FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
.S.B.No.2408 
) 
) 
) 
Introduced by Senator Ralph G. Recto 
Explanatory Note 
The centerpiece of President Benigno Aquino Ill's platform of governance is curbing 
corruption in all levels of government, particularly in revenue-generating arms of the State such as 
the Bureau ofInternal Revenue (BIR) and the Bureau of Customs (BOC). 
In the BOC alone, studies have shown that up to PI 00 billion is lost due to smuggling, which 
is believed to be principally aided by corrupt officers and employees of the bureau. 
In fact, this amount appears to be a conservative estimate as the UN Conference of Trade and 
Development reported that in the year 2003, exports to the Philippines stood at $44 billion while 
recorded imports amounted to $34.5 billion - a difference of $10 billion or roughly about P450 
billion. 
This bill therefore seeks to address the smuggling problem in the country by amending 
pertinent provisions of Presidential Decree No. 1464 or the Tariff and Customs Code. 
Aptly entitled "Anti-Smuggling Act of 2010," this proposed legislation aims to make 
smuggling a much more serious offense by imposing a maximum penalty of life imprisonment if the 
amount of goods smuggled into the country exceeds P I million, plus a fine in an amount equal to the 
appraised value plus fifty percent thereof. Graduated penalties are also imposed depending on the 
value of the goods illegally imported. 
This bill also empowers the Commission on Audit (COA) to ensure transparency and 
accountability in the BOC by conducting a post-entry audit on the operational processes, collection 
and financial reporting, fiscal and personnel performance, system efficiency, internal control, 
information and communication flow, and fraudulent and illegal practices upon the recommendation 
of the bureau or petition duly made by the !ocal industry. 
The COA, in the conduct of its audit and investigations, is also given the authority to issue 
subpoenas duces tecum and ad testificandum - or require the production of documents and require 
bureau personnel to respond to its inquiries - under this bill. Any person who shall refuse to abide by 
the subpoena issued by COA may be held liable for contempt. 
This piece of legislation also updated the list of acts that constitute smuggling and expanded 
the definition of technical smuggling to inClude other acts not otherwise defined and punished under 
present laws. 
Other amendments include an array of new stringent requirements for surety companies and 
bonded warehouses doing business in the BOC, as well as the creation of a valuation library which is 
to be updated at all times and be made available for public viewing. 
While smuggling and corruption in the BOC con~inue 
to d n;<-ge ernment coffers of the 
much-needed revenues, the immediate passage of this bill now 
omes imper tive . 
• 
, 
RAL 


1 
FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
) 
) 
) 
SENATE 
S.B. No. 2408 
Introduced by Sen. Ralph G. Recto 
AN ACT 
AMENDING CERTAIN PROVISIONS OF PRESIDENTIAL DECREE NO. 1464, 
OTHERWISE KNOWN AS THE TARIFF AND CUSTOMS CODE OF THE 
PHILIPPINES, AS AMENDED 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled. ' 
SECTION 1. 
Short Title. - This Act shall be known and cited as the "Anti-Smuggling 
2 
Act of 201 0." 
3 
SEC. 2. Section 201, Title II, Part 1 of the Tariff and Customs Code of the Philippines, as 
4 
amended, is hereby further amended to read as follows: 
5 
"Sec. 201. Basis of Dutiable Value. - (A) Method One. - Transaction Value. - The dutiable 
6 
value of an imported article subject to an ad valorem rate of duty shall be the transaction value, 
7 
which shall be the price actually paid or payable for the goods when sold for export to the 
8 
Philippines, adjusted by adding: 
9 
(1) The following to the extent that they are incurred by the buyer but are not included in the 
10 
price actually paid or payable for the imported goods: 
11 
(a) Commissions and brokerage fees (except buying commissions); 
12 
(b) Cost of containers; 
13 
(c) The cost of packing, whether for labour or materials; 
14 
(d) The value, apportioned as appropriate, of the following goods and services: materials, 
15 
components, parts and similar items incorporated in the imported goods; tools; dies; moulds and 
16 
similar items used in the production of imported goods; materials consumed in the production of 
17 
the imported goods; and engineering, development, artwork, design work and plans and sketches 
18 
undertaken elsewhere than in the Philippines and necessary for the production of imported 


, 
I 
goods, where such goods and services are supplied directly or indirectly by the buyer free of 
2 
charge or at a reduced cost for use in connection with the production and sale for export of the 
3 
imported goods; 
4 
(e) The amount of royalties and license fees related to the goods being valued that the buyer 
5 
must pay, either directly or indirectly, as a condition of sale of the goods to the buyer . 
• 
6 
(2) The value of any part of the proceeds of any subsequent resale, disposal or use of the 
7 
imported goods that accrues directly or indirectly to the seller; 
8 
(3) The cost of transport of the imported goods from the port of exportation to the port of 
9 
entry in the Philippines; 
10 
(4) Loading, unloading and handling charges associated with the transport of the imported 
II 
goods from the country of exportation to the port of entry in the Philippines; and 
12 
(5) The cost of insurance. 
13 
All additions to the price actually paid or payable shall be made only on the basis of objective 
14 
and quantifiable data. 
15 
No additions shall be made to the price actually paid or payable in determining the" customs 
16 
value except as provided in this Section: Provided, That Method One shall not be used in 
17 
determining the dutiable value of imported goods if: 
18 
(a) There are restrictions as to the disposition or use of the goods by the buyer other than 
19 
restrictions which: 
20 
(i) Are imposed or required by law or by Philippine authorities; 
21 
(ii) Limit the geographical area in which the goods may be resold; or 
22 
(iii) Do not substantially affect the value of the goods. 
23 
(b) The sale or price is subject to some condition or consideration for which a value cannot be 
24 
determined with respect to the goods being valued; 
25 
(c) Part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer 
26 
will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in 
27 
accordance with the provisions hereof; or 
28 
(d) The buyer and the seller are related to one another, and such relationship influenced the 
29 
price of the goods. Such persons shall be deemed related if: 
2 


I 
(i) They are officers or directors of one another's businesses; 
2 
(ii) They are legally recognized partners in business; 
3 
(iii) There exists an employer-employee relationship between them; 
4 
(iv) Any person directly or indirectly owns, controls or holds five percent (5%) or more of the 
5 
outstanding voting stock or shares of both seller and buyer; 
6 
(v) One of them directly or indirectly controls the other; 
7 
(vi) Both of them are directly or indirectly controlled by a third person; 
8 
(vii) Together they directly or indirectly control a third person; or 
9 
(viii) They are members of the same family, including those related by affinity or 
10 
consanguinity up to the fourth civil degree. 
II 
Persons who are associated in business with one another in that one is the sole agent, sole 
12 
distributor or sole concessionaire, however described, of the other shall be deemed to be related 
13 
for the purposes of this Act if they fall within any ofthe eight (8) cases above. 
14 
THE TRANSACTION VALUE OF JMPORTED GOODS ABOVE SHALL BE ACCEPTED 
15 
PROVIDED THAT: 
16 
I) 
THE SALE IS IN THE ORDINARY 
COURSE OF TRADE UNDER FULLY 
17 
COMPETITIVE CONDITIONS; 
18 
2) 
THE SALE DOES NOT INVOLVE ANY ABNORMAL DISCOUNT OR REDUCTION 
19 
FROM THE ORDINARY COMPETITIVE PRICE; 
20 
3) THE SALE DOES NOT INVOLVE SPECIAL DISCOUNTS LIMITED TO EXCLUSIVE 
21 
AGENTS; 
22 
4) 
OBJECTIVE AND QUANTIFIABLE DATA EXIST WITH REGARD TO THE 
23 
ADJUSTMENTS REQUIRED TO BE MADE, UNDER THE PROVISIONS OF SECTION 201 
24 
ABOVE, TO THE TRANSACTION VALUE. 
25 
(B) Method Two. - Transaction Val~e of Identical Goods. - Where the dutiable value cannot 
26 
be determined under method one, the dutiable value shall be the transaction value of identical 
27 
goods sold for export to the Philippines and exported at or about the same time as the goods 
28 
being valued. "Identical goods" shall mean goods which are the same in all respects, including 
3 


1 
physical characteristics, quality and reputation. Minor differences in appearances shall not 
2 
preclude goods otherwise conforming to the definition from being regarded as identical. 
3 
(C) Method Three. - Transaction Value of Similar Goods. - Where the dutiable value cannot 
4 
be determined under the preceding method, the dutiable value shall be the transaction value of 
5 
similar goods sold for export to the Philippines and exported at or about the same time as the 
6 
goods being valued. "Similar goods" shall mean goods which, although not alike in all respects, 
7 
have like characteristics and like component materials which enable them to perform the same 
8 
functions and to be commercially interchangeable. The quality of the goods, their reputation and 
9 
the existence of a trademark shall be among the factors to be considered in determining whether 
10 
goods are similar. 
11 
If the dutiable value still cannot be determined through the successive application of the two 
12 
immediately preceding methods, the dutiable value shall be determined under method four or, 
13 
when the dutiable value still cannot be determined under that method, under method five, except 
14 
that, at the request of the importer, the. order of application of methods four and five shall be 
15 
reversed: Provided, however, That if the Commissioner of Customs deems that he will 
16 
experience real difficulties in determining the dutiable value using method five, the 
17 
Commissioner of Customs may refuse such a request in which event the dutiable value shall be 
18 
determined under method four, if it can be so determined. 
19 
(D) Method Four. - Deductive Value. - The dutiable value of the imported goods under this 
20 
method shall be the deductive value which shall be based on the unit price at which the imported 
21 
goods or identical or similar imported goods are sold in the Philippines, in the same condition as 
22 
when imported, in the greatest aggregate quantity, at or about the time of the importation of the 
• 
23 
goods being valued, to persons not related to the persons from whom they buy such goods, 
24 
subject to deductions for the following: 
25 
(1) Either the commissions usually paid or agreed to be paid or the additions usually made for 
26 
profit and general expenses in connection with sales in such country of imported goods of the 
27 
same class or kind; 
28 
(2) The usual costs of transport and insurance and associated costs incurred within the 
29 
Philippines; [and) 
4 


, 
I 
(3) Where appropriate, the costs and charges referred to in subsection (A) (3), (4) and (5); and 
2 
(4) The customs duties and other national taxes payable in the Philippines by reason of the 
3 
importation or sale of the goods. 
4 
If neither the imported goods nor identical nor similar imported goods are sold at or about the 
5 
time of importation of the goods being valued in the Philippines in the conditions as imported, 
6 
the customs value shall, subject to the conditions set forth in the preceding paragraph hereof, be 
7 
based on the unit price at which the imported goods or identical or similar imported goods sold 
8 
in the Philippines in the condition as imported at the earliest date after the importation of the 
9 
goods being valued but before the expiration of ninety (90) days after such importation. 
10 
If neither the imported goods nor identical nor similar imported goods are sold in the 
II 
Philippines in the condition as imported, then, if the importer so requests, the dutiable value shall 
12 
be based on the unit price at which the imported goods, after further processing, are sold in the 
13 
greatest aggregate quantity to persons in the Philippines who are not related to the persons from 
14 
whom they buy such goods, subject to allowance for the value added by such processing and 
15 
deductions provided under Subsections (D)(I), (2), (3) and (4) hereof. 
16 
(E) Method Five. - Computed Value. - The dutiable value under this method shall be the 
17 
computed value which shall be the sum of: 
18 
(1) The cost or the value of materials and fabrication or other processing employed in 
19 
producing the imported goods; 
20 
(2) The amount for profit and general expenses equal to that usually reflected in the sale of 
21 
goods of the same class or kind as the goods being valued which are made by producers in the 
22 
country of exportation for export to the Philippines; 
23 
(3) The freight, insurance fees and other transportation expenses for the importation of the 
24 
goods; 
25 
(4) Any assist, if its value is not included under paragraph (1) hereof; and 
26 
(5) The cost of containers and packirig, if their values are not included under paragraph (1) 
27 
hereof. 
28 
The Bureau of Customs shall not require or compel any person not residing in the Philippines 
29 
to produce for examination, or to allow access to, any account or other record for the purpose of 
5 


1 
detennining a computed value. However, information supplied by the producer of the goods for 
2 
the purposes of determining the customs value may be verified in another country with the 
3 
agreement of the producer and provided they will give sufficient advance notice to the 
4 
government of the country in question and the latter does not object to the investigation. 
5 
(F) Method Six. - Fallback Value. - If the dutiable value cannot be determined under the 
6 
preceding methods described above, it shall be detennined by using other reasonable means and 
7 
on the basis of data available in the Philippines. 
8 
If the importer so requests, the importer shall be infonned in writing of the dutiable value 
9 
detennined under Method Six and the method used to detennine such value. 
10 
No dutiable value shall be detennined under Method Six on the basis of: 
II 
(1) The selling price in the Philippines of goods produced in the Philippines; 
12 
(2) A system that provides for the acceptance for customs purposes of the higher of two 
13 
alternative values; 
14 
(3) The price of goods in the domestic market of the country of exportation; 
15 
(4) The cost of production, other than computed values, that have been detennined for 
16 
identical or similar goods in accordance with Method Five hereof; 
17 
(5) The price of goods for export to a country other than the Philippines; 
18 
(6) Minimum customs values; or 
19 
(7) Arbitrary or fictitious values. 
20 
"If in the course of determining the dutiable value of the imported goods, it becomes 
21 
necessary to delay the final determination of such dutiable value, the importer shall nevertheless 
22 
be able to secure the release of the imported goods upon filing of a sufficient guarantee in the 
23 
form of a LETTER OF CREDIT, surety bond, a deposit, cash, or some other appropriate 
24 
instrument in an amount equivalent to the imposable duties and taxes [on) FOR WHICH the 
25 
imported goods [in question) may be li(!ble: Provided, however, That goods, the importation of 
26 
which is prohibited by law, shall not be released under any circumstances whatsoever: 
27 
PROVIDED, FURTHER, THAT SURETY BONDS FROM A SURETY COMPANY WHICH 
28 
HAS AN OUTSTANDING LIABILITY OF THIRTY PERCENT (30%) OR MORE OF THE 
29 
TOTAL DUE AND DEMANDABLE BONDS ISSUED IN FAVOR OF THE BUREAU OF 
6 


CUSTOMS, AT ANY TIME, SHALL NOT BE ACCEPTABLE AS GUARANTEE FOR THE 
2 
RELEASE OF THE IMPORTED GOODS: 
PROVIDED, FURTHERMORE, THAT THE 
3 
PERMIT OR LICENSE OF THE SURETY COMPANY WHICH HAS AN OUTSTANDING 
4 
LIABILITY OF THIRTY PERCENT (30%) OR MORE OF THE TOTAL DUE AND 
5 
DEMANDABLE BONDS, AT ANY TIME, WITH THE BUREAU OF CUSTOMS, TO ISSUE 
6 
SURETY BOND FOR CUSTOMS PURPOSES, SHALL BE CANCELLED: PROVIDED, 
7 
FINALLY, THAT ANY SURETY COMPANY SHALL BE ELIGIBLE TO ISSUE CUSTOMS 
8 
SURETY BOND ONLY AFTER DETERMINATION OF GOOD STANDING BY THE 
9 
INSURANCE COMMISSION. 
10 
THE BUREAU OF CUSTOMS SHALL ACCEPT GUARANTEES IN THE FORM OF 
11 
SURETY BONDS EXCLUSIVELY ISSUED BY SURETY COMPANIES, INCLUDING THE 
12 
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), WHO ARE MEMBERS OF A 
13 
BUREAU OF CUSTOMS' APPROVED CONSORTIUM. 
14 
"Nothing in this Section shall be construed as restricting or calling into question the right of 
15 
the Collector of Customs to satisfy himself as to the truth or accuracy of any statement, 
16 
document or declaration presented for customs valuation purposes. When a declaration has been 
17 
presented and where the customs administration has reason to doubt the truth or accuracy of the 
18 
particulars or of documents produced in support of this declaration, the customs administration 
19 
may ask the importer to provide further explanation, including documents or other evidence, that 
, 
20 
the declared value represents the total amount actually paid or payable for the imported goods, 
21 
adjusted in accordance with the provisions of Subsection (A) hereof. 
22 
"REFERENCE INFORMATION OBTAINED FROM A V ALUE DATA BASE APPROVED 
23 
BY THE COMMISSIONER OF CUSTOMS, INCLUDING REVISION ORDERS, SHALL BE 
24 
USED TO TEST THE TRUTHFULNESS AND ACCURACY OF A GIVEN VALUE 
25 
DECLARATION. A VALUE DECLARATION WHICH FALLS OUTSIDE OF THE VALUE 
26 
RANGE OF REVISION ORDERS SHALL TRIGGER A VALUATION QUERY ON THE 
27 
APPLICABILITY OF THE METHOD OF VALUATION USED BY THE IMPORTER, IN 
28 
WHICH CASE THE VALUATION tSSUE SHALL BE DECIDED BY THE VALUATION 
29 
AND CLASSIFICATION REVIEW COMMITTEE (VCRC) ON THE APPROPRIATE 
7 


1 
METHOD OF VALUATION PRESCRIBED UNDER THIS SECTION. FOR PURPOSES OF 
2 
THIS SECTION, A 'REVISION ORDER' SHALL REFER TO THE DOCUMENT WHICH 
3 
INDICATES THE LATEST VALUES OF A PRODUCT(S), WHICH SHALL BE 
4 
APPLICABLE AND EFFECTIVE WITHIN THE PERIOD OF NINETY (90) DAYS FROM 
5 
DATE OF ITS ISSUANCE BY THE BUREAU OF CUSTOMS, AFTER CONSULTATION 
6 
WITH INDUSTRY REPRESENTATIVES. THESE REFERENCE INFORMATION SHALL 
7 
BE IMMEDIATELY PUBLISHED BY THE BUREAU OF CUSTOMS IN ITS WEBSITE. 
8 
"If, after receiving further information, or in the absence of a response, the customs 
9 
administration still has reasonable doubts about the truth or accuracy of the declared value, it 
10 
may, without prejudice to an importer's right to appeal pursuant to Article 11 of the World Trade 
11 
Organization Agreement on customs valuation, be deemed that the customs value of the 
12 
imported goods cannot be determined under Method One. Before taking a final decision, the 
13 
Collector of Customs shall communicate to the importer, in writing if requested, his grounds for 
14 
doubting the truth or accuracy of the particulars or documents produced and give the importer a 
15 
reasonable opportunity to respond. When a final decision is made, the customs administration 
16 
shall communicate to the importer in writing its decision and the grounds therefor." 
• 
17 
SEC. 3. Section 607 of the Tariff and Customs Code of the Philippines, as amended, is 
18 
hereby further amended to read as follows: 
19 
"SEC. 607. Annual Report of Commissioner. - The annual report of the Commissioner to the 
20 
President shall, among other things, contain a compilation of the (a) quantity and value of the 
21 
articles imported into the Philippines and the corresponding amount of customs duties, taxes and 
22 
other charges assessed and cpllected on imported articles itemized in accordance with the tariff 
23 
headings and subheadings as appearing in the liquidated customs entries provided for in this 
24 
Code, (b) percentage collection of the peso value of imports, (c) quantity and value of 
25 
conditionally-free importations, (d) customs valuation over and above letters of credit opened, 
26 
(e) quantity and value of tax-free imports, and (f) the quantity and value of articles exported from 
27 
the Philippines as well as the taxes and other charges assessed and collected on them for the 
28 
preceding year. Copies of such annual'report shaH be furnished regularly to the Department of 
29 
Finance, Tariff Commission, NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY , 
8 


I 
BANGKO SENTRAL NG PILIPINAS [Central Bank of the Philippines], Board ofInvestments, 
2 
Department of Budget AND MANAGEMENT, and other economic agencies of the government, 
3 
on or before December 30, of each year. 
4 
"For more scientific preparation of the annual report, the Commissioner shall cause the 
5 
computerization of the data contained in the liquidated entries filed with the Bureau of 
6 
Customs." 
7 
SEC. 4. Section 609 of the TARIFF AND CUSTOMS CODE OF THE PHILIPPINES, as 
8 
amended, is hereby further amended to read as follows: 
9 
"SEC. 609. Commissioner to Furnish Copies of Collectors' Liquidated Duplicates. - The 
10 
Commissioner shall regularly furnish the NATIONAL ECONOMIC AND DEVELOPMENT 
11 
AUTHORITY, the BANGKO SENTRAL NG PILIPINAS [Central Bank of the Philippines], the 
12 
Tariff Commission, AND THE NATIONAL STATISTICS OFFICE, BOTH ELECTRONIC 
13 
AND PAPER COPIES of each of all customs import/export entries as filed with the Bureau of 
14 
Customs. The Tariff Commission or its duly authorized agents shall have access to and the right 
15 
to copy all the customs liquidated import entries and other documents appended thereto as finally 
16 
filed in the Commission on Audit. 
17 
SEC. 5. Section 701 ofthe Tariff and' Customs Code of the Philippines, as amended, is hereby 
18 
further amended to read as follows: 
19 
"SEC. 701. Collection Districts and Ports of Entry Thereof - For administrative purposes, 
20 
the Philippines shall be divided into as many collection districts as necessary, the respective 
21 
limits of which may be changed from time to time by the Commissioner of Customs upon 
22 
approval of the Secretary of Finance. [The principal ports of entry for the respective collection 
23 
districts shall be Manila, Ninoy Aquino International Airport, Cebu, Iloilo, Davao, Tacloban, 
24 
Zamboanga, Cagayan de Oro, Surigao, Legaspi, Batangas, San Fernando, Subic and Manila 
25 
International Container Port.] 
26 
SEC. 6. Section 709 of the Tariff and Customs Code of the Philippines, as amended, is 
27 
hereby further amended to read as follows: 
28 
"SEC. 709. Authority of the Collector to Remit Duties. - A Collector [shall have discretionary 
29 
authority to] remit the assessment and collection of customs duties, taxes and other charges when 
9 


I 
the aggregate amount of such duties, taxes, and other charges is [less than ten] FIVE HUNDRED 
2 
pesos (P500.00) OR MORE, and he may dispense with the seizure of articles of less than [ten] 
3 
FIVE HUNDRED pesos (P500.00) in value except in cases of prohibited importations or the 
4 
habitual or the intentional violation ofthe tariff and customs laws." 
5 
SEC. 7. A new Part 3 shall be inserted after Section 712 of the Tariff and Customs Code of 
6 
the Philippines, as amended, which shall'read as follows: 
7 
"PART3.-AUDIT, TRANSPARENCY AND ACCOUNTABILITY 
8 
"SEC. 713. UPON THE RECOMMENDATION BY THE BUREAU OF CUSTOMS OR 
9 
PETITION DULY MADE BY THE LQCAL INDUSTRY, THE COMMISSION ON AUDIT 
10 
(COA) SHALL CONDUCT THE CORRESPONDING POST ENTRY AUDIT ON THE 
II 
OPERATIONAL PROCESSES, COLLECTION AND FINANCIAL REPORTING, FISCAL 
12 
AND PERSONNEL PERFORMANCE, SYSTEM EFFICIENCY, INTERNAL CONTROL, 
13 
INFORMATION AND COMMUNICATION FLOW, FRAUDULENT AND ILLEGAL 
14 
PRACTICES, AND SUCH OTHER' AREAS AS MAY BE NECESSARY FOR THE 
15 
EFFECTIVE OPERATION OF THE BUREAU OF CUSTOMS AND ITS ATTACHED 
16 
AGENCIES. 
17 
PROVIDED THE PRIVATE AUDITING FIRM SHALL BE DISQUALIFIED FROM 
18 
CONDUCTING A POST ENTRY ON IMPORTERS WHERE ITS CLIENT HAS DIRECT OR 
19 
INDIRECT BUSINESS INTEREST ON THE ARTICLES OR PRODUCTS SUBJECT 
20 
MATTER OF THE AUDIT: PROVIDED, FURTHER, THAT THE FEES TO BE PAID TO 
21 
THE PRIVATE AUDITING FIRMS SHALL BE ON CONTINGENT BASIS EQUIVALENT 
22 
TO 20% OF IT'S POSITIVE FINDINGS. 
23 
"IN THE CONDUCT OF ITS AUDIT AND INVESTIGATIONS, THE COMMISSION 
24 
ON AUDIT SHALL HAVE THE AUTHORITY TO REQUIRE THE PRODUCTION OF 
25 
DOCUMENTS AND REQUIRE BUREAU PERSONNEL TO RESPOND TO ITS INQUIRIES. 
26 
FOR THIS PURPOSE, IT MAY ISSUE SUBPOENA DUCES TECUM AND . AD 
27 
TESTIFICANDUM. ANY PERSON WHO SHALL REFUSE TO ABIDE BY THE SUBPOENA 
28 
SO ISSUED MAY BE HELD LIABLE FOR CONTEMPT." 
10 


I 
"SEC. 714. ON THE BASIS OF THE AUDIT CONDUCTED PURSUANT TO THE 
2 
PRECEDING SECTIONS, THE RECOMMENDATIONS MADE BY THE COA SHALL 
3 
HAVE PERSUASIVE WEIGHT AND SHALL BE PROMPTLY ACTED UPON BY THE 
4 
COMMISSIONER WHO SHALL LIKEWISE HAVE THE AUTHORITY TO ORDER THE 
5 
CONDUCT OF INVESTIGATIONS FOR THE PURPOSE OF INITIATING PROSECUTION 
6 
OF FRAUD AND OTHER GRAFT AND CORRUPT PRACTICES IN THE BUREAU, AND 
7 
SHALL RECOMMEND TO THE OMBUDSMAN THE FILING OF APPROPRIATE 
8 
CRIMINAL CASES AGAINST THE ERRING PERSONNEL, AND TO 
IMPOSE 
9 
ADMINISTRATIVE SANCTIONS. 
10 
"SEC. 715. THE COMMISSION ON AUDIT SHALL SUBMIT AN ANNUAL REPORT TO 
II 
THE COMMISSIONER, THE SECRETARY OF FINANCE, THE OFFICE OF THE 
12 
PRESIDENT, AND THE CONGRESS, STATING THE RESULT OF ITS INSPECTIONS 
13 
AND AUDITS. THE REPORT SHALL CONTAIN ALL THE NECESSARY DATA WHICH 
14 
LED TO ITS RECOMMENDATIONS AND FINDINGS, AND SHALL BE MADE 
IS 
AVAILABLE TO THE PUBLIC THROUGH ELECTRONIC AND NON-ELECTRONIC 
16 
MEANS, UNLESS NON-DISCLOSURE IS WARRANTED BY NATIONAL SECURITY. 
17 
SEC. 8. A new section to be known as Section 1001-A is hereby inserted after Section 1001 
18 
of the Tariff and Customs Code of the Philippines, as amended, which shall read as follows: 
19 
"SEC. 1001-A. TRANSMISSION OF ELECTRONIC COPY OF MANIFEST/STOWAGE 
20 
PLAN PRIOR TO ARRIVAL -
AN ELECTRONIC COpy OF THE CARGO AND 
21 
PASSENGER MANIFEST AS WELL AS THE STOWAGE PLAN OF THE VESSEL 
22 
ENGAGED IN FOREIGN TRADE ~HALL BE TRANSMITTED TO THE BUREAU OF 
23 
CUSTOMS, DEPARTMENT OF TRADE AND INDUSTRY AND DEPARTMENT OF 
24 
AGRICULTURE AT LEAST TWELVE (12) HOURS FOR OCEAN GOING VESSELS AND 
25 
TWO (2) HOURS FROM DEPARTURE FOR AIRLINES PRIOR TO THEIR ARRIVAL IN 
26 
THE PORT OF ENTRY: PROVIDED, THAT IF THE VESSEL IS AN AIRCRAFT, THE 
27 
MANIFEST SHALL BE ELECTRONICALLY TRANSMITTED TO THE BUREAU OF 
28 
CUSTOMS, DEPARTMENT OF TRADE AND INDUSTRY, AND DEPARTMENT OF 
11 


1 
AGRICULTURE AT LEAST ONE (1) HOUR PRIOR TO THE AIRCRAFT'S ARRIVAL IN 
2 
THE PORT OF ENTRY." 
3 
SEC. 9. 
Section 1005 of the Tariff and Customs Code of the Philippines, as amended, is 
4 
hereby further amended to read as follows: 
5 
"SEC. 1005. Manifest Required of Vessel from Foreign Port. -
Every vessel from a foreign 
6 
port must have on board a complete manifest of all her cargo. 
7 
"All of the cargo intended to be landed at a port in the Philippines must be described in 
8 
separate manifests for each port of call therein. Each manifest shall include the port of departure 
9 
and the port of delivery with the marks, numbers, quantity and description of the packages and 
10 
the names of the consignees thereof. Every vessel from a foreign port must have on board 
11 
complete manifests of passengers and their baggage, in the prescribed form, setting forth their 
12 
destination and all particulars required by immigration laws, and every such vessel shall have 
13 
prepared for presentation to the proper customs official upon arrival in ports of the Philippines a 
14 
complete list of all sea stores then on board. If the vessel does not carry cargo or passengers, the 
15 
manifest must show that no cargo or passenger, as the case may be, is carried from the port of 
16 
departure to the port of destination in the Philippines. 
17 
"A TRUE AND COMPLETE COpy OF THE CARGO MANIFEST AND BILL OF 
18. 
LADING SHALL BE SENT UPON ARRIVAL TO THE BUREAU OF CUSTOMS AND THE 
19 
PHILIPPINE PORTS AUTHORITY WITHIN FORTY-EIGHT (48) HOURS AFTER RECEIPT 
20 
THEREOF BY THE MASTER OF THE VESSEL. 
21 
"A cargo manifest shall in no case be changed or altered after entry of the vessel, except by 
22 
means of an amendment by the master~ consignee or agent thereof, under oath, and attached to 
23 
the original manifest: 
Provided, however, That after the invoice and/or entry covering an 
24 
importation have been received and recorded [in the office of the appraiser] EITHER 
25 
MANUALLY OR ELECTRONICALLY IN THE BUREAU OF CUSTOMS OR HAD BEEN 
26 
LOGGED IN ITS COMPUTER SYSTEM, no amendment of the manifest shall be allowed, 
27 
except when it is obvious that a clerical error or any discrepancy has been committed in the 
28 
preparation of the manifest, without any fraudulent intent, discovery of which would not have 
29 
been made until after examination has been completed. 
PRIOR TO RELEASE OF THE 
12 


1 
CARGO, THE VERACITY OF THE AMENDMENT SHALL BE EXAMINED BY THE 
2 
COLLECTOR OF CUSTOMS FOR THE PURPOSE OF INVOKING PENAL PROVISION 
3 
UNDER SECTIONS 2503 AND 3602 OF THIS CODE." 
4 
SEC. 10. Section 1007 of the Tariff and Customs Code of the Philippines, as amended, is 
5 
hereby further amended to read as follows: 
6 
"SEC. 1007. Maniftst for Commission on Audit and Collector. - Papers to be Deposited 
7 
with Consul. - Immediately after the arrival of a vessel from a foreign port, the master shall 
8 
deliver or mail to the Chairman, Commission on Audit, Manila, a copy of the cargo manifest 
9 
properly indorsed by the boarding officer, and UPON ARRIVAL, he shall present to the 
10 
Collector the original copy of the cargo manifest and, for inspection, the ship's register or other 
11 
document in lieu thereof, together with t~e clearance and other papers granted to the vessel at the 
12 
port of departure for the Philippines. 
13 
"WITHIN THREE DAYS FROM RECEIPT OF THE CARGO MANIFEST FROM THE 
14 
MASTER OF THE VESSEL, THE COLLECTOR SHALL POST COPIES THEREOF AT A 
15 
CUSTOMS BULLETIN BOARD FOR TWO CONSECUTIVE WEEKS." 
16 
SEC. 11. Section 1008 of the Tariff and Customs Code of the Philippines, as amended, is 
17 
hereby further amended to read as follows: 
18 
"SEC. 1008. 
Transit Cargo AND FOREIGN TRANSHIPMENT OF GOODS. - When 
19 
transit cargo from a foreign port or other local ports is forwarded from the port of importation 
• 
20 
separate manifest, in triplicate, shall be presented by each carrier. 
21 
"WITHIN FIVE DAYS FROM THE ACTUAL DISCHARGE OF A VESSEL, BUT IN ANY 
22 
CASE NOT LATER THAN FIFTEEN (15) DAYS FROM THE DATE OF THE VESSEL'S 
23 
DEPARTURE FROM THE PHILIPPINES, THE PARTY WHO APPLIED FOR FOREIGN 
24 
TRANSSHIPMENT SUCH AS THE SHIPPING COMPANY OR AGENT, TRANSSHIPMENT 
25 
OPERATOR OR THE OWNER OF THE GOODS SHALL SUBMIT TO THE BUREAU OF 
26 
CUSTOMS AND/OR TO THE BUREAU OF INTERNAL REVENUE, A CERTIFICATE OF 
27 
DISCHARGE FROM THE FOREIGN PORT OF DISCHARGE OR DESTINATION. THE 
28 
CERTIFICATE OF DISCHARGE SHALL CERTIFY THAT THE GOODS TRANSSHIPPED 
29 
FROM THE PHILIPPINES WERE DISCHARGED AT THE PORT OF DESTINATION AND 
13 


1 
RECEIVED BY THE CONSIGNEE NAMED IN THE MANIFEST. THE CERTIFICATE OF 
2 
DISCHARGE SHALL BE ISSUED BY THE CUSTOMS OR PORT OFFICIALS AT THE 
3 
FOREIGN PORT OF DESTINATION: PROVIDED, THAT IF THE SAID CERTIFICATE IS 
4 
IN A FOREIGN LANGUAGE OTHER THAN ENGLISH, IT SHALL BE ACCOMPANIED 
5 
BY AN ENGLISH TRANSLATION DULY AUTHENTICATED BY A PHILIPPINE 
6 
COMMERCIAL ATTACHE OR CONSUL. THE CERTIFICATE OF DISCHARGE TO BE 
7 
SUBMITTED TO THE BUREAU OF CUSTOMS AND/OR BUREAU OF INTERNAL 
8 
REVENUE SHALL BE ACCOMPANIED BY A COPY OF THE INWARD FOREIGN 
• 
9 
MANIFEST SUBMITTED TO, RECEIVED BY, AND PROPERLY STAMPED BY THE 
10 
CUSTOMS AUTHORITIES AT THE PORT OF DESTINATION. 
11 
"FAILURE TO SUBMIT THE CERTIFICATE OF DISCHARGE AND THE INWARD 
12 
FOREIGN MANIFEST AS REQUIRED HEREINABOVE SHALL CONSTITUTE PRIMA 
13 
FACIE PROOF THAT THE GOODS ALLEGEDLY TRANSSHIPPED WERE IN FACT 
14 
DIVERTED TO THE PHILIPPINES, WITHOUT THE CORRESPONDING PAYMENT OF 
15 
DUTIES AND TAXES WHICH SHALL BE IMMEDIATELY COLLECTED AND PAID BY 
16 
THE PARTY(IES) WHICH FAILED TO SUBMIT THE CERTIFICATE OF DISCHARGE. 
17 
THEREAFTER AND UNTIL THE REQUIRED CERTIFICATE OF DISCHARGE AND THE 
18 
INWARD FOREIGN MANIFEST SHALL HAVE BEEN SUBMITTED, ALL SUBSEQUENT 
19 
TRANSSHIPMENT OF GOODS TO AND FROM THE PHILIPPINES BY THE SAID 
20 
PARTY(IES) WITHOUT THE PAYMENT OF DUTIES AND TAXES SHALL BE 
21 
DISALLOWED. THE SUBMISSION OF THE CERTIFICATE OF DISCHARGE IS 
22 
REQUIRED ONLY FOR TRANSSHIPPED GOODS SUBJECT TO EXCISE TAX OF MORE 
23 
THAN TWENTY PERCENT (20%) IN ADDITION TO THE PAYMENT OF TAXES AND 
24 
DUTIES IF SUCH GOODS ENTER THE DOMESTIC MARKET. " 
25 
SEC. 12. Section 1024 of the Tariff and Customs Code of the Philippines, as amended, is 
26 
hereby further amended to read as follows: 
27 
"SEC 1204. Liability of Importer for Duties. -"Unless relieved by laws or regulations, the 
• 
28 
liability for duties, taxes, fees and other charges attaching on importation constitutes a personal 
29 
debt from the importer to the government which can be discharged only by payment in full of all 
14 


duties, taxes, fees and other charges legally accruing. It constitutes a lien upon the articles 
2 
imported which may be enforced while such articles are in custody or subject to the control of 
3 
the government. AS USED IN THIS CODE, OTHER CHARGES SHALL INCLUDE LIENS 
4 
OF GOVERNMENT REGULATORY AGENCIES. 
5 
SEC. 13. Section 1025 of the Tariff and Customs Code of the Philippines, as amended, is 
6 
hereby further amended to read as follows: 
7 
"SEC. 1025. 
Export Product to Conform to Standard Grades AND EXPORT 
8 
MARKING REQUIREMENTS. - A Collector shall not permit products for which standard grades 
9 
OR "EXPORT ONLY" OR "FOR EXPORT" MARKING REQUIREMENTS have been 
10 
established by the government THROUGH LAWS OR REGULATIONS to be laden aboard a 
11 
vessel clearing for a foreign port, unless the shipment conforms to the requirements of law OR 
12 
REGULATION relative to the shipment of such products: PROVIDED, HOWEVER, THAT 
13 
EXPORT OF PRODUCTS MARKED "NOT FOR EXPORT" SHALL BE PROHIBITED, AND 
14 
THAT LABELS OR MARKS INDICATING "PLACE OF SALE" OF THE PRODUCT OR 
15 
"NOT FOR EXPORT" MARKINGS SHALL NOT BE CHANGED, TAMPERED OR 
16 
CONCEALED. 
• 
17 
"GOODS INTENDED FOR EXPORT WHICH DO NOT COMPLY WITH STANDARD 
18 
GRADES, EXPORT MARKING REQUIREMENTS, OR WHOSE "NOT FOR EXPORT" OR 
19 
"PLACE OF SALE" LABELS HAVE BEEN CHANGED, TAMPERED OR CONCEALED 
20 
SHALL BE DISPOSED OF IN ACCORDANCE WITH THIS CODE, EXCEPT THROUGH 
21 
EXPORTATION." 
22 
SEC. 14. Section 1210 of the Tariff and Customs Code of the Philippines, as amended, is 
23 
hereby further amended to read as follows: 
24 
"SEC. 1210. Disposition of Imported Articles Remaining on Vessel After Time for Unlading. -
25 
Imported articles remaining on board any vessel after the expiration of the said period for 
26 
discharge and not reported for transshipment to another port, may be unladen by customs 
27 
authorities and stored at the vessel's expense. 
28 
"Unless prevented by causes beyond the vessel's control, such as port congestion, strikes, 
29 
riots, or civil commotions, failure of vessel's gear, bad weather, and similar causes, articles so 
15 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
l3 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
stored shall be entered within [thirtyJ FIFTEEN ([3 OJ 15) days, which shall not be extendible, 
from the date of discharge of the last package from the vessel or aircraft and shall be claimed 
within fifteen (15) days, which shall likewise not be extendible from the date of posting of the 
notice to claim in conspicuous places in the Bureau of Customs. If not entered or not claimed, it 
shall be disposed of in accordance with the provisions of this Code." 
SEC. 15. A new section, to be known as Section 1212 is hereby inserted in the Tariff and 
Customs Code of the Philippines, as amended, to read as follows: 
"SEC. 1212. 
IMPORT PERMIT/IMPORT AUTHORITY FOR 
AGRICULTURAL 
PRODUCTS. - IMPORTED AGRICULTURAL PRODUCTS MUST BE COVERED BY A 
VALID IMPORT OR QUARANTINE PERMIT ISSUED BY THE DEPARTMENT OF 
AGRICULTURE OR ITS CONCERNED BUREAU PRIOR TO IMPORTATION INTO THE 
PHILIPPINES. NO AGRICULTURAL PRODUCTS MUST BE ACCEPTED FOR LOADING 
AND/OR TRANSPORT BY A VESSEL OR AIRCRAFT INTO THE COUNTRY IF TiIEElE 
AGRICULTURAL PRODUCTS HAVE NOT BEEN AUTHORIZED THROUGH AN IMPORT 
PERMIT OR IMPORT AUTHORITY ISSUED BY THE DEPARTMENT OF AGRICULTURE 
PRIOR TO SHIPMENT. THE SAME AGRICULTURAL PRODUCTS MUST BE SHIPPED 
BACK TO THE COUNTRY OF ORIGIN BY THE IMPORTER! CONSIGNEE THROUGH 
THE SAME CARRIER THAT LOADED/TRANSPORTED, OR BROUGHT IN THE 
PRODUCTS: PROVIDED, THAT ANY IMPORTED AGRICULTURAL PRODUCT THAT 
WAS ISSUED AN IMPORT PERMIT OR IMPORT AUTHORITY AFTER ENTRY INTO 
THE PHILIPPINES, WHEN SUCH IMPORT PERMIT/AUTHORITY IS REQUIRED PRIOR 
TO 
IMPORTATION 
OF 
SUBJECT 
AGRICULTURAL 
PRODUCT, 
SHALL 
BE 
CONSIDERED AS SMUGGLED ARTICLE AND SHALL BE DISPOSED OF IN THE 
MANNER PROVIDED FOR IN SECTION 2602 OF THIS CODE." 
SEC. 16. Section l302 of the Tariff and Customs Code of the Philippines, as amended, is 
hereby further amended to read as follows: 
27 
"SEC. l302. 
Import Entries. - All imported articles, except importations admitted free of 
28 
duty under Subsection "k", Section one hundred and five of this Code, shall be subject to a 
29 
formal or informal entry. Articles of a commercial nature intended for sale, barter or hire, the 
16 


1 
dutiable value of which is Two thousand pesos (P2,000.00) or less, and personal and household 
2 
effects or articles, not in commercial quantity, imported in passenger's baggage, mail or 
3 
otherwise, for personal use, shall be cleared on an informal entry whenever duty, tax or other 
4 
charges are collectible. 
5 
The Commissioner may, upon instruction of the Secretary of Finance, for the protection of 
, 
6 
domestic industry or of the revenue, require a formal entry, regardless of value, whatever be the 
7 
purpose and nature of the importation. 
8 
"A formal entry may be for immediate consumption, or under irrevocable domestic letter of 
9 
credit, bank guarantee or bond for: 
10 
"(a) Placing the article in customs bonded warehouse; 
11 
"(b) Constructive warehousing and immediate transportation to other ports of the Philippines 
12 
upon proper examination and appraisal; or 
13 
"(c) Constructive warehousing and immediate exportation. 
14 
"FOR PURPOSES HERETO, ALL IMPORT ENTRIES SHALL EXPLICITLY AND 
15 
CLEARLY INDICATE THE NAME OF THE WAREHOUSE WHERE THE IMPORTED 
16 
ARTICLES WILL BE PLACED OR DEPOSITED, AND THE NAME OF THE IMPORTER 
17 
OR CONSIGNEE. 
18 
"Import entries under irTevocable domestic letter of credit, bank guarantee or bond shall be 
19 
subject to the provisions of Title V, Book II of this Code. 
20 
"All importations entered under formal entry shall be covered by a letter of credit or any other 
21 
verifiable document evidencing payment." (R.A. 9135, April 27, 2001) 
22 
SEC. 17. Section 1313 of the Tariff and Customs Code of the Philippines, as amended, is 
23 
hereby further amended to read as follows: 
24 
"SEC. 1313. lriformation Furnished on Classification and Value. -
25 
a. As to classification OF AN ARTICLE AND TRADE FACILITATION - [When an article 
26 
imported or intended to be imported id not specifically classified in this Code, the interested 
27 
party, importer or foreign exporter may submit to the Tariff Commission a sample together with 
28 
a full description of its component materials and uses, and request it in writing to indicate the 
29 
heading under which the article is or shall be dutiable, and the Tariff Commission shall comply 
17 


with such requests within thirty days from receipt thereof if it is satisfied that the application is 
2 
made in good faith, in which case classification of the article in question upon the particular 
3 
importation involved shall be made' according 
to the heading indicated by the Tariff 
4 
Commission: Provided, however, That such rulings of the Tariff Commission on commodity 
5 
classification, shall be binding upon the Bureau of Customs, unless the Secretary shall rule 
6 
otherwise.) IMPORTERS, EXPORTERS OR ANY INTERESTED PARTY SHALL REQUEST 
7 
THE TARIFF COMMISSION IN WRITING, BEFORE OR AFTER THE ARRIVAL OF THE 
8 
GOODS OR COMMODITY SUBJECT OF IMPORTATION. FOR AN OFFICIAL TARIFF 
9 
CLASSIFICATION RULING UPON SUBMISSION OF A SAMPLE TOGETHER WITH THE 
10 
BROCHURE AND PERTINENT TECHNICAL INFORMATION SHEETSIDATA. 
THE 
11 
TARIFF COMMISSION SHALL COMPLY WITH SUCH A REQUEST WITHIN THIRTY 
12 
(30) DAYS FROM RECEIPT HEREOF. THE RULING SHALL BE BINDING WITH THE 
13 
BUREAU OF CUSTOMS, UNLESS THE SECRETARY OF FINANCE SHALL RULE 
14 
OTHERWISE. ANY TARIFF CLASSIFICATION RULING/S AS MAY BE ISSUED BY THE 
15 
COMMISSION SHALL REMAIN VALID AND EFFECTIVE, UNLESS SUCH TARIFF 
16 
CLASSIFICATION RULING/S ARE AMENDED BY THE COMMISSION SO AS TO 
17 
CORRECT ERRORS IN THE CLASSIFICATION OF AN ARTICLE OR IN CASES OF 
18 
AMENDMENT TO THE ASEAN HARMONIZED TARIFF NOMENCLATURE (AHTN), OR 
19 
FOR ANY OTHER REASON AS THE COMMISSION MAY SEE FIT." 
20 
SEC. 18. Section 1401 of the Tariff and Customs Code of the Philippines as amended, is 
21 
hereby further amended to read as follows: 
22 
"SEC. 1401. Conditions for Examination. -
For the protection of government revenue and 
23 
public interest and to prevent the entry into the country of smuggled or contraband goods, the 
24 
Commissioner shall, in consultation with the Oversight Committee and subject to the approval of 
25 
the Secretary of Finance, promulgate the rules and regulations that shall prescribe the procedure 
26 
in accordance with which examination shall be undertaken on the importation and the required 
27 
quantity or percentage thereof: Provided, That the imported articles shall in any case be subject 
28 
to the regular physical examination when: 
18 


I 
"(I) The government surveyor's seal on the container has been tampered with or broken or the 
2 
container shows signs of having been opened or having its identity changed; 
3 
"(2) The container is leaking or damaged; 
4 
"(3) The number, weight and nature of packages indicated in the customs entry declaration 
5 
and supporting documents differ from that in the manifest; 
6 
"(4) The shipment is covered by alert/hold orders issued pursuant to existing orders; 
7 
"(5) The importer disagrees with the findings as contained in the government surveyor's 
8 
report; or 
9 
"(6) The articles are imported through air freight where the Commissioner or Collector has 
10 
knowledge that there is a variance between the declared and true quantity, measurement, weight, 
11 
and tariff classification." 
12 
(7) THE PRODUCT DESCRIPTION OF THE SHIPMENT IS NOT IN ACCORDANCE 
13 
WITH THE EXISTING HARMONIZED SYSTEMS CODE. 
14 
SEC. 19. A new section to be known as Section 1401-A is hereby inserted after Section 1401 
15 
of the Tariffand Customs Code of the Philippines, as amended, which shall read as follows: 
16 
"SEC. 1401-A. VALUATION LIBRARY. - THE COMMISSIONER SHALL ENSURE THAT 
17 
THERE SHALL BE A VALUATION LIBRARY, WHICH SHALL BE KEPT UP TO DATE 
18 
AND MAINTAINED USING THE BEST AVAILABLE TECHNOLOGY. THE VALUATION 
19 
LIBRARY SHALL BE MADE READILY AVAILABLE TO THE PUBLIC." 
20 
SEC. 20. Section 1403 of the Tariff and Customs Code of the Philippines, as amended, is 
21 
hereby further amended to read as follows: 
22 
"Sec. 1403. Duties of Customs Offi~er Tasked to Examine, ClassifY and Appraise Imported 
23 
Articles. -
The customs officer tasked to examine, classify, and appraise imported articles shall 
24 
determine whether the packages designated for examination and their contents are in accordance 
25 
with the declaration in the entry, invoice and other pertinent documents and shall make a return 
26 
in such a manner to indicate whether the articles have been truly and correctly declared in the 
27 
entry as regard their quantity, measurement, weight, and tariff classification and not imported 
28 
contrary to law. 
SUBJECT TO THE GUIDELINES TO BE ISSUED BY THE 
29 
COMMISSIONER WITH THE APPROVAL OF THE SECRETARY OF FINANCE, THE 
19 


• 
I 
CUSTOMS OFFICER [He] shall TAKE A REPRESENTATIVE [submit] sample OF THE 
2 
IMPORTED ARTICLE IN THE PRESENCE OF THE IMPORTER, CONSIGNEE OR THEIR 
3 
REPRESENTATIVES to BE SUBMITTED TO the CUSTOMS laboratory OR TO THE 
4 
LABORATORY OF THE APPROPRIATE GOVERNMENT REGULATORY AGENCY for 
5 
analysis when feasible to do so [and] OR when such analysis is necessary for the proper 
6 
classification, appraisal and/or admission into the Philippines of imported articles. THE 
7 
CUSTOMS OFFICER SHALL TAKE INTO ACCOUNT THE RESULT OF THE ANALYSIS 
8 
IN THE CLASSIFICATION, APPRAISAL AND/OR ADMISSION INTO THE PHILIPPINES 
9 
OF THE IMPORTED ARTICLE. 
10 
Likewise, the customs officer shall determine the unit of quantity in which they are usually 
II 
bought and sold and appraise the import«d articles in accordance with Section 201 of this Code. 
12 
Failure on the part of the customs officer to comply with his duties shall subject him to 
13 
penalties prescribed under 3604 of this Code. (RA 7650, April 06, 1993) 
14 
SEC.21. Section 1704(d) of the Tariff and Customs Code of the Philippines, as amended, is 
15 
hereby further amended to read as follows: 
16 
"SEC. 1704. 
Abatement or Refund of Duties on Articles Lost or Destroyed After 
17 
Arrival. - A Collector may abate or refund the amount of duties accruing or paid, and may 
18 
likewise make a corresponding allowance on the irrevocable domestic letter of credit, bank 
19 
guarantee, or the entry bond or other document, upon satisfactory proof of injury, destruction, or 
• 
20 
loss by theft, fire or other causes of any article as follows: 
21 
. "a. While within the limits of any port of entry prior to unlading under customs supervisions; 
22 
"b. While remaining in customs custody after unlading; 
23 
"c. While in transit under irrevocable domestic letter of credit, bank guarantee or bond with 
24 
formal entry in accordance with section one thousand three hundred two from the port of entry to 
25 
any port in the Philippines; 
26 
"d. While released under irrevocable domestic letter of credit, bank guarantee or bond for 
27 
export except in case of loss by theft: 
PROVIDED THAT ABATEMENT SHALL BE 
28 
ALLOWED UPON PROOF OF LOSS DUE TO FORCE MAJEURE OR ACTS OF GOD 
29 
DULY SUPPORTED WITH PROPER DOCUMENTS AND SWORN STATEMENTS." 
20 


, 
I 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
SEC. 22. Section 1801 of the Tariff and Customs Code of the Philippines, as amended, is 
hereby further amended to read as follows: 
"SEC. 1801. 
Abandonment, Kinds and Effects of - An imported article is deemed 
abandoned under any of the following circumstances: 
"a. When the owner, importer, consignee of the imported article expressly signifies in 
writing to the Collector of Customs his intention to abandon; or 
"b. When the owner, importer, consignee or interested party after due notice, fails to file an 
entry within thirty (30) days, which shaV not be extendible, from the date of discharge of the last 
package from the vessel or aircraft, or having filed such entry, fails to claim his importation 
within fifteen (15) days, which shall not likewise be extendible, from the date of posting of the 
notice to claim such importation. 
"ALL SHIPPING LINES, SHIPPING COMPANIES, FREIGHT FORWARDERS, 
CONSOLIDATORS, BREAK BULK AGENTS AND THEIR AGENTS AND SUB-AGENTS 
AND ARRASTRE CONTRACTORS ARE REQUIRED TO STATE IN BOLD, PROMINENT 
AND COMPREHENSIBLE CHARACTERS THE PHRASE 'CUSTOMS LAW REQUIRES 
THE FILING OF ENTRY WITHIN THIRTY (30) DAYS FROM THE DATE OF DISCHARGE 
OF THE LAST PACKAGE FROM THE VESSEL, OTHERWISE, THE CARGO MAY BE 
DEEMED ABANDONED AND TO BE FORFEITED IN FAVOR OF THE GOVERNMENT 
AND SHALL BE DISPOSED OF IN ACCORDANCE WITH THIS CODE' IN EACH AND 
EVERY NOTICE OF ARRIVAL TO THE OWNERS, IMPORTERS, CONSIGNEES OR 
OTHER INTERESTED PARTIES. THE SAME SHALL SERVE TO SATISFY THE DUE 
NOTICE REQUIREMENT REFERRED TO IN PARAGRAPH (B) HEREOF, IN WHICH 
CASE THE OWNER, IMPORTER OR CONSIGNEE OF THE IMPORTATION SHALL 
HAVE A PERIOD OF THIRTY (30) DAYS, WHICH SHALL NOT BE EXTENDIBLE, FROM 
THE DATE OF DISCHARGE OF THE LAST PACKAGE FROM THE VESSEL WITHIN 
WHICH TO FILE THE APPROPRIATE ENTRY. 
FAILURE ON THE PART OF THE 
SHIPPING 
LINES, 
SHIPPING 
COMPANIES, 
FREIGHT 
FORWARDERS, 
CONSOLIDATORS, BREAK BULK AGENTS AND THEIR AGENTS AND SUB-AGENTS 
AND ARRASTRE CONTRACTORS TO COMPLY HEREWITH SHALL CONSTITUTE A 
21 


1 
GROUND FOR THE SUSPENSION OF THEIR LICENSES OR AUTHORITY TO ENGAGE 
2 
IN THEIR RESPECTIVE LINE OF ACTIVITIES IN THE IMPORTATION OPERATIONS OR 
3 
WHEN THERE IS A WRITTEN DENIAL OF OWNERSHIP FROM THE PERSON 
4 
INDICATED ON THE MANIFEST OR BILL OF LADING AS THE OWNER, IMPORTER, 
5 
OR CONSIGNEE OF THE IMPORTED ARTICLE. 
6 
"Any person who abandons an article or who fails to claim his importation as provided for in 
7 
the preceding paragraph shall be deemed to have renounced all his interests and property rights 
8 
therein. (R.A. 7651, June 4,1993) 
9 
SEC. 23. Section 1802 of the Tariff and Customs Code of the Philippines, as amended, is 
10 
hereby further amended to read as follows: 
11 
"SEC. 1802. Abandonment of Imported Articles. - An abandoned article shall ipso facto be 
12 
deemed the property of the Government. ALL ABANDONED ARTICLES SHALL BE 
13 
AUTOMATICALLY SUBJECT TO AUCTION AND SHALL IN NO CASE BE SUBJECT TO 
14 
SETTLEMENT OR COMPROMISE. 
15 
"AN UPDATED LISTING OF ALL ABANDONED SHIPMENTS SCHEDULED FOR 
16 
AUCTION SHALL BE POSTED ON THE OFFICIAL WEBSITE OF THE BUREAU OF 
17 
CUSTOMS AND AT THE MAIN ENTRANCE OF CUSTOMS HOUSES. 
18 
"Nothing in this section shall be construed as relieving the owner or importer from any 
19 
criminal liability which may arise from any violation of law committed in connection with the 
20 
importation of abandoned article. 
21 
"Any official or employee of the Bureau of Customs or of other government agencies who, 
22 
having knowledge of the existence of an abandoned article or having control or custody of such 
23 
abandoned article, fails to report to the Collector within twenty-four (24) hours from the time the 
24 
article is deemed abandoned shall be punished with the penalties prescribed in Paragraph 1, 
25 
Section 3604 of this Code." (RA 7651, June 4, 1993) 
26 
SEC. 24. Section 1901 of the Tariff and Customs Code of the Philippines, as amended, is 
27 
hereby further amended to read as follows: 
28 
"SEC. 1901. Establishment and Supervision of Warehouses. - When the business of the port 
29 
requires such facilities, the Collector, subject to the approval of the Commissioner, shall 
22 


1 
designate and establish INDUSTRY SPECIFIC warehouses for use as public and private bonded 
2 
warehouses, sheds or yards, or for other special purposes. ALL SUCH WAREHOUSES SHALL 
3 
BE ACCREDITED BY AN ACCREDITATION COMMITTEE WHICH SHALL BE 
4 
COMPOSED OF THE SECRETARY OF TRADE AND INDUSTRY, AS CHAIR THEREOF, 
5 
AND ONE REPRESENTATIVE EACH FROM THE INDUSTRY ASSOCIATION OR 
6 
INDUSTRY SECTOR AFFECTED, AND THE INDUSTRY ASSOCIATION SOUGHT TO BE 
7 
SERVICED BY THE CUSTOMS BONDED WAREHOUSE. 
8 
"All such warehouses and premises shall be subject to the supervision of the Collector, who 
9 
shall impose such conditions as may be deemed necessary for the protection of the revenue and 
10 
of the articles stored therein. 
THE CUSTOMS COLLECTOR SHALL CONDUCT SPOT 
II 
CHECKS AND PERIODIC AUDITS TO ENSURE THAT APPLICABLE CUSTOMS LAWS 
12 
AND REGULATIONS ARE COMPLIED WITH BY BONDED FACILITIES." 
13 
SEC. 25. Section 1902 of the Tariff and Customs Code of the Philippines, as amended, is 
14 
hereby further amended to read as follows: 
15 
"SEC. 1902. Responsibility of Operators. - The operators of bonded warehouses in case of 
16 
loss of the imported articles stored shall be liable for the payment of duties and taxes due 
17 
thereon. 
18 
"The government assumes no legal responsibility in respect to the safekeeping of articles 
19 
stored in any customs warehouses, sheds, yards or premises. 
20 
"THE OPERATORS OF THE BONDED WAREHOUSES SHALL, FOR LEGITIMATE 
21 
PURPOSES, MAKE AVAILABLE AN INVENTORY OF ALL ARTICLES STORED 
22 
THEREIN. FAILURE TO DO SO IS A MANDATORY GROUND FOR THE REVOCATION 
23 
OF LICENSE TO OPERATE A BONDED WAREHOUSE." 
24 
SEC. 26. Section 1903 of the Tariff and Customs Code of the Philippines, as amended, is 
25 
hereby further amended to read as follows: 
26 
"SEC. 1903. Bonded Warehouses. - Application for the establishment of bonded warehouses 
27 
must be made in writing and filed with the Collector, describing the premises, the location, and 
28 
capacity of the same, the purpose for which the building is to be used, AND THE INDUSTRY 
29 
TO WHICH IT BELONGS. THE APPLICATION SHALL LIKEWISE BE ACCOMPANIED 
23 


I 
BY VERIFIED COPIES OF DOCUMENTS INDICATING THE OWNERSHIP AND THE 
2 
FINANCIAL CAPACITY OF THE BONDED WAREHOUSE. 
3 
"Upon receipt of such application, the Collector shall cause an examination of the premises, 
4 
with reference particularly to its location, construction and means provided for the safekeeping 
5 
of articles. THE COLLECTOR SHALL LIKEWISE DETERMINE THE OWNERSHIP OF 
6 
THE APPLICANT BONDED WAREHOUSE OR TO VERIFY IF OWNERS OF A BONDED 
7 
WAREHOUSE WHICH HAD BEEN CLOSED DUE TO ITS NON-COMPLIANCE WITH 
8 
CUSTOMS LAWS and REGULATIONS WHICH HAVE ANY INTEREST THEREIN. [i]If 
9 
THE APPLICATION IS found satisfactory, [he] THE COLLECTOR may authorize its 
10 
establishment, and accept a bond for its operation and maintenance. The operator of such bonded 
II 
warehouse shall pay an annual supervision fee in an amount to be fixed by the Commissioner. 
12 
The bonded warehouse officers and other employees thereof shall be regular customs employees 
13 
who shall be appointed in accordance with the Civil Service Law, rules and regulations . 
• 
14 
"THE PAID-UP CAPITAL AND NET ASSETS OF THE BONDED WAREHOUSE SHALL 
IS 
BE SET AT AN AMOUNT DETERMINED BY THE COMMISSIONER AS SUFFICIENT TO 
16 
COVER THE TAX AND DUTIES OF GOODS OF UNLIQUIDATED ENTRIES WHICH 
17 
SHALL BE STORED THEREIN AT ANY GIVEN TIME. OTHERWISE, THE APPLICATION 
18 
SHALL NOT BE GRANTED, AND AN AUTHORITY ALREADY GRANTED SHALL BE 
19 
REVOKED. 
20 
"THESE REQUIREMENTS SHALL LIKEWISE EXTEND TO REGISTERED LOCATORS 
21 
OPERATING UNDER THE CHARTERS OF THE PHILIPPINE ECONOMIC ZONE 
22 
AUTHORITY, THE SUBIC BAY METROPOLITAN AUTHORITY, AND OTHER 
23 
FREEPORTS AND ECOZONES." 
24 
SEC. 27. Section 1904 of the Tariff and Customs Code of the Philippines, as amended, is 
25 
hereby amended to read as follows: 
26 
"SEC. 1904. Irrevocable Domestic Letter of Credit or Bank Guarantee [or Warehousing 
27 
Bond]. - After articles declared in the entry for warehousing shall have been examined and the 
28 
duties, taxes and other charges shall have been determined, the Collector shall require from the 
29 
importer an irrevocable domestic letter of credit OR bank guarantee [or bond] equivalent to the 
24 


1 
amount of such duties, taxes and other charges conditioned upon the withdrawal of articles 
2 
within the period prescribed by Section nineteen hundred and eight of this Code and for payment 
• 
3 
of any duties, taxes and other charges to which the articles shall be then subject and upon 
4 
compliance with all legal requirements regarding their importation." 
5 
SEC. 28. Section 1905 of the Tariff and Customs Code of the Philippines, as amended, is 
6 
hereby further amended to read as follows: 
7 
"SEC. 1905. Discontinuance of Warehouses. -
The use of any warehouse may be 
8 
discontinued by the Collector at any time when conditions so warrant, or in the case of a private 
9 
warehouse, upon receipt of written request to that effect from the operator thereof of the 
10 
premises, provided all the requirements of the law and regulations have been complied with by 
11 
said operator. A LEGITIMATE INDUSTRY GROUP MAY LIKEWISE RECOMMEND TO 
12 
THE COLLECTOR THE DISCONTINUANCE OF THE BONDED WAREHOUSE ON 
13 
GROUNDS OF NON-COMPLIANCE WITH THE REQUIREMENTS OF LAW AND 
14 
REGULATIONS. 
When the dutiable' article is stored in such premises, the same must be 
15 
removed at the risk and expense of the operator and the premises shall not be relinquished, nor 
16 
discontinuance of its use authorized, until a careful examination of the account of the warehouse 
17 
shall have been made. Discontinuance of any warehouse shall be effective upon official notice 
18 
and approval thereof by the Collector." 
19 
SEC. 29. Section 1906 of the Tariff and Customs Code of the Philippines, as amended, is 
20 
hereby further amended to read as follows: 
21 
"SEC. 1906. Entry of Articles for Warehousing. - The entry of articles for warehousing shall 
22 
be in the required number of copies in the prescribed form, and shall be verified as in the entry of 
23 
the articles for consumption. No warehousing entry shall be accepted for any article if from the 
24 
entry, supporting documents and/or information such article is imported contrary to any law. 
25 
THE CUSTOMS OFFICER MAKING THE ENTRY SHALL BE RESPONSIBLE FOR 
26 
TRANSMITTING A COpy OF THE SAME TO THE DEPUTY COMMISSIONER FOR 
27 
AUDIT AND TRANSPARENCY." 
28 
SEC. 30. 
Section 1907 of the Tariff and Customs Code of the Philippines, as amended, is 
29 
hereby further amended to read as follows: 
25 


1 
"SEC. 1907. 
Withdrawal of Articles from Bonded Warehouse. - Articles entered under 
2 
irrevocable domestic letter of credit OR bank guarantee [or bond] may be withdrawn at any time 
3 
for consumption, for transportation to ahother port, for exportation or for delivery on board a 
4 
vessel or aircraft engaged in foreign trade for use on board such vessel or aircraft as sea stores or 
5 
aircraft stores after liquidation of the entry: PROVIDED, THAT PROOF IS SHOWN THAT 
6 
THE ORDER TO IMPORT THE SUBJECT ARTICLES HAS BEEN CANCELLED: 
7 
PROVIDED, FURTHER, THAT THE ARTICLES TO BE WITHDRAWN DO NOT AMOUNT 
8 
TO MORE THAN FIFTY PERCENT (50%) OF THE TOTAL INVENTORY OF THE 
9 
BONDED WAREHOUSE. The withdrawal must be made ONLY BY THE IMPORTER OF 
10 
THE ARTICLES BEING WITHDRAWN OR BY A REPRESENTATIVE [by a person or firm 
11 
duly authorized by the former,] whOSe> authority must appear in writing upon the face of the 
12 
withdrawal entry. 
13 
SEC. 31. Section 1908 of the Tariff and Customs Code of the Philippines, as amended, is 
14 
hereby further amended to read as follows: 
15 
"SEC. 1908. Limit to Period of Storage in Bonded Warehouse. - Articles duly entered for 
16 
warehousing may remain in bonded warehouses for a maximum period of [one year] SIX (6) 
17 
MONTHS, EXTENDIBLE FOR ANOTHER THREE (3) MONTHS from the time of RECEIPT 
18 
OF THE WAREHOUSE. Articles not withdrawn at the expiration of the prescribed period shall 
19 
be DEEMED ABANDONED AND SUBJECT TO DISPOSITION IN ACCORDANCE WITH 
20 
THE PROVISIONS OF THIS CODE. EMBROIDERY AND SHIPBUILDING INDUSTRIES 
21 
MAY STORE THEIR IMPORTS IN THE CUSTOMS BONDED WAREHOUSE FOR A 
22 
PERIOD OF TWENTY-FOUR (24) MONTHS." 
23 
"A DAILY RECORD OF ALL ENTRIES LIQUIDATED SHALL BE POSTED IN A 
24 
CONSPICUOUS PLACE IN THE MAIN ENTRANCE OF THE CUSTOMS HOUSE, 
25 
STATING THE NAME OF THE VESSEL OR AIRCRAFT, THE PORT FROM WHICH SHE 
26 
ARRIVED, THE DATE OF HER ARRIVAL, THE NAME OF THE IMPORTER, AND THE 
27 
SERIAL NUMBER OF THE DATE OF ENTRY. THE COLLECTOR MUST ALSO KEEP A 
28 
DAILY RECORD OF ALL ADDITIONAL DUTIES, TAXES AND OTHER CHARGES 
29 
FOUND UPON LIQUIDATION, AND SHALL PROMPTLY SEND NOTICE TO THE 
26 


1 
INTERESTED PARTIES." 
2 
THE LIQUIDATION OF WAREHOUSING ENTRIES SHALL BE MADE NOT MORE 
3 
THAN THREE (3) MONTHS FROM THE TIME OF RECEIPT OF THE WAREHOUSE. 
4 
SEC. 32. 
A new section to be known as Section 1910 is hereby inserted in Part 1, Title V, 
5 
Book II ofthe Tariff and Customs Code ofthe Philippines, as amended, to read as follows: 
6 
"SEC. 1910. 
ACTS DEEMED AS SMUGGLING PUNISHABLE UNDER SECTIONS 3601 
7 
AND 3602 OF THIS CODE. - THE FOLLOWING SHALL BE DEEMED AS ACTS OF 
8 
SMUGGLING WHICH SHALL BE PUNISHABLE UNