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SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Second Regular Session 
SENATE 
S.B. 2348 
Introduced by Senator Poe 
AN ACT 
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AUG -7 AlO:1O 
AMENDING PRESIDENTIAL DECREE NO. 1464, OTHERWISE KNOWN AS THE 
TARIFF AND CUSTOMS CODE OF THE PHILIPPINES, TO DEFINE SMUGGLING 
.AS AN ACT THAT CONSTITUTES ECONOMIC SABOTAGE, TO PROVIDE THE 
APPROPRIATE PUNISHMENT AND PENAL TIES, AND FOR OTHER PURPOSES 
Explanatory Note 
Smuggling had long plagued the Philippine economy, hounded the revenue-
generating agencies and crippled key programs of the government. Two forms of 
smuggling-"pure" and "direct" smuggling, or moving goods into the country 
undetected and by bypassing all legal channels, and "technical" smuggling, which 
involves manipulation of customs documentation to misrepresent the value, quantity or 
quality of goods being imported-tend to circumvent duties to the disadvantage of the 
government, where actual imports are considerably larger than officially documented. 
Smuggling clearly deprives the government of its much-needed revenue. These 
unlawful acts often sully the Philippines' reputation as a haven for smugglers. Likewise, 
smuggling puts a dent on the operation of domestic enterprises. 
In 2011 alone, the Philippines lost an estimated $3.85 billion in tax revenues due 
to smuggling, "more than double the size of the fiscal deficit and also constituted 95 
percent of the Philippines' total government expenditures on social benefits during the 
same year," said the Global Financial Integrity (GFI) in .its study.! The United States-
based think tank also said that about 25 percent of the total value of all goods imported 
into the Philippines goes unreported to Customs officials. The GFI said that over the 52-
year period, the Philippines lost $177 billion through capital flight. For a period of 52 
years, the country lost $176.6 billion through capital flight-or an average of $3.5 billion 
annually from 1960 to 2011. 
1 Dev Kar and Brian LeBlanc. Illicit Financial Flows to and from the Philippines: A Study in Dynamic Simulation, 1960-2011. 
(February 2014), p. 13 


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The Federation of Philippine Industries, a business organization that groups 
some 800 companies, for its part, said that in nine years-or from 2002 to 2011-the 
government lost more than P1.33 trillion in revenue due to smuggling2, 
The Bureau of Customs, the government's second largest revenue-generating 
agency which accounts for about a fifth of state revenues, reported gains in the first half 
of this year, compared with the same period last year, but did not meet its collection 
target. From January to June 2014, the agency collected P173.401 billion, short of its 
P198,949 billion target for the period but higher from last year's P145.132 billion 
collections3 • 
Amid efforts to eliminate the illegal trade and continuing bid to shore up 
revenues, smuggling continues to exist. For one, the existence of smuggled agricultural 
products still persists in the local markets, 
This bill seeks to define any form of smuggling, which involves goods with an 
aggregate value of PI million, as economic sabotage. With this proposal, it is expected 
to ward off such illegal activities and haul to court perpetrators. 
In this light, approval is earnestly requested. 
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2 Retrieved fro m http://newsi nfo, inquirer. n et/5 6295 5/p h -lost -p 1-3 3-tri llio n-to-smuggll ng-in-9-yea rs-says-business-grou p 
3 Retrieved from http://customs.gov . ph/news/2014/07 /21/boc-revenues-grow-17 -5-in-ju ne-2014/ 


