounds
thereof.

The Bureau may allow a reasonable time for the submission

of supporting evidence to the appeal.

CHAPTER 3
TYPES OF IMPORTATION

SEC. 115. Treatment of Importation. — Imported goods

shall be deemed "entered" in the Philippines for constmption when
the goods declaration is electronically lodged, together with any
required supporting documents, with the pertinent customs office.

SEC. 116. Free Importation and Exportation. — Unless

otherwise provided by law or regulation, all goods may be freely
imported into and exported from the Philippines without need for
import and export permits, clearances or licenses.

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SEC.117. Regulated Importation and Exportation. —

Goods which are subject to regulation shall be imported or exported
only after securing the necessary goods declaration or export
declaration, clearances, licenses, and any other requirements,
prior to importation or exportation. In case of importation,
submission of requirements after arrival of the goods but prior to
release from customs custody shall be allowed but only in cases
provided for by governing laws or regulations.

SEC. 118. Prohibited Importation and Exportation. -- The

unportation and exportation of the following goods are prohibited:

(a) Written or printed goods in any form containing any

matter advocating or inciting treason, rebellion, insurrection,
sedition against the government of the Philippines, or forcible
resistance to any law of the Philippines, or written or printed
goods containing any threat to take the life of, or inflict bodily
harm upon any person in the Philippines;

(b) Goods, instruments, drugs and substances designed,

intended or adapted for producing unlawful abortion, or any printed
matter which advertises, describes or gives direct or indirect
information where, how or by whom unlawful abortion is
committed; :

(c) Written or printed goods, negatives or cinematographic

films, photographs, engravings, lithographs, objects, paintings,
drawings or other representation of an obscene or immoral
character;

(@) Any goods manufactured in whole or in part of gold,

silver or other precious metals or alloys and the stamp, brand or
mark does not indicate the actual fineness of quality of the metals
or alloys:

) Any adulterated or misbranded food or goods for human

consumption or any adulterated or misbranded drug in violation

of relevant laws and regulations; :
16

(® Infringing goods as defined under the Intellectual

Property Code and related Jaws: and

(g) Allother goods or parts thereof, which importation and

exportation are explicitly prohibited by law or rules and
regulations issued by the competent authority.

SEC. 119. Restricted Importation and Exporiation. —

Except when authorized by law or regulation, the importation
and exportation of the following restricted goods are prohibited:

(2) Dynamite, gunpowder, ammunitions and other

explosives, firearms and weapons of war, or parts thereof:

(b) Roulette wheels, gambling outfits, loaded dice, marked

cards, machines, apparatus or mechanical devices used in
gambling or the distribution of money, cigars, cigarettes or other
goods when such distribution is dependent on chance, inchuding
jackpot and pinball machines or similar contrivances, or parts
thereof:

() Lottery and sweepstakes tickets, except advertisements

thereof and lists of drawings therein;

(@) Marijuana, opium, poppies, coca leaves, heroin or other

narcotics or synthetic drugs which are or may hereafter be declared
habit forming by the President of the Philippines, or any
compound, manufactured salt, derivative, or preparation thereof,
except when imported by the government of the Philippines or
any person duly authorized.by the Dangerous Drugs Board, for
medicinal purposes;

() Opiem pipes or parts thereof, of whatever material:

@® Any other goods whose importation and exportation are

restricted.

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The restriction to import or export the above stated goods

shall include the restriction on their transit.

CHAPTER 4
RELIEF CONSIGNMENT

SEC. 120. Relief Consignment. — Goods such as food,

medicine, equipment and materials for shelter, donated or leased
to government institutions and accredited private entities for free
distribution to or use of victims of calamities shall be treated and
entered as relief consignment.

Upon declaration of a state of calamity, clearance of relief

consignment shall be a matter of priority and subject to a
simplified customs procedure. The Bureau shall provide for:

(a) Lodging of a simplified goods declaration or of a.

provisional or incomplete goods declaration subject to completion
ofthe declaration within a specified period:

(b) Lodging, registering and checking of the goods

declaration and supporting documents prior to the arrival of the
goods, and their release upon arrival:

(©) Clearance beyond the designated hours of business or

away from customs offices and waiver of any corresponding
charges; and

(@) Examination and/or sampling of goods only in

exceptional circumstances.

The Department of Finance (DOF) and the Department of

Social Welfare and Development (DSWD) shall jointly issue the
rules and regulations for the implementation of this provision.

SEC. 121. Duiy and Tax Treatment. —- Relief consignment,

as defined in Section 120, imported during a state of calamity
and intended for a specific calamity area for the use of the calamity
victims therein, shall be exempt from duties and taxes.
18

TITLETL
BUREAU OF CUSTOMS
CHAPTER 1
GENERAL ADMINISTRATION

SEC. 200. Chief Officials of the Bureau. ~ The Bureau

shail be headed by a Commissioner and shall he assisted by at
least four (4) but not more than six (6) Deputy Commissioners.

The Commissioner shall be appointed by the President of

the Philippines.

The Deputy Commissioners shall also be appointed by the

President and at least majority of whom shall come from the
ranks of the Bureau.

SEC. 201. Powers and Functions of the Commissioner. ~

The Commissioner shall have the following powers and fictions:

(@) Exclusive and original jurisdiction to interpret the

provisions of this Act, in collaboration with other relevant
government agencies, subject to review by the Secretary of Fmance;

(>) Exercise any customs power, duties and functions,

directly or indirectly;

() Review any action or decision of any customs officer

performed pursuant to the provisions of this Act:

(® Review and decide disputed assessments and other

matters related thereto, subject to review by the Secretary of
Finance and exclusive appellate jurisdiction of the Court of Tax
Appeals (CTA);

) Delegate the powers vested under this Act to any

customs officer with the rank equivalent to division chief or higher,
except for the following powers and functions:

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(1) Promulgation of rules and regulations:

(2) Issuance, revocation or modification of rulings; and
(3) Compromise or abate of customs obligations.

() Assignment or reassignment of any customs officer

subject to the approval of the Secretary of Finance: Provided,
That District Collectors and other customs officers that perform
assessment functions shall not remain in the same area of
assignment for more than three (8) years: and:

(g) Perform all other duties and functions as may be

necessary for the effective implementation of this Act and other
customs related laws.

SEC. 202. Functions of the Bureau. — The Bureau shall

exercise the following duties and functions:

(a) Assessment and coliection of customs revenues from

imported goods and other dues, fees, charges, fines and penalties

accruing under this Act;

*

(o) Simplification and harmonization of customs procedures

to facilitate movement of goods in international trade;

(©) Border control to prevent entry of smuggled goods;

(@) Prevention and suppression of smuggling and other

. customs fraud;

e) Facilitation and security of international trade and

commerce through an informed compliance program;
(© Supervision and control over the entrance and clearance
of vessels and aircraft engaged in foreign commerce:

@) Supervision and control over the handling of foreign

mails arriving in the Philippines for the purpose of collecting
revenues and preventing the entry of contraband;
20

(h) Supervision and control on all import and export

cargoes, landed cr stored in piers, airports, terminal facilities,
including container yards and freight stations for the protection
of government revenue and prevention of entry of contraband:

@ Conduct a compensation study with the end view of

developing and recommending to the President a competitive

compensation and remuneration system to attract and retain
highly qualified personnel, while ensuring that the Bureau
remains financially sound and sustainable;

Q) Exercise of exclustve original jurisdiction over forfeiture

cases under this Act: and

() Enforcement of this Act and all other laws, rules and

regulations related to customs administration.

SEC. 203. Annual Report of the Commissioner. — The

Commissioner shall submit to the President, the Congress of the
Philippines and the NEDA an annual report on the performance
ofthe Bureau, on or before March 31 of the following year.

SEC. 204. Promulgation of Rules and Regulations. — The

Commissioner, subject to the approval ofthe Secretary of Finance,
shall promulgate rules and regulations for the enforcement of
this Act. The Commissioner shall regularly prepare and publish
an updated customs manual, and the rules, regulations and
decisions of the Bureau. The Commissioner shall furnish the
Congress of the Philippines, the NEDA and the Tariff Commission
with electronic copies of department orders, administrative orders,
- circulars, and rules and regulations promulgated pursuant to
this Act. :

SEC. 205. Copies of Goods Declaration. — The

Commissioner shall regularly furnish the NEDA, the Philippine
Statistics Authority (PSA), the Bureau of Internal Revenue (BIR)
and the Tariff Commission electronic copies of all customs goods
declaration processed and cleared by the Bureau.

21

Upon request, the Tariff Commission shall have access to,

and the right to be furnished with copies of liquidated goods
declaration and other documents supporting the goods declaration
as finally Gled in the Commission on Audit (COA).

For this purpose, the Bureau shall maintain electronic

records of goods declaration and other documents supporting the
declaration,

CHAPTER 2
CUSTOMS DISTRICTS AND Ports oF ENTRY
SEC. 206. Customs Districts. — For administrative
purposes, the Philippines shall be divided into as many Customs
Districts as necessary, the respective limits of which may
be changed from time to time by the Commissioner, with
the approval of the Secretary of Finance.

Each Customs District shall be supervised by one (1)

District Collector, assisted by as many Deputy District Collectors
as may be necessary. The choice of the location of a District
Office, its business hours and the staffing pattern thereof, shall
be based on the particular requirements of each district.

SEC. 207. Ports of Entry. — All ports of entry shall be

under the supervision and control of a Customs District.
A District Collector shall be assigned in the principal ports of
entry while a Deputy District Collector may be assigned to
other types of ports of entry. .

The principal ports of entry shall be located in Aparri; San

Fernando, Manila, Manila International Container Port, Ninoy
Aquino International Airport, Subic, Clark, Batangas, Legaspi,
Hloilo, Cebu, Tacloban, Surigao, Cagayan de Orc? Zamboanga,
Davao, Limay and such other ports that may be created pursuant
to this Act.

For the effective enforcement of the Bureau's functions and

without hampering business and commercial operations of the
ports, sea ports and airport authorities and private ports and
22

airport operators shall provide suitable areas for examination and

for other customs equipment free of charge within a definite period
of time, as agreed with private port and airport operations, if
any.

SEC. 208. Power of the President to Open and Close Any

Port. - Upon the recommendation of the Secretary of Finance,
‘the President may open or close any port of entry. Upon closure
ofa port of entry, the existing personnel shall be reassigned by
the Commissioner, subject to the approval of the Secretary of
Finance.

SEC. 209. Assignment of Customs Officers and Employees

to Other Duties. — The Commissioner, with the approval of the
Secretary of Finance, may assign any employee of the Bureau
to any port, service, division or office of the Bureau within
the Bureau's staffing pattern or organizational structure, or
may assign any employee other duties: Provided, That such
assignment shall not affect the employee's tenure of office nor
result in a change of status, demotion in rank and/or salary
deduction.

SEC. 210. Duties of the District Collectar. ~- The District

Collector shall have the following duties in their assigned Customs
Thstrict:

(i) Ensure entry of all imported goods at the customs office;

(2) Prevent importation and exportation of prohibited goods;

(3) Ensure legal compliance of regulated goods and facilitate

the flow of legitimate trade;

(4) Examine, classify and value imported goods;

(6) Assess and collect duties, taxes and other charges on

imported goods;

(6) Hold and dispose imported goods in accordance with

this Act;

23

(7% Prevent smuggling and other customs fraud; and

(8) Perform other necessary duties that may be assigned

by the Commissioner for the effective implementation of this Act.

Subject to the supervision and control of the District

Collector, the duties and functions of the District Collector may
be delegated to the Deputy District Collector. The Deputy District
Collector assigned to a sub-port shall be under the supervision
and control of the District Collector of the corresponding principal
port.

SEC. 211. Temperary Succession of Deputy District

Collector to Position of Acting District Collector. — Inthe absence
or disability of a District Collector or, in case of vacancy, the
Deputy District Collector shall temporarily discharge the
duties of the District Collector. Should there be no Deputy District
Coliector, the District Collector shall designate, in writing,
a senior ranking customs officer to temporarily perform the
duties of the District Collector. In case there are two (2) or more
senior ranking customs officers with equal length of service,
a drawing of lots shall be undertaken. The District Collector
shall report the designation to the Commissioner within
twenty-four (24) hours after the designation.

SEC. 212. Records to be Kept by Customs Officers. ~—

District Collectors, Deputy District Collectors, and customs officers
acting in such capacities must maintain permanent records of
official transactions and turn-over all records and official
papers to their respective successors or other authorized officials.
The records shall be made available for inspection by other
authorized officials of the Bureau. :

ifrequired, the District Collector shail affix the official dry

seal of the Bureau on all documents and records requiring
authentication.

SEC. 213. Reports of the. District Collector to the

Commissioner. ~ The District Collector shall report to the
Commissioner any probable or initiated litigation within the
24

Customs District and shall submit regular monthly reports on

all district transactions.

CHAPTER 3
EXERCISE OF POLICE AUTHORITY

SEC. 214, Persons Exercising Police Authority. — For

the effective implementation of this Act, the following persons
are authorized to effect search, seizure, and arrest:

(a} Officials of the Bureau, District Collectors, Deputy

District Collectors, police officers, agents, inspectors and guerds
ofthe Bureau; ,

(ob) Upon authorization of the Commissioner, officers and

members of the Armed Forces of the Philippines (AFP)- and
national law enforcement agencies; and

{o) Officials of the BIR on all cases falling within the regular
‘performance of their duties, when payment ofinternal revenue
taxes is involved,

All officers authorized by the Coromissioner to exercise police

authority shall at all times coordinate with the Commissioner.

Goods seized by deputized officers pursuant to this section

shall be physically turned-over immediately to the Bureau, unless
provided under existing laws, rules and regulations.

For this purpose, mission orders shail clearly indicate the

specific name carrying out the mission and the tasks to be carried
out. “

Subject to the approval of the Secretary of Finance, the

‘Commissioner shall define the scope, areas covered, procedures
‘and conditiens governing the exercise of such police authority

including custody and responsibility for the seized goods.

The rules and regulations to this effect shall be furnished to the

25

concerned government agencies and personnel for guidance and

compliance.

All seizures pursuant to this section must be effected in

accordance with the provisions on the conduct of seizure
proceedings provided for in Chapters 3 and 4 of Title XI of this
Act.

SEC. 215. Place Where Authority May be Exercised. — Ail

persons exercising police authority as described in the preceding
section shall only exercise powers within customs premises as
provided for in Section 303 of this Act, and within the limits of
the authority granted by the Commissioner.

Port and airport authorities in all ports of entry shall provide

authorized customs officers with unhampered access to all
premises within their administrative jurisdiction.

SEC. 216. Exercise of Power of Seizure. — Any person

exercising police authority under this Act has the power and duty
to seize any vessel, aircraft, cargo, goods, animal or any other
movable property when the same is subject to forfeiture or when
they are subject of a fine imposed wnder this Act.

SEC. 217. Duty of Officer io Disclose Official Character.

— For the proper exercise of police authority, any authorized
person shall disclose the nature of the authority upon being
questioned at the time of exercise thereof and shall exhibit the
corresponding written authority issued by the Commissioner.

BEC. 218. Authority to Require Assistance and

Information. — Any person exercising police authority may
demand the assistance of and request information from the
Philippine National Police (PNP), the AFP and other national
law enforcement agencies, when necessary, to effect. any search,
seizure or arrest. It shall be the duty of any police officer and
other national law enforcers to give such lawful assistance.

SEC. 219. Authority to Enter Properties. — Any person

exercising police authority may, at any time, enter, pass through,
26

and search any land, enclosure, warehouse, store, building or

structure not principally used as a dwelling house.

When a security personnel or any other employee lives in

the warehouse, store, or any building, structure or enclosure that
is used for storage of goods, it shall not be considered as a dwelling
house for purposes of this Act.

SEC. 220. Authority tao Search Dwelling House. — A

dwelling house may be entered and searched only upon warrant
issued by a Judge of a competent court, the sworn application
thereon showing probable cause and particularly describing the
place to be searched and the goods to be seized,

SEC.221. Authority to Search Vessels or Aircrafts and

Persons or Goods Conveyed Therein. — Any person exercising
police authority under this Act may board, inspect, search
and examine a vessel or aircraft and any container, trunk,
package, box or envelope found on board, and physically
search and examine any person thereon. In case of any
probable violation of this Act, the person exercising police
authority may seize the goods, vessel, aircraft, or any part thereof.

Such power to search includes removal of any false bottom,

partition, bulkhead, or any other obstruction for the purpose of
uncovering any concealed dutiable or forfeitable goods.

The proceeding herein authorized shall not give rise to any

claim for damage caused to the goods, vessel or aircraft, unless ©

there is gross. negligence or abuse of authority in the exercise

thereof.

SEC. 222. Authority to Search Vehicles, Other Carriers,

Persons and Animals. — Upon reasonable cause, any person
exercising police authority may open and examine any box,
trunk, envelop e, or other container for purposes of determining
the presence of dutiable or prohibited goods. This authority
includes the search of receptacles used for the transport ofhuman
remains and dead animals, Such authority Hkewise includes
the power to stop, search, and examine any vehicle or carrier,

SPICE MMAAPN Hite ita + cubtenta use

27

person or animal suspected of holding or conveying dutiable or

prohibited goods.

SEC. 223, Authority to Search Persons Arriving From

Foreign Countries. — Upon reasonable cause, travelers arriving
from foreign countries may he subjected to search and detention
by the customs officers. The dignity of the person under search
and detention shall be respected at alltimes, Female inspectors
may be employed for the examination and search of persons of
their own sex.

SEC.224. Power to Inspect and Visit. — The

Commissioner or any 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, In the event thatthe interested party fails to produce
such evidence within fifteen (15) days, the goods may he seized
and subjected to forfeiture proceedings: Provided, That during
the proceedings, the interested party shall be given the opportunity
to prove or show the source of the goods and the payment of duties
and taxes thereon: Provided, further, That when the warrant of
seizure has been issued but subsequent documents presented
evidencing proper payment are found to be authentic and in order,
the District Collector shall, within fifteen (15) days from the receipt
of the motion to quash or recall the warrant, cause the immediate
release of the goods seized, subject to clearance by the
Commissioner: Provided, finally, That the release thereof shall
not be contrary to law.

TITLE Tit
CUSTOMS JURISDICTION AND CUSTOMS CONTROL,
CHAPTER I
CUSTOMS JURISDICTION

SEC. 300. Customs Jurisdiction. — For the effective

implementation of this Act, the Bureau shall exercise jurisdiction
over all seas within Philippine territory and ali coasts, ports,
28

airports, harbors, bays, rivers and inland waters whether

navigable or not from the sea and any means of conveyance.

. The Bureau shall pursue imported goods subject to seizure

during its transport by land, water and air and shall exercise
jurisdiction as may be necessary for the effective enforcement of
this Act. When a vessel or aircraft becomes subject to seizure for
violation of this Act, a pursuit of such vessel or aircraft which
began within the territorial waters or air space may continue
beyond the same, and the vessel or aircraft may be seized in the
high seas or international air space.

CHAPTER 2
CUSTOMS CONTROL

SEC. 301. Customs Contrel Over Goods. — All goods,

including means of transport, entering or leaving the customs
territory, regardless of whether they are liable to duties and taxes,
shall be subject to customs control to ensure compliance with
this Act.

In the application of customs control, the Bureau shall

employ audit-based controls and risk management systems, use
automation to the fullest extent possible, and adopt a compliance
measurement strategy to support risk management.

The Bureau shall seek to cooperate and conclude mutual

administrative assistance agreements with other customs
administrations to enhance customs contrel. The Bureau shall
consult, coordinate, and cooperate with other government
regulatory agencies, free zones authorities, and the customs
stakeholders, in general, to enhance customs control.

SEC.302. Enforcement of Port Regulation of the Bureau

of Quarantine, — Customs officials and employees shall cooperate
with the quarantine authorities in the enforcement of the port
quarantine regulations promulgated by the Bureaw of Quarantine
and shall give effect to the same insofar as connected with matters
of shipping and navigation,

29

SEC. 303. Control Over Premises Used for Customs

Purposes. — The Bureau shall, for custome purposes, have
exclusive control, direction and management of customs offices,
facilities, warehouses, ports, airports, wharves, infrastructure
and other premises in the Customs Districts, im all cases without
prejudice to the general police powers of the local government
units (LGUs), the Philippine Coast Guard and of law enforcement
agencies in the exercise of their respective functions.
SEc. 304. _ Power of the President to Subject Premises to
Customs Jurisdiction. — When public interest requires, the
President may, by executive order, declare any public wharf,

- landing place, infrastructure, street or land, in any port of entry

under the jurisdiction of the Bureau as may be necessary, for

customs purposes and/or to authorize a port or terminal operator
to transfer overstaying cargoes in an inland depot or terminal.

SEC. 305. Trespass or Obstruction. of Customs Premises.

— No person shall enter or obstruct a customs office, warehouse,
port, airport, wharf, or other premises under the control of the
Bureau without prior authority, including the streets or alleys
where these facilities are located. :

SEC. 306. Special Surveillance for the Protection of

Customs Revenue and Prevention of Smuggling. — The Bureau
shall conduct surveillance on vessels or aircratts entering
Philippine territory and on imparted goods entering the customs
office: Provided, That the function of the Philippine Coast Guard
to prevent and suppress the illegal entry of these goo ds, smuggling
and other forms of customs fraud and violations of maritime law
and its proper surveillance of vessels entering and/or leaving
Philippine territory as provided in, Republic Act No. 9998, otherwise
known as the "Philippine Coast Guard Law of 2009", shall continue
to bein force.

SEC. 307. Temporary Storage of Goods. ~ Subject to the

_ rules and regulations to be issued by the Secretary of Finance,

the Commissioner shall establish a system for temporary storage

of imports prior to goods declaration in case of abandoned or

overstaying goods. :
80

TITLE IV
IMPORT CLEARANCE AND FORMALITIES
_. CHAPTER 1
GOODS DECLARATION

SEC. 400. Goods to be Imported through Customs Office.

-~ All goods imported into the Philippines shall be entered through
a customs office at a port of entry, or may be admitted to or
removed from a free zone as defined in this Act, as the case may
be.

SEC. 401. fmportations Subject to Goods Declaration. —

Unless otherwise provided for in this Act, all imported goods shail
be subject to the lodgement of a goods declaration. A goods
declaration may be for consumption, for customs bonded
warehousing, for admission, for conditional importation, or for
customs transit.

SEC. 402. Goods Declaration for Consumption. -- All

goods declaration for consumption shall be cleared through
a formal entry. process except for the following goods which
shall be cleared through an informal entry process:

{a) Goods of a commercial nature with Free on Board (FOB)

or Free Carrier At (FCA) value of less than fifty thousand pesos
(P50,000.00). Every three (8) years after the effectivity of this
Act, the Secretary of Finance shall adjust this amount as provided
herein to its present value, using the Consumer Price Index (CPD
as published by the PSA; and

(b} Personal and household effects or goods, not in

commercial quantity, imported in a passenger's baggage or mail,

The Commissioner may adjust the value of goods of

commercial nature that shall be cleared through an informal
entry process without prejudice to the periodic adjustment period
in subparagraph (a) of this section.

d
i

31

All importations entered through a formal entry process

shall be covered by a letter of credit or any verifiable commercial
document evidencing payment or in cases where there is no sale
for export, by any commercial document indicating the commercial
value of the goods.

SEC. 403. Provisional Goods Declaration. — Where the

declarant does not have all the information or supporting
documents required to complete the goods declaration, the lodging
of a provisional goods declaration may be allowed: 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) days from the filing of the provisional goods
declaration, which period may be extended by the Bureau for
another forty-five (45) days for valid reasons.

Ifthe Bureau accepts a provisional goods declaration, the

duty treatment of the goods shall not be different from that of
goods with complete declaration.

Goods under a provisional goods declaration may bereleased

upon posting of any required security equivalent to the amount -
ascertained to be the applicable duties and taxes.

Sec. 404. Owner of Imported Goods. — All goods imported

into the Philippines shall be deemed to be the property of the
consignee or the holder of the bill of lading, airway bill or other
equivalent transport document if duly endorsed by the consignee
therein, or, ifconsigned to order, duly endorsed by the consignor.
The underwriters of abandoned goods and the salvors of goods
saved from wreck at sea, coast, or in any area of the Philippines,
may be regarded as the consignees.

Sec. 405. Liability of Importer for Duties,and Taxes. =

Unless relieved by laws or regulations, the Hability for duties,
taxes, fees, and other charges attached to importation constitutes
a personal debt due and demandable against the importer in favor
of the government and shall be discharged only upon payment of
duties, taxes, fees and other charges. It also constitutes a lien on
32

the imported goods which may be enforced while such goods are
under customs’ custody.

SEC. 406. Importations by the Government. — xcept

those provided for in Section 800 of this Act, all importations by
the government for its own use or that ofits subordinate branches
or instrumentalities, or corporations, agencies or instrumentalities
owned or controlled by the government, shall be subject to the
duties, taxes, fees and cther charges under this Act.

SEC. 407. Goods Declaration and Period of Filing. — As

far as practicable, the format of the goods declaration shall conform
with international standards. The data required in the goods
declaration shall be limited to such particulars that are
deemed necessary for the assessment and collection of duties
and taxes, the compilation of statistics and compliance with this
Act. The Bureau shall require the slectronic lodgement of the
goods declaration. —

The Bureau shail only require supporting documents

necessary for customs control to ensure that all requirements of
the law have ‘been complied with. Translation of supporting
documents shall not be required except when necessary.

Goods declaration must be lodged within fifteen (15) days

trom the date of discharge of the last package from the vessel or
aircraft. Theperiod to file the goods declaration may, upon
request, be extended on valid grounds for another fifteen (15)
days: Provided, That the request is made before the expiration

-of the original period within which to file the goods

declaration: Provided, however, That the period ofthe lodgement
of the goods declaration may be adjusted by the Commissioner.

SEc.408. Lodgement and Amendment of Goods

Declaration. —'The Bureau shall permit the electronic lodgement
of the goods declaration at any designated customs office. The
Bureau shall, for valid reason and under terms and conditions
provided by regulation, permit the dedlarant to amend the goods
declaration that has already been lodged: Provided, That the
request to amend the goods declaration, together with the intended

33

amendments, must be received prior to final assessment or

examination of the goods.

SEC. 409. Advance Lodgement and Clearance. — The

Bureau may provide for the lodgement and clearance of goods
declaration and supporting documents prior to the arrival of the
goods under such terms and conditions as may be provided by
rules and regulations to be promulgated under this Act.
SEC. 410. Entry of Goods in Pari for Consumption and
in Part for Warehousing. — Goods declaration covered by one bill
of lading or airway bill over goods which are meant in part for
consumption and in part for warehousing may be both entered
simultaneously for release at the port of entry.

Sec. 411. Contents of Goods Declaration. — Goods

declaration shall contain the names of the consignee, importing
vessel or aircraft, port of departure, port of destination and date
of arrival, the number and marks of packages, or the quantity, if
in bulk, the nature and correct commodity description of the goods
contaimed therein, its value as set forth in a proper invoice, and
such other information as may be required by rules and
regulations. Where the declarant does not have all the information
required to make the goods declaration, a provisional or incomplete
goods declaration shall, for certain cases and for reasons deemed
valid by the Bureau, be allowed to be lodged: Provided, That it
contains the particulars deemed necessary by the Bureau fér the
acceptance of the entry filed and that the declarant undertakes
to complete it within forty-five (45) days from the filing of the
provisional goods declaration in accordance with Section 403 of
this Act. ‘

SEC. 412. Statements to be Provided in the Goods

Declaration. — No entry of imported goods shall be allowed
unless the goods declaration has been lodged with the
Bureau. The goods declaration shall, under penalties of
falsification or perjury, contain the following statements:

(a) The invoice and goods declaration contain an accurate

and faithful account of the prices paid or payable for the goods,
and other adjustments to the price actually paid or payable, and
a4

that nothing has been omitted therefrom or concealed whereby

the government of the Republic of the Philippines might be
defrauded of any part of the duties and taxes lawfully due on the

goods; aud

(b) To the best of the declarant's information and belief,

all the invoices and bills of lading or airway bills relating to the
goods are the only ones in existence relating to the importation in
question, and that these documents are in the same state as when
they were received by the declarant, and the declaration thereon
are in all respects genuine and true.

Goods declaration shall be submitted electronically pursuant

to Republic Act No. 8792, otherwise known as the "Electronic
Commerce Act. of 2000". Such declarations when printed and
certified by a competent customs officer as a faithinl reproduction
of the electronic submission shall be considered as actionable
documents for purposes of prosecuting a declarant if the
declarations are found to be fraudulent.

SEC. 413. Description of Goods. — Under such terms and.

conditions prescribed under the rules and regulations, the
description of the goods in the goods declaration must be sufficient
and specific iv detail to enable the goods to be identified for
customs valuation, statistical purposes, and classification to
the appropriate tariff heading and subheading in the currency
- of the invoice, and in such other particulars necessary for
the proper assessment and collection of duties and taxes.
The quantity and value of each of the several classes of goods
shall be separately declared according to their respective
headings or subheadings and the totals of each heading or
subheading shall be duly shown.

SEC. 414. Commercial and Noncommercial Invoice. —

Commercial invoice of imported goods shall contain the following:

(a) The agreed price paid or to be paid for the goods;

fi) The adjustments to the price paid or to be paid as defined

in Section 701(1) of this Act, if not yet included in the invoice, ag

may be applicable;

35

ofsale” The names of the buyer, seller, and the time and place

@) The port of entry;

; ; @ A sufficient description, to enable the accurate
identification of goods for tariff classification, customs valuation,
and. statistical purposes, indicating the correct commodity
aescription, in customary term or commercial designation, the
grade or quality, wumbers, marks or symbols under which they
are sold by the seller or manufacturer, together with the marks
and number of packages in which the goods are packed:

() The quantities in the weights or meas

shippats ann g. measures of the goods

&) Any other fact deemed necessary for the proper

examination, customs valuation, and tariff classification of the
goods as may he prescribed by rules and regulations.

To the extent possible, the above requirements shall also

apply to goods imported but not covered by sale, such as goods on
consignment or lease, samples, or donations, covered by a
consignment, pro forma invoice, or other nencommercialinvoice,

/ SEc. 415. Mode of Payment and Terms of Trade. —

Subject te existing laws and rules on foreign currency exchange,

. the internationally accepted standards and practices on the mode

of payment or remittance covering import and export tr: i

including standards developed by international trading bodice such
as the International Chamber of Commerce (ICC) on trading terms
fpegterms) and on international letters of credit such as the
niform Customs and Practice for i
(OCPDOC), shall be recognized. Documentary Credits
| a hp

SEC. 416. Examination of Samples. — Customs officers

shall see to it that representative samples taken during
examination shall be properly receipted for and retained within a
reasonable period oftime. The quantity and value of the samples
taken shall be noted in the specified box of goods declaration or
36

electronic form. Such samples shall be duly labeled as will

definitely identify them with the importation for which they are
taken.

SEC. 417. Forwarding of Cargo and Remains of Wrecked

Vessel or Aircraft. — When vessels or aircrafts are wrecked
within the Philippines, the original owners or consignees of the
eargo, or by its underwriters, in case of abandonment, may seck
approval from the Bureau to forward the goods saved from the
wreck to the ports of destination without going through the
customs office in the district in which the goods were cast ashore
or unloaded. Upon approval, the goods may he forwarded with
particular manifests and duly certified by a customs officer In
charge of the goods.

The owner of the vessel or aircraft may be permitted to

export the remains of the wreck upon proper examination and
inspection. The remains of a wrecked vessel shall include not
only its hull and rigging, but also all sea stores, goods and
equipment, such as sails, ropes and chain anchors.

Sec. 418. Derelicts and Goods from Abandoned Wrecks.

— Derelicts and all goods recovered from sea or from abandoned
wrecks shall be under the jurisdiction ofthe port where the goods
arrive, and shall be retained in the custody of the Bureau. Ifnot
claimed by thé owner, underwriter or salvor, the same shall be
deemed as property of the government.

When such goods are brought into port by lighters or other

erafi, each vessel shall submit a manifest of their respective cargo.

The customs officer nearest the scene of the wreck shall

take charge of the goods saved and shall give immediate notice to
the District Collector or the nearest customs office.

Tn order to prevent any attempt to commit fraud, the District

Collector shall he represented at the salvage of the cargo by customs
officers who shall examine and receive the inventory made on the
cargo.

37

Derelicts and goods salvaged from foreign vessels or airerafts

recovered from sea or wreck: are prima facie dutiable and may be
entered for consumiption or warehousing. If claimed to be of
Philippine production, and consequently conditionally duty-free,
proof must be submitted as in ordinary cases of retmportation of
goods. Foreign goods landed from a vessel or aircraft in distress
is dutiable if sold or disposed ofin the Philippines.

Before any goods taken from a recent wreck are admitted

to the customs territory, the same shall be appraised, and the
owner or importer shall have the same right to appeal as in
ordinary importation.

No part ofa Philippine vessel or aircraft or its equipment,

wrecked either in Philippine or foreign waters, shall be subject to
duty,

CHAPTER 2
EXAMINATION OF GOODS

SEC. 419. Examination of Goods.— Examination of goods,

when required by the Bureau, shall be conducted immediately
after the goods declaration has been lodged. Priority in the
examination shall be given to live animals, perishable goods and
other goods requiring immediate examination.

Whenever necessary, a system of coordination and joint

examination of goods shall be established by the Bureau and other
regulatory agencies under existing laws and regulations.

As a general rule, the Bureau may examine the goods in

the presence of the declarant or an authorized representative.
Examination of the goods in the absence of the declarant or
authorized representative may be allowed “thnexceptional
circumstance and for valid and justifiable grounds, as may be
defined by regulations promulgated by the Secretary of Finance,
upon recommendation of the Commissioner. The Bureau may
require the declarant to be present or to be represented at the
38

examination of the goods or to render any assistance necessary to

facilitate the examination.

The Bureau shall take samples of the goods only when

needed to establish the tariff description and value of goods
declared, or to ensure compliance with this Act. Samples drawn
shall be as minimal as possible.

SEC. 420. Conditions for Examination. — Pursuant to

internationally accepted standards, the Bureau may adopt
nonintrusive examination of goods, such as the use of x-ray
machines.

Physical examination of the goods shall be conducted when:

(a) It is directed by the Commissioner on account of a

derogatory information;

(b) The goods are subject to an Alert Order issued by

competent authority;

{c) The goods are electronically selected for physical

examination;

(@) There are issues and controversies surrounding the

goods declaration and theimport clearance process; or

(e) Theimporter or declarant requests for the examination

of the goods.

The Commissioner may exempt from physical examination

the goods of authorized economic operators or of those provided.
for under any. existing trade facilitation program of the Bureau.

Physical examination, when required, shall be conducted

in.an expeditious manner.

38

SEC. 421. Duties of Customs Officer Tasked to Examine

the Imported Goods. — In the examination, classification, and
valuation of the goods, the customs officer shall:

(a) Determine whether the packages for examination and

their contents are in accordance with the goods declaration, invoice
and other pertinent documents:

()) Take samples of the imported goods for examination or

laboratory analysis when necessary;

(©) Issue a receipt for a sample taken and retained during

examination; and

(a) Report whether the goods have been correctly declared

as to value, quantity, measurement, weight, tariff classification
and net imported contrary to law.
Failure on the part of the customs officer to perform the
above duties shall be penalized according to Section 1431 of Title
AIV of this Act.

SEC. 422. Customs Expenses Constituting Charges on

Goods. — The cost of examination shall be for the account of the
importer or exporter, subject to proper accounting and
documentation. All expenses incurred by the Bureau for the
handling or storage of goods and other necessary operations shall
be chargeable against the goods, and shall constitute a Lien
thereon.

CHAPTER 8
ASSESSMENT AND RELEASE

Sec. 423. Determination of the De Minimis Value. —No

duties and taxes shall be collected on goods with an FOB or FCA
value of ten thousand pesos (P 10,000.00) or below. The Secretary
of Finance shall adjust the de minimis value as provided herein,
every three (3) years after the effectivity of this Act. The value

herein stated shall be adjusted to its present value using the CPI,
ae nubliched hy tha PSA
40

SEC. 424. Duty of Customs Officer Tasked to Assess

imported Goods. — For purposes of assessing duties and taxes

on imported goods, the customs officer shall classify, value, and —

determine the duties and taxes to be paid. The customs officer

shall prepare and submit an assessment report as established
under this Act.

SEC. 425. Tentative Assessment of Goods Subject to

Dispute Setilement. — Assessment shall be deemed tentative if
the duties and taxes initially assessed are disputed by the importer.
The assessment shall be completed upon final readjustment based
- onthe tariffruling in case of classification dispute, or the final
resolution of the protest case involving valuation, rules of origin,
and other customs issues.

The District Collector may allow the release of the imported

goods under tentative assessment upon the posting of sufficient
security to cover the applicable duties and taxes equivalent to the
amount that is disputed.

SEC. 426. Tentative Assessment of Provisional Goods

Declaration. '— Assessment of a provisional goods declaration
shall be deemed tentative and such assessment shall be completed

upon final readjustment and submission by the declarant of the |

additional information or documentation required to complete the

declaration within the period provided in Section 403 of this Act.

SEC. 427. Readjustment of Appraisal, Classification

or Return. — Such appraisal, classification or return, as finally
passed upon and approved or modified by the District Collector,
shali not be altered or modified in any manner, except:

- () Within one (1) year after payment of the duties, upon

statement of error in conformity with Section 912 of this Act, as
approved by the District Collector: .

(2) With fifteen (15) days after such payment, upon

request for reappraisal or reclassification addressed to the
Commissioner by the District Collector, if the appraisal or
classification is deemed to be low;

4i

(3) Upon request for reappraisal and/or reclassification, in

the form ofa timely protest addressed to the District Collector by |
the interested party if the latter should be dissatisfied with the
appraisal or return; or ,

(4) Upon demand by the Commissioner after the completion

ofcompliance audit in accordance with the provisions of this Act.

SEC. 428. Assessment of Duty on Less Than Entered

Value. — Duty shall not be assessed in any case upon an amount
less than the entered value, unless by direction of the Commissioner
in cases when the importer certifies at the time of entry that the
entered value is higher than the dutiable value and that the goods
are so entered in order to meet increases made by the appraiser
in similar cases then pending re-appraisement; and the lower
assessment shall be allowed only when the importer's contention
is sustained by a final decision, and shall appear that such action
of the importer was taken in good faith after due diligence and
inquiry.

SEC. 429. Final Assessment, — Assessment shall be

deemed final fifteen (15) days after receipt of the notice of
assessment by the importer or consignee.

SEC. 430. Period of Limiiation. — In the absence of fraud

and when the goods have been finally assessed and released, the
assessment shall be conclusive upon all parties three (3) years
from the date of final payment of duties and texes, or upon
completion of the post clearance audit. ~

SEC. 431. Release of Goods after Payment of Duties and

Taxes. ~ Goods declared shall be released when duties and taxes
and other lawful charges have been paid or secured and all the
pertinent iaws, rules and regulations have been complied with.

When the Bureau requires laboratory analysis of samples,

detailed technical documents or expert advice, it may release the
goods before the results of such examination are known after
posting of sufficient security by the declarant.
42

- SEC. 432. Release of Goods to the Holder of Bill of Lading

or Airway Bill. — Any customs officer who releases goods to the
consignee or lawful holder of the bill of lading or airway bill shall
not be liable for any defect or irregularity in its negotiation unless
the customs officer has notice of the defect or irregularity.

SEC. 433. Release of Goods Without Production of Bill of |

Lading or Airway Bill, - No customs officer shall release goods

to any person without the submission of the bill of lading or
airway bill covering the goods, except on written order of the
carrier or agent of the vessel or aircraft, in which case neither
the government nor the customs officer shall be held liable
for any damage arising from wrongful release of the goods:
Provided, That when the release of goods is made against such
written order, the customs officer shall require the submission of
acopy of the bill. :

SEC. 4934. Release of Goods Upon Order of Importer. —

Animporter may issue a written authorization for the release of
goods stored in a bonded warehouse to another person. Such
authorization shall not relieve the importer from liability for the
duties, taxes and other charges due on the goods unless the person
to whom the release was authorized assumes such liability.

SEC. 435. Withholding Release Pending Satisfaction of

Lien. —When the District Collector is duly notified through a
lawful order of a competent court of a lien for freight, lighterage
or general average upon any imported goods, the District Collector
shall withhold the release of the goods unless the claim has been,
paid or secured. In case of disagreement, the District Collector
may release the goods after payment of the freight and lighterage
due on the quantity or weight landed as actually determined.

SEC. 436. Hine or Surcharge on Goods. — Goods subject

to any fine or surcharge shall be released only after the payment
of the fine or surcharge.

43

CHAPTER 4
SPECIAL PROCEDURES

SEC. 437. Traveler and Passenger Baggage. — The

Bureau shall provide simplified customs procedure for traveler
and baggage processing based on international agreements and
customs best practices.

Travelers shall be permitted to export goods for commercial

purposes, subject to compliance with the necessary export
formalities and payment of export duties, taxes and charges, if
any. .

SHC. 438. Postal Item or Mail, — Postal item or mail

shall include letter-post and parcels, as described in international
practices and agreements, suchas the Acts ofthe Universal Postal
Union (AUPU), currently in force.
A simplified procedure shall be used in the clearance of

' postal item or mail, including the collection of the applicable duties

and taxes on such items or goods.

When all the information required by the customs are

available in the special declaration form for postal items as
provided in the AUPU or similar international agreements, the
special declaration form and supporting documents shall be
the goods declaration, However, a separate goods declaration
shall be required for the following:

{a) Goods whese value fall within the level that the
Commissioner has determined to be taxable and thus must be
covered by a goods declaration:

(b) Prohibited and regulated goods;

(ce) Goods, the exportation of which must he certified; and

() Imported goods under a customs procedure other than

for consumption. ,
44

SEC. 439. Express Shipment. — The Bureau shail provide

- simplified customs procedures based.on international standards

and customs best practices for air shipments considered as

time-sensitive and requiring pre-arrival clearance. Express

shipments of aceredited air express cargo operators may be

released prior to the payment of the duty, tax and other charges
upon posting ofa sufficient security.

SEC. 440. Establishment of Advance Customs Clearance

and Control Program. ~ The Bureau may establish and
implement a voluntary program on advance customs clearance
and control on containerized cargoes. The details of the voluntary
advance customs clearance shall be subject to the rules and |
regulations to be issued by the Bureau after conducting the
necessary public hearings and consultations with the concerned

sectors.
TITLE V
EXPORT CLEARANCE AND FORMALITIES
CHAPTER 1
EXPORT CLEARANCE AND DECLARATION

Src. 500. Export Declaration. — All goods exported from

the Philippines, whether subject to export duty or not, shall be
declared through a competent customs office through an export
declaration, duly signed electronically or otherwise by the party
making the declaration.

The description of the goods in the export declaration must

contain sufficient and specific information for statistical purposes
as well as for the proper valuation and classification of the goods.

SEC. 501. Expert Product to-Conform to Standard

Grades. — Ifapplicable, products shall conform to export standard
grades established by the government. The packaging of the said
goods shall likewise be labeled and marked in aceordance with

45

related laws and regulations. Export declaration may not be

granted for goods violating the aforementioned requirements.

SEC. 502. Lodgement and Processing of Export

Declaration. — The Bureau shali promulgate rules and
regulations to allow manual and electronic lodgement and
processing of the export declaration.

SEC. 603. Rules of Origin. ~ Pursuant to the applicable

rules of origin, the Bureau or any other designated government
agency may determine the origin of goods for export and, if
appropriate, issue the corresponding certificates of origin.
However, the exporter may adopt a self-certification system:
Provided, That itis duly accredited by the Bureau or any other
authorized government agencies,

TITLE VI
CUSTOMS TRANSIT AND TRANSSEIPMENT
CHAPTER 1
CUSTOMS TRANSIT

SEC. 600. Customs Transit in the Customs Territory. =

Customs transit within the customs territory shall be allowed for
goods except those intended for consumption, to be transported as
follows:

(a) From port ofentry to another port of entry as exit point

for outright exportation; ,

(b) From port of entry to another port of entry or inland

customs office;
BRM oy
(¢) From inland customs office to a port of entry as exit
point for outright exportation; and

(d)} From one port of entry or inland customs office to

another port of entry or inland customs office.
46

A transit permit is required for goods transported under

customs transit. However, transfer of goods in customs transit
from one means of transport to another shall be allowed:
Provided, That any customs seal or fastening is not broken or
tampered. ;

The party responsible for the compliance of the obhgations

imposed on customs transit shall ensure that the goods are
presented intact and in due course at the customs office of
destination. Failure to comply with the aforementioned obligations
or likewise failure to fcllow a prescribed itinerary or period for
delivery of the goods may immediately subject the goods to the
corresponding duties, taxes and other applicable fines, penalties,
and surcharges.

SEC. 601. Duty and Tax on Goods Intended for Transit.

— Transit goods admitted for storage in a. customs bended
warehouse, or for outright exportation at the port of destination
or inland customs office, and goods intended for transit covered
by Republic Act No. 10668, otherwise known as "An Act Allowing
Foreign Vessels to Transport and Co-Load Foreign Cargoes for
Domestic Transshipment and for Other Purposes", shall not be
subject to the payment of duties and taxes at the port of entry:
‘Provided, That any conditions and security required by the
Burean are complied with.

Goods for consumption and other geods intended for customs

transit not covered by the immediately preceding paragraph shall
be subject to the payment of duties and taxes at the pert of
discharge.

SEC. 602. Carrier's Security. — Carriers that transport

imported geods that shall be placed under customs transit from a
port of entry to other ports, shall post a general transportation
security amounting to at least fifty thousand pesos (P50,000.00).
Such security shall ensure the complete and immediate delivery
of goods to the customs officer at the port of destination and the
payment of pertinent customs charges and expenses and other
transfer costs. The amount of the security may be adjusted by
the Commissioner, upon approval of the Secretary of Finance.

47

CHAPTER 2
CUSTOMS TRANSSHIPMENT

SEC. 603. Customs Transshipment. — Goods admitted

for transshipment shall not be subject to the payment of duties
and taxes: Provided, That the gocds declaration for customs
transshipment particularly indicates such nature of the goods,
duly supported by commercial or transport documents or evidence
as required by the Bureau.

. Goods for transshipment must be exported from the

Philippines within thirty (80) days from arrival thereof. The
Commissioner may allow an extension of such period after the
establishment of valid reasons.
SEC. 604. Goods Entered for Immediate Reexportation.—

’ Where an intent of reexportation of the goods is shown by the bill

of lading, invoice, manifest, or other satisfactory evidence, the

whole or a part of a bill comprising not less than one package
may be entered for immediate reexportation under security.
The District Collector shall designate the vessel or aircraft in
which the goods are loaded constructively as a warehouse to
faeilitate the direct transfer of the goods to the exp orting vessel or
aircraft.

a Unless it shall appear in the bill of lading, airway bill,

invoice, manifest, or other satisfactory evidence, that goods
arriving in the Philippines are destined for transshipment, no
exportation thereof will be permitted except under entry for
immediate reexportation under sufficient security in an amount
equal to the ascertained duties, taxes and other charges.

Upon the reexportation of the goods, and the production of

proof of landing beyond the limits of the Philippines, the security
shall be released.
48

TITLE VI
IMPORT DUTY AND TAX
CHAPTER 1
BASIS OF VALUATION

Sec. 700. Sequential Application of Valuation Methods.

— Imported goods shall be valued in accordance with the provisions
of Section 701 of this Act whenever the conditions prescribed
therein are fulfilled.

Where the customs value cannot be determined under the

provisions of Section 701 of this Act, it is to be determined by
proceeding sequentially through the succeeding sections hereof
to the first such section under which the customs value can be
determined. Except as provided in Section 704 of this Act, it is
only when the customs value cannot be determined under the
provisions of a particular section that the provisions of the next
section in the sequence can be used.

Ifthe importer does not request that the order of Sections

704 and 705 of this Act be reversed, the normal order of the
sequence is to be followed. If the importer so requests but it is
impossible to.-determine the customs value under Section 705 of
this Act, the customs value shall be determined under Section
104.

When the customs value cannot be determined under

Sections 701 through 705, it may be determined under Section
706 of this Act.

SEC. 701. Transaction Value System — Method One. ~

The transaction value shall be the price actually paid or payable
for the goods when sold for export to the Philippines adjusted
in accordance with the provisions of this section: Provided, That:

(a) There are no restrictions as to the disposition or use of

the goods by the buyer other than restrictions which:

48

@ Are imposed or required by law or by Philippine

authorities:

Gi) Limit the geographical area in which the goods may be

resold; or

ii) Do net substantially affect the value of the goods;

; (b) The sale or price is not subject to some condition or

consideration for which a value cannot be determined with respect
to the goods being valued; and

() The buyer and the seller are not related, or where the
buyer and the seller are related, that the transaction value is
acceptable for customs purposes under the provisions hereof.

For purposes of this Act, persons shall be deemed related

only it

@ They are officers or directors of one another's business:

Gi) They are legally recognized partners in business;

7 ii) There exists an employer-employee relationship between

them:

(iv) Any person directly or indirectly owns, controls or holds

five percent (5%) or more of the outstanding veting stocks or shares
of both seller and buyer; :

(v) One ofthem directly or indirectly confrols the other;

(i) Both of them are directly or indirectly controlled by a

third person; Bere

(vii) Together they directly or indirectly control a third

person; or
50

. (viii) They are members of the same family, imcluding those

related by affinity or consanguinity up to the fourth civil degree.

Persons who are associated in business with one another

in that one is the sole agent, sole distributor or sole concessionaire,
however described, of the other shali be deemed to he related for
the purposes of this Act if they fall within any of the eight (8)
cases cited in the preceding paragraph.

In a sale between related persons, the transaction value

shall be accepted as basis for customs valuation whenever the
importer demonstrates that such value closely approximates one
ofthe following occurring at or about the same time:

(a) The transaction value in sales to unrelated buyers of

identical or. similar goods for export to the same country of
importation;

(b) The customs value of identical or similar goods as

determined under the provisions of Section 704 of this Act; or

(ce) The customs value of identical or similar goods are

determined under the provisions of Section 705 of this Act.

In determining the transaction value, the following shall

be added to the price actually paid or payable for the imported
goods:

() Tothe extent that they are incurred by the buyer but

are not included in the price actually paid or payable for the
imported goods:

‘@ Commissions and brokerage fees except buying

commissions;

(b) Cost of containers;

() Cost of packing, whether for labor or materials:

(@ Value, apportioned as appropriate, of the following goods

and services: materials. comnanents. narte and similar tame

51

items used in the production of imported goods; materials

consumed in the production of the imported goods; and engineering,
development, artwork, design work and plans and sketches
undertaken elsewhere than in the Philippines and necessary for
the production ofimported goods, where such goods and services
are supplied directly or indirectly by the buyer free of charge or
at a reduced cost for use in connection with the production and
sale for export of the imported goods: and

©) Amount of royalties and license fees related to the goods

being valued that the buyer must pay either directly or indirectly,
as a condition ofsale of the goods to the buyer.
@) Value of any part of the proceeds of any subsequent
resale, disposal or use of the imported goods that accrues directly
or indirectly to the seller:

(3) Cost of transport of the imported goods from the port of

exportation to the port of entry in the Philippines;

@) Loading, unloading and handling charges associated

with the transport of the imported goods from the country of
exportation to the port of entry in the Philippines; and

(5} Cost ofinsurance,

All additions to the price actually paid or payable shall be

made only on the basis of objective and quantifiable data.

. SEC. 702. Transaction Value of Identical Gobds — Method

Lwo.— Where the dutiable value cannot be determined under
method one, the dutiable value shall be the transaction value of
identical goods sold for export to the Philippines and exported at
or about the same time as the goods being valued. For purposes
of this section, “Identical goods" refer to goods wHithare the same
in all respects, including physical characteristics, quality and
reputation. Minor differences in appearances shall not preclude
goods otherwise conforming to the definition from being regarded.
as identical.

i
1
|
|
i
52

If im applying this section, more than cne transaction value

of identical goods are found, the lowest value shall be used to
determine the customs value.

SEC. 703. Transaction Value of Similar Goods — Method

Three. — Where the dutiable value cannot be determined under
the preceding method, the dutiable value shall be the transaction
value of similar goods sold for export to the Philippines and
exported at or about the same time as the goods being valued. For
purposes of this section, “Similar goods" refer to goods which,
although not alike in all respects, have like characteristics and
similar component materials which enable them to perform the
same functions and to be commercially interchangeable. The
quality of the goods, its reputation and the existence of a
trademark shall be among the factors to be considered in
determining whether goods are similar.

Ef in applying this section, more than one transaction value

of identical goods are found, the lowest such value shall be used.
to determine the customs value.

SEC.704. Deductive Value — Method Four. — Where the

dutiable value cannot be determined under the preceding method,
the dutiable value shall be the deductive value unless otherwise
requested by the importer as provided in Section 700 hereof. The
deductive value which shall be based on the unit price at which
the imported goods or identical or similar imported goods are sold
in the Philippines, in the same condition as when imported, in
the greatest aggregate quantity, at or about the time of the
importation of the goods being valued, to persons not related to
the persons from whom they buy such goods, subject to deductions
for the following:

() Either the commissions usually paid or agreed to be

paid or the additions usually made for profit and general expenses
in connection with sales in such country of imported goods of the

_ same class or kind;

(2) The usual costs of transport and insurance and

associated costs incurred within the Philippines:

53

(8) Where appropriate, the costs of: () transport of the

imported goods from the port of exportation to the port of entry in
the Philippines; Gi) loading, unloading and handling charges
associated with the transport of the imported goods from the
country of exportation to the port of entry in the Philippines; and
(i) insurance; and

() The customs duties and other national taxes payable

in the Philippines by reason of the importation or sale of the
goods.

If neither the imported goods nor identical nor similar

imported goods are sold at or about the time of importation of the
goods heing valued in the Philippines in the conditions they were
imported, the customs value shall, subject to the conditions set
forth in the preceding paragraph, be based on the unit price at
which the imported goods or identical or similar imported goods
sold in the Philippines in the condition they were imported and at
the earliest date after the importation of the goods being valued,
but before the expiration of ninety (90) days after such importation.

If neither the imported goods nor identical nor similar

imported goods are sold in the Philippines in the condition as
imported, then, if the importer so requests, the dutiable value
shall be based.on the unit price at which the imported goods,
after further processing, are sold in the greatest aggregate quantity
to persons in the Philippines who are not related to the persons
from whem they buy such goods, subject to allowance for the
value added by such processing and deductions provided under
subsections (1), (2), (3) and (4 hereof.

SEC. 705. Computed Value — Method Five. — Where the

dutiable value cannot be determined under the preceding method,
the dutiable value shall be the computed value of the sum of:

(1) The cost or the value of materials and fabrication or

other processing employed in producing the imported goods;

@) The amount for profit and general expenses equal to

that usually reflected.in the sale of goods of the same class or
54

kind as the goods being valued which are made by producers in

the country of exportation for export to the Philippmes;

@) The freight, msurance fees and other transportation,

expenses for the importation of the goods;

(4) Any assist, ifits value is not included under paragraph

(D hereof: and

(®) The cost of containers and packing, if their values are

not included under paragraph (1) hereof.

The Bureau shall not require or compel any person not

residing in the Philippimes to produce for examination, or to allow
access to, ‘any account or other record for the purpose of
determining a computed value. However, information supplied
by the producer of the goods for the purposes of determining the
customs value may be verified in another country with the
agreement of the producer and provided that said producer will
give sufficient advance notice to the government ofthe country in
question and that the latter does not object to the investigation.

SEC.706. Fallback Value—Method Six. — ifthe dutiable

value cannot be determined under the preceding methods
described. above, it shail be determined by using other
reasonable means and on the basis of data available in the
Philippimes. If the importer so requests, the importer shall be
informed in writing of the dutiable value determined under method
six and the method used to determine such value.

No dutiable value shall be determined under method six on

the basis of:

(1) The selling price in the Philippmes of goods produced in

the Philippines;

(2) Asystem that provides for the acceptance for customs

purposes of the higher of two (2) alternative values;

55

(3) Theprice of goods in the domestic market of the country

of exportation:

(4) The cost of production, other than computed values,

that have been determined for identical or similar goods in
accordance with method five hereof:

6) The price of goods for export toa country other than

the Philippines;

(©) Minimum customs values; or

(7) Arbitrary or fictitious values.

