Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

5548

House Bill No.

Introduced by Representative Sharon jarin

EXPLANATORY NOTE

Republic Act No. 10863 otherwise known as the Customs Modernization
and Tariff Act (CMTA)was enacted barely three (3) years from the filing of this
measure. Despite the passage of such important piece of legislation that aimed to
modernize, simplify, harmonize, make the customs processes transparent, and
enhance the trade facilitation in the Philippines, CMTA still needs to be improved
particularly on the other third parties involved in the entire customs process.

Hence this bill seeks to amend the provisions, among others, affecting the
customs clearance, Off-Dock Customs Facilities Warehouse (CFWs) and that of
the other third parties as defined in the law.

To further assist the government in the collection of revenue without
hampering the trade facilitation, this bill seeks to simplify and clearly define some
processes in the customs clearance of imported goods. To prevent the
proliferation of Off-Dock CFWs, a situation that will imperil the capability of
Bureau of Customs to properly supervise and control customs operations, there
is a need to define Aggregate Capacity Utilization (ACU). To protect the
proliferation of “fly-by-night and “bukas-sara” operators and ultimately, to curb
smuggling, it is imperative separate the process of the establishing the CFWs.
Lastly, to further promote utilization of CY/CFS as the facilities for the proper
collection of duties and taxes, to prevent the entry of drugs and other social-
goods, to facilitate customs clearance process for containerized consolidated
shipments, it is important to set stricter provisions in granting the authority to
operate a CFW.

This bill likewise seeks to further empower the BOC in the imposition of
administrative sanctions insofar as the third parties are concerned.

In view of the foregoing, passage of this bill is earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

5548
House Bill No.

Introduced by Representative Sharon S. Garin

AN ACT
AMENDING FOR THE PURPOSE SECTIONS 102, 119, 201, 307, 402, 405,
407,431, 802, 806,1135, 1100, 1129, 1147, 1400 AND 1226 AND DELETING
SECTION 709 OF THE REPUBLIC ACT NO. 10863 OTHERWISE KNOWN
AS THE CUSTOMS MODERNIZATION AND TARIFF ACT

Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Title |, Chapter Il, Section 102, Definition of Terms of
Republic Act No. 10863 otherwise known as the Customs Modernization and
Tariff Act(CMTA) is hereby amended by inserting a new paragraph (d) and the
subsequent paragraphs shall be renumbered accordingly, to read as follows:

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

(a) xxx

XXX

(d) AGGREGATE CAPACITY UTILIZATION (ACU) REFERS TO THE
TOTAL CAPACITY IN TWENTY EQUIVALENT UNITS (TEU) OF
EXISTING CFWs.”

[(qq) 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;]

SECTION 2. Title |, Chapter III ,Section 119, Restricted Importation,
and Exportationof R.A. No. 10863 otherwise known as the CMTA is hereby
amended to read as follows:


“SEC.119. Restricted Importation, and Exportation— Except when
authorized by law or regulation, the importation and exportation of the
following restricted goods are prohibited:

(a) 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, including jackpot and
pinball machines or similar contrivances, or parts thereof,

(C) xxx;

XXX
XXX
(f) xxx.”

SECTIONS. Title Il, Chapter |, Section 201, Powers and Functions of
the Commissioner of R.A. No. 10863 otherwise known as the CMTA is hereby
amended to read as follows:

“SEC. 201.Powers and Functions of the Commissioner.—
TheCommissioner shall have the following powers and functions:

(a) xxx;

XXX;
XXX;

(d) 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);

(e) xxx

XXX

(g) xxx."

SECTION4. Title Ill, Chapter Il, Section 307, Temporary Storage of
Goods of R.A. No. 10863 otherwise known as the CMTA is hereby amended
to read as follows:


“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 AND in case of abandoned or
overstaying goods.”

SECTIONS. Title IV, Chapter |, Section 402, Goods Declaration for
Consumption of R.A. No. 10863 otherwise known as the CMTA is hereby
amended to read as follows:

“SEC. 402. Goods Declaration for Consumption.— x x x;

(a) xx x; and

(b) Personal and household effects or goods, not in commercial
quantity.[, imported in a passenger's baggage or mail.]

XXX

Been

SECTION6. Title IV, Chapter |,Section 405, Liability of Importer for
Duties and Taxes of Republic Act No. 10863 is hereby amended to be read as
follows:

“SEC. 405. Liability of Importer for Duties and Taxes.— x x x.

“EXCEPT FOR GOVERNMENT IMPORTATION, THE DISTRICT
OFFICER SHALL HOLD THE DELIVERY OF IMPORTED OR
CONSIGNED GOODS OF AN IMPORTER WITH AN OUTSTANDING
AND DEMANDABLE ACCOUNT WITH THE BUREAU. UPON DUE
NOTICE TO THE IMPORTER, THE DISTRICT COLLECTOR MAY
SELL THE GOODS OR ANY PORTION THEREOF BASED ON THE
INVOICE PRICE OR FAIR MARKET VALUE, WHICHEVER IS
HIGHER, TO COVER THE PAYMENT OF THE OUTSTANDING
ACCOUNT. HOWEVER, THE IMPORTER MAY SETTLE THE
OVERDUE OBLIGATION PRIOR TO THE SALE. THE GOODS SHALL
BE RELEASED AND DELIVERED TO THE IMPORTER ONLY AFTER
PAYMENT OF THE DUTIES, TAXES, AND OTHER CHARGES


WITHOUT PREJUDICE TO CHARGES AND FEES DUE TO THE
PORT OR TERMINAL OPERATOR.”

SECTION7. Title IV, Chapter |,Section 407, Goods Declaration and

Period of Filing of Republic Act No. 10863 is hereby amended to be read as
follows:

“SEC. 407. Goods Declaration and Period of Filing.— x x x The Bureau
shall require the electronic lodgement of the goods declaration.

The Bureau shall only require supporting documents necessary for
customs control to ensure that all requirements of the law have been
complied with. x x x.

Goods declaration must be lodged AND PAID within fifteen (15) days
from the date of discharge of the last package from the vessel or aircraft.
THE PERIOD OF THE LODGEMENT OF THE GOODS
DECLARATION MAY BE ADJUSTED BY THE COMMISSIONER.

[The period 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
of the lodgement of the goods declaration may be adjusted by the
commissioner].

THE PAYMENT OF DUTIES AND TAXES BASED ON SELF-
ASSESSMENT SHALL BE MADE PRIOR OR UPON LODGMENT, AS
MAY BE DETERMINED BY THE BUREAU.”

SECTIONS. Title IV, Chapter IIl,Section 427, Readjustment of Appraisal,

Classification or Return of Republic Act No. 10863 is hereby amended to be
read as follows:

“SEC. 427. Readjustment of Appraisal, Classification or Return.— x x x
(1) xxx


(2) Within 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]
INCORRECT;

(3) xxx; or

(4) xxx.”

SECTION11.Title 1V, Chapter III,Section 431, Release of Goods after
Payment of Duties and Taxes of Republic Act No. 10863 is hereby amended
to be read as follows:

“SEC. 431. Release of Goods after Payment of Duties and Taxes.—

Goods declared shall be released when duties and taxes and other

lawful charges AS FINALLY ASSESSED BY THE BUREAU have been

paid or secured and all the pertinent laws, rules and regulations have
been complied with.

randy

SECTION14. Title VII, Chapter II,Section 709, Government's Right of

Compulsory Acquisition of Republic Act No. 10863 is hereby deleted:
“[SEC709. 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 a 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.


Wrere no appeal is made by the importer, or upon reaffirmation of the
Commissioner's decision during the appeals 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.]"

SECTION 15. Title Vill, Chapter II, Section 802, Types of Customs
Bonded Warehouses (CBWs) of R.A. No. 10863 otherwise known as the
CMTA is hereby amended to read as follows:

“SEC. 802. Types of Customs Bonded Warehouses (CBWs).— x x x.
Manufacturing customs bonded warehouse may be of the following
types; (a) miscellaneous customs bonded warehouse; (b) GARMENTS
AND TEXTILES BONDED WAREHOUSE; (C) customs common
bonded warehouse; or {(c)] (D) industry-specific bonded warehouse

eee

SECTION 16. Title Vill, Chapter Il, Section 806, Customs Control Over
CBWs and CFWs of R.A. No. 10863 otherwise known as the CMTA is hereby
amended to read as follows:

“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 Actf:]

THE BUREAU SHALL MAINTAIN THE NUMBER OF OFF-DOCK
CONTAINER YARD OR CONTAINER FREIGHT STATION (CY/CFS)
AND CBWs OPERATING IN A PORT TO A NUMBER CONSISTENT
WITH THE BUSINESS REQUIREMENTS OF THE PORT.


THE AGGREGATE CAPACITY UTILIZATION (ACU) OF THE
EXISTING OFF-DOCK (CY/CFS) SHALL BE CONSIDERED IN NEW
APPLICATIONS FOR AUTHORITY TO OPERATE AN OFF-DOCK
CY/CFS. IT IS ONLY WHEN THE ACU OF EXISTING CY/CFS FOR
THE IMMEDIATELY PRECEEDING TWELVE (12) MONTHS HAVE
EXCEEDED FIFTY PERCENT (50%) WILL ANY APPLICATION BE
ACCEPTED AND CONSIDERED BY THE BUREAU.

[Provided, That the] THE Bureau shall not be liable for any loss or
damage of the goods stored for safekeeping in any CBW, CFW, yard or
premises.”

SECTION 17. Title XI, Chapter IX, Section 1135, Supervision and
Control over Criminal and Civil Proceedings of R.A. No. 10863 otherwise
known as the CMTA is hereby amended to read as follows:

“SEC. 1135. 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 Bureau 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 (DOJ): 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
DOJ: 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.”

SECTION 18. Title XI, Chapter |, Section 1100, Classification Ruling of
R.A. No. 10863 otherwise known as the CMTA is hereby amended to read as
follows:


“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 AND THE
DISTRICT COLLECTOR DETERMINES THAT IT INVOLVES
DIFFICULT OR HIGHLY TECHNICAL QUESTION OF TARIFF
CLASSIFICATION, [the importer, exporter, or] the Bureau shall submit
the matter to the Commission for a ruling, without prejudice to the
application of Section 1106 of this Act on “protest”: Provided, That such
rulings of the Commission on commodity classification shall be binding
upon the Bureau, unless the Secretary of Finance shall rule otherwise.

FOR THIS PURPOSE, TARIFF CLASSIFICATION SHALL BE
CONSIDERED AS DIFFICULT OR HIGHLY TECHNICAL QUESTION
WHEN THE GOODS ARE CLASSIFICABLE UNDER MORE THAN
ONE AHTN CHAPTER, HEADING OR SUBHEADING; OR THE
PRODUCT DESCRIPTION IS NOT SPECIFICALLY PROVIDED FOR
IN ANY AHTN HEADING OR SUBHEADING.”

SECTION 19. Title XI, Chapter VI, Section 1129, Abandonment, Kinds
and Effects of R.A. No. 10863 otherwise known as the CMTA is hereby
amended to read as follows:

“SEC. 1129. Abandonment, Kinds and Effects of— Imported goods
are deemed abandoned under any of the following circumstances;

(a) When the owner, importer, or consignee of the imported 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, falls to [file] LODGE the goods declaration AND PAY THE
DUTIES AND TAXES BASED ON SELF-ASSESSMENT 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 in the District Office, or send a notice to the
consignee within five (5) days from the date of discharge; or

(c) Having [filed] LODGED such goods declaration AND PAID THE
DUTIES AND TAXES BASED ON SELF-ASSESSMENT, the owner,
importer, consignee or interested party after due notice, fails to pay the
[assessed]READJUSTED duties, taxes and other charges thereon, or,
if the regulated goods failed to 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

[(d) 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 (30) 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

(e) 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 tins purpose, the accreditation of importers,
exporters, and other third parties shall indude provision for mandatory
receipt of electronic notices.”

SECTION 20. Title XI, Chapter X, Section 1147, Disposition of Restricted
Goods of R.A. No. 10863 otherwise known as the CMTA is hereby amended
to read as follows:


“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]PHILIPPINE NATIONAL POLICE (PNP);

(b) xxx;

() xxx;

(d) xxx;

(e) xxx; and

(f) xxx.”

SECTION 21. Title XIV, Chapter |, Section 1400, Misdeclaration,
Misclassification, Undervaluation in Goods Declaration of R.A. No. 10863
otherwise known as the CMTA is hereby amended to read as follows:

“SEC. 1400. Misdeclaration, Misclassification, Undervaluation in
Goods Declaration —Misdeclaration as to quantity, quality, description,
weight, or measurement of the 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 legally 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 shall be imposed when the
discrepancy in duty AND TAX 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 tariff
classification, or when the tariff classification declaration relied on an
Official government ruling.”

SECTION 22. Title XII, Chapter Ill, Section 1226, Supervision and
Regulation of Third Parties of R. A. No. 10863 otherwise known as the CMTA
is hereby amended to read as follows:


“SEC. 1226.Supervision and Regulation of Third Parties. — x x x

XXX

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 the Bureau in relation to
the importation, exportation, movement, storageand clearance of goods
for and 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 in case such
third parties are, for valid reasons, barred from transacting with the
Bureau[.]WHICH SHALL INCLUDE BLACKLISTING, SUSPENSION,
REVOCATION OR CANCELLATION OF THE ACCREDITATION OR
REGISTRATION, AS THE CASE MAY BE. Third party is defined under
Section 102 (uu) 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 terminal operators, and warehouse operators, if such persons or
entities transacted with the Bureau.”

SECTION 23. Repealing Clause. — All laws, decrees, executive orders,
issuances or regulations inconsistent which the provisions of this Act hereby
revised or amended accordingly.

SECTION 24. Separability Clause.- If any part of this Act is declared
unconstitutional or invalid such parts or provisions thereof not so declared
shall remain valid and subsisting.

SECTION 25. Effectivity Clause.- This Act shall take effect fifteen (15)
days after its publication in at least one (1) newspapers of general circulation.

Approved.