· . 
SIXTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
Second Regular Session 
SENATE 
S. B. 2348 
Introduced by Senator Poe 
AN ACT 
'14 
AUG -7 AlO:1 0 
AMENDING PRESIDENTIAL DECREE NO. 1464, OTHERWISE KNOWN AS THE 
TARIFF AND CUSTOMS CODE OF THE PHILIPPINES, TO DEFINE SMUGGLING 
AS AN ACT THAT CONSTITUTES ECONOMIC SABOTAGE, TO PROVIDE THE 
APPROPRIATE PUNISHMENT AND PENALTIES, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
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Section 1. Section 3514 of Presidential Decree 1464 is hereby amended to read as 
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follows: 
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"Sec. 3514. Words and phrases Defined - As used in this Code: 
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'Foreign port' means port or place outside the jUrisdiction of the Philippines. 
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'Port of entry' is a domestic port open to both foreign and coastwise trade. The 
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term includes principal ports of entry and sub ports of entry. A 'principal port of entry' 
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is the chief port of entry of the collection district wherein it is situated and is the 
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permanent station of the Collector of such port. Subparts of entry are under the 
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administrative jurisdiction of the Collector of the principal port of entry of the district. 
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Whatever the 'Port of entry' is used herein, it shall include' airport of entry'. 
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'Person' whether singular or plural refers to an individual, corporation, 
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partnership, association, cooperative, company or any other kind of organization. 
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'Economic Sabotage' refers to any and all activities that undermines, weakens or 
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render into disrepute the economic system or viability of the country or tends to bring 
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about such effects. For the purpose of this Act, any violation of Section 3601 and 3602 of 
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this Act, which involves goods and/or articles with the aggregate value of One Million 
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Pesos (PI,OOO,OOO.OO), shall constitute as 'Economic Sabotage'. 
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Section 2. Section 3601 of Presidential Decree No. 1464 is hereby amended to 
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read as follows: 
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"Sec, 360L Unlawful Importation, - Any person who shall fraudulently import 
or bring in to the Philippines, or assist in so doing, any article, contrary to law, or shall 
receive, conceal, buy, sell or in any manner facilitate the transportation, concealment, or 
sale of such article after importation, knowing the same to have been imported contrary 
to law, shall be punished by a fine of not less than Six Hundred Pesos (P600,00) nor 
more than Five Thousand Pesos (P5,000.00) and imprisonment for not less than six (6) 
months nor more than two (2) years and if the offender is an alien, he shall be deported 
after serving the sentence. 
Any violation of this provision that constitutes as economic sabotage, as defined 
in this Act, shall be punished as follows: 
(a) Fine equal to twice the fair market value of the articles involved; 
(b) Fine equal to the aggregate amount of the taxes, duties and other charges 
avoided; 
(c) Imprisonment of a minimum of eight (8) years and one (1) day up to life 
imprisonment; and 
(d) Confiscation of the articles involved. 
If the person violating this provision is a juridical entity, the penalty of 
imprisonment shall be imposed on the president and the responsible officers thereof. In 
addition, the business permits and licenses of the business entity shall be revoked or 
cancelled. 
The broker of the violator of this provision shall be punished as a principal. 
When, upon trial for a violation of this section, the defendant is shown to have or 
to have had possession of the article in question, such possession shall be deemed 
sufficient evidence to authorize conviction, unless the defendant shall explain the 
possession to the satisfaction of the court." 
Section 3. Sec. 3602 of Presidential Decree No. 1464 is hereby amended to read as 
follows: 
"Sec. 3602. Various Fraudulent Practices Against Customs Revenue. - Any 
person who makes or attempts to make any entry of imported or exported article by 
means of any false or fraudulent invoice, declaration, affidavit, letter, paper, or by 
means of any false statement, written or verbal or by means of any false or fraudulent 
practice whatsoever, or shall be guilty of any willful act or omission by means of 
. whereof the Government might be deprived of the lawful duties, taxes and other 
charges, or any potion thereof, accruing from the article or any portion thereof, 
embraced or referred to in such invoice, declaration, affidavit, letter, paper, or 
statement, or affected by such act or omission, shall, for each offense, be punished by a 
fine of not less than Six Hundred Pesos (P600.00) or more than Five Thousand Pesos 
(5,000.00) and by imprisonment for not less than six (6) months or more than two (2) 
years and if the offender is an alien, he shall be deported after serving the sentence. 


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Any violation of this provision that constitutes as economic sabotage, as defined 
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in this Act, shall be punished as follows: 
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(a) Fine equal to twice the fair market value of the articles involved; 
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(b) Fine equal to twice the aggregate amount of the taxes, duties and other 
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charges avoided; 
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(c) Imprisonment of a minimum of eight (8) years and one (1) day up to life 
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imprisonment; and 
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(d) Confiscation of the articles involved. 
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If the person violating this provision is a juridical entity, the penalty of 
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imprisonment shall be imposed on the president and the responsible officers thereof. In 
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addition, the business permits and licenses of the business entity shall be revoked or 
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cancelled. 
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The broker of the violator of this provision shall be punished as a principaL" 
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Section 4. Repealing Clause - All laws, decrees, executive orders, issuances, or 
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regulations inconsistent with the provisions of this Act are revised or amended 
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accordingly. 
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Section 5. Separability Clause -
If any part of this Act is declared 
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unconstitutional or invalid, such parts or provisions not so declared shall remain valid 
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and subsisting. 
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Section 6. Effectivity Clause - This Act shall take effect fifteen (15) days after its 
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publication in at least two (2) newspapers of general circulation. 
Approved,