SEC. 707. Ascertainment of the Accuracy of the Declared

Value. — Nothing in this section shall be construed as restricting
or calling into question the right of the Bureau to ascertain the
trath or accuracy of any statement, document cr declaration
presented for customs valuation purposes. When a declaration
has been presented and when the Bureau has reason to doubt the
truth or accuracy of the particulars or of documents produced in
support of such declaration, it may ask the importer to provide
further explanation, including documents or other evidence, that
the declared value represents the total amount actually paid or
payable for the imported goods, adjusted in accordance with the
provisions of Section 701 of this Act.

ifin the course of determining the dutiable value of. imported.

goods, it becomes necessary to delay the final determination of
such dutiable value, the importer shall nevertheless be able to
secure the release of the imported goods upon posting of a sufficient
secunity in an amount equivalent to the duties and taxes in dispute
conditioned on the payment of additional duties and taxes, ifany,
as may be determined: Provided, That prohibited goods shail
not be released under any circumstance. ante ng

lf, after receiving further information, or in the absence of

a response, the Bureau still has reasonable doubts on the truth
or accuracy of the declared value, it may deem that the customs
value of the imporied goods cannot be determined under method
56

one, without prejudice to an importer's right to appeal pursuant

to Section 1104 of this Act. Before taking a final decision, the
District Collector shall communicate to the importer, in writing
ifrequested, the grounds for doubting the truth or accuracy of
the particulars or documents produced and give the importer a
reasonable opportunity to respond. When a final decision is made,
the Bureau shall communicate its decision and the grounds
therefor in writing.

SEC. 708. Exchange Rate. - For the assessment and

collection of import duty upon imported goods and for other
purposes, the value and prices thereof quoted in foreign currency
shall be converted into the currency of the Philippines at the
current rate of exchange or value specified or published, from
time to time, by the Bangko Sentral ng Pilipinas (BSP).

CHAPTER 2
SPECIAL DUTIES AND TRADE REMEDY MEASURES

SEC. 708. Government's Right of Compulsory

Acquisition..— In order to protect government revenues against
undervaluation of goods, the Commissioner may, motu proprio
or upon the recommendation of the District Collector, acquire
imported goods under question for a price equal to their declared
customs value plus any duties already paid on the goods, payment
for which shall be made within ten (10) working days from
issuance of 4 warrant signed by the Commissioner for the
' acquisition of such goods,

An importer who is dissatisfied with a decision of the

Commissioner pertaining to this section may, within twenty (20)
working days after the date on which notice of the decision is
given, appeal to the Secretary of Finance, and thereafter if still
dissatisfied, to the CTA as provided for in Section 1136 of this
Act,

Where no appeal is made by the importer, or upon

reaffirmation of the Commissioner's decision during the appeals

57

process, the Bureau or its agents shall sell the acquired goods
pursuant to existing laws and regulations.

Nothing in this section limits or affects any other powers

of the Bureau with respect to the disposition of the goods or any
liability of the importer or any other Person with respect to an
offense committed in the importation of the goods.

SEC. 710. Marking of bnported Goods and Containers. —

(A) Marking of Goods. — Except as hereinafter provided, all goods
of foreign origin imported into the Philippines or their containers,
as provided in subsection (B) hereof shall be conspicuously marked
in any official language of the Philippines as legibly, indelibly
and permanently as the nature of the goods or container will
permit and in such manner as to indicate to an.ultimate purchaser
in the Philippines the name of the country of origin of the goods.
Pursuant thereto, the Commissioner shall, with the approval of
the Secretary of Finance:

(1) Determine the character of words and phrases cr

abbreviation thereof which shall be acceptable as indicating the
country of origin and prescribe any reasonable method of marking,
whether by printing, stenciling, stamping, branding, labeling or
by any other reasonable method, and in a conspicuous place on
the goods or container where the marking shall appear:

( Require the addition of other words or symbols which

may be appropriate to prevent deception or mistake as to the
origin of the goods or as to the origin of any other goods with
which such imported goods is usually combined subsequent to
importation but before delivery to an ultimate purchaser; and

(8) Authorize the exception of aay goods from the

requirements of marking if: /
. iy

@ Such goods are incapable of being marked:

Gi) Such goods cannot be marked prior to shipment to the

Philippines without injury;
58

Gi). Such goods cannot be marked prior to shipment to

the Philippines, except at an expense economically prohibitive of

their importation;

Gv) The marking of a container of such goods will

reasonably indicate the origin of such goods;

() Such goods are crude substances;

(i) Such goods are imported for use by the importer and
not intended for sale in their imported or any other form;

(viil} Such goods are to be processed in the Philippines by

the importer or for the importer's account other than for the
purpose of concealing the origin of such goods and in such manner
that any mark contemplated by this section would necessarily be
obliterated, destroyed, or permanently concealed:

(iit) An ultimate purchaser, by reason of the character of

such goods or by reason of the circumstances of their importation,

must necessarily know the country of origin of such goods even -

though they are not marked to indicate their origin:

(x) Such goods were produced more than twenty (20) years
prior to their importation into the Philippines; or

) .Such goods cannot be marked after importation except

at an expense which is economically prohibitive, and the failure
to mark the goods before importation was not due to any purpose
of the importer, producer, seller or shipper to avoid compliance
with this section. :

(B) Marking of Containers, — Whenever goods are exempt

under paragraph (3) of subsection (A) of this section from the
requirements of marking, the immediate container, if any, of
such goods; or such other container or containers of such goods,
shall be marked in such manner as to indicate to an ultimate
purchaser in the Philippines the name ‘of the country of origin of
such goods in any official language of the Philippines, subject to

59

all provisions of this section, including the same exceptions as

are applicable to goods under paragraph (3) of subsection (A).

(C) Fine for Faihire to Mark. — lé at the time ofimportation

any good or its container, as provided in subsection (B) hereof, is
not marked in accordance with the requirements of this section,
there shal] be levied, collected, and paid upon such good a marking
duty of five percent (5%) of dutiable value, which shall be deemed
to have accrued at the time of importation.

(D) Release Withheld Until Marked. — No imported goods

held in customs cust ody for inspection, @xamination, or
assessment shall be released until such goods or their containers
shall have been marked in accordance with the requirements of
this section and until the amount of duty estimated to be payable
under subsection (C) of this section shall have been deposited.

(E) The failure or refusal of the owner or importer to mark

the goods as herein required within a period of thirty (80) days
after due notice shall constitute as an act of abandonment of said
goods and their disposition shall be governed by the provisions of
this Act relative to abandonment of imported goods.

SEC. 71L. Dumping Duty, ~

The provisions of Republic Act No. 87 52, otherwise known

as the "Anti-Dumping Act of 1999", are hereby adopted.

SEC. 712, Safeguard Duty. —

The provisions of Republic Act No. 8800, otherwise known

as the "Safeouard Measures Act", are hereby adopted.

SEc. 713. Countervailing Duty. - adeag

The provisions of Republic Act No. 87. 51, otherwise known

as "An Act Strengthening the Mechanisms for the Imposition of
Countervailing Duties on Imported Subsidized Products,
Commodities or Articles of Commerce in Order to Protect Domestic
industries from Unfair Trade Competition, Amending for the
60

Purpose Section 302, Part 2, Title If, Book I of Presidential Decree

No. 1464", otherwise known as the "Tariff and Customs Code of
the Philippines, as Amended", are hereby adopted.

SEC. 714. Discrimination by Foreign Countries. —

Without prejudice to the Philippine commitment in any ratified
international agreements or treaty, the following recourse shall
be applicable in case of discrimination by foreign countries:

@ When the President finds that the public interest will

be served thereby, the President shall, by proclamation, specify
and declare new or additional duties in an amount not exceeding
one hundred percent (100%) ed valorem upon goods wholly orin
part the growth or product of, or imported in a vessel of any
foreign country whenever the President shall find as a fact that
such country: ,

(1) Imposes, directly or indirectly, upon the disposition or

transportation in transit or through reexportation from such
country of any goods wholly or in part the growth or product of
the Philippines, any unreasonable charge, exaction, regulation
or limitation which is not equally enforced upon the like goods of
every foreign country: or

@) Discriminates in fact against the commerce of the

Philippines, directly or indirectly, by law or administrative
regulation or practice, by or in respect to any customs, tonnage,
or port duty, fee, charge, exaction, classification, regulation,
condition, restriction or prohibition, in such manner as to place
the commerce of the Philippines at a disadvantage compared with
the commerce of any foreign country.

{b) If at any time the President shall find it to be a fact

that any foreign country has not only discriminated against the
commerce of the Philippines, as aforesaid, but has, after the
issuance of a proclamation as authorized in subsection (a) of this
section, maintained or increased its said discrimination against
the commerce of the Philippines, the President is hereby
authorized, if deemed consistent with the interests of the
Philippines and of public interest, to issue a further proclamation

61

directing that such product of said country or such goods imported

in their vessels be excluded from importation into the Philippines,

(ce) Any proclamation issued by the President under this

section shall, ifthe President deems it consistent with the interest
of the Philippines, extend to the whole of any foreign country or
may be confined to any subdivision or subdivisions thereof
Provided, That the President may, whenever the public interest
requires, suspend, revoke, supplement or amend any such
proclamation.

@) AU goods imported contrary to the provisions of this

section shall be forfeited to the government of the Philippines and
shall be liable to be seized, prosecuted and condemned in like
manner and under the same regulations, restrictions, and
provisions as may from time to time be established for the recovery,
collection, distribution, and remission or forfeiture to the
government by the tariff and customs laws. Whenever the
provision of this section shall be applicable to importations into
the Philippines of goods wholly orin part the growth or product of
any foreign country, it shall be applicable thereto, whether such
goods are imported directly or indirectly.

(©) It shall be the duty of the Commission to ascertain and

at all times be informed whether any of the discriminations
against the commerce of the Philippines enumerated in
subsections {a) and (b) of this section are practiced by any country;
and if and when such discriminatory acts are disclosed, it shall
be the duty of the Commission to bring the matter te the attention
of the President, and to recommend measures tg address such
discriminatory acts.

@ The Secretary of Finance shall make such rules and

regulations as are necessary for the execution of a proclamation
that the President may issue in accordance withthe provisions of
this section. :
62

TITLE VII
. Tax AND Duty DEFERMENT, PREFERENCE AND EXEMPTION
| CHAPTER 1
CONDITIONALLY TAX AND/OR DUTY-EXEMPT IMPORTATION

SEG, 800. Conditionally Tax and/or Duity-Exempt

Importation. ~ The following goods shall be exempt from the
payment of import duties upon compliance with the formalities
prescribed in the regulations which shall he promulgated by the
Commissioner with the approval of the Secretary of Finance:
Provided, That goods sold, bartered, hired or used for purposes
other than what they were intended for and without prior payment
of the duty, tax or other charges which would have been due and
payable at the time of entry if the goods had been entered without
the benefit of this section, shall be subject to forfeiture and the
importation shall constitute afraudulent practice against customs
laws: Provided, however, That a sale pursuant to a judicial order
or in liquidation of the estate of a deceased person shall not be
subject to the preceding Provigo, without prejudice to the payment
of duties, taxes and other charges: Provided, further, That the
President may, upon the recommendation of the Secretary of
Finance, suspend, disallow or completely withdraw, in whole or
in part, any conditionally free importation under this section:

{a) Aquatic products such as fishes, crustaceans, mollusks,

marine animals, seaweeds, fish oil, roe, caught or gathered by
fishing vessels of Philippine registry: Pro vided, That they are
umported.in such vessels orin crafts attached thereto: Provided,
however, That they have not been landed in any foreign territory
or, if so landed, that they have been landed solely for
transshipment without having been advanced in condition;

(b) Equipment for use in the salvage of vessels or aircrafts,

not available locally, upon identification and the giving of a
security in an amount equal to one hundred percent (100%) of the
ascertained duties, taxes and other charges thereon, conditioned
for the exportation thereof or payment of corresponding duties,

63

taxes and other charges within six (6) months from the date of
acceptance of the goods declaration: Pro vided, That the Bureau
may extend the time for exportation or payment of duties, taxes
and other charges for a term not exceeding six (6) months from
the expiration of the original period;

(©) Cost of repairs, excluding the value of the goods used,

made in foreign countries upon vessels or aircraft documented,
registered or licensed in the Philippines, upon proof satisfactory
to the Bureau: (1) that adequate facilities for such repairs are not
afforded in the Philippines; or (2) that such vessels or aircrafts,
while in the regular course of their voyage or flight, were compelled
by stress of weather or other casualty to put into a foreign port to
make such repairs in order to secure the safety, seaworthiness,
or airworthiness of the vessels or aircrafts to enable them to reach
their port of destination;
(d) Goods brought into the Philippines for repair, processing
or reconditioning to be reexported upon completion of the repair,
processing or reconditioning: Provided; That the Bureau shall
require security equal to one hundred percent (100%) of the duties,
taxes and other charges thereon, conditioned for ‘the exportation
thereof or payment of the corresponding duties, taxes and other
charges within six (6) months from the date of acceptance of the
goods declaration:

) Medals, badges, cups, and other small goods bestowed

as trophies or prizes, or those received or accepted as honorary ©
distinction;

@ Personal and household effects belonging to returning

residents including household appliances, jewelry, precious stones,
and other goods of luxury which were formally declared and listed
before departure and identified under oath before the District
Collector when exported from the Philippines by such returning
residents upon their departure therefrom or during their stay
abroad; personal and household effects including wearing apparel,
goods of personal adornment, toilet goods, instruments related
to one's profession and analogous personal or household
effects, excluding luxury items, vehicles, watercrafts, aircrafts
and animals purchased in foreign countries by residents of the
64

Philippines which were necessary, appropriate, and normally used.

for their comfort and convenience during their stay abroad,
accompanying them on their return, or arriving within a
reasonable time which, barring unforeseen and fortuitous events,
in no case shall exceed sixty (60) days after the owner's return.

For ptirposes of this section, the phrase "returning residents"

shall refer to nationals who have stayed in a foreign country for a
period of at least six (6) months. Returning residents shall have
tax and duty exemption on personal and household effects:

Provided, That:
@) Itshall not be in commercial quantities:
@) Itis not intended for barter, sale or for hire: and
(3) Limited to the FCA or FOB value of:

@ Three hundred fifty thousand pesos (P250,000.00) for

those who have stayed in a foreign country for at least ten (10)
years and have not availed of this privilege within ten (10) years
prior to returning resident's arrival:

Gi) Two hundred fitty thousand pesos (P250,000.00) for

those who have stayed in a foreign country for a period of at least
five (5) but not more than ten (10) years and have not availed of
this privilege within five (5) years prior to returning resident's
arrival: or

Gil) One hundred fifty thousand pesos (P150,000.00) for

those who have stayed in a foreign country for ap eriod of less

than five (5) years and have not availed of this privilege within
six (6) months prior to returning resident's arrival.

Any amount in excess of the above-stated threshold shall

be subject te the corresponding duties and taxes under this Act.

Every three (3) years after the effectivity of this Act, the
Secretary of Finance shall adjust the amount herein stated to its
present value using the CPI as published by the PSA. .

65

Tn addition to the privileges granted under the immediately

preceding paragraph, returning Overseas Filipino Workers
(GF Ws) shall have the privilege to bring in, tax and duty-free,
home appliances and other durables, limited to one of every kind
once in 4 given calendar year accompanying them on their return,
or arriving within a reasonable time which, barring unforeseen
and fortuitous events, in no case shall exceed sixty (60) days after
every returning OF W's return upon presentation of their original
passport at the port of entry: Provided, That any amount in
excess of FCA value of one hundred fifty thousand pesos
(P150,000.00) for personal and household effects or of the number
of duty-free appliances as provided for under this section, shall be
subject to the corresponding taxes and duties: Provided, further,
That every three (8) years after the effectivity of this Act, the
Secretary of Finance shall adjust the amount herein stated to its
present value using the CPI as published by the PSA:

(g) Residents of the Philippines, OF Ws or other Fikpinos

while residing abroad or upon their return to the Philippines
shall be allowed to bring in or send to their families or relatives
in the Philippines balikbayan boxes which shall be exempt from
applicable duties and taxes imposed under the NIRC of 1997, as
amended: Provided, That balikbayan boxes shall dontain personal
and household effects only and shall neither be in commercial
quantities nor intended for harter, sale cr for hire and that the
FCA value of which shall not exceed one hundred fifty thousand
pesos (P150,000.00): Provided, further, That every three (3) years
after the effectivity of this Act, the Secretary of Finance shall
adjust the amount herein stated to its present value using the
CPI as published by the PSA: Provided, finally, That residents
of the Philippines, OF Ws or other Filipinos can ofily avail ofthis
privilege up to three (8) times ina calendar year. Any amountin
excess of the allowable non-dutiable value shall be subject to the
applicable duties and taxes;

(1) For purposes of this Act, OFWs refer to Folders of valid

passports duly issued by the Department of. Foreign Affairs (DFA)
and certified by the Department ofLabor and Employment (DOLE).
or the Philippine Overseas Employment Administration (POEA)
for overseas employment purposes. They cover all Filipinos,
working in a foreign country under employment contracts,
66

regardless of their professions, skills or employment status ina

foreign country; and (2) Calendar Year refers to the period from
January 1 to December 31.

(h} Wearing apparel, goods of personal adornment, toilet

goods, portable tools and instruments, theatrical costumes and
similar effects accompanying travelers, or tourists, or arriving
within a reasonable time before or after their arrival in the
Philippines, which are necessary and appropriate for the wear
and use of such persons according to the nature of the journey,
their comfort and convenience: Provided, That this exemption
shall not apply to goods intended for other persons or for hatter,
sale or hire: Provided, however, That the Bureau may require
either a written commitment or a security in an amount equal to

one hundred percent (100%) of the ascertained duties, taxes and

other charges thereon, conditioned for the exportation thereof or
payment of the corresponding duties, taxes and other charges
within three (3) months from the date of acceptance of the goods
declaration: Provided, further, That the Bureau may extend the
time for exportation or payment of duties, taxes and other charges
for a term not exceeding three (8) months from the expiration of
the original period.

Personal and household effects and vehicles belonging to

foreign consultants and experts hired by, or rendering servies to,
the government, and their staff or personnel and families
accompanying them or arriving withina reasonable tune before
or after their arrival in the Philippines, in quantities and of the
kind necessary and suitable to the profession, rank or position of
the person importing said items, for their own use and not for
barter, sale or hire: Provided, That the Bureau may require
either a written commitment or a security in an amount equal to
one bundred percent (100%) of the ascertained duties, taxes and
other charges thereon, upon the goods classified under this
subsection; conditioned for the exportation thereof or payment of
the corresponding duties, taxes and other charges within three
(3) months after the expiration of their term or contract: Prov ided,
however, That the Bureau may extend the time for exportation
or payment of duties, taxes and other charges for a term not
exceeding three (8) months from the expiration of the original

period;

67

@ Professional instruments and implements, tools of

trade, occupation or employment, wearing apparel, domestic
animals, and personal and household effects belonging to persons
coming to settle in the Philippines or Filipinos or their families
and descendants who are now residents or citizens of other
countries, such parties hereinafter referred to as overseas
Filipinos, in quantities and of the class suitable to the profession,
rank or position of the persons importing said items, for their
own use and not for barter or sale, accompanying such persons,
or arriving within a reasonable time: Provided, That the Bureau
may, upon the production of satisfactory evidence that such
persons are actually coming to settle in the Philippines and that
the goods are brought from their former place of abode, exempt
such goods from the payment of duties and taxes: Provided,
further, That vehicles, vessels, aircrafts, machineries and other
similar goods for use in manufacture, shall not fall within this
classification and shall therefore be subject to duties, taxes and
other charges;

G) Goods used exclusively for public entertainment, and

for display in public expositions, or for exhibition or cormmpetition
for prizes, and devices for projecting pictures and paris and
appurtenances thereof, upon identification, exhmination, and
appraisal and the giving of a security in an amount equal to one
hundred percent (100%) of the ascertained duties, taxes and other
charges thereon, conditioned for exportation thereof or payment
ofthe corresponding duties, taxes and other charges within three
(8) months from the date of acceptance of the goods declaration:
Provided, That the Bureau may extend the time for exportation
or payment of duties, taxes and other charges for a term not
exceeding three (3) months from the expiration of the original

‘period; and technical and scientific films when imported by

technical, cultural and scientific institutions, and not te be

exhibited for profit: Provided, further, That if any of the films is
exhibited for profit, the proceeds therefrom shall be subject to
confiscation, in addition to the penalty provided«mder this Act;

{k) Goods brought by foreign film producers directly and

exclusively used for making or recording motion picture films on
location in the Philippines, upon their identification, examination
and appraisal and the giving ofa security in an amount equal to
68

one hundred percent (100%) of the ascertained duties, taxes and

other charges thereon, conditioned for exportation thereof or
payment of the corresponding duties, taxes and other charges
within three (3) months from the date of acceptance of the goods
declaration, unless extended by the District Collector for another
three (8) months; photographic and cinematographic films,
underdeveloped, exposed outside the Philippines by resident
Filipino citizens or by producing companies of Philippine registry
where the principal actors and artists employed for the production
are Filipinos, upon affidavit by the importer and identification
that such exposed films are the same films previously exported
from the Philippines. As used in this paragraph, the terms "actors"
and "artists" include the persons operating the photographic
camera or other photographic and sound recording apparatus by
which the film is made;

@) Importations for the official use of foreign embassies,

legations and other agencies of foreign governments: Provided,
That those foreign countries accord like privileges to corresponding
agencies of the Philippines. Goods imported for the personal or
family use of members and attachés of foreign embassies,
legations, consular officers and other representatives of foreign
governments: Provided, houiever, That such privilege shall be
accorded under special agreements between the Philippines and
the countries which they represent: Provided, further, That the
privilege may be granted only upon specific instructions of the
Secretary of Finance pursuant to an official request of the DFA
on behalf of members or attachés of foreign embassies, legations,
consular officers and other representatives of foreign governments.

(m) Imported goods donated to or, for the account of the

Philippine government or any duly registered relief organization,
not operated for profit, for free distribution among the needy,
upon certification by the DSWD or the Department of Education
(DepED), or the Department of Health (DOD, as the case may
be:

(0) Containers, holders and other similar receptacies of

any material including kraft paper bags for locally manufactured
cement for export, including corrugated boxes for bananas,
mangoes, pineapples and other fresh fruits for export, except other

69

containers made of paper, paperboard and textile fabrics, which

are of such character as to be readily identifiable and/or reusable

for shipment or transportation of goods shall be delivered to the

importer thereof upon identification, examination and appraisal:

and the giving ofa security In an amount equal to one hundred

percent (100%) of the ascertained duties, taxes and other charges

thereon, within six (6) months from the date ofacceptance of the
goods declaration;

(} Supplies which are necessary for the reasonable

requirements of the vessel or aircraft in its voyage or flight outside
the Philippines, including goods transferred from a bonded
warehouse in any Customs District to any vessel or aircraft
engaged in foreign trade, for use or consumption of the passengers
or its erew on board such vessel or aircraft as sea or air stores; or
goods purchased abroad for sale on board a vessel or aircraft as
saloon stores or air store supplies: Provided, That any surplus
or excess of such vessel or aircraft supplies arriving from foreign
ports or airports shall be dutiable;

(®) Goods and salvage from vessels recovered after a period

of two (2) years from the date of filing the marine protest or the
time when the vessel was wrecked or abandonéd, or parts of a
foreign vessel or its equipment, wrecked or abandoned in
Philippine waters or elsewhere: Provided, That goods and salvage
recovered within the said period of two (2) years shall be dutiable;

@ Coffins or urns containing human remains, bones or

ashes, used personal and household effects (not merchandise) of
the deceased person, except vehicles, the FCA value of which does
not exceed one hundred fifty thousand pesos (P150,000.00), upon
identification as such: Provided, That every three (3) years after
the effectivity of this Act, the value herein stated shall be adjusted
to its present value using the CPL as published by the PSA:

stsy

«) Samples of the kind, in such quantity and of such

dimension or construction as to render them unsaleable or of no
commercial value; models not adapted for practical use; and
samples of medicines, properly marked "sample-sale punishable
by law", for the purpose of introducing new goods inthe Philippine
market and imported only once in a quantity sufficient for such
70

purpose by a person duly registered and identified to be

engaged in that trade: Provided, That mmportations under this
subsection shall be previously authorized by the Secretary of
Fimance: Provided, ho wever, That importation of sample
medicines shall have been previously authorized by the
Secretary of Health, and that such samples are new medicines
not available in the Philippines: Provided, further, That samples
not previously authorized or prop erly marked in accordance with
this section shall be levied the corresponding tariff duty.

Commercial saimples, except those that are not readily and

easily identifiable as in the case of precious and semi-precious
stones, cut or uncut, and jewelry set with precious or semi-precious
stones, the value of any single importation of which does not exceed
FCA value of fifty thousand pesos (P50,000.00) upon the giving of
a security in an amount equal to the ascertained duties, taxes
and other charges thereon, conditioned for the exportation of said
samples within three (3) months from the date of the acceptance
of the goods declaration or in. default thereof, the payment of the
corresponding duties, taxes and other charges: Provided, That
if the FCA value of any single consignment of such commercial
samples exceeds fifty thousand pesos (P50,006.00), the importer
thereof may select any portion of the same not exceeding the
FCA value of fifty thousand pesos (P50,000. 00) for entry under
the provision of this subsection, and the excess of the consignment
may be entered in bond, or for constunption, as the importer may
elect: Provided, further, That every three (3) years after the
effectivity of this Act, the Secretary of Finance shall adjust the
amount herein stated to its present value using the CPI as
published by the PSA.

(s) Animals, except race horses, and plants for scientific,

experimental propagation or breeding, and for other botanical,
‘ zoological and national defense purposes: Provided, That no live
trees, shoots, plants, moss and bulbs, tubers and seeds for
propagation purposes may be imported under this section, except
by order of the government or other duly authorized institutions:
Provided, however, That the free entry of animals for breeding
purposes shall be restricted to. animals of recognized breed, duly
registered in the record or registry established for that breed,
and certified as such by the Bureau of Animal Industry (BAD:

FL

Provided, further, That the certification of such record, and

pedigree of such animal daly authenticated by the proper custodian
of such record or registry, shall be submitted to the District
Collector, together with the affidavit of the owner or importer
that such animal is the animal described in said certificate of
record and pedigree: Provided, finally, That the animals and
plants are certified by the NEDA as necessary for economic
development;

() Economic, technical, vocational, scientific,

philosophical, historical and cultural booka or publications, and
religious books like Bibles, missals, prayer books, the Koran,
Ahadith and other religious books of similar nature and extracts
therefrom, hymnal and hymns for religious uses: Provided, Thai
those which may have already been imported but are yet to be
released by the Bureau at the effectivity of this Act may still
enjoy the privilege herein provided upen certification by the
DepED that such imported books and/or publications are for
economic, technical, vocational, scientific, philosophical, historical
or cultural purposes or that the same are educational, scientific
or cultural materials covered by the International Agreement on
Importation of Educational Scientific and Cultural Materials
(IAESCM) signed by the President of the Philippines on
August 2, 1952, or other agreements binding upon the Philippines.
Educational, scientific and cultural materials covered by
international agreements or commitments binding upon the
Philippine government so certified by the DepED.

{u) Philippine goods previously exported from the

Philippines and returned without having been advanced in value
ot improved in condition by any process of manufacturing or other
means, and upon which no drawback or bounty has been, allowed,
including instruments and implements, tools of trade, machinery
and equipment, used abroad by Filipino citizens in the pursuit of
their business, occupation or profession; and foreign goods
previously imported when returned after ha¥fi? been exported.
and loaned for use temp orarily abroad solely for exhibition, testing
and experimentation, for scientific or educational purposes: and
foreign containers previously imported which have been. used in
packing exported Philippine goods and returned empty ifimported
by or for the account of the person or institution who exported
72

them from the Philippines and not for sale, barter or hire subject
to identification: Provided, That Philippine goods falling ander
this subsection upon which drawback or bounty have been allowed
shall, upon reimportation thereof, be subject toa duty under this
subsection equal to the amount of such drawback or bounty;

(vy) Aircraft, equipment and machinery, spare parts,

commissary and catering supplies, aviation gas, fuel and oil,
whether crude or refined except when directly or indirectly used
for domestic operations, and such other goods or supplies imported
by and for the use of scheduled airlines operating under
congressional franchise: Provided, That such goods or supplies
are not locally available in reasonable quantity, quality and price
and are necessary or incidental to the proper operation of the
scheduled airline importing the same;

(w) Machineries, equipment, tools for production, plans to

convert mineral ores into saleable form, spare parts, supplies,
materials, accessories, explosives, chemicals, and transportation
and communications facilities imported by and for the use of new
mines and old mines which resume operations, when certified to
as such by the Secretary of the Department of Environment and
Natural Resources (DENR), upon the recommendation of the
Director of Mines and Geosciences Bureau, for a period ending
five (5) years from the first date of actual commercial production
of saleable mineral products: Provided, That such goods are not
locally available in reasonable quantity, quality and price and
are necessary or incidental in the proper operation of the mine;
and aircrafts imported by agro-industrial companies to be used
by them in their agriculture and industrial operations or activities,
spare parts and accessories thereof, when certified to as such by
the Secretary of the Department of Agriculture (DA) or the
Secretary of the Department of Trade and Industry (DTD, asthe
case may be;

() Spare parts of vessels or aireraft of foreign registry

engaged in foreign trade when brought into the Philippines
exclusively as replacements or for the emergency repair thereof,
upon proof satisfactory to the District Collector that such spare
parts shall be utilized to secure the safety, seaworthiness or

73

airworthiness of the vessel or aircraft, to enable it to continue its

voyage or flight;

() Goods exported from the Philippines for repair,

processing or reconditioning without having been substantially
advanced in value, and subsequently reimported in its original
form and in the same state: Provided, That in case the reimported.
goods advanced in value, whether or not in their original state,
the value added shall be subject to the applicable duty rate of the
tariffheading of the reimported goods; and

@ Trailer chassis when imported by shipping companies

for their exclusive use in handling containerized cargo, upon
posting a security in an amount equal to one hundred percent,
(100%) of the ascertained duties, taxes and other charges due
thereon, to cover a period of one (1) year from the-date of acceptance
of the entry, which period, for meritorious reasons, may be
extended by the Commissioner from year to year, subject to the
following conditions:

() That they shall be properly identified and registered

with the Land Transportation Office (LTO); ,

@) That they shall be subject to customs supervision fee

to be fixed by the District Collector and subject to the approval of
the Commissioner:

(3) That they shall be deposited in the customs territory

when not in use; and

(4 That upen the expiration of the period prescribed above,

duties and taxes shall be paid unless otherwise reexported.

faa) Any officer or employee of the DEA, including any

attaché, civil or military or member of the staff assigned ta a
Philippine diplomatic mission abroad by the Department or any
similar officer or employee of other departments assigned to any
Phikppine consular office abroad, or any AFP military personnel
accorded assimilated diplomatic rank or on duty abroad whe is
returning from a regular assignment abroad, for reassignment
74

to the home office, or who dies, resigns, or is retired from the

service, after the approval of this Act, shall be exempt from the
payment of all duties and taxes on personal and household effects,
including one (1) motor car which must have been ordered or
purchased prior to the receipt by the mission or consulate of the
order of recall, and which must be registered in the name of the
officer or employee: Provided, That this exemption shall apply
only to the value of the motor car and to the aggregate assessed
value of the personal and household effects, the latter not.to exceed
thirty percent (30%) of the total amount received by the officer or
employee in salary and allowances during the latest assignment
abroad, but not to exceed four (4) years: Provided, however,
That this exemption shall not be availed of more than once every

four (4) years: Provided, further, That the officer or employee ©

concerned must have served abroad for not Jess than two (2) years,

The provisions of general and special laws, to the contrary

notwithstanding, including those granting franchises, there shall
be no exemption whatsoever from the payment of duties except as
provided for in this Act; those granted to government agencies,
instrumentalities or government-owned or -controlied corporations
(GOCCs) with existing contracts, commitments, agreements, or
obligations with foreign countries requiring such exemption: those
granted to international institutions, associations or organizations
entitled te exemption pursuant te agreements or special laws:
and those that may be granted by the President upon prior
recommendation of the NEDA in the interest ofnational economic
development.

CHAPTER 2
CUSTOMS WAREHOUSES

SEC. 801. Establishment and Supervision of Customs

Bonded Warehouses. — When the business of the port requires
such facilities, the District Collector, subject to the approval of
the Commissioner, shall designate and establish warehouses for
use as public and private bonded warehouses, yards, or for other
special purposes. Ali such warehouses and premises shall be
subject to the supervision of the District Collector who shall
impose such:conditions as may be deemed necessary for the

76

protection of the revenue, and of the goods stored therein. In the

exercise of the District Collector's supervisory functions herein
and in the Bureau's implementation of this chapter, existing
contracts of private operators with appropriate government agency
or regulator, such as, but not limited to, the Philippine Ports
Authority (PPA), Subic Bay Metropolitan Authority (SBMA) and
Phividec Industrial Authority (PTA) and their respective
authorities and powers already granted by law pertinent to such
contracts, shall not be impaired or adversely affected.

Goods manufactured in whole or in part of imported

materials, and intended for exportation, may be made and
manufactured in a bonded manufacturing warehouse subject to
the following conditions: .

(1) The manufacturer shall file sufficient security for the

faithful observance of all laws, rules and regulations applicable
thereto;

(2 The application for the establishment of bonded

warehouses must be made in writing and filed with the customs
officer, describing the premises, the location, and capacity of the
same, and the purpose for which the building is to be used,
pursuant to Section 804 of this Act:

(3} From the receipt of the application, the customs officer

shail examine the prentises, evaluate its location, construction,
and means provided for the safekeeping of the goods;

(4) The customs officer may authorize the establishment of

the customs bonded warehouse, and accept a bond for its operation
and maintenance if the applicant was compliant with the
prescribed requirements; and

J
(5) The operator of the bonded warehttise shall pay an
annual supervision fee in an amount to be fixed by the
Commissioner.

SEC. 802. Types of Customs Bonded Warehouses (CBWs).

— Customs bonded warehouses may be classified as either
manufacturing or nonmanufacturing.
76

Manufacturing customs bonded warehouse may be of the

following types: (a) miscellaneous customs bonded warehouse; (b)

customs common bonded warehouse; or (c) industry-specifie
bonded warehouse.

Nonmanufacturing customs bonded warehouse include: (a)

public bonded warehouse; (b) private bonded warehouse: or (c)
other customs facilities.

SEC. 803. Types of Customs Facilities and Warehouses

(CFWs).— Customs facilities and warehouses shall include:

(a) Container yard;

(b) Container freight station;

() Seaport warehouses; and
@ Airport warehouses.

Subject to consultation with the NEDA and the DTI, and

based on prevailing economic circumstances, the Secretary of
Finance may, upon the recommendation of the Commissioner,
create or dissolve certain types of warehouses.

SEC. 804. Application far Operation of a Customs

Warehouse. — Application for the establishment of CBW and
CEW shail be filed with the District Collector where the CBW or
CFW is located, describing the premises, location, capacity and
purpose thereof.

Upon receipt of such application, the District Collector shall

examine the premises of such proposed warehouse, particularly
its location, construction and storage facilities. The District
Collector, with the approval of the Commissioner, may authorize
the establishment of customs warehouses, and accept the required
security for its operation and maintenance. The operator of such
CBW and CEW shall pay an annual supervision fee, as determined
by the Commissioner.

47

SEC. 805. Responsibility of Operators. ~ The operator of

a CBW or CFW shall comply with the customs requirements on
establishment, security, suitability and management, including
stock-keeping and accounting of the goods, of the CBW or CFW.

Upon lawful demand, the operator of a CBW or CFW shall

allow authorized representatives of the Bureau access to the
premises at a reasonable time, and to all documents, books and

records of accounts pertaining to the operations of the CBW or

CFw.

Incase of loss of the goods stored ina CBW or CFW due to

operator's gross negligence or willful misconduct, the operator
shall be liable for the payment of duties and taxes due thereof.
The government assumes no legal responsibility over the
safekeeping of goods stored in any customa warehouse, yard or
premises.

SEC. 806. Customs Control Over CBWs and CFWs. — The

Bureau shall, for customs purposes, exercise control over, direct
and manage CBWs and CFWs pursuant to Section 303 of this
Act and likewise over the goods thereat pursuant to Section 301
of this Act: Provided, That the Bureau shall not be liable for any
loss or damage of the goods stored for safekeeping in any CBW,
CFW, yard or premises.

SEC. 807. Discontinuance of CBW and CFW.. — The use

of any CBW and CFW may be discontinued by the District
Collector when conditions so warrant, or upon receipt of a written
request from the operator thereof: Provided, That all the
requirements of the laws and regulations have been complied
with by said operator. Where dutiable goods are stored in
such premises, the same must be removed at the nek and
expense of the operator: Provided, however, That the premises
shall not be relinquished, and its use shall tetbe discontinued
until after a careful examination of the account of the warchouse
shall have been made. Discontinuance of the use of any
warehouse shall be effective upon approval thereof by the
District Collector who shall, within ten (10) days, inform the
Commissioner of such action in writing.
78

Notice of discontinuance made by the operator shall not

result in the discharge from any duties, taxes, fees and other
charges imposed on dutiable goods in said warehouse.

SEC. 808. Warehousing Security on Goods Stored in

CBWs. — For goods declared in the entry for warehousing in CBWs,
the District Collector shall require the importer to post a sufficient
security equivalent to the computed duties, taxes and other
charges, conditioned upon the withdrawal of the goods within the
period prescribed by Section 811 of this Act or the payment of
duties, taxes and other charges and compliance with all
importation requirements.

SEC. 809. Withdrawal of Goods from CBRWs,. — 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.

Gocds 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.

SEC. 810. Reiease of Goods from CFWe. ~—Imported goods

shall be released when the goods declaration is electronically
lodged, together with any related document required by any
provision of this Act and other regulations. All goods entered into
the CFWs shall be subject to the filing of a goods declaration
within the period specified under Section 407 of this Act.

Sec. 811. Period of Storage in CBWs. — Goods entered

for warehousing may remain in a CBW for a maximum period of
one (1) year from the time ofits arrival thereat. For perishable
goods, the storage period shall be three (8) months from the date
of arrival, extendible for valid reasons, and upon written request,
to another three (3) months. Goods not withdrawn after the
expiration of the prescribed period shall be deemed as abandoned,
as provided under Section 1129 of this Act.

79

The Commissioner shall, in consultation with the

Secretary of Trade and Industry, establish a reasonable storage
period mit beyond one (1) year for 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.

SEC. 812. Exemption from Duty of Goods in CBWs. — Goods

duly entered for warehousing in CBWs shall be exempt from duty
and tax within the allowed period for storage unless withdrawn
for consumption, exportation or transit to a free zone or another
CBW, in which case, such withdrawal will be subject to the
applicable rules and regulations on the liquidation of the
warehousing entry.
SEC. 813. Records to be Kept by CBW Operators. — An
account shall be kept by the Bureau of all goods delivered to a
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 may require electronic submission.

All documents, books, and records of accounts concerning

the operation of any CBW shall, upon demand, be made available
to the District Collector or the representative of the District
Collector for examination or audit. For record purposes, all
documents shall be kept for three (8) years.

CHAPTER 3
FREE ZONES

SEC. 814. When Goods are Admitted and Withdrawn. —

Imported goods shall he adinitted into a free zone when the goods
declaration, together with required documettts; as required by

_ existing laws and regulations, are electronically lodged with the

Bureau and other relevant government authorities at the time of

admission,
80

Imported goods shall be withdrawn from the free zone for

entry to the customs territory when the goods declaration is
electronically lodged, together with required documents at the
time of the withdrawal from the free zone.

SEC. 815. Exemption from Duty and Tax of Goods in Free

Zones. — Unless otherwise provided by law and in accordance
with the respective laws, rules and regulations of the free zone
authorities, goods admitted into a free zone shall not be subject ta

duty and tax,

SEC. 816. Movement of Goods into and from Free Zones.

~ The entry of goods into a free zone, whether directly or through
the customs territory, shall be covered by the necessary goods
declaration for admission or transit. Withdrawal from the free
zone into the customs territory shall be covered by the necessary
goods declaration for consumption or warehousing.

Transfer of goods from one free zone into another free zone
shall likewise be covered by the necessary transit permit.

The implementing rules and regulations on the transit of

goods admitted into, exported from, withdrawn into the custems
territory, and moved between free zones shall be formulated and
issued jointly by the Bureau and the free zone authorities.

SEC. 817. Coordination With Free Zone Authority. — To

ensure compliance with customs laws and regulations, the Bureau
shall coordinate with the governing authority of the free zone.

CHAPTER 4

. STORES

SEC.818. Stores for Consumption. ~ Stores for

consumptien shall include:

(a) Goods intended for use by the passengers and the crew
on board vessels, aircrafts, or trains, whether or not sold; and

ve.

81

(b) Goods necessary for the operation and maintenance of

vessels, aircrafts, or trains including fuel and lubricants but
excluding spare parts and equipment which are either on board
upon arrival or are taken on board during the stay in the customs
territory of vessels, dircrafts, or trains used, or intended to be
used, in international traffic for the transport of persons for
remuneration or for the industrial or commercial transport of
goods, whether or not for remuneration.

SEC. 819. Stores to be Taken Away. — For purposes of

this chapter, “stores to be taken away" means goods for sale to
the passengers and the crew of vessels, aircrafts, or trains witha
view to being landed, which are either on board upon arrival
or are taken on board during the stay in the customs territory
of vessels, aircrafts, or trains used, or intended to be used,
in international traffic for the transport of persons for
remuneration or for the industrial or commercial transport of
goods, whether or not for remuneration.

SEC. 820. Exemption from Duties and Taxes of Stores. ~

Customs treatment of stores should apply uniformly, regardless
of the country of registration or ownership of vessels, aircraft, or
trains. Stores which are carried in a vessel, aircraft, or train
arriving in the customs territory shall be exempted from import
duties and taxes provided that they remain on board. Stores
for consumption by the passengers and the crew imported as
provisions on international express vessels, aircrafts, or trains
shall be exempted from import duties and taxes: Provided, That:

{a) Such goods are purchased only in the countries crossed.

by the international vessels and aircrafts in question; and

(b) Any duties and taxes chargeable on such goods in the

. country where they were purchased are paid.

pokey
Stores necessary for the operation and maintenance
of vessels, aircrafts, or trains which are on board these means
of transport shall be exempted from import duties and taxes:
Provided, further, That they remain on board while these means
of transport are in the customs territory. The Bureau shall allow
the issue of stores for use on, board during the stay of a vessel
82

in the customs territory in such quantities as the customs

authority deems reasonable with due regard to the number of the
passengers and the crew and to the length of the stay of the vessel
in the customs territory. The Bureau should allow the issue of
stores for use on board by the crew while the vessel is undergoing
repairs ina dock or shipyard: Provided, finally, That the duration
of stay in a dock or shipyard is considered to be reasonable.

When an aircraft is to land at one or more airports in the

customs territory, the Bureau should allow the issuance of stores
for consumption on board both during the stay of the aircraft at
such intermediate airports and during its flight between such

airports.

The Bureau shall require a carrier to take appropriate

measures to prevent any unauthorized use of the stores including
sealing of the stores, when necessary. It shall require the removal
of stores from the vessel, aircraft, or trains for storage elsewhere
during its stay in the customs territory only when the Bureau
considers it necessary.

Vessels, aircrafts, or trains which depart for an ultimate

foreign destination shall be entitled to take on board, exempted.
from duties and taxes, the following:

() Stores in such quantities as the Bureau deems

reasonable with due regard to the number of the passengers and
the crew, to the length of the voyage or flight, and to any quantity
ofsuch stores already on board: and

(2) Stores necessary for the operation and maintenance of

a vessel, aircraft, or train, in such quantities as are deemed
reasonable for operation and maintenance during the voyage or
flight, after due regard of the quantity of such stores already on
board.

Replenishment of stores that are exempted from duties and

taxes shall be allowed for vessels, aircrafts, or trains which have
arrived in the customs territory, and which need to replenish

83

their stores for the journey to their final destination in the customs
territory, subject to the same conditions provided in this Chapter.

SEC. 821. Goods Declaration for Stores. ~ When a

declaration concerning stores on board vessels arriving in the
customs territory is required by the Bureau, the information
required shall be kept to the minimum and as may be necessary
for customs control.

The quantities of stores which are supplied to vessels during

its stay in the customs territory should be recorded on the required
goods declaration concerning stores.

The Bureau shall not require the presentation of a separate

declaration of remaining stores on board a vessel, an aircraft
or a train. No separate declaration concerning stores should be
required upon departure of vessels from the customs territory.
When a declaration is required concerning stores taken on board.
the vessels or aircrafts upon departure from the customs territory,
the information required shall be kept to the minimum as may
be necessary for customs control.

_ When a vessel, aircraft, or train arrives in the customs

territory, stores on board shall:

(a) Be cleared for consumption or placed under another

customs procedure, subject to compliance with the conditions and
formalities applicable in each case: or

(b) Subject to prior authorization by*the Bureau, be

transferred respectively to another vessel, aircraft, or train
assigned to an international route.
84

TITLE IX
DUTY DRAWRACK AND REFUND
CHAPTER 1
Dury DrawBack

SEC. 900. Basis of Duty Drawback. — (A) On Fuel Used.

for Propulsion of Vessels. — On all fuel imported into the
Philippines used for propulsion of vessels engaged in trade with
foreign countries, or in the coastwise trade, a refund or tax credit
shail be allowed not exceeding ninety-nine percent (99%) of the
duty imposed by law upon such fuel, which shall be paid or credited
under such rules and regulations as may be prescribed by the
Commissioner with the approval of the Secretary of Finance.

(B) On Petroleum Oils and Oils Obtained from Bituminous

Minerals, Crude, Eventually Used for Generation of Electric
Power and for the Manufacture of City Gas. — On petroleum oils
and oils obtained from bituminous materials, crude oil imported
by nonelectric utilities, sold directly or indirectly, in the same
form or after processing, to electric utilities for the generation of
electric power and for the manufacture of city gas, a refund or
tax credit shall be allowed not exceeding fifty percent (50%) of the
duty imposed by law upon such oils, which shall be paid or credited
under such rules and regulations as may be prescribed by the
Commissioner with the approval of the Secretary of Finance.

(CQ) On Goods Made from Imported Materials. — Upon

exportation of goods manufactured or produced in the Philippines,
inchiding the packing, covering, putting up, marking or labeling
thereof either in whole or.in part of the imported materials for
which duties have been paid, a refund or tax credit shall be allowed
for the duties paid on the imported materials so used including
the packing, covering, putting up, marking or labeling thereof,
subject to the following conditions:

(1) The actual use of the imported materials in the

production or manufacture of the goods exported with their

85

quantity, value, and amount of duties paid thereon, should be

established satisfactorily;

(2) The duties refunded or credited, shall not exceed one

hundred percent (100%) of duties paid on the imported materials
used;

@) There is no determination by the NEDA of the

requirement for certification on nonavailability of locally-produced
or manufactured competitive substitutes for the imported
materials used at the time of ‘importation:

(4) The exportation shall be made within one (LD) year after
the importation of materials used and claim of refund or tax credit
shall be filed within six (6) months from the date of exportation;
and
(5) When two or more products result from the use of the
same imported materials, an apportionment shall be made on
its equitable basis. .

SEC. 901. Payment of Drawbacks. — Eligible claims for

refund or tax credit shall be paid or granted by the Bureau to
claimants within sixty (60) days after receipt of properly
accomplished claims: Provided, That a registered enterprise
under Republic Act No. 5186, otherwise known asthe "Investinent
Incentives Act", or Republic Act No. 6135, otherwise known as
the "Export Incentives Act of 1970", which has previously enjoyed
tax credits based on customs duties paid on imported raw materials
and supplies, shall not be entitled toa drawback under this section
with respect to the same importation subsequently processed and
reexported. :

The Secretary of Finance may, upon the recommendation

ofthe Commissioner, promulgate rules and regulations allowing
partial payments of drawbacks pursuant to this section.

SEC. 902. Frescription of Drawback Claim. — A claim

and application for a drawback shall prescribe if it is not filed
within one (1) year from the date of importation in case of
86

Section 900, paragraphs (A) and (B) and within one (1) year from
the date of exportation in the case of Section 900, paragraph (C),
subject to such rules and regulations as may be issued by the
Commissioner, upon approval of the Secretary of Finance.

CHAPTER 2
REFUND AND ABATEMENT

SEC. 903. Refund of Duties and Taxes. — Refund shall be

granted where it is established that duties and taxes have been
overcharged as a result of an error in the assessment or goods
declaration.

Where permission is given by the Bureau for goods originally

declared for a customs procedure with payment of duties and
taxes to he placed under another customs procedure, a refund
shall be made of any duties and taxes charged in excess of the
amount due under the new procedure, subject to such regulation
issued for the purpose.

Arefuad shall not be granted if the amount of duties and

taxes invdlved is less than five thousand pesos (P5,000.00):
Provided, That the Secretary of Finance, in consultation with
the Commissioner, may adjust the minimum amount
specified in this Act, taking into account the CPI as published
by the PSA.

SEC. 904. Abatement of Duties and Taxes. — When goods

have not yet been released for consumption or have been placed
under another customs procedure, provided that no other offense
or violation has been committed, the declarant shall neither be
required to pay the duties and taxes nor be entitled to refund
thereof in any of the following cases:

(a) When, at the request of the declarant, the goods are :

abandoned, or as determined by the Bureau, the goods are

destroyed or rendered commercially valueless while under customs
control. Any cost herein incurred shall be borne by the declarant;

reas SEB acta ams tnittions cena ete

et

87

(b) When goods are destroyed or itrecoverably lost by

accident or force majeure, the remaining waste or scrap after
destruction, if taken into consumption, shall be subject to the
duties and taxes that would be applicable on such waste or scrap
if imported in same state; and

(©) When there are shortages due to the nature of the goods.
SEC. 905. Abatement for Damage Incurred During Voyage.
~ Except as otherwise provided, no abatement of duties shall he
made on account of damage incurred or deterioration suffered
during the voyage of importation; and duties will he assessed on
the actual quantity imported as determined by the customs officers
concerned.

SEC. 806. Abatement or Refund of Duty on Mj issing

Package. — When any package appearing on the manifest or bill
of lading or airway billis missing, an abatement or refund of the
duty shall be made if it is certified by the importer or consignee,
under pain of penalty for falsification or perjury, and upon
production of proof satisfactory to the Collector concerned, that
the package in question has not been unlawfully imported into
the Philippines.

SEC, 907. Abatement or Refund jor Deficiency in Contents

of Packages. — Tf, upon opening of any package, a deficiency in
the quantity of the goods is found to exist based upon the invoice,
such deficiency shall be certified, under pain of penalty for
falsification or perjury, by the customs officers concerned and.
upon the production of proof showing that the shortage
occurred before the arrival of the goods in the Philippines.
Upon sufficient proof thereof, the proper abatement or refund
of the duty shall be made.

SEC. 908. Abatement or Refund of, Datties on Goods Lost

or Desiroyed After Arrival. —The Bureau may abate or refund
the amount of duties accruing or paid on any goods that have
been lost due to injury, theft, destruction through fize or through
any other causes, upon satisfactory proof of the same, under any
of the following circumstances:
88

(a) While within the territory of any port of entry, prior to

unloading under the Bureau’s supervision;

()) While remaining in customs custody after unloading:

(c) While in transit from the port of entry to any port in

the Philippines: and

{d) While released under sufficiont security for export

except in case of loss by theft.

SEC. 909. Abatement and Refund of Defective Goods.

— Under conditions to be set by the Commissioner, and with
the approval of the Secretary of Finance, an abatement and
refund shail be granted on imported or exported goods which are
found defective or otherwise not in accordance with the agreed
specifications at the time of importation or exportation and are
returned either to the supplier or to another person designated by
the supplier, subject to the following conditions:

(a) The goods have not been worked, repaired, or used in

the countzy of importation, and are reexported within a reasonable
time; and

b) The goods have not been worked, repaired, or used in

the country to which they were exported, and are reimported
within a reasonable time.

Use of the goods shall, however, not hinder the refund if

such use was indispensable to discover the defects or other
circumstances which caused the reexportation or renmportation
of the goods.

As an alternative to reexportation or reimportation, the

goods may be expressly abandoned or destroyed or rendered .

commercially valueless under customs control as the Bureau may

decide. In such case, the importer shall not be entitled to an
abatement or a refund if it does not defray the costs of such
abandonment, destruction, or rendition.

lt foice web eR GEE Pent

pte oe

89

SEC. 910. Abatement of Duty on Dead or Injured Animals.

— Where it is certified, under pain of penalty for falsification or
perjury, and upon production of proof satisfactory to the Bureau
that an animal subject of importation dies or suffers injury before
arrival, or while in customs custody, the duty due thereon shall
be abated provided thatits carcass on board or in customs custody
is removed in the manner required by the Bureau and at the
expense of the importer.

SEC. 911. Investigation Required in Case of Abatemenis

and Refunds. — The Customs Officer concerned shall, in all
cases of abatement or refund of duties, submit an examination
report as to any fact discovered which indicates any discrepancy
and cause the corresponding adjustment on the goods declaration,

SEC. 912. Refund Arising from Correction of Errors.

— Manifest clerical errors made on an invoice or entry, errors in
return of weight, measure and gauge, when duly certified under
penalties of falsification or perjury by the surveyor or examining
officer when there are such officers at the port, and errors in the
distribution of charges on invoices not involving any question
of law and certified under penalties of falsification or perjury
by the examining customs officer, may be corrected in the
computation of duties, if such errors are discovered before the
payments of duties, or if discovered within one () year after
release from customs custody of imported goods upon written
request and notice of error from the importer, or upon statement
of error certified by the District Collector.

For the purpose of correcting errors specified in the next

preceding paragraph, the Bureau is authorized to make refunds
within the statutory time limit,

SEc.913. Claims for Refund. — Allclaims and application

for refund of duties and taxes shall be made Ueyriting and filed
with the Bureau within twelve (12) months from the date of
payment of duties and taxes.

Jf as a result of the refund of duties, a corresponding refund

of internal revenue taxes on the same importation becomes due,
the Bureau shall cause the refund of internal revenue taxes in
90

favor of the importer after issuance of a certification from the

Commissioner of Internal Revenue, when applicable.

The importer may file an appeal of a denial of a claim for

refund or abatement, whether it is a full or partial denial, with
the Commissioner within thirty (30) days from the date of the
receipt of the denial. The Commissioner shalt render a decision
within thirty (80) days from the receipt of all the necessary
documents supporting the application. Within thirty (30) days
from receipt of the decision of the Commissioner, the case may
also be appealed to the CTA.

. Notwithstanding the provisions in the preceding

paragraphs, the filing of claims for refund of national internal
revenue taxes shall be governed by the provisions provided under
the NIRC of 1997, as amended.

TITLE X
Post CLEARANCE AUDIT

SEC. 1000. Audit and Examination of Records. — Within

. three (8) years from the date of final payment of duties and taxes
or customs clearance, as the case may be, the Bureau may conduct
an audit examination, inspection, ve rification, and investigation
of records pertaining to any goods declaration, which shall include
statements, declarations, documents, and electronically generated
or machine readable data, for the purpose of ascertaining the
correctness of the goods declaration and determining the lability
of the importer for duties, taxes and other charges, including any
fine or penalty, to ensure compliance with this Act.

SEC. 1001. Scope of the Audit. — The audit of importers

shall be conducted when firms are selected by a computer-aided
tisk management system, the parameters of which are to be based

on objective and quantifiable data, subject to the approval |

of the Secretary of Finance upon recommendation of the

Commissioner. The criteria for selecting firms to be audited
shall include:

RUE dane

:
j
i

seniker aM

A
=

91
{a) Relative magnitude of customs revenue to be generated
from the firm:

(b) The rates of duties of the firm’s imports;

(¢) The compliance track records of the firm; and

(@) An assessment of the risk to revenue of the firm’s import

activities.

SEC.1002. Access to Records. — Any authorized officer

of the Bureau shall be given by the importer and customs broker
full and free access to the premises where the records are kept,
to conduct audit examination, inspection, verification, and
investigation of those records relevant to such investigation or
inquiry,

A copy of any document certified by or on behaif of the

importer is admissible in evidence in all courts as if it were the
original copy.

Acustoms officer is not entitled to enter the premises under

this section unless, before so doing, the officer produces to the
person occupying or apparently in charge of the premises written
evidence of the fact of being duly authorized. The person occupying
or apparently in charge of the premises entered by an officer shall .
provide the officer with all reasonable facilities and assistance for
the effective exercise of the officer's authority under this section.

Unless otherwise provided herein or in other provisions of

law, the Bureau may, in case of disobedience, invoke the aid of
the proper regional trial court within whose Jurisdiction the matter
falls. The court may punish contumacy or refusal as contempt.
Jn addition, the fact that the importer or-cugtoms broker denies.
the authorized customs officer full and free access to importation
records during the conduct of a post clearance audit shail create
a presumption of inaccuracy in the transaction value declared for
their imported goods and constitute grounds for the Bureau to
conduct a reassessment of such goods,
92

In addition, the imposition of the appropriate criminal

sanctions provided under this Act and other administrative
sanctions may be concurrently invoked against contumacious
importers, including the suspension of the delivery or release of
their imported goods.

SEG. 1003. Requirement to Keep Records. — (a) All

importers are required to keep at their principal place of business,
in the manner prescribed by regulations to be issued by the
Commissioner and for a period of three (3) years from the date of
final payment of duties and taxes or customs clearance, as the
case may be, all records pertaining to the ordinary course of
business and to any activity or information contained in the records
required by this title in connection with any such activity.

For purposes of the post clearance audit and Section 1005

of this Act, the term importer shall include the following:

(i) Importer-of-record or consignee, owner or declarant, or

aparty who:

@ Imports goods into the Philippines or withdraws such

goods into the Philippine customs territory for consumption
or warehousing; files a claim for refund or drawback; or
transports or stores such goods carried or held under security; or

@) Knowingly causes the importation or transportation or

storage of imported goods referred to above, or the filing of refund
or drawback claim.

(2) An agent of any party described in paragraph (1); or

(3) A person whose activities require the filme ofa goods

declaration.

A person ordering imported goods from a local importer or

supplier in a domestic transaction shall be exempted from the

requirements imposed by this section unless:

93

(i) The terms and conditions of the importation are

controlled by the person placing the order; or

(2) The circumstances and nature of the relationship

between the person placing the order and the importer or supplier
are such that the former may he considered as the beneficial or
true owner of the imported goods; or
(3) The person placing the order had prior knowledge that
they will be used in the manufacture or production of the imported
goods, :

(b) Allparties engaged in customs clearance and processing

are required to keep at their principal place of business, in the
manner prescribed by regulations to be issued by the
Cornamissioner and for a period of three (8) years from the date of
filing of the goods declaration, copies ofthe abovementioned records
covering the transactions handled.

{e) Locators or persons authorized to bring imported goods

into free zones, such as the special economic zones and free ports,
are required to keep subject-records of all its activities, inckuding
im whole or in part, records on imported goods withdrawn from
said zones into the customs territory for a period of three (8) years
from the date of filing of the goods declaration.

Failure to keep the records required by this Act shall

constitute a waiver of this right to contest the results of the audit
based on records kept by the Bureau.

SEC. 1004. Power of the Commissioner to Obtain

Information and Issue Summons, — For the effective
implementation of the post clearance audit functions of the
Bureau, the Commissioner is hereby authorized to:

Hidang

(a) Obtain on a regular basis from any person, in addition

to the person who is the subject of a post clearance audit or
investigation, or from any office or officer of the national and
local governments, government agencies and instrumentalities,
including the BSP and GOCCs, any information such as costs
94

and volume of production, receipts or sales and gross income of

taxpayers, and the names, addresses, and financial statements
of corporations, regional operating headquarters of multinational
companies, joint accounts, associations, joint ventures or consortia
and registered partnerships, and their members, whose business
operations or activities are directly or indirectly involved in the
importation or exportation of imported goods or products
manufactured from imported component materials:

(b) Swmmon the person liable for duties and taxes or

required to file goods declaration, or any officer or employee of
such person, or any person having possession, custody, or care of
the books of accounts and other accounting records containing
entries relating to the business of the person Hable for duties and
taxes, or any other person, to appear before the Commissioner or
the duly authorized representative at a time and place specified
in the summons and ¢o produce such books, papers, records, or
other data, and to give testimony;

©) Take such testimony of the person concerned, under

oath, as may be relevant or material to such inquiry; or

@ Obtain information from: banks or other financial

institutions on commercial documents and records pertaining
specifically to payments relevant to import transaction.

The provisions of the foregoing paragraphs notwithstanding,

nothing in this section shall be construed as granting the
Commissioner the authority to inquire into bank deposits of
persons or entities mentioned in this Title.

SEC. 1005. Failure to Pay Correct Duties and Taxes on

imported Goods. —Any person who, after being subjected to post
clearance audit and examination as provided in Section 1000 of
this Act, is found to have incurred deficienciesin duties and taxes

paid for imported goods, shall be penalized according to two (2):

degrees of culpability subject to any mitigating, aggravating, or

extraordinary factors that are clearly established by available
evidence as described hereunder:

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95

(a) Negligence. — When a deficiency results from an

offender's failure, through an act or acts of omission or
commission, to exercise reasonable care and competence in
ensuring that a statement made is correct, the offender shall be
charged for committing negligence, and, if found guilty shall be
penalized with a fine equivalent to one hundred twenty-five
percent (125%) of the revenue loss: Provided, That subject. to
Section 108 of this Act, no substantial penalty shall be imposed
on an inadvertent error amounting to simple negligence, as defined
by rules promulgated by the Secretary of Finance, upon
recommendation of the Commissioner;

(b) Fraud, —When the material false statement or actin

connection with the transaction was committed or omitted
knowingly, voluntarily and intentionally, as established by clear
and convincing evidence, the offender who is charged for
committing fraud and is found guilty thereof, shall be penalized
with a fine equivalent to six (6) times of the revenue loss and/or
imprisonment of not less than two (2) years, but not more than
eight (8) years. :

; The decision of the Commissioner, upon proper hearing, to

impose penalties as prescribed in this section may be appealed in
accordance with Section 1104 of this Act.

SEC. 1006. Records to be Kept by the Bureau. — The

Bureau shall keep a database of importer and broker profiles
which shall include a record of au dit results and the following
information and papers:

(a) Articles of Incerporation:

(b) The company structure, which shall include, but not

limited to, incorporators and board of directors, key officers, and
organizational structure: whos

(ce) Key importations;

(@) Privileges enjoyed:

96

(e) Penalties; and

() Risk categories.

The Bureau shall furnish the BIR and the DOF a copy ot
the final audit results within thirty (30) days from the issuance
thereof.

TITLE XI

ADMINISTRATIVE AND JUDICIAL PROCEDURES

CHAPTER 1

ADVANCE RULING AND DISPUTE SETTLEMENT

SEC. 1100. Classification Ruling. — An importer or

exporter may file a written application for an advance ruling
on the tariff classification of goods with the Commission. The
Commission shall render a ruling within thirty (30) days from
receipt of a properly documented application,

When a declared tariff classification of goods, not subject of

a pending application for advance ruling, is in dispute, the
importer, exporter, or the Bureau shall submit the matter to the
Commission for a ruling, without prejudice to the application of
Section 1106 ofthis Act on "protest": Provided, That such, rulings
ofthe Commission on commodity classification shall be binding
upon the Bureau, unless the Secretary of Finance shall rule
otherwise. :

SEC. 1101. Valuation Ruling. — An importer ox exporter

may file a written application for an advance valuation ruling on.
the proper application of a specific method on customs valuation

of specific goods as prescribed in Title VII, Chapter 1 of this Act. .

- The application for a valuation ruling shall be filed with

the Commissioner who shal issue a ruling within thirty (30)
days from submission of the application form and supporting
documents as may be required by rules and regulations.

37

When the valuation method of goods not subject of an

application for advance valuation ruling or the declared customs
value is in dispute, the matter shall be resolved in accordance
with Section 1106 of this Act on "protest".

SEC. 1102. Ruling on the Rules of Origin. — An importer

or exporter may file a written application for a ruling on whether
the goods qualify as originating under the rules of origin of the
applicable preferential trade agreement. The application for an
advance ruling on origin shall be filed with the Commissioner
who shall act on the application within thirty (80) days from
receipt of the application and supporting documents as may be
required by rules and regulations.
When the declared origin of the goods, not subject of a
request for advance ruling on crigin, is in dispute, the matter
shall be resolved in accordance with Section 1106 ofthis Act on
"protes: He .

SHC. 1108. Conditions for Application and “effect of

Advance Ruling. — An application for an advance ruling shall
cover only one (1) product or item. The application for advance
ruling shall be filed at least ninety (90) days before the importation
or exportation of the product or item, as the case ay be.

SEC. 1104. Administrative and Judicial Appeals. — An

aggrieved party may, within thirty (80) days from receipt of an
adverse ruling or decision, appeal the same to the CTA without
prejudice to the authority of the Secretary of Finance to review
decisions adverse to the govermmentin accordance with Sections
1427 and 1128 of this Act, as the case may be.

SEC. 1105. Implementing Rules and Regulations. — The

Secretary of Finance, upon the recommendation of the Bureau
and the Commission, shall promulgate rules aedreculations to

implément the preceding provisions on advance ruling,

98

CHAPTER 2
PROTEST

SEC. 1106. Protest. — When a ruling or decision of the

District Collector or customs officer involving goods with valuation,
rules of origin, and other customs issues is made, except the fixing
of fines in seizure cases, the party adversely affected may appeal
by way of protest against such ruling or decision by presenting to
the Commissioner at the time when payment of the amount claimed
to be due the government is made, or within fifteen (15) days
thereafter, a written protest setting forth the objection to the
ruling or decision in question and the reasons therefore.

Subject to the approval of the Secretary of Finance, the

Commissioner shall provide such rules and regulations as to the
requirement for payment or nonpayment of the disputed amount
and in case of nonpayment, the release of the importation under
protest upon posting of sufficient security.

SEC.1107. Protest Exclusive Remedy in Protestable

Case. — in all cases subject ta protest, the interested party who
desires to have the action of the District Collector reviewed, shall
file a protest as provided in Section 1106 of this Act, otherwise
the action of the District Collector shall be final and conclusive.

SEC. 1108. Form and Scope of Protest, —A protest shall

be filed in accordance with the prescribed rules and regulations
promulgated under this section. It shall specify the particular
decision or ruling of the District Collector for which protest is
being made, and shall indicate the particular ground or grounds
upon which the protesting party bases the claim for relief. The
scope of a-protest shall be limited to the particular goods subject
ofa goods declaration, but any number of issues may be raisedin
a protest with reference to the goods declaration constituting the
subject matter of the protest. .

SEC. 1109. Samples to be Furnished by Protesting

Parties. — If the nature of the goods permit, importers filing
protests involving questions of fact must, upon demand, present

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39

to the Commissioner samples of the goods which are the subject

matter of the protest. The samples of the goods shall be yerified
by the customs officer who made the classification against which
the protests are filed.

SEC. 1110. Decision in Protest. — When a protest is filed

in proper form, the Commissioner shall render a decision within
thirty (80) days from receipt of the protest. In case the protest is
sustained, in whole or in part, the appropriate order shall be
made, and the entry reassessed, if necessary.

CHAPTER 3
ALERT ORDERS

SEC. 1111. Alert Orders. — Alert orders are written orders

issued by customs officers as authorized by the Commissioner
on the basis of dero gatory information regarding possible
noncompliance with this Act. An alert order will result in the
suspension of the processing of the goods declaration and the
conduct of physical or nonintrusive inspection of the goods
within forty-eight (48) hours from issuance of the order. Within
forty-eight (48) hours or, in the case of perishable goods, within
twenty-four (24) hours from inspection, the alerting officer shall
recommend the continuance of processing of goods in case of a
negative finding, or issuance of a warrant ofseizure and detention
ifa discrepancy between the declaration and actual goods is found,
The Bureau's information system shali immediately reflect the
imposition or lifting of an alert order.

Derogatory information shall indicate the violations and

other necessary specifics thereof. For this purpose, the following
shall not be considered derogatory information:

(a) General allegations of undervaluatiete

; (b) General allegations of misclassification without

providing the appropriate tariff heading and duty of the shipment
to be alerted;
100

(©) General allegations of over-quantity without indicating

the source of information supporting the allegation:

@) General allegations of misdeclaration in the entry

without indicating the suspected actual contents thereof: and

{e) General allegations of importations contrary to law

without indicating the specific law or rule to be violated.

No alert order shall be issued on account of allegations of

undervaluation unless said undervaluation is caused by the
submission to customs of forged or spurious invoice or other
commercial documenis.

An alert order may be issued only after lodgement of the

goods declaration and prior to the release of goods from customs
custody. Under no circumstances shall the suspension of the
processing of goods declaration be allowed except through an alert.
order issued by an authorized customs officer.

The costs of the physical inspection shall be borne by the

Bureau: Provided, That such cost shall be reimbursed by the
owner prior to the release of the goods if the physical inspection
resulis in the assessment of additional duties or taxes or the
issuance of a warrant of seizure.

The Commissioner shall be notified of the recommendation

by the alerting officer within twenty-four (24) hours from the
issuance of the alert order. Alert orders shall be dated and assigned
a unique reference number in series which shall be the basis for
reporting to and monitoring by the Commissioner and the
Secretary of Finance.

The Bureau shall create a central clearing house for alert

orders and shail submit reports quarterly on the status therecf.

SEC. 1112. Alert Orders on Perishable Goods. — When

the subject of the alert order are perishable goods, the Bureau
shall attach to the recommendation a certificate stating that the
goods are perishable.

101

CHAPTER 4
SEIZURE AND FORFEITURE

SEC. 1118. Property Subject to Seizure and Forfeiture. —

Property that shall be subject to seizure and forfeiture include:

(a) Any vehicle, vessel or aircraft, including cargo, which

shall be used unlawfully in the importation or exportation of goods
or in conveying or transporting smuggled goods in commercial
quantities into or from any Philippine port or place. The mere
carrying or holding on board of smuggled goods in commercial
quantities shall subject such vehicle, vessel, aircraft, or any other
craft to forfeiture: Provided, That the vehicle, vessel, aircraft
or any other craft is not used as a common carrier which has
been chartered or leased for purposes of conveying or transporting
persons or cargo;

(b) Any vessel engaging in the coastwise trade which shall

have on board goods of foreign growth, produce, or manufacture
in excess of the ammount necessary for sea stores, without such
goods having been properly entered or legally imported:

(¢) Any vessel or aircraft into which shall be transferred

cargo unloaded contrary te law prior to the arrival of the importing
vessel or aircraft at the port of destination;

@) Any part of the cargo, stores, or supplies of a vessel or

aireraft arriving from a foreign port which is unloaded before
arrival at the vessel's or aircraft's port of destination and without
authority from the customs officer; but such cargo, ship, or aircraft
stores and supplies shall not be forfeited if such unloading was
due to accident, stress of weather, or other necessity and is
subsequently approved by the District Collector;

ang

(©) Goods which are fraudulently concealed in or removed

contrary to law from any public or private warehouse, container
yard, or container freight station under customs sup ervision;
102

® Goods, the importation or exportation of which are

effacted or attempted contrary to law, or any goods of prohibited
importation or exportation, and all other goods which, in the
opinion of the District: Collector, have been used, are or were
entered to be used as instruments in the importation or the
exportation of the former:

(g) Unmanifested goods found on any vessel or aircraft

ifmanifest therefor is required;

{h) Sea stores or aircraft stores adjudged by the District

Collector to be excessive, when the duties and taxes assessed. by
the District Collector thereon are not paid or secured forthwith
upon assessment of the same;

@ Any package of imported goods which is found upon

examination to contain goods not specified in the invoice or goods
declaration including all other packages purportedly containing
imported goods similar to those declared in the invoice or goods
declaration to be the contents of the misdeclared package;

@ Boxes, cases, trunks, envelopes. and other containers

of whatever character used ag receptacle or as device to conceal
goods which are subject to forfeiture under this Act or which are
so designed as to conceal the character of such goods;

(k) Any conveyance actually used for the transport of goods

subject to forfeiture under this Act, with its equipage or trappings,
and any vehicle similarly used, together with its equipment and
appurtenances. The mere conveyance of smuggled goods by such
transport vehicle shall be sufficient cause for the outright seizure
and confiscation of such transport vehicle but the forfeiture shall
not be effected ifitis established that the owner of the means of
conveyance used as aforesaid, is engaged as common carrier and
not chartered or leased, or that the agent in charge thereof at the
time, has no knowledge of the unlawful act; and

, @ Goods sought to be imported or exported:

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103

( Without going through a customs office, whether the

act was consummated, frustrated, or attempted;
(2) Found in the baggage of a person arriving from abroad
and undeclared by such person;

(8) Through a false declaration or affidavit executed by

the owner, importer, exporter, or consignee concerning the
importation of such goods;

(4) On the strength of a false invoice or cther document

executed by the owner, importer, exporter, or consignee concerning
the importation or exportation of such goods: or

(6) Through any other practice or device contrary to law

by means of which such goods entered through a customs office
to the prejudice of the government.

SEC. 1114. Properties not Subject to Forfeiture in the

Absence of Prima Facie Evidence. — The forfeiture of the vehicle,
vessel, or aircraft shail not be effected if it is established thatthe
owner thereof or the agent in charge of the meals of conveyance
used as aforesaid has no knowledge of or participation in the
unlawful aet: Provided, That a prima facie presumption shall
exist against the vehicle, vessel, or aircraft under any of the
following circumstances:

(a) Ifthe conveyance has been used for smugeling before:

(b) If the owner is not in the business for which the -

conveyance is generally used; and

(© Ifthe owner is not financially ina position to own such

conveyance. ai

SEC. 1115. Conditions Affecting Forfeiture of Goods. ~

The forfeiture shall be effected only when and while the goods are
in the custody or within the jurisdiction of customs officers, or in
the possession or custody of or subject to the control of the
importer, exporter, original owner, consignee, agent of another
104

person effecting the importation, entry or exportation in question,

or in the poasession or custody of or subject to the control of persons
who shall receive, conceal, buy, sell, or transport the same, or aid
in any of such acts, with knowledge that the goods were imported,
or were the subject of an attempt at importation or exportation
contrary to law.

SEC. 1116. Seizure or Release of Goods. — The District

Collector shall issue an order of release or a warrant of seizure
within five (5) days, or two (2) days in case of perishable goods,
upon the recommendation of the alerting officer or any other
customs officer, The District Collector shall luomediately make a
report of such seizure or release to the Commissioner.

SEC. 1117. Warrant of Seizure ar Order of Reiease, —The

District Collector shall have the authority to issue a warrant of
seizure of the goods upon determination of the existence of probable
cause and in case of nonexistence thereof, the issuance of order of
release. In case the District Collector issued an order of release,
the District Collector shall immediately transmit all the records
to the Commissioner who shall automatically review within
forty-eight (48) hours, or within twenty-four (24) hours in
case of perishable goods. When no decision is made by the
Commissioner within the prescribed period, the imported goods
shall be deemed released.

The lifting of the alert order shall be issued by the District

Collector only upon the affirmation of the decision of the District
Collector by the Commissioner, or after the lapse of the period of
review by the Commissioner, whichever is earlier.

SEG. 1118. Sale of Perishable Goods During Forfeiture

Proceedings. — Upon motion of the importer of the perishable
goods, the goods may be sold at a public auction during the pendency
of the forfeiture proceedings. The proceeds of the auction shall be
held in escrow until the final resclution of the proceedings.

SEC. 1119. Service of Warrant of Seizure. — The District

Collector shall cause the service of warrant of seizure to the
owner or importer of the goods or the authorized representative

105

thereof. The owner or importer shall be given an opportunity to

be heard during the forfeiture proceedings.

For the purpose of serving the warrant, the importer,

consignee, or person holding the bill of lading or airway bill shall
be deemed the "owner" of the goods. For the same purpose,
"authorized representative" shall include any agent of the owner
and if the owner or the agent is unknown, any person having
possession of the goods at the time of the seizure.

Service of warrant to an unknown owner shall be effected

by posting the warrant for fifteen (15) days in a public place at
the concerned district, and by electronic or printed publication.

SEC. 1120. Description, Classification and Valuation of

Seized Goods. — The District Collector shall cause the preparation
ofa list and particular description, classification, and valuation

of the goods seized and valuation of identical or similar goods.

SEC. 1121. Proceedings in Case of Property Belonging to

Unknown Parties. — Uf, within fifteen (15) days after service of
warrant, no owner or agent can be found or appears before the
District Collector, the seized goods shall he forfeited ipso facto in
favor of the government to be disposed ofin accordance with this
Act.

SEC. 1122. Seizure of Vessel ar Aircraft for Delinquency

of Owner or Officer. ~ When the owner, agent, master, pilet in
command or other responsible officer of any vessel or aircraft
becomes liable for any violation of this Act, the vessel or aircraft
may be seized and be subjected to forfeiture proceedings for the
settlement of any fine or penalty for which such person is hable.
In determining whether or not to seize a vessel or aircraft, the
Bureau shall take into account the amount of fine or penalty in
relation to the commercial impact that may be caused to
international trade by the seizure cr detention as well as the
value of the vessel or aircraft.

SEC. 1123. Burden of Proof in Forfeiture Proceedings. —

Tn all proceedings for the forfeiture of any vehicle, vessel, aircraft,
or goods under this Act, the burden of proof shall be borne by the

claimant
106

SEC. 1124, Settlement of Pending Seizure Case by |

Payment of Fine or Redemption of Forfeited Goods. ~ Subject

to the approval of the Commissioner, the District Collector may
allow the settlement by payment of fine or the redemption of
forfeited goods, during the course of the forfeiture proceeding,
However, the Commissioner thay accept the settlement by
redemption of any forfeiture case on appeal. No settlement by
payment of fine shall be allowed when there is fraud or when the
discrepancy in duties and taxes to be paid between what is
determined and what is declared amounts to more than thirty
percent (30%).

In case of settlement by payment of fine, the owner,

importer, exporter, or consignee or agent shall offer to pay a fine
equivalent to thirty percent (30%) of the landed cost of the seized
goods. Incase of settlement by redemption, the owner, importer,
exporter, or consignee or agent shall offer to pay the redeemed
value equivalent to one hundred percent (106%) of the landed
cast.

Upon payment of the fine or payment of the redeemed value,

the goods shall be released and all liabilities which may attach to
the goods shall be discharged without prejudice to the filing of
administrative or criminal case.

Settlement of any seizure case by payment of the fine or

redemption of forfeited goods shall not be allowed when there is
fraud, or where the importation is prohibited or the release of the
goods is contrary to law.

SEC. 1125. Decision in Forfeiture Cases. ~In forfeiture

cases, the District Collector shall issue an order for hearing within
fifteen (15) days, or five (6) days in case of perishable goods, from

‘issuance of the warrant. The Distzict. Collector shall render a

decision within thirty (30) days upon termination of the hearing,
or Within ten (10) days in case of perishable goods. The decision
shall include a declaration of forfeiture, the imposition ofa fine or
such other action as may be proper.

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107

CHAPTER 5
APPEAL IN PRoragt AND FORFEITURE Cases

SEC. 1126. Appeal to the Commissioner. ~ Tn, forfeiture

cases, the berson aggrieved by the decision ofa District Collector
may, within fifteen (15) days or five (5) days in case of perishable
goods, from receipt of the decision, file a written notice of appeal,

together with the required appeal fee to the District Collector,

Appeals to protest cases shall be governed by & tion 1

this Ant g0 ry Section 114 of

The decision of the Commissioner may be served through

the recognized modes of service under existing law.

records, shall be final upon the Bureau.

108

SEC.1128. Automatic Review by the Secretary of Finance

in Other Cases. — In cases not involving protest or forfeiture, the
Commissioner shall automatically review any decision by the
District Collector that is adverse to the government. The records
of the case shall be elevated to the Commissioner within five @)
days from the promulgation of the decision. The Commissioner
shall decide on the automatic review within thirty (30) days
from receipt of the records, or within ten (10) days in the case of
perishable goods. When no decision is rendered within the

prescribed period or when any decision rendered by the -

Commissioner is adverse to the government, the records of the

case under review shall be automatically elevated within five (5)
days for the review of the Secretary of Finance. The decision issued
by the Seeretary of Finance, whether or not a decision was rendered
by the Commissioner within thirty (30) days from receipt of the
records, or within ten (10) days in the case of perishable goods,
shall be final upon the Bureau.

CHAPTER 6
ABANDONMENT

SEC.1129. Abandonment, Kinds and Effects of. 7

Imported goods are deemed abandoned under any of the following
circumstances:

{a) When the owner, importer, or consignee of the mmported.

goods expressly signifies in writing to the District Collector the
intention to abandon the same; or

(b) When the owner, importer, consignee, or interested

party after due notice, fails to file the goods declaration within
the prescribed period in Section 407 of this Act: Provided, That
the term goods declaration shall include provisional or incomplete
goods declaration deemed valid by the Bureau as provided in
Section 403 of this Act. For this purpose, it is the duty of the
District Collector to post a list of all packages discharged and
their consignees, whether electronically or physically im the
District Office, or send a notice to the consignee within five (5)
days from the date of discharge: or

169
() Having filed such goods declaration, the owner,
importer, consignee or interested party after due notice, fails to
pay the assessed duties, taxes and other charges thereon, or, if
the regulated goods failed io comply with Section 117 of this Act,
within fifteen (15) days from the date of final assessment:
Provided, That if such regulated goods are subject of an alert
order and the assessed duties, taxes and other charges thereof
are not paid within fifteen (15) days from notification by the
Bureau of the resolution of the alert order, the same shall also be
deemed abandoned: or

() Having paid the assessed duties, taxes and other

charges, the owner, importer or consignee or interested party
after due notice, fails to claim the goods within thirty (80) days
from payment, For this purpose, the arrastre or warehouse
operator shall report the unclaimed goods to the District Collector
for disposition pursuant to the provisions of this Act: or

() When the owner or importer fails to claim goods in

customs bonded warehouses within the prescribed period.

The due notice requirement under this section may be

provided by the Bureau through electronic notice or personal
service: Provided, That for non-regular importers, notification
shall be by registered mail or personal service. For this purpose,
the accreditation of importers, exporters, and other third parties
shall include provision for mandatory receipt of electronic notices.

SEC, 1180. Treatment and Disposition of Abandoned

Goods. — Expressly abandoned goods under paragraph (a) of
Section 1129° of this Act shall ipso facto be deemed the
property of the government and shall be disposed of in
accordance with the provisions of this Act.

Tfthe Bureau has not disposed of the abandoned goods, the

owner or importer of goods impliedly abandoned may, at any time
within thirty (80) days after the lapse of the prescribed period to
file the declaration, reclaim the goods provided that all legal —
requirements have been comphed with and the corresponding
duties, taxes and other charges, without prejudice to charges and
fees due to the port or terminal operator, as well as expenses
110

incurred have been paid before the release of the goods from customs
custody.

When the Bureau sells goods which have been impliedly

abandoned, although no offense has been discovered, the proceeds
of the sale, after deduction of any duty and tax and all other
charges and expenses incurred as provided in Section 1148 of this
Act, shall be turned over to those persons entitled to receive them
or, when this is not possible, held at their disposal for a specified
period. After the lapse of the specified period, the balance shall be
transferred to the forfeiture fund as provided in Section 1151 of
this Act.

CHAPTER 7
OTHER ADMINISTRATIVE PROCEEDINGS

SEC. 1181. Authority of the Commissioner to Make

Compromise. — Subject to the approval of the Secretary of Finance,
the Commissioner may compromise any administrative case
atising under this Act involving the imposition of fines and
surcharges, including those arising from the conduct of a post
clearance audit, unless otherwise specified by law.

Cases involving forfeiture proceedings shall however not

be subject to any compromise.

CHAPTER 8
CIVIL REMEDIES FOR THE COLLECTION OF DUTIES AND TAXES

SEG. 1132. Remedies for the Collection of Duties, Taxes,

Fines, Surcharges, Interests, and Other Charges. — The civil
remedies for the collection of import duties, taxes, fees, or charges
resulting from the conduct of a post clearance audit shall be
obtained by:

(a) Distraint of goods, chattels, or effects, and other

personal property of whatever character, including stocks and
other securities, debts, credits, bank accounts, and interest in

ambiad Rehan

11}

and rights to personal property, and by levy upon real property

and interest in rights to real property; and
() Civil or criminal action,

Hither or both of these remedies may be pursued at

the discretion of the Bureau: Provided, That the remedies of
distraint and levy shall not be allowed when the amount of
duties and taxes invelved is not more than ten thousand
pesos (P10,000.00).

The Bureau shall advance the amounts needed to defray

costs of collection by means of civil or criminal action, tacluding
the preservation or transportation of personal property distrained
and the advertisement and sale thereof, as well as of real property
and improvements thereon.

SEC. 1188. Constructive Distraint of the Property. — To

safeguard the interest of the government, the Commissioner may
place under constructive distraint the property of a delinguent
importer who, in the opinion of the Commissioner, is retiring
from any business subject to duty and tax, or is intending to
leave the Philippines, or to remove the property therefrom, orto
hide or conceal the property, or to perform any act tending to
obstruct the proceedings for collecting the duty and tax due, or
which may be due,

The constructive distraint of personal property shall be

effected by requiring the importer or any person in possession
or control of such property to sign a receipt covering the
property, to obligate to preserve the distrained property on
the state and condition at the time of the government's seizure
of the same, and not to dispose of the same in any manner
whatseever, without the express authority of the
Commissioner. ance

incase the importer or the person in possession and control

of the property sought to be placed under constructive distraint
refuses or fails to sign the receipt herein referred to, the customs
officer effecting the constructive distraint shall proceed to prepare
Tz

a list of such property and, in the presence of two (2) witnesses,

leave a copy thereof in the premises where the property distrained
is located, after which the said property shall be deemed to have
been placed under constructive distraint.

SEC. 1134. Summary Remedies. — (A) Distraint of

Personal Property. — Upon failure of the person owing any
delinquent duty, tax and other charges to pay at the time required,
the Commissioner shall seize and distraint the goods, chattels or
effects, and the personal property, including stocks and other
securities, debts, credits, bank accounts, and interests in and
rights to personal property of such persons, in sufficient quantity
to satisfy the duty, tax or other charge and the expenses of the
distraint and the cost of the subsequent sale.

The officer serving the warrant of distraint shall make or

cause to be made an account of the goods, chattels, effects, or
other personal property distrained, a copy of which, signed by the
said officer, shall be left either with the owner or person from
whose possession such goods, chattels, or effects or other personal
property were taken, or at the dwelling or other place of business
of such person and with someone of suitable age and discretion,
to which list shall be added a statement of the sum demanded
and note of the time and place of sale.

Stocks and other securities shall be distrained by serving a

copy of the warrant of distraint upon the importer and upon the
president, manager, treasurer, or other responsible officer of the
corporation, company or association, which issued the said stocks
or securities.

Bebis and credits shall be distrained by leaving with the

person owing the debts or having in his/her possession or under
his/her control such credits, or with his/her agent, a copy of the
warrant of distraint. The warrant of distraint shall be sufficient
authority to the person owing the debte or having in his possession
or under his control any credits belonging to the importer to pay
to the Commissioner the amount of such debts of credits.

Bank accounts shall be garnished by serving a warrant of

garnishment upon the importer and upon the president, manager,

113

to satisfy the claim of the government.

A report on the distraint shall, within ten ( 10) days from
receipt of the warrant, be submitted by the Commissioner
to the Secretary of Finance: Provided, That the Commissioner
shall have the power to lift such order of distraint subject to the
rules and regulations promulgated pursuant to this Act.

The levy shall be effected by writing upon the certificate a

description of the property on which levy is made. At the same
time, written notice of the levy shall be mailed to or served upon
the register of deeds of the province or city where the property is
located and upon the importer, or if the latter is not in the
Philippines, upon the agent or the manager of the business from
which the liability arose, or if there be none, to the occupant of
the property in question.

In case the warrant of levy on real property is not issued

before or simultaneously with the warrant of distraint on personal
property, and the personal Property of the importer is not sufficient

Within ten (10) days after receipt of the Warrant, a report

on any levy shall be submitted by the levying officer to the
Commissioner: Provided, That the Commissioner may lift such
1l4

warrants of levy issued, subject to the rules and regulations

promulgated pursuant to this Act.

CHAPTER 9
JUDICIAL PROCEEDINGS

SEC. 1185. Supervision and Control over Criminal and

Civil Proceedings. -- Civil and criminal actions and proceedings
instituted on behalf of the Government under the authority of
this Act or other laws enforced by the Burean shall be brought in
the name of the government of the Philippines and shall be

prosecuted and handled by the Bureau with the assistance

of the Department of Justice (OJ): Provided, That the

determination of the existence of probable cause and the
subsequent filing of any criminal or civil case with the proper
court against violators of this Act shall exclusively belong to the
BOS: Provided, however, That no civil or criminal action for
the recovery of duties or the enforcement of any fine, penalty or
forfeiture under this Act shall be filed in court without the
approval of the Commissioner.

SEC.1136. Review by the CTA. — Unless otherwise

provided in this Act or by any other law, the party aggrieved by
the ruling or decisions of the Commissioner may appeal to the
CTA, in the manner and within the period prescribed by law and
regulations. Decisions of the Secretary of Finance when required
by this Act, may Hkewise be appealed to the CTA.

Unless an appeal is made to the CTA in the manner and

within the period prescribed by law and regulations, the ruling
or decision of the Commissioner or the Secretary of Finance shall
be final and executory.

SEC.1187. Exclusive Jurisdiction of the Bureau, — .

Jurisdiction over imported goods and goods for exportation shall

be exclusive to the Bureau, or the Secretary of Finance, when
under review by the latter, subject to the proceedings described
in this title.
115

Except for the CTA, no court may issue any order or decision
until all the remedies for administrative appeal have been
exhausted.

SEC. 1188. Freud Investigation and Presecution. — No

criminal case for violation of this title shall be instituted without
the approval of the Commissioner pursuant to the provisions of
this Act.

The Bureau shall have the power to investigate and institute

smuggling cases committed within its jurisdiction: Provided,
That in case of inquest, the same may be instituted by the
apprehending customs officer.

CHAPTER 10
DISPOSITION OF PROPERTY IN CUSTOMS CUSTODY

SEC.11389. Goods Subject to Disposition. — Goods in

customs custody that are in the following conditions and status
shall be subject: to disposition:

fa) Abandoned goods;

(b} Goods entered under warehousing entry but not

withdrawn, or those whose duties and taxes have not been paid
within the period prescribed under Section 811 of this Act;

(©) Forfeited goods, other than prohibited, restricted and

regulated goods; after liability have been established by the proper
administrative or judicial proceedings in conformity with the
provisions of this Act; and ,

@) Goods subject to a valid lien for cugtoms duties, taxes

and other charges collectible by the Bureau, after the expiration
of the period allowed for payment thereof.

SEC. 1146. Place of Disposition of Geods. —Upon the order

of the District Collector, goods may be sold or otherwise disposed
116

ofat the port where the goods are located, unless the Commissioner
shall direct its transfer to another port.

SEC. 1141. Mode of Disposition. — The goods subject to

disposition may be donated to another government agency or
declared for official use of the Bureau, after approval of the
Secretary of Finance, or sold at a public auction within thirty
(30) days after a ten (10)-day notice posted at a public place at the

port where the goods are located and published electronically or .

10 a newspaper of general circulation.

For purposes of donating the goods as above described, goods

suitable for shelter or consisting of foodstuffs, clothing materials
or medicines may be donated to the DSWD. :

SEC. 1142. Disqualification to Participate in Auction Sale.

— No customs officer or employee, their spouses and relatives
within the fourth degree of consanguinity or affinity shall be
allowed to bid directly or indirectly, in any customs auction.

SEC. 1143. Disposition of Proceeds. — The following

expenses and obligations shall be paid from the proceeds of the
sale in the order provided:

(2) Customs duties, except in the case of forfeited goods;

tb) Taxes and other charges due the government;

(c) Government storage charges:

(d@) Expenses for the appraisal, advertisement, and sale of

auctioned goods;

' ©) Arrastre and private storage charges and demurrage

charges; and

@® Freight, ighterage or general average, on the voyage

ofimportation, of which due notice shall have been given to the
District Collector.

altianunibiiny
iy -

The Commissioner is authorized to determine the maximum

charges to be recovered by private entities concerned under
subsections (e) and (B of this section.

SEC. 1144. Disposition of Perishable Goods. — Perishable

goods as defined under this Act when certified as such by the
Bureau, may be sold at a public auction within five (5) days, after
a three (8)-day notice.

For this purpose, perishable goods shall include goods Hable

to perish or be wasted, or those that depreciate greatly in value
while stored, or which cannot be kept without great
disproportionate expense. The Bureau shall proceed to advertise
and seli the same at auction upon notice as shall be deemed to be
reasonable.

SEC. 1145. Disposition of Goods Injurious to Public

Health. — Goods in the custody of the Bureau which, in the
opinion of the District Collector are injurious to public health,
shall be seized. The District Collector shall, ifthe matter is not
disposable under the provisions relating to food and drugs, appoint
three (3) members to constitute a Board to examine the gocds.
The Board shall be composed of one (1) representative from either
the DOH or other appropriate government agency or the local
government unit (LGU) concerned, and two (2) representatives
from the Bureau. Ifthe goods are found to be injurious te public
health, the Board shall report this to the District Collector, who
shall order its destruction in an appropriate manner or order its
reexportation in accordance with this Act.

The District Collector shall immediately coordinate with

the health and quarantine officers at the port of entry for the
disposition of goods injurious to public health.

SEC. 1146. Disposition of Prohibited Godds. — Prohibited

goods, as provided in Section 118 of this Act, shall be destroyed,
except paragraph (d} thereof which shall be turned ovet to the
BSP. All goods suitable for shelter, foodstuffs, clothing materials

or medicines may be disposed in accordance with Section 1141 of

this Act.
118

SEC. 1147. Disposition of Restricted Goods. — Restricted

goods as described in Section 119 of this Act shall be disposed as
follows:

(a) Dynamite, gunpowder, ammunitions and other

explosives, firearms and weapons of war, and parts thereof shall
be turned over to the AFP;

tb) Roulette wheels, gambling outfits, loaded dice, marked

cards, machines, apparatus or mechanical devices used in
gambling or the distribution of money, cigars, cigarettes, or other
goods when such distribution is dependent on chance, including
jackpot and pinball machines or similar contrivances, or paris
thereof shall be turned over to the appropriate government body
or agency;

(c) Lottery and sweepstakes tickets, except advertisements

thereof, and lists of drawings therein shall be tarned over to the
appropriate government body or agency;

(d) Marijuana, opium, poppies, coca leaves, heroin, or other

narcotics or synthetic drugs which are or may hereafter be dedared
habit forming by the President of the Philippines, or any
compound, manufactured salt, derivative, or preparation thereof,
shall be turned over to the Dangerous Drugs Board:

(e} Optum pipes and parts thereof, of whatever material,

shall be turned over to the Dangerous Drugs Board: and

() Allother restricted goods which are highly dangerous

tobe kept or handled shall be destroyed in a manner asthe District
Collector deems appropriate. Otherwise, the restricted goods shall
be turned over to the proper government agency for appropriate

handling. ,

SEC. 1148. Disposition of Regulated Goods. — Regulated

goods shalt be disposed of in a manner to be determined by the
appropriate regulatory agency. In the event that the regulatory
agency allows the disposition of the regulated goods with

Silt es blame ie

11a

commercial value and capable of legitimate use, these shall be

disposed of in accordance with Section 1141 of this Act.

SEC. 1149. Disposition of Unsold Goods for Want of

Bidders. — Goods subject to sale at public auction by the Bureau
shall be sold at a price not less than the landed cost of the goods
adjusted for normal depreciation.

Goods which remain unsold after at least two (2) public

biddings either due to the lack of bidders or for the lack of an
acceptable bid, may be donated to another government
agency or declared for official use ofthe Bureau. Ifthe goods are
not suitable either for official use or donation, these may be subject
to reexport as government property or sold through a negotiated
sale. In case of negotiated sale, the same shall be subject to the
approval of the Secretary of Finance and executed in the presence
of a representative of the COA. For purposes of donating the
goods as above described, goods suitable for shelter or consisting
of foodstuffs, clothing materials or medicines may be donated to
the DSWD.

SEC. 1150_ Disposition of Smuggied Goods. — Smuggled

goods, when forfeited, shall be disposed of as provided in Section
1148 of this Act.

SEC. 1151. Forfeiture Fund. — AY proceeds from public

auction sales after deduction of the charges as provided in
Section 1143 of this Act and subject to the claim of the owner or
importer of an impliedly abandoned goods as provided in Section
1130 of this Act, shall be deposited in an account to be known as
Forfeiture Fund.

The Fund shall be in the name of and shall be managed by

the Bureau which is hereby authorized, subject to the usual
government accounting rules and regulations, t¥utilize it for the
following purposes:

{fa} To cutsource, subject to the rules on government

procurement established by law, the management of the
inventory, safekeeping, maintenance and sale of goods
120

enumerated in Section 11389 of this Act to private service

providers: Provided, That the Bureau shall retain jurisdictional
control and supervision over these goods as well as the operations
of the service provider so contracted;

(b) To facilitate customs seizure, abandonment and

forfeiture proceedings and the disposition of goods under
Section 1189 of this Act, particularly those to be disposed of other
than through public sale;

(©) To enhance customs intelligence and enforcement

capability to prevent smuggling: and

dq To support the modernization program and other

operational efficiency and trade facilitation initiatives of the
Bureau.

‘The DOF and the Department of Budget and Management

(DBM) shall, upon the recommendation of the Bureau, issue a
joint regulation to implement the provisions of this section.

TITLE XII
| THIRD PARTIES
CHAPTER 1
CUSTOMS SERVICE PROVIDERS

SEC. 1200. Customs Brokers and Other Service

Providers. ~ Upon the recommendation of the Commissioner,
the Secretary of Finance shall issue the necessary rules and
regtlations for the registration of customs brokers and the
accreditation of other customs service providers to ensure
compliance with this Act and the rules and regulations that shall
be promulgated to implement it.

Aisa ps

121

CHAPTER 2
CARRIERS, VESSELS, AND AIRCRAFTS

SEC. 1201. Ports Open to Vessels and Aircrafts Engaged

in Foreign Trade. — Vessels and aircrafts engaged in foreign
trade shall visit designated ports of entry only except ag
otherwise especially allowed by law: Provided, That no existing
and valid government contract covering the handling of
import and export cargo shall be diminished or tupaired. Every
vessel or aircraft arriving within a Customs District of the
Philippines from a foreign port shall dock at the designated
port of entry and shall be subject to the authority of the
District Collector of the port while within its jurisdiction.

SEC. 1202. Control of Customs Officer Over Boarding or

Leaving of Incoming Vessel and Over Other Vessel Approaching
the Former. — Upon the arrival in port of any vessel engaged
in foreign trade, it shall be unlawful for any person, except the
pilot, consul, quarantine officers, customs officers, or other
duly authorized persons, to board or leave the vessel without
permission of the customs officer concerned. It shall Hkewise be
unlawful for any tugboat, rowboat, or other craft to go
alongside such vessel and for any person so authorized to board
the vessel to take any unauthorized person to board the same, or
allow loitering near or alongside such vessel. Unauthorized
tugboats and other vessels shall keep away from such vessel
engaged in foreign trade at a distance of not less than fifty
(50) meters.

SEC, 1203. Documents to be Produced by the Master Upon

Entry of Vessel. — Upon entry of a vessel engaged in foreign
trade, the master thereof shall present the following certified
documents to the customs boarding officers: ,

. q
hts
{a} The vessel's general declaration;

(b) The original manifest of afl cargoes destined for the

port, to be returned with the endorsement ofthe boarding officers:
122

(c) Three (3) copies of the original manifest, one of which,

upon certification by the boarding officer as to the correctness of
the copy, shall be returned to the master:

@) Acopy ofthe cargo stowage plan:

©) Two (2) copies of the store list;

@ One (1) copy of the passengers list;

{g) One (1) copy of the crew list;

th) The original copy of all through cargo manifest, for

deposit with the customs officer who has jurisdiction over the
vessel while in port;

@ The passengers manifest containing the names of all

foreigners, in conformity with the requirements of the
immigration laws in force in the Philippines;

G One (1) copy of the original duplicate of fully

accomplished bill oflading;

&) The shipping goods and register of the vessel of

- Philippine registry; and .

@ Such other related documents.

SEC. 1204. Manifest Required of Vessel fram Foreign

Port, — Every vessel from a foreign port must have on board a
complete manifest of allits cargoes.

All cargoes intended to be landed at'a port in the Philippines

must be described in separate manifests for each port of call.
Each manifest shall include the port of departure and the
port of delivery with the marks, numbers, quantity, and
description of the packages and the names ofthe consignees. Every
vessel from a foreign port must have on board complete manifests
ofpassengers and baggage, in the prescribed form, setting forth

AORN aS inant

hae MASR

123

the destination and all particulars required by immigration laws.

Every vessel shall present to the proper customs officers upen.
arrival in ports of the Philippines a complete list of all sea stores
then on board. [the vessel does not carry cargo or passengers,
the manifest must show that no cargo or passenger is carried
from the port of departure to the port of destination in the
Phikppines.

A true and complete copy of the cargo manifest shall be

electronically sent in advance by the shipping company, NVOCC,
freight forwarder, cargo consolidator, or their agents within the
cut-off period as may be determined by the Bureau before the
arrival of the carrying vessel atthe port of entry. Upon arrival of
the carrying vessel, the shipping company, NVOCC, freight
forwarder, cargo consolidator, or their agents shall provide two
(2) hard copies of the cargo manifest to the Bureau in case the
port of entry is either the Port of Manila (PoM) or the Manila
International Container Port (MICP), and one (1) copy only in the
case of the other ports of entry.

A cargo manifest shall in no case be changed or altered

after entry of vessel, except by means ofan amendment, under
cath, by the master, consignee or agent thereof, which shall be
attached to the original manifest: Provided, That after the invoice
and/or goods declaration covering an importation have heen
received and recorded in the office of the appraiser, no amendment
ofthe manifest shall be allowed, except when it is obvious that a
clerical error or any other discrepancy has been commitied in the
preparation of the manifest, without any fraudulent intent, the
discovery of which would not have been made until after
examination of the importation has been completed.

| SEC.1205. Translation of Manifest. — The cargo manifest

and each copy thereof shail be accompanied by a translation in

English, if originally written in another langyage.

SEC. 1206. Manifesis for the Commission on Audit and

District Collector. —Upon arrival ofa vessel from a foreign port,
the Bureau shall provide electronic copies of the manifest to the
Chairperson of the COA. The master shall immediately present
te the District Collector the original copy of the cargo manifest
124.

properly endorsed by the boarding officer, and for inspection, the

ship's register, or other documents in lieu thereof, together with
the clearance and other papers granted to the vessel at the port of
departure for the Philippines.

SEC. 1207. Production of Philippine Crew. — The master

of a Philippine vessel returning from abroad shall produce the
entire crew listed in the vessel's shipping crew manifest. If any
member is missing, the master shall produce proof satisfactory
to the District Collector that the member has died, or absconded,
has been forcibly impressed into another service, or has been
discharged. In case of discharge in a foreign country, the
master shali produce a certificate from the consul, vice consul, or
consular agent of the Philippines there residing, showing that
such discharge was effected with the consent of the aforesaid
representative of the Philippines.

SEC. 1208. Record of Arrival and Entry of Vessels and

Aurecraft. - A record shall be made and kept open to public
inspection in every Customs District of the date of arrival and
entry of ali vessels and aircraft.

SEC. 1209. Arrest of Vessel or Aircraft Departing Before

Entry Made, — When a vessel or aircraft arriving within the
limits of a Customs District from a foreign port departs or
attempts to depart before entry shall have been made, not
being thereunto compelled by stress of weather, duress of
enemies, or other necessity, the District Collector of the port
may cause the arrest and bring back such vessel or aircraft
to the most convenient port with the assistance of other
concerned agencies.

SEC. 1210. Discharge of Ballast. ~When not brought to .

port as goods, ballast of no commercial value may be discharged

upon permit granted by the District Collector for the purpose.

SEC. 1211. Time of Unloading Cargo. — Unloading of

cargo from a vessel or aircraft froma foreign port during official
nonworking hours shall be allowed subject te payment of service
fees by shipping lines, airlines, or other interested parties at rates
presonibed by the Commissioner.

125

SEC. 1212. Entrance of Vessel through Necessity, —-When

a vessel from a foreign port is compelled, by stress of weather or
other necessity to put inte any other port than that of its
destination, the master within twenty-four (24) hours after its
arrival, shall make a protest under oath setting forth the causes
or circumstances of such necessity. This protest, if not made
before the District Collector, must be produced and lodged with
the District Collector,

Within the same time, the master shall make a report to

the District Collector if any part of the cargo was unloaded from
necessity or lost by casualty before arrival, and produce sufficient
proof to the District Collector of such necessity or casualty before
the latter who shall give the approval thereto and the unleading
shall be deemed to have been lawfully effected.

SEC. 1213. Unloading of Vessel in Port from Necessity. —

ifa situation arises where the unloading of the vessel is required
pending sojourn in port, the District Collector shall, upon sufficient
proof of the necessity, grant a permit therefore, and the goods
shall be unloaded and stored under the supervision of customs
oificers.

At the request of the master of the vessel or the owner

thereof, the District Collector may grant permission to enter the
port and pay duties, taxes and other charges on, and dispose of,
such part of the cargo as may be perishable in nature or as may
be necessary to defray the expenses attending the vessel.

Upon departure, the cargo, or a part thereof, may be

reloaded on board the vessel, and the vessel may proceed with the
same to its destination, subject only to the charge for storing and
safekeeping of the goods and the fees for entrance and clearance.
No port charges shall be collected on vessels entering through
stress of weather, duress or other urgent necesgiiies.

SEC. 1214. Entry and Clearance of Vessels of a Foreign

Government. — The entry and clearance of transport or supply
ship of a foreign government shall be in accordance with the
agreement by and between the Philippines and the foreign
government.
126

SEC. 1215. Clearance of Vessel jor Foreign Port. — Before

a clearance shall be granted to any vessel bound to a foreign port,
the master or the agent thereof shall: present to the District

Collector the following properly authenticated documents:

(a) A bill of health from the quarantine officer or officer of

the public health service in the port;

(b) Three (8) copies of the manifest of export cargo, one of

which, upon certification by the customs officer as to the
correctness of the copy, shall be returned to the master;

(©) Two (2) copies of the passengers list, showing foreigners

and other passengers;

() The register and shipping goods, if the vessel is of

Philippine registry:

) Clearance issued by the last port of entry; and

@® Acertificate from the Philippine Postal Corporation to

the effect that it received timely notice of the sailing of the vessel:
Provided, That the District Collector shail not permit any vessel
to sail for a foreign port if the master or agent thereof refuses to
receive bags of mail delivered to the same by the Philippine
Postal Corporation for transport upon reasonable compensation.
Tn case the Postmaster General and the master or agent do not.
come te an apreement concerning the amount of the compensation
to be paid for the carriage of the mail, the matter shall be
submitted for decision to a Board of Referees to be composed of
three (8) members appointed, respectively, by the Philippine Postal
Corporation, the agency of the company to which the vessel
concerned belongs, and the Bureau, who shall fix a reasonable
rate of compensation.

SEC. 1216. Detention of Warlike Vessel Containing Arms

and Munitions. — District Collectors shall report to the proper
authorities or detain any vessel of, commercial registry manifestly
built for warlike purposes and about to depart from the Philippines
with a cargo consisting principally of arms and munitions of war,

: —

127

when the number of men shipped on board or other circumstances

render it probable that such vessel is intended to be employed
by the owner or owners to cruise or commit hostilities upon the
subjects, citizens, or property of any foreign principality or state,
or of any colony, district, or people with whom the Philippines
is at peace, until the decision of the President ofthe Philippines
is rendered thereon, or until the owner or owners shall give a
security, in double the value of the vessel and cargo, that it
will not be.so employed, ifn the discretion of the District Collector
such security will prevent the violation of the provisions of this
section. —

SEC. 1217. Oath of Masier of Departing Vessel. — The

master ofa departing vessel shall state under oath that:

(@} All cargoes conveyed on the vessel, destined for the

Philippines, have been duly discharged or accounted for;

(b) A true copy of the outgoing cargo manifest has been

furnished to the Bureau;

(© No letters or packets, not enclosed in properly stamped

envelope sufficient to cover postage, have been received or will be
conveyed, except those relating to the vessel; and that all mails
placed on board the vessel before its last clearance from the
Philippines have been delivered at the proper foreign port; and

(qd) clearing without passenger, the vessel will not carry

upon the instant voyage, from the Philippine port; any p assenger
of any class, or other person not entered upon the ship's
declaration.

SEC.1218. Extension of Time for Clearance, — At the

time of clearance, the master of a departingivessel shall be
required to indicate the time of intended departure, and if the
vessel should remain in port forty-eight (48) hours after the time
indicated, the master shall report to the District Collector for an
extension of time of departure, and without such extension the
original clearance shall be nullified.
128

SEC. 1219. Advance Notice of Aircraft Arrival. -- (A)

Nonscheduled Arrivals. — Before an aircraft comes into any area
in the Philippines from any place outside thereof, a timely notice
ofthe intended flight shall be furnished to the District Collector
or other customs officer-in-charge at or nearest the intended
place of first landing, and to the quarantine and immigration
officers-in-charge at or nearest such place of landing. Ifdependable
facilities for giving notice are not available before departure, the
use of any radio equipment shall be appropriate as long as it will
result in the giving of adequate and timely notice of the aircraft's
approach, otherwise landing shall be made at a place equipped
with navigational facilities. If, upon landing in any area, the
government officers have not arrived, the pilot-in-command shall
hold the aircraft and any baggage and goods thereon intact and
keep the passengers and crew members in a segregated place
until the inspecting officers arrive.

(B) Scheduled Arrivals. — Such advance notice will not be

required in the case of an airline arriving im accordance with
the regular schedule filed with the District Collector for the
Customs District in which the place of first landing area
is situated, and also with the quarantine and immigration
officers-in-charge of such place.

SEC. 1220. Landing at International Airport of Eniry. —

Except in case of emergency or forced landings, aircraft arriving
in the Philippines from any foreign port or place shall make the
first landing at an international airport of entry, unless permission
to land elsewhere other than at an international airport of entry
is first obtained from the Commissioner. In such cases, the owner,
operator, or person in charge of the aircraft shall pay the expenses
incurred m inspecting the aircraft, goods, passengers, and baggage
carried thereon, and such aircraft shall be subject to the authority
of the District Collector at the airport while within its jurisdiction.

Should an emergency or forced landing be made by an

aircraft coming into the Philippines at a place outside the
Jurisdiction of the latter, the pilot-in-command shall not allow
goods, baggage, passenger, or crew member to be removed or to
depart from the landing place without permission of a customs
officer, unless such removal or departure is necessary for purposes

129

of safety, communication with customs officers, or preservation

of life, health, or property. As soon as practicable, the pilot-in-
command, or a member of the erew-in-charge, or the owner of the
aircraft, shall communicate with the customs officer at the
intended place of first landing or at the nearest international
airport or other customs port of entry in the area and make a full
report of the circumstances of the flight and of the emergency or
forced landing.

SEC. 1221. Report of Arrival and Entry of Aircraft. —

The pilot-in-command of any aircraft arriving from a foreign port
or place shall immediately report its arrival to the District
Collector at the airport of entry or to the customs officer detailed
to meet the sireraft at the place of first landing. Upon arrival,
such aircraft shall be boarded by a quarantine officer, and after
predigque or health clearance is granted, shall be boarded bya
customs officer; subsequently no person shall be permitted to board
or leave the aircraft without the permission of the customs officer.
The pilot-in-command or any other authorized agent of the owner
or operator of the aircraft shall make the necessary entry. No
such aircraft shall, without previous permission from the District
Collector, depart from the place of first landing or discharge goods,
passengers, or baggage.

SEC. 1222. Documents Required in Making Entry for

Aircraft. — (a) For the purpose of making entry, there shall be
presented to the boarding customs officer four (4) copies of a general
declaration which shall contain the following data, unless any of
such data is otherwise presented on a separate official form:

(1} Name of owner or operator of aircratt, registration

marks and nationality of aircraft, and flight number of
identification;

@) Points of clearance and entry, and date of arrival;

(8) Health and customs clearance at the last airport of

departure;
180

(4 Itinerary of aircraft, including information as to airport

of origin and departure dates;

(5) Names and nationality of crew members;

(6) Passengers manifest showing places of embarkation and

destination;

(7) Cargo manifest showing information as to airway bill

number, the number of packages related to each airway bill
number, nature of goods, destination, and gross weight, together
with a copy ofeach airway bill securely attached thereto;

(8) Store list; and

@) Such other documents as may be required by the

Bureau.

(b) The general declaration shall be written in English and

duly signed by the pilot-in-command or operator of the aircraft,
or the authorized agent. The section on health, and customs
clearances, however, shall be signed only by the pilot-in-command
or when necessary, by a crew member when the general
declaration itself has been signed by a non-crew member. Ifthe
aircraft does not carry cargoes or passengers, such facts must be
shown in the manifest.

(c) Acargo manifest shall in no case be changed or altered

after entry of the aircraft, except by means of an amendment by
the pilot-in-command or authorized agent thereof, under oath,
and attached to the original manifest: Provided, That after the
Invoice and/or goods declaration covering an importation have
been received and recorded in the office of the appraiser, no
amendment shall be allowed except when it is cbvious that a
clerical error or any other discrepancy has been committed without
any fraudulent intent in the preparation of the manifest, the
discovery of which could not have been made until after complete
examination of the importation.

131

SEC. 1223. Manifests for the Commission on Audit (COA)

and District Collector. — Upon arrival of an aircraft from a
foreign port, the Bureau shall provide electronic copies of the
manifest to the Chairperson of the COA. The master shall
immediately present to the District Collector the original copy of
the cargo manifest properly endorsed by the boarding officer, and
for inspection, the aireraft's register or other documents in lieu
thereof, together with the clearance and other papers granted to
the aircraft at the port of departure for the Philippines.

SEC. 1224. Clearance of Aircraft for foreign Port. —(a}

Any aircraft bound to a foreign port shall, before departure, be
granted clearance by the Commissioner at an airport of entry
where such aircraft has been authorized to make its landing; and
(b) Before clearance shall be granted to an aircraft bound
to a foreign port, there shall be presented to the District Collector
or to the customs officer detailed at the place of departure four (4)
copies of a general declaration signed by the pilot-in-command or
authorized agent of an aircraft which shall contain the following

ata:

(1) Name of owner or operator of aircratt, registration

marks and nationality of aircraft, and flight number of
identification; :

@) Port of clearance, data thereofand destination;

(8) Health and customs clearance;

(4) Itinerary of aircraft, including information as to airport

of destination and departure date;

6) Names and nationality of crew members;

hos
(6) Passengers manifest showing places of destination;

(2) Export cargo manifest showing information as to airway

bill number, the number of packages related to each airway bill
132

number, nature of goods, destination, and gross weight, together

with a copy of each airway bill secutely attached thereto; and

(8) Store list showing stores loaded.

SEC. 1225. Oath of Person-in-Charge of Departing

Aircraft. — The pilot-in-command or authorized agent of such
departing aircraft shall also state under oath to the effect that:

(a) All cargoes conveyéd on the aircraft destined to the

Philippines have been duly discharged and accounted for: and

(b) The aircraft has not received nor will convey any letter
or packet not enclosed in properly stamped envelope sufficient to
cover postage, except those relating to the cargo of the aircraft,
and that there was delivery to the proper foreign port of all mails
placed on board said aircraft before clearance from the Philippines.

If an aireraft is cleared to depart without passengers, the

aircraft shall not carry any passenger thereon.

Arecord shall be made and kept open to public inspection

in every customs office at an atrport of entry of the dates of arrival
and entry of all aireraft.

CHAPTER 3
OTHER THIRD PARTIES

SEC. 1226. Supervision and Regulation of Third Parties.

— Third parties transacting with the Bureau on behalfot importers
and ¢onsignees shall be treated equally as true importers or
consignees.

Third parties transacting with the Bureau shall be hhable

for acts committed in violation of this Act and related laws.

Upon the recommendation of the Commissioner, the

Secretary of Finance shall issue rules and regulations to govern
and regulate the conduct of all third parties dealing directly with

133

the Bureau in relation to the importation, exportation, movement,

storage and clearance of goods for and on behalf of another person,
The rules and regulations shall provide for specific conditions
when third parties may or may not directly transact with the
Bureau and shall provide a written notice im case such third parties
are, for valid reasons, barred from transacting with the Bureau.
Third party is defined under Section 102(wu) of this Act. For
purposes of this section, third parties may also refer to logistics
providers, importers, exporters, carriers, airlines, shipping lines,
shipping agents, forwarders, consolidators, port and termina}
operators, and warehouse operators, if such Persons or entities
transacted with the Bureau.
CHAPTER 4
AUTHORIZED ECONOMIC OPERATORS (AEQOs)

SEC. 1227. Treatment of Authorized Economic Operators

(AFOs). — The Bureau shall promulgate the necessary
procedures and requirements for the compliance of Authorized
Economic Operators (AEOs). For AEOs who have displayed
diligence in complying with the rules and the submission of
official customs requirements, and have satisiactorily managed
their commercial records, the Bureau shall extend the following
imeentives:

; (a) Release of the goods upon provision of the minimum

information necessary to identify the goods and permit the
subsequent completion of the final goods declaration;

©) Grant of clearance of the goods at the declarant's

premises or another place authorized by the Bureau: and

() Other special procedures such as: pha

oO Allowing a single goods declaration for all imports or

exports In a given period where goods are imported or exported
frequently by the same person;
134

Gi) Use of commercial records to selfassess their duty and

tax lability and, where appropriate, to ensure compliance with
other customs requirements; and

Gi) Allowing the lodgement of goods declaration by means

ofan entry in the records by the authorized person to be supported
subsequently by a supplementary goods declaration.

SEC. 1228. Trade Facility for AEO. — The Secretary of

Finance shall, upon the recommendation of the Commissioner,
issue the necessary rules:

(a) To supervise and regulate the conduct and operations

of the AEOs, consistent with mternational best practices, the
World Customs Organization (WCO) framework of standards to
secure and facilitate global trade, and other international
conventions and agreements:

() To develop a trade facilitation program for AEOs and

other authorized persons consistent with international best
practices and international conventions and agreements; and

(c) To recognize existing facilities where the authority or

right to operate AEOs has been granted by the relevant government
agency or regulator through a contract, where the Bureau shall:

@ Only require an endorsement by the relevant agency

or regulator;

Gi) Issue a certificate of authority as a matter of course: ,

and

Gi) Ensure that the term of the certificate of authority

shall be coterminous with the applicable government contract or
any extension thereof.

The Bureau shall implement the Provisions of this chapter

without interfering, or impeding AEO operations as well as
existing operations of wharves, container yards, container freight
stations, warehouses, examination areas and other facilities located

135

incustoms territory and/or in airports and seaports. The Bureau

shall likewise ensure that any subsequent rules, regulations,
orders or memoranda issued in relation to AEOs shall be consistent
with the appropriate government agency's or regulator's prevailing
operating procedures and international best practices.

Hixisting contracts of private operators with appropriate

government agency or regulator, such as, but not limited to, the
PPA, SBMA and PIA and their respective authorities and powers
already granted hy law pertinent to such contract, shall not be
impaired or adversely affected with the Bureau's implementing
rules and regulations on AEOs.

TITLE XTH
CUSTOMS FEES AND CHARGES

SEC. 1300. Customs Dues, Fees and Charges. — For

services rendered and documents issued by the Bureau, dues,
fees and charges shall be collected as may be provided under
existing regulations issued by the Secretary of Finance, upon the
recommendation of the Commissioner.

SEC. 1301. General Provision on the Authority to Increase

or Decrease Dues, Fees and Charges. — The Secretary of Finance
may, upon the recommendation of the Commissioner, increase
or decrease the dues, fees and charges collectible by the Bureau
to protect the interest of the government.

TITLE XIV
OFFENSES AND PENALTIES
CHAPTER 1 athe
CRIMES AND OTHER OFFENSES

SEc, 1400. Misdeclaration, Misclassification,

Undervaluation in Goods Declaration. —Misdeclaration as to
quantity, quality, description, weight, or measurement of the
136

goods, or misclassification through insufficient or wrong

description of the goods or use of wrong tariff heading resulting to
a discrepancy in duty and tax to be paid between what is Jegaliy
determined upon assessment and what is declared, shall be subject
to a surcharge equivalent to two hundred fifty percent (250%) of
the duty and tax due. No surcharge shail be imposed when the
discrepancy in duty is less than ten percent (10%), or when the
declared tariff heading is rejected in a formal customs dispute
settlement process involving difficult or highly technical question
of tariffclassification, or when the tariff classification declaration
relied on an official government ruling.

There is undervaluation when: (a) the declared value fails

to disclose in full the price actually paid or payable or any dutiable
adjustment to the price actually paid or payable; or (b) when an
incorrect valuation method is used or the valuation rules are not
properly observed, resulting in a discrepancy in duty and tax to
be paid between what is legally determined as the correct value
against the declared value. When the undervaluation is
astablished without the need to go through the formal dispute
settlement process provided for in this Act, a surcharge shall be
imposed equivalent to two hundred fifty percent (250%) of the
duty and tax due. No surcharge shall-be imposed when the
discrepancy in duty is less than ten percent (10%), or the declared
value is rejected as a result of an official ruling or decision under
the customs dispute settlement process involving diffieult or highly
technical question relating to the application of customs valuation
rules.

Adiscrepancy in duty and tax to be paid between what is

legally determined and what is declared amounting to more than
thirty percent (30%) shall constitute a prima facie evidence of
fraud.

When the mis declaration, misclassification or

undervaluation is intentional or fraudulent, such as when a false
or altered document is submitted or when false statements or
imformation are knowingly made, a surcharge shall be imposed
equivalent to five hundred percent (500%) of the duty and tax due
and that the goods shall be subject to seizure regardless of the
amount ofthe discrepancy without prejudice to the application of

137

fines or penalties provided under Section 1401 of this Act against

the importer and other person or persons who willfully participated
in the fraudulent act.

SEC. 1401. Unlawful Importation or Exportation, — Any

person who shall fraudulently import or export or bring into or
outside of the Philippines any goods, or assist in so doing, contrary
to law, or shall receive, conceal, buy, sell, or In any manner
facilitate the transportation, conceahnent, or sale of such goods
after importation, or shall cormmit technical snuggling as defined
in this Act shall be penalized by:
a) Imprisonment of not less than thirty (30) days and
one (I} day but not more than six (6) months, or a fine of not Jess
than twenty-five thousand pesos (P25,000.00) but not more than
seventy-five thousand pesos (P75, 000.00), or both, if the appraised.
value of the goods unlawfully imported, to be determined in the
manner prescribed under this Act, including duties and taxes, of
the goods unlawfully imported does not exceed two humdred fifty
thousand pesos (P250,000.00);

{b) Imprisonment of not less than six (6) months and one
(1) day but not more than one (D) year, or a fine of not less than

seventy-five thousand pesos (P75,000.00) but not more than

. one hundred fifty thousand pesos (P150,000.00}, or both, ifthe

appraised value of the goods unlawfully imported, to be

determined in the manner prescribed under this Act, including
duties and taxes, exceeds two Wundred fifty thousand pesos
(P250,600.00) but not more than five hundred thousand pesos
(P500,000.00);

(©) Imprisonment of not less than one (1) year and one (1)
day but not more than three (3) years, or a fine of not Jess than
one hundred fifty thousand pesos (P150,000.00) but not more than
three hundred thousand pesos (P300,000.00) aesboth, if the
appraised value of the goods unlawfully imported, to be determined
in the manner prescribed under this Act, including duties and
taxes, exceeds five hundred thousand pesos (P500,000.00) but not
more than one million pesos (P1,000,000.00);
138

d@) imprisonment of not less than three (3) years and one
(1) day but not more than six (8) years, or a fine of not less than
three hundred thousand pesos (P300,000.00) but not more than
one million five hundred thousand pesos (P1,500,600.00), or both,
if the appraised value of the goods unlawfully imported, to be
determined in the manner prescribed under this Act, including
duties and taxes, exceeds one million pesos (P1,000,000.00) but
not more than five million pesos (P5,000,000.00);

fe) Imprisonment of not less than six (6) years and one (1)
day but not more than twelve (12) years, or a fine of not Jess than
one million five hundred thousand pesos (P1,500,000.00) but not
more than fifteen million pesos (P15,600,000.00), or both, if the
appraised value of the goods unlawfully imported, to be determined
in the manner prescribed under this Act, including duties and
faxes, exceeds five million pesos (P5,000,000.00) but not more
than fifty million pesos (P50,000,000.00);

() Imprisonment of not less than twelve (12) years and

one (1) day but not more than twenty (20) years, or a fine of not
less than fifteen million pesos (P15,000,000.00) but not more than
fifty million pesos (P50,000,060.00), or both, if the appraised value
ofthe goods unlawfully imported, to be determined in the manner
prescribed under this Act, including duties and taxes, exceeds
fifty million pesos (P50,000,000.00) but not more than two hundred
million pesos (P20G6,006,000.00);

(g) lithe appraised value of the goods unlawfully imported

to be determined in the manner prescribed under this Act,
including duties and taxes, exceeds two hundred million pesos
(P200,000,000.00) or if the aggregate amount of the appraised
value of the goods which are the subject of unlawful importation
committed in more than one instance, including duties and taxes,
exceeds two hundred million pesos (P200, 000,606.00), the same
shall be deemed as a heinous crime and shall be punishable with
a penalty of reclusion perpetua and a fine of not less than fifty
million pesos (P50,000,000.00); and

th) The penalty of prisien. mayer shall be imposed when

the crime of serious physical injuries shall have been committed,
and the penalty of reclusion perpetua shall be imposed when the

189

crime of homicide shall have been committed by reason or on the

occasion of the unlawful importation.

In applying the above scale of penalties, an offender who is

a foreigner shall be deported without further proceedings after
serving the sentence. If the offender is a public officer or employee,
the penalty which is the next higher in degree shall be imposed
in addition to the penalty of perpetual disqualification from
public office, and disqualification to vate and to participate in any
public election. If the offender fails to pay the fine, subsidiary
imprisonment shall be served.
When, upon trial for violation of this section, the defendant
is shown to have had possession of the goods in question, possession
shall be deemed sufficient evidence to authorize conviction unless
the defendant shall explain the possession to the satisfaction of
the court: Provided, That each act of unlawful Importation or
exportation shall be deemed as a separate offense: Provided,
however, That payment of the tax due after apprehension shall
not constitute a valid defense in any prosecution under this section:
Provided, further, That outright smuggling shall also be
punishable under this section: Provided, finally, That the rights
and privileges provided in this Act for the importers, consignees,
exporters, service providers, third-parties and other third parties
who committed this offense shall be revoked.

SEC. 1402. Failure or Refusal of Party to Give Evidence

or Submit Documents for Assessment. — When the owner,
importer or consignee of any imported goods, or the agent of either,
fails or refuses, upon lawful demand in writing by any customs
officer to appear, lawfully depose, or submit to examination orto
answer any material question or refuses to produce records,
accounts or invoices in possession pertaining to the value,
classification or disposition of the goods in question and deemed
material in assessing the same, the District Collector shall assess
a surcharge of twenty percent (20%) on the dufbile value of the
goods which is the subject of the importation.

SEC. 1403. Other Fraudulent Practices Against Customs

Revenue. — Any person who makes or attempts to make any
entry of imported or exported goods by means of any false or
140

fraudulent statement, document or practice or knowingly and

willfully files any false or fraudulent claim for payment of
drawback or refund of duties shall, for each act, be punished in
accordance with the penalties prescribed in Section 1401 of this
Act.

Suc. 1404. Failure to Declare Baggage. — Whenever

dutiable goods are not declared by any person arriving within the
Philippines, such goods shall be seized and the person may obtain
release of such goods, ifnot imported contrary to any law, upon
payment of a surcharge equivalent to thirty percent (30%) of the
landed cost of such goods, in addition to all duties, taxes and
other charges due. Nothing in this section shall preclude the
filing of criminal action against the offender.

SEC. 1405. Vessel, Séacraft, or Aircraft Departing Before

Undergoing Customs Formalities. — Any vessel, seacraft, or
aircraft arriving within the limits of a Customs District from a
foreign port which departs before undergoing customs formalities,
without being compelled to do so by stress of weather, pursuit or
duress of enemies, or other necessity, shall be liable for a fine of
not less than one hundred thousand pesos (P100,000.00) but not
more than three hundred thousand pesos (P300,000.00).

SEC.-1406. Obstruction to Boarding Officer. — If the

master or pilot-in-command or any member of the complement of
any vessel or aircraft arriving at the Philippine port obstructs or
hinders any officer from lawfully going on board such vessel or
aircraft for the purpose of enforcing this Act, or intentionally
causes any officer to be so obstructed or hindered, the vessel or
aircraft shall be liable to a fine of not less than one hundred
thousand pesos (P100,000.00) but not more than three hundred
thousand pesos (P300,000.00),

SEC. 1407. Unlawful Boarding or Leaving of Vessel or

Aircraft. — Tf, upon arrival at the Philippine port, any master of
a vessel or pilot-in-command of an aircraft engaged ina foreign
trade permits any person to board or leave the vessel or aircraft
without the permission ofthe customs officer-in-charge, the owner
or operator of such vessel or aircraft shall be liable for a fine of

141

‘not Jess than one hundred thousand pesos.(P100,000.00) but not

more than three hundred thousand pesos (P300,000.00).

SEC. 1408. Unloading of Cargo Before Arrival at Port of

Eniry. — Hf, upon the arrival within the limits of any Customs
District of the Philippines of any vessel or aircraft engaged in
foreign trade, the master or pilct-in-command thereof permits
any part of the cargo to be unloaded before arrival at the port of
entry, and without authority from a proper customs officer, the
owner, operator, or agent of such vessel or aircraft shall be Hable
for a fine ofnot less five hundred thousand pesos (P500,000.00)
but not more than two million pesos (P2,000,000.00): Provided,
That no fine shall accrue upon satisfactory proof to the proper
District Collector that the unloading was rendered necessary by
stress of weather, accident or other necessity: Provided, however,
That the fine imposed herein shall be without prejudice to the
appheation of fmes or penalties provided under Section 1401 of
this Act.

SEC. 1409. Unloading of Cargo at Improper Time or Place

After Arrival. —The owner or operator of any vessel or aircraft
from which cargo is discharged upon arrival in the Philippines at
a time or place other than that designated by the District Collector,
shall be fined not less one hundred thousand pesos (P100,000.00)
but not more than three hundred thousand pesos (P300,000.00)-
Provided, That no fine shall accrue upon satisfactory proof to the

‘proper District Collector that the unloading was rendered

necessary by stress of weather, accident or other necessity.

SEC. 1410. Failure to Exhibit or Deposit Documents. —

When the master of a vessel or pilot-in-command of an aircraft
engaged in foreign trade fails to submit to the District Collector
at the time of entry of the vessel or aircraft the register or other
documents in leu thereof, together with the clearance and other
documents granted by the customs officers to the vessel or aircraft
at the last foreign port of departure, or fails to exhibit any
certificate or other documents required to be then exhibited, the
owner or operator of such vessel or aircraft shall be Hable for a
fine of not less than one hundred thousand pesos (P 100,600.00)
but not more than three hundred thousand pesos (P300,000.00).
142

SEC. 1411. Bringing of Unmanifested Arms, Explosives

or War Equipment. — The owner, operator, or agent of a vessel
or aircraft axriving at a port in the Philippines bearing cargo
consisting of firearms, gunpowder, cartridges, dynamite or any
other explosives, munitions or equipment of war not contained in
the manifest of the vessel or aircraft, or which are concealed on
board, shall be liable for a fine of not less than five hundred
thousand pesos (P500,000.00) but not more than one million pesos
(P1,000,000.00).

SEC. 1412. Failure to Supply Advance and Requisiie

Manifests. — Failure to transmit the electronic manifest within
the required time as may be prescribed by the Bureau, prior
to arrival of the carrying vessel or aircraft at the port of
entry shall make the owner, operator, or agent of the vessel or
aircraft liable for a fine of not less than one hundred
thousand pesos (P100,000.00) but not more than three
hundred thousand pesos (P3090, 600.00).

[fthe transit time from port of origin ta port of entry is at

least seventy-two (72) hours, the shipping or forwarding agent
of the carrier or the vessel who fails to submit the manifest
at least twenty-four (24) hours before entry shall ikewise be
Hable for a fine of not less than one hundred thousand
pesos (P 100,000.00} but not more than three hundred thousand
pesos (P300,000.00).

SEC. 1413. Disappearance of Manifested Goods. —When

any package or goods mentioned in the manifest meant to be
unloaded at the port of destination is not unloaded upon the arrival
of the vessel or aircraft, its agent shall be liable fora fine of not
less than one hundred thousand pesos (P'100,000.00) but not more
than three hundred thousand pesos (P300,000.00) unless
the disappearance of the package or the goods in question was not
due to the negligence of the master of the vessel or
pulot-in-command of an aircraft, andis explained to the satisfaction
of the District Collector.

The owner, operator, or agent of a vessel or aircraft shall

be liable for the payment of the same fine when a package or

143

goods listed in the manifest, does not tally materially in character

or otherwise with the description thereofin the manifest.

SEC. 1414. Discrepancy Between Actual and Declared

Weight of Manifested Goods. — If the gross Weight of goods or
package described in the manifest or bill of lading exceeds the
declared weight by more than ten percent (10%), and such
discrepancy was due to the negligence of the master or pilot-in-
command, the owner, employee, operator or agent ofthe importing
vessel or aircraft shall he liable for a fine of not more than twenty
percent (20%) of the value of the package or goods in respect to
which the deficiency exists. .
SEC. 1415. Discrepancy With the Master 's or Pilot's-in-
Command Report. — When a vessel or aircraft arriving from a
foreign port is compelled by necessity to unload in another port
other than the port of entry and permission is granted by the
District Collector for the unloading of the vessel or aircraft or the
delivery of any part ofthe cargo and it shall be found that there is
discrepancy between the cargo unloaded and the report of the
master or the pilot-in-command and Such discrepancy is not
satisfactorily explai ed, the owner, operator or agent cf the vessel
or aircraft shall be liable for a fine of not Jess than one hundred
thousand pesos (P 100,006.00) but not more than three
hundred thousand pesos (P300,000.00).

; SEC.1416. Failure to Report Fraud. — A master, pilot-

in-command or other officer, owner or agent of any vessel or aircraft
trading with or within the Philippines who has knowledge of the
commission of fraud that shall result in the loss or diminution of
customs revenue but fails to report all information relative theretn
to the District Collector shall be penalized with imprisonment of
not less than six (6) months and one (1) day but not more than
one (1) year and shall be Liable for a fine of not less than one
hundred thousand pesos (P 100,000.00) but not eoxe than three
hundred thousand pesos (P300,000.00). If the offender isa
foreigner, the offender shall be deported after serving the sentence,
Ifthe offenderis a public officer or employee, the offender shall
suffer additional penalty of perpetual disqualification to hold public
office, ta vote and to participate in any election. All the benefits
144

due from service in the government, including the separation

and retirement benefits, shall be forfeited.

SHC. 1417. False Statement of Vessel's or Aircraft's

Destination. — When the master or pilot-in-command of a vessel
or aircraft loaded with goods shall make a false statement as to
the next destination of such vessel or aircraft when that
information is required by acustoms officer, the owner or operator
of such vessel or aircraft shall be Hable for a fine of not less than
one hundred thousand pesos (P100,000.00) but not more than
three hundred thousand pesos (P300,000.00). The arrival of a
vessel or aircraft at a different port other than the one ithad been
originally authorized and cleared for without having been impelied
to do so by necessity, shall be prima facie proof that the original
statement of the actual destination of the vessel or aircraft was
false.

SEC. 1418. Ajfixing Seals. — Any person who, without

authority, affixes or attaches a customs seal, fastening, or any
mark, or fastening purporting to be a customs seal, to any vessel,
aircraft, vehicle, warehouse, or package, shall be penalized with
imprisenment of not Jess than six (6) months and one (1) day but
not more than one (1) year, and shall be Hable for a fine of not less
than one hundred thousand pesos (P100,000.00) but not more
than three hundred thousand pesos (P300,000.60). If the offender
is a foreigner, the offender shall be deported after serving the
sentence. ifthe offender is a public officer or employee, the offender
shall suffer an additional penalty of perpetual disqualification to
hold public office and disqualification from exercising the right te
vote and to participate in any election.

SEC, 1419. Breaking of Seal Placed by Custems Officers.

— Ifany seal placed by a customs officer upon any vessel or
aircraft or compartment thereof, or upon any box, tramk or other
package of goods on board is broken, the owner, operator, or
agent of the vessel or aircraft shall be liable for a fine of not less
than one hundred thousand pesos (P106,000.00) but not more
than three hundred thousand pesos (P300,000.00) for each broken
or destroyed seal.

145

SEC. 1420. Breaking of Lock or Fastening Placed by

Customs Officers. — If any lock or other fastening device placed
by a customs officer upon any hatch door, or other means of
communication in the hold of a vessel or aircraft, or other part
thereof for the security of the same during the night time, is
unlawfully opened, broken or removed, or if any of the goods
contained in the hold or in the other compartments so secured is
clandestinely abstracted and landed, the owner, operater, or agent
of the vessel or aircraft shall be liable for a fine of not less than
one hundred thousand pesos (P100,000.00) but not more than
three hundred thousand pesos (P300,000.00).

SEC. 1421. Removai, Breakage, and Alteration of Marks.

~ Any person who, without authority, willfully removes, breaks,
injures, defaces or alters any customs seal or other fastening
or mark placed upon any vessel, vehicle, on land, sea or air,
warehouse or package containing merchandise or baggage in
bond or in customs custody, shall be punished with the penalty
prescribed in Section 1420 hereof.

SEC. 1422. Unauthorized Withdrawal of Imported Goods

from Bonded Warehouse. — ¥Y person who causes the
unauthorized withdrawal of imported goods stored from a CBW
shall be liable for payment ofa surcharge of fifty percent (50%) of
duties, taxes, customs fees, and charges, found te be due and
unpaid. The amount of surcharge shall be added to the duties,
taxes and charges due on the goods withdrawn. Ifthe delinquency
lasts for more than one (1) year, the surcharge shall be increased
by twenty-five percent (25%) of the unpaid duties and taxes
annually: Provided, That where the withdrawal is attended with
fraud, such as when a fake or altered withdrawal permit is
submitted, the warehouse operator shall be held liable under the
pertinent provisions of this Act, without prejudice to the suspension
or revocation of the warehousing privileges granted by the Bureau
pursuant to this Act, , i :

eet

SEC. 1423. Remo ving of Repacking Goods in Warehouse.

~ Any person who fraudulently conceals, removes, or repacks
merchandise m any warehouse or fraudulently alters, defaces, or
obliterates any mark or numbers placed upon packages deposited
146

in such warehouse, or shall aid or abet any such acts, shall he

punished with the penalties prescribed in Section 1418 hereof.

Merchandise so conce aled, removed, or trepacked, or

packages upon which marks, numbers or the values thereof have
been so altered, defaced, or obliterated shall be forfeited in favor
ofthe government.

SEC. 1424. Removing Goods from Customs Custody. —

Any person who enters any warehouse, or any vehicle loaded with

or containing merchandise with intent to unlawfully remove

therefrom any merchandise or baggage in such vessel, vehicle or

warehouse or otherwise in customs custody or control, or any

person who receives or transports any merchandise or baggage

unlawfully removed from. any such vessel, vehicle or warehouse,

_ oF shall aid or abet such removal, shall suffer the penalties

provided in Section 1461 hereof

SEC. 1425. Failure to Pay Duties, Taxes and Other

Charges. ~ For failure to pay the duties, taxes and other charges
of an assessment within fifteen (15) days from the date of final
assessment, a surcharge of ten percent (10%) of the total assessed
amount or balance thereon shall be added and collected, which
surcharge shall be increased to twenty-five percent (25%) if the
delinquency lasts for more than one (i) year.

SEC. 1426. Breach of Security, — Upon breach of security

required to be filed under this Act, the District Collector, subject
to the approval of the Commissioner, may accept in satisfaction

thereofa smaller sum than that mentioned in the penalty clause |

of the security, but in no case less than the amount necessary to

indemnify the government for the damage occasioned by such’

breach.

SEC.1427. Failure to Keep Importation Records and Full

Access to Customs Officers. — Any person who fails to keep all
the records of importations or books of accounts, business and
computer systems and all customs commercial data in the manner
prescribed under this Act, shall be punished with imprisonment

147

of not less than three (8) years and one (1) day but not more than
six (6) years and/or a fine of one million pesos (P1,000,000.00).
This penalty shall likewise be imposed against importers and
brokers who deny an authorized customs officer full and free access
to such records, books of accounts, business and computer
systems, and all customs commercial data including payment
records, without prejudice tothe imposition of the administrative
sanctions by the Bureau against contumacious importers,
including the authority to hold delivery or release of their imported
goods.

SEC. 1428. Concealment or Destruction of Evidence of

Fraud. — Any person who willfully conceals or destroys any
invoice, book, or document relating to any goods liable to duty
after an inspection thereof has been demanded by the District
Collector or at any time conceals or destroys any such invoice,
book, or document for the purpose of suppressing any evidence of
fraud therein contained, shall be penalized withimprisonment of
not less than three (3) years and one (1) day but not more than
six (6) years and shall be Hable for a fine of not less than three
hundred thousand pesos (P300,000.00) but not more than one
million pesos (P1,000,000.00). ,

SEC. 1429. Other Offenses. — The owner or operator of a

vessel, aircraft or train shall he Hable for a fine for the following
acts:

(a) For anchoring at any dock, pier, wharf, quay, or

bulkhead other than a port of entry, a fine of not less than five
hundred thousand pesos (P500,000.00) but not more than one
million pesos (P1,000, 000.00) for overseas vessels;

() For dumping of garbage or slops over the sides of the

vessel within three (3) miles from the nearest coastline, a fine of
not less than one million, pesos (P1,000,000.00) Bee hot more than
ten million pesos (P10,000,000.00);

@ For dumping or causing to spread crude oil, kerosene,

or gasoline in the bay or at the piers within three (3) miles from
the nearest coastline, a fine of not less than one million pesos
148

{P1,006,000.00) but uot more than ten million pesos

(P10,000,000.00) for each offense:

@ For loading gasoline or any other petroleum products

ai a place other than that designated by the regulations, a fine of
not less than five hundred thousand pesos (P500,000.00) but not
more than one million pesos (P1, 000,000.00) for each offense;

@) For causing the emission and spread of harmful gas,

fumes and chemicals, a fine of not less than one million pesos
(P1,000,000.00) but not more than ten million pesos
(P-10,000,000.00) for each offense: and

@® For transporting hazardous waste, radioactive waste

and other toxic substances as provided under the Basel Convention
and Republic Act No. 6969, otherwise known as the "Toxic
Substances and Hazardous and Nuclear Wastes Control Act of
1990", the penalty shall be forfeiture of the vessel in favor of the
government.

The fines imposed herein shall be without prejudice to the

application of fines or penalties provided under special laws and.
regulations.

SEC. 1430. Violations of this Aci and Rules and

Regulations in General. ~ Any person who violates any other
provision of this Act or the rules and regulations issued pursuant
thereto, shall be penalized with imprisonment of not less than
thirty (30) days and one (1) day but not more than one (1) year, or
be liable for a fine of not less than one hundred thousand pesos
(P100,000.00) but not more than three hundred thousand pesos
(P300,000.00), or both. If the offender is a foreigner, the offender
shall be deported after serving the sentence. If the offender is a
public officer or employee, the offender shall be disqualified from
holding public office, from exercising the right to vote and to
participate in any public election for ten (10) years.

149

CHAPTER 2

PENALTIES ImMposep UPON Burrat EMPLOYEES

the provisions of this Act, who shall be found eui f-

delinquency as described below shall be pending with

@) Extortion or willful oppression under color of law;

) Knowingly demanding other or greater sums that are

authorized by law or receive any fee, compensation, or reward
except as by law prescribed, for the performance of any duty;

©) Willfully neglecting to give receipts, as required by law.

for any sum collected in the performance of duty, or who willfully
negiect to perform any of the duties enjoined by law;
a (dd Conspiring or colluding with another or others to
lefraud the customs revenue or otherwise violate the law;

) Providing an opportumity for any yerson to defraud the

government of customs revenue or failing todo any act with the

intent to enable any person to defraud th

woven € government of customs

® Negligent! designed! a
cently or designedly permitting the vi lati
the law by any other person: =. Molson of

book @® Making or signing for any false entry or entries in any

ook, making or signing any false certificate or return in any
150

case where the law requires the making by them of such entry
certificate or return; :

(h) Failing to report knowledge or information to their

superior officer about an act or acts of fraud committed in revenue
collection as required by law;

@ . Demanding or accepting or attempting, without

authority, to collect directly or indirectly as payment or otherwise,
any sum of money or other thing of value for the compromise,
adjustment, or settlement of any charge or complaint for any
violation or alleged violation of law:

@) Unlawfully disclosing confidential information gained

during any investigation or audit, or using such information for
personal gain or to the detriment of the government, the Bureau,
or third parties.

All the benefits due from service in the government,

including separation and retirement benefits, of an officer, agent,
or employee of the Bureau or of any other agency of the government
charged with the enforcement of the provisions of this Act found
guilty of the foregoing violations shall be forfeited.

SEC. 1432. Failure to Report Fraud. ~ Any employee of

the Bureau who has knowledge of any fraud committed against
the government pertaining to customs revenue, and who fails to
report all information relative thereto to the District Collector,
shall be penalized with imprisonment of not less than six (6)
years and one (1) day but not more than twelve (12) years anda
fine of not less than five hundred thousand pesos (P500,000.00)
but not more than one million pesos (P1,000,000.00). The offender
shall suffer the additional penalty of perpetual disqualification to
hold public office, to vote and to participate in any election. All
the benefits of the offender due from service in the government,
including separation and retirement benefits, shall be forfeited.

SEC. 1433. Liability for Other Offenses. — The fines and

penalties imposed in this chapter shall be without prejudice ta

151

the application of fines or penalties provided under Chapter 1 of

this title and special laws and regulations.

TITLE XV
MISCELLANEOUS PROVISIONS

SEC. 1500. Information, Decisions, and Rulings. — The

Bureau shall ensure that all information of general application

pertaining to customs, including revisions or amendm: nts th

shail be available to the general public. " oretey

; SEC. 1501. Period to Issue Ruling. — Unless otherwise

provided in this Act, the issuing authority shall act on the
application for ruling within thirty (30) days from receipt of the
application and supporting documents as may be required by

_ regulation. Within three (3) days from issuance of a ruling, the

issuing authority shall notify the requesting party of such ruling.

SEC. 1502. Publication and Confidentiality of Certain

information in Ruling. — The Bureau and the Commission shall
regularly publish its rulings in a manner accessible to the public
For this purpose, each application for ruling shall be assigned
a title and, unique ruling nurober for easy reference. The
publication shall contain information on the goods involved, the
body or summary of the ruling, particularly the grounds relied
upon to support the ruling, but shall exclude the name of
the requesting party and other information which by their very
nature are confidential, including those which the requesting party
indicated in its application as confidential in nature, Except

‘in the context of judicial proceedings, any disclosure of

confidential information under this section shall not be made

except upon the written consent of the beneficiary of the advance

ruling,

to the SEG. 1603. Duty of District Collector to Report Rulings

0 Commissioner. — When any new or unsettled question

shall be determined by a District Collector, and ifthe matter is

not otherwise appealed for review in the ordinary course, the

152

District Collector shall notify the Commissioner of the decision

and submit an adequate statement of the facts involved.

SEC. 1504. Application of Established Ruling or Decision.

— Aruling or decision of the Commissioner which determines the
construction or application of any provision of law imposing
customs duties and taxes, and which changes any existing
established valuation, classification, rules of origin and other
customs rules, interpretation or practice shall not take effect until
thirty (30} days after public notice shall have been given in the
form of a published decision. When the ruling or decision favors
the taxpayers, it shall become effective immediately.

SEC. 1505. Authority of Official to Administer Gaths and

Take Testimony. — The Commissioner, District Collectors and
their deputies, and other customs officers especially deputized by
the District Collector shall have authority to administer caths
and take testimony in connection with any matter within the
jurisdiction of the Bureau and, in connection therewith, may
require the production of relevant papers, documents, books and
records in accordance with law.

SEC. 1506. General Security. — In cases where securities

are required to be given under the provisions of this Act and:
related customs laws, the District Collector, instead of. requiring
separate special security where transactions of a particular party
are numerous, may accept general security extending over such
periods of time and covering such transactions of the party in
question as may be satisfactory to the District Collector.

- SEC. 1507, Security, — The Bureau shall prescribe the

forms and amount of security required to guarantee the payment
of duties and taxes and other obligations provided for in this Act.

Any party required to provide security shall have the option

ta choose from any form of security prescribed by the Bureau.
The Bureau may not require security if satisfied that an obligation
to the Bureau will be fulfilled, but shall require and accept a
general security from declarants who regularly declare goods at
different offices in customs territory under such terms and
conditions as may be determined by the Commissioner.

153

The required amount of security shall be the lowest possible

and shall not exceed the amount of imposable duties, taxes and
other charges.

When the obligation under which the securit i

f ¥ was required
has been satisfied, the security shall be discharged immediately.

SEC. 1508. Customs Service Fees. — Customs personnel

may be assigned by a District Collector to render overtime work
and other customs services and shall be paid for such services by
the Bureau according to service fees fixed by the Commissioner
and approved by the Secretary of Finance. The Bureau may
charge additional customs service fees when applicable, subject
to the rates prescribed under existing rules and regulations.

SEC. 1509. Testimony in Writing. — When testimony is

taken in any proceeding or matter under the authority of the
Bureau, either party may require that the testimony shall be
made in writing, and when so taken, the written testimon:

A ry shall
be filed with the Office of the District Collector and to be preserved
for use or reference until the final decision has been reached,

SEO. 1810. District Collecter Noi Liable in Respect to

Ruling in Customs Cases.— Every District Collector or other
officials of the Bureau shall vot bein any way personally liable on
aceount of any official ruling or decision as to which the person
claiming to be aggrieved has the right to obtain either an
administrative or judicial review. Exeept for misdelivery of goods
a District Collector may not, in the absence of abuse of authority,

be liable to any person for any loss occasioned either by the official
act or the acts of the subordinates.

SEC.1511. Interest Prohibited to be Held by Customs

Employees. — Any person employed under the authority of the
government in the assessment of duties, taxciilfbes and other
charges in connection with imports or exports, shall not own,
either in whole orin part, any vessel or aircraft or act as attorney,
agent or consignee for the owner of any vessel or aircraft or of any
cargo Joaded on board the vessel or aircraft; and shall not import
cr be involved, directly or indirectly, in the importation of an
goods for sale into the Philippines. °
154

SEC, 1512. Reward to Persons Instrumental in the

Actual Collection of Additional Revenues Arising from the
Discovery of Violations of this Act. — A cash reward equivalent
to twenty percent (20%) of the actual proceeds from the sale of
smuggled goods and confiscated goods or actual collection of
additional revenues shall be given to the customs and non-customs
informers or whistleblowers who are instrumental in the collection
of additional revenues arising from the discovery of violations of
this Act in accordance with the rules and regulations to be issued
by the Secretary of Finance.

SEC. 1518. Outsourcing of Non-Sovereign Customs

Functions to Private Entities. — Subject to the approval of the
Secretary of Finance, the Bureau may outsource any ofits non-
sovereign and ancillary function to a qualified and competent
private entity in accordance with government rules on service
procurement,

SEC. 1514. International Standards and Best Practices:

— The Bureau may adopt international standards and best
practices in customs administration laid down by international
agreement or convention pertaining to trade facilitation, supply
chain security, and related matters, whether or not the
Philippines is a signatory to such international agreement or
convention.

TITLE XVI
TARIEF ADMINISTRATION AND POLICY
CHAPTER I
TARIFF COMMISSION

SEC. 1600. Chief Officials of the Tariff Commission and

Qualifications. — The officials of the Tariff Commission shall
consist ofa Chairperson and two (2) Commissioners to be appointed
by the President of the Philippines. The Chairperson and the
Commissioners shall be natural-born citizens of the Philippines,
of good moral character and proven integrity, and who, by

exp erience and academic training possess the necessary

qualifications requisite for developing expert knowledge of tariff

not be, directly or indirectly, financially interested in any contract

with the government, or any subdivision or instrumentality
thereof.

SEC. 1601. Appointment and Compensation of Officials

and Employees. — Al} employees of the Commission shall be
appointed by the Chairperson in accordance with the Civil Service
Law except as the private secretaries to the offices of the
Chairperson, Comiissioners and Executive Director.

SEC. 1602. Official Seal. — The Commission is authorized

to adopt an official seal,

SEC. 1603. Functions of the Cammission, — The

Commission shall have the following functions:

; (a) Adjudicate cases on the application of trade remedies

against imports pursuant to Sections 7 Ji, 712 and 713 of this
ct;

; ) Study the impact of tariff policies and programs on

national competitiveness and consumer welfare in line with the
econotnic objectives of the government;

(¢} Administer the Philippine tariff schedules and tariff

nomenclatures;
sh

@ Issue advance rulings on tariff classification of imported

goods and render rulings on disputes over tariff classification of
goods onan to Section 1100 of this Act, exceptin cases involving
g00ds on which the Commission has provided advance rulin:
tariff classification: een
156

(e) Provide the President and Congress with independent

analysis, information and technical support on matters related
to tariff and nontariff measures affecting Philippine industries
and exports for policy guidance;

() Analyze the nature and composition, and the

classification of goods according to tariff commodity classification.
and heading number for customs and other related purposes,
which information shall be furnished the NEDA, DTT, DA, DOF,
DENR, and BSP;

(g) Review the trade agreements for negotiation and trade

agreements entered into by the Philippines and make
recommendations, ifnecessary, on the consistency of the terms
of the agreements with the national policy objectives;

() Conduct public consultations and public hearings

pursuant toits functions; and

@ Deputize or delegate, to appropriate government agency

ite function of rendering rulings on disputes over tariff
classification of goods, until the plantilla positions necessary for
undertaking such function have been approved and filled-up:
Provided, That such delegation of function shall not extend beyond.
three (3) years from the effectivity of this Act.

SEC. 1604. Reports of the Commission. —The Commission

shall place at the disposal of the President and any Member of
the Congress of the Philippines all information at its command.
it shall conduct such investigation and submit reports as may be
required by the President and the Congress of the Philippines. Tt
shall likewise report to the President and Congress on the first
Monday of December of each year and hereafter, a statement of
methods adopted and a summary of all reports made during the
year.

SEC. 1605. Access to Documenis and Assistance to the

Commission. — The Commission or its duly authorized
representative shall have access to any document, paper or record
pertinent to the subject matter under investigation, in the

157

possession of any person, firm, copartnership, corporation, or

association engaged in the production, importation, or distribution
of goods under investigation, and shall have power to summon

_ witnesses, take testimony, administer oaths, and to issue

subpoena duces tecum requiring the production of books

papers, or documents relating to the matter under investigation.
The Commission may also request the views, recommendations,
and assistance of any government office, agency, or
instrumentality who shall be expected to cooperate fully with the
Commission.
SEC. 1606.. Sworn and Verified Statements. — The
Commission may order the taking of sworn statements at any
stage of any proceéding or investigation before it, The sworn
statements must be made before a person duly authorized to

administer oaths.

The Commission is authorized to require any importer,

grower, producer, manufacturer or seller to file with the
Commission a statement, under oath, giving the selling prices in

the Philippines of goods imported, grown, produced, fabricated or

manufactured by such person.

SEC. 1607. Implementing Rules and Regulations. — The

Commission shall promulgate and adopt such rules and

regulations as may be necessary to carry out the provisions of

this Act.

CHAPTER 2
FLEXIBLE TARIFF

SEC. 1608. Flexible Clause. — (a) In the interest of the

general welfare and national security, and, subject to the
imitations prescribed under this Act, the Président, upon the
recommendation of the NEDA, is hereby empowered to:

dutes qd). Increase, reduce, or remove existing rates of import

uty including any necessary change in classification. The existing
rates may be increased or decreased to any level, in one or several
158

stages, but in no case shall the increased rate of import duty be

higher than a maximum of one hundred percent {100%) ad
valorem;

@ Establish import quotas or ban imports of any

commodity, as may be necessary; and.

(8) Impose an additional duty on all imports not exceeding

ten percent (10%) ad valorem whenever necessary: Provided,
That ‘upon periodic investigations by the Commission and
recommendation ofthe NEDA, the President may cause a gradual
reduction of rates of import duty granted in Section 1611 of this
Act, including those subsequently granted pursuant to this section.

(b) Before any recommendation is submitted to the

President by the NEDA pursuant to the provisions of this section,
except in the imposition of an additional duty not exceeding ten
percent (10%) ad valorem, the Commission shall conduct an
investigation and shall hold public hearings wherein interested
parties shall he afforded reasonable opportunity to be present, to
produce evidence and to be heard. The Commission shall also
hear the views and recommendations of any government office,
agency, or instrumentality. The Commission shall submit its
findings and recommendations to the NEDA within thirty (30)
days after the termination ofthe public hearings.

(©) The power of the President to increase or decrease rates

of import duty within the limits fixed in subsection (a) hereof
shall include the authority to modify the form of duty. In
modifying the form of duty, the corresponding ad valorem or
specific equivalents of the duty with respect to imports from the
principal competing foreign country for the most recent
representative period shall be used as basis.

(d} Any order issued by the President pursuant to the

provisions of this section shall take effect thirty (30) days after

promulgation, except in the imposition of additional duty not

exceeding ten percent (10%) ad valorem which shall take effect
at the discretion of the President.

159

(e) The power delegated to the President as provided for in

this section shall be exercised only when, Congress is not in session,

(@ The power herein delegated may be withdrawn or

terminated by Congress through a joint resolution.

The NEDA shall promulgate rules and regulations

necessary to carry out the provisions of this section.

SEC. 1609. Promotion of Foreign Trade. — (a) For the

purpose of expanding foreign markets for Philippine products as
ameans of assisting in the economic development of the couniry,
in overcoming domestic unemployment, in increasing the
purchasing power of the Philippine peso, and in establishing and
maintaining better relations between the Philippines and other
countries, the President, shall, from time te time:

QQ) Enter into trade agreements with foreign governments .

or instrumentalities thereof and

(2) Modify import duties, including any necessary change

in classification and other import restrictions as are required or
appropriate to carry out and promote foreign trade with other
countries: Provided, Thatin modifying import duties or fixing
import quota, the requirements prescribed in subsection (a) of
Section 1608 of this Act shall be observed: Provided, however,
That any modification in import duties and the fixing of import
quotas pursuant to the various trade agreements the Philippines
has entered into, shall not be subject to the limitations of aforesaid
subsection (a) of Section 1608.

(b) The duties and other import restrictions as modified in

subsection (a) of this section, shall apply to goods which are the
growth, produce, or manufacture of the specific gpuntry, whether
“mported directly or indirectly, with which the Philippines has
entered into a trade agreement: Provided, That the President
may suspend the application of any concession to goods which are
the growth, produce, or manufactured product of the specific
country because of acts or policies which tend to defeat the purposes
160

setin this section, including the operations of international cartels:

and the duties and other import restrictions as negotiated shall
be in force and effect from and after such time as specified in the
order, without prejudice to the Philippine commitments in any
ratified international agreement or treaty.

(©) Nothing in this section shall be construed to give any

authority to cancel or reduce in any manner the indebtedness of
any foreign country to the Philippines or any claim of the
Philippines against any foreign country.

@) Before any trade agreement is concluded with any

foreign government or instrumentality thereof, reasonable public
notice of the intention to negotiate an agreement with such
governinent or instrumentality shall he given in order that
interested persons may have an opportunity to present their
views to the Commission. The Commission shall seek information
andadvice from the DTI, DA, DOF, DENR, DFA and BSP, and
from such other sources as it may deem appropriate.

©) Inadvising the President, ona trade agreement entered

into by the Philippines, the following shall be observed:

: @) The Commission shall determine whether or not the

domestic industry has suffered or is being threatened with injury
and whether or not the wholesale prices at which the domestic
products are sold are reasonable, taking into account the cost of
raw materials, labor, overhead, a fair return on investment, and
the overall efficiency of the industry.

(@) The NEDA shall evaluate the report of the Commission

and submit recommendations tothe President.

(3) Upon receipt of the report of the findings and

recommendations of the NEDA, the President may prescribe
adjustments in the rates of import duties, withdraw, modify or
suspend, in whole or in part, any concession under any trade
agreement, establish import quota, or institute such other import
restrictions, as the NEDA recommends to be necessary in order
to fully protect domestic industry and the consumers, subject to

161

the condition that the wholesale prices of the domestic products

shall he reduced to, or maintained at, the level recommended by
the NEDA unless, for good cause shown, anincrease thereof, as
recommended by the NEDA, is authorized by the President.
Should increases be made without such authority, the NEDA
shall immediately notify the President who shail allow the
importation of competing productsin such quantities as to protect
the public from the unauthorized increase in wholesale Prices.

(® This section shalt not brevent the effectivity of any

executive agreement or any future preferential trade agreement
with any foreign country.

{g) The NEDA and the Commission shall promulgate such

reasonable procedures, rules and regulations as they may deem
necessary to execute their respective functions under this section.

CHAPTER 8
TARIFF NOMENCLATURE AND RATE OF Dury

SEC. 1610. General Rules for the Interpretation, (GRP).

~ The classification of goods and its tariffnomenclature as provided
pursuant to this Act shall be governed by the following principles:

(1) The titles of sections, chapters and subchapters are

' provided for easy reference only. For legal purposes, classification
shall be determined according to the terms of the headings and
any relative section or chapter notes and, provided such headings
or notes do not otherwise require, according to the following
provisions:

(2a) Any reference in a heading to the ‘oods shall be

taken to include a reference to the same in thei¥ Licomplete or
162

(b) Any reference in a heading to a material or substance

shall be taken to include a reference to mixtures or combinations
ofthat material or substance with other materials or substances.
Any reference to goods ofa given material or substance shall be
taken to include a reference to goods consisting wholly or parily
of such material or substance. The classification of goods
consisting of more than one material or substance shall be
according to the principles of Rule 3.

(3} When by application of Rule 2(b) or for any other

reason, goods are, prima facie, classifiable under two (2) or
more headings, classification shall be effected as follows:

(a) The heading which provides the most specific

description shall be preferred to headings providing a more
general description. However, when two (2) or more headings
each refer to part only of the materials or substances contained
in mixed or composite goods or to part only of the items ina set
put up for retail sale, those headings are to be regarded as equally
specific in relation to thoge goods, even if one of them gives a
more complete or precise description of the goods.

(b) Mixtures, composite goods consisting of different

materials or made up of different components, and goods put up
in sets for retail sale, which cannot be classified by reference to
3a), shall be classified as if they consisted of their essential
character, insofar as this criterion is applicable.

(¢} When goods cannot he classified by reference to 8(@) or

3th), they shall be classified under the heading which occurs last
in numerical order among those which equally merit
consideration:

(4) Goods which cannot be classified in accordance with

the above Rules shall be classified under the heading appropriate
to the goods to which they are moet akin.

(6) In addition to the foregoing provisions, the following

Rules shall apply with respect to the goods referred to therein:

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(a) Camera cases, musical instrument cases, gun cases,

drawing instrument cases, necklace cases and similar containers,
specially shaped or fitted to contain specific goods or set of goods,
suitable for long-term use and presented with the goods for which
they are intended, shall be classified with such goods when of a
kind normally sold therewith. The Rule does not, however, apply
to containers which give the whole its essential character; and

(b) Subject to the provisions of Rule 5(a), packing materials

and packing containers presented with the goods therein shall be
classified with the goods if they are of a kind normally used for
packing such goods. However, this provision does not apply when
such packing materials or packing containers are clearly suitable
for repetitive use.

(®) For Iegal purposes, the classification of goods in the

subheadings ofa heading shall be determined according to the
terms of those subheadings and any related subheading notes
and, mutatis mutandis, to the above Rules, on the understanding
that only subheadings at the same level are comparable. For the
purposes of the Rule, the relative section and Chapter Notes also
apply, unless the context otherwise requires,

SEC. 1611. Toriff Nomenclature and Rates of Import Duty.

~— The provisions of Section 104 on Rates of Import Duty of
Presidential Decree No. 1464, otherwise known as the Tariffand
Customs Code of the Philippines of 1978, as amended, specifically
providing for the tariff sections, chapters, headings and
subheadings and the rates of import duty, shall still apply and
shall supplement this Act. There shall be levied, collected and
paid upon all imported goods the rates of duty indicated
thereon except as otherwise specifically provided for in this Act:
Provided, That the maximum rate shall not exceed one hundred
percent (100%) ad valorem.

Bhs

The rates of duty provided or subsequently fixed pursuant

to Sections 1608 and 1609 of this Act chall be subject to periodic
investigation by the Tariff Commission and may be revised by
the President, upon the recommendation of the NEDA.
164

Tt shall also apply to all products, whether imported directly

or indirectly, of all foreign countries, which do not discriminate
against Philippine export products. An additional one hundred
percent (100%) across-the-board duty shall be levied on the
products of any foreign country which discriminates against
Philippine export products.

SEC. 1612. Tariff Nomenclature and Rates of Export Ditty.

-- The provisions of Section 514 on Export Products Subject to
Duty and Rates of Presidential Decree No. 1464, otherwise known
as the Tariff and Customs Code of 1978, as amended, specifically
providing for the export products subject to duty and rates, shall
still apply and shall supplement this Act.

TITLE XVI
CONGRESSIONAL OVERSIGHT COMMITTEE

SEC. 1700. Congressional Oversight Committee. ~ The

Congressional Customs and Tariff Oversight Committee, herein
referred to as the Committee, is hereby constituted in accordance
with the provisions of this Act. The Committee shall be composed
ofthe Chairpersons of the Committee on Ways and Means of the
Senate and House of Representatives and four (4) additional
members from each House, to be designated by the Senate
President and the Speaker of the House of Representatives,
respectively. The Committee shall, among others, in aid of
legislation: ‘

{a) Monitor and ensure the proper implementation of this

Act;

(b) Review the collection performance of the Bureau; and

{c) Review the implementation of the programs of the

Bureau

In furtherance of the hereimabove cited objectives, the

Committee shall require the Bureau to submit all pertinent
information which includes:

165

(1) Industry audits;

(2) Collection performance data: and

(3) Status report on administrative, civil and criminal .

actions initiated against persons.

TITLE XVOL
FINAL PROVISIONS

SHC. 1800. Implementing Rules and Regulations. — The

Secretary of Finance shall, wpon the recommendation of the
Commissioner, promulgate the necessary rules and regulations
for the effective implementation of this Act.
_ SEC. 1801. Transitory Provisions. — ATL suits, proceedings,
or prosecutions whether civil or criminal, for causes arising or
acts done or committed prior to the effectivity of this Act, shall be
commenced and prosecuted within the same time in the same
manner and with the same effect as if this Act had not heen
enacted and all rights acquired, offenses committed, and penalties
or forfeitures or Habilities waived prior to the said effectivity shall
not be affected thereby.

SEC. 1802. Saving Clause.— Allother laws, acts, executive

orders, and Customs Administrative Orders (CAQOs}, Customs
Memorandum Orders (CMOs), orders, memoranda, circulars,
rules and regulations issued by the Bureau, under the provisions
of Presidential Decree No, 1464, otherwise known as the Tariff

, and Customs Code of the Philippines of 1978, as amended, not

inconsistent with the provisions of this Act, shall remain valid

unless the same will be repealed or amended accordingly, pursuant
to the provisions of this Act. :

SEC. 1803. Repealing Clause. — Presidential Decree

No. 1464, otherwise known as the Tariff and Customs Code of
the Philippines of 1978, as amended, and Presidential
Decree No. 1853 which require any applicant for letter of credit
covering imports ta deposit the full amount of duties due on the
166

importation, are hereby expressly repealed. All other laws, acts,

presidential decrees, executive ordera, rules and regulations or
parts thereofinconsistent with the provisions of this Act ara hereby
expressly repealed, amended or modified accordingly. 4

SEC. 1804. Separability Clause. — Tf any provision of this

Act is declared invalid or unconstitutional, the remaining
provisions or parts shall remain in full force and effect.

SEG. 1805. Effectivity, — This Act shall take effect fifteen

(15) days after its publication in the Official Gazeite or in a
newspaper of general circulation.

Approved,

L DITOR FELICIANO BELMONTE a

. M.
pesident of the Senate Speaker of the House
of Representatives

This Act which is a consolidation of House Bill No. 5525

and Senate Bill No, 2968 was finally passed by the House of
Representatives and the Senate on February 2, 2016.

OSCAR Gh ES MARILYN, BARWACV Ap

Secretary of thé Senate Secretary General

House of Representatives

Approved: MAY 3 6 ate

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BENIGNO S}AQUINO It i:

President of é Philippines
@itice of the Breatdent of he ines 0 |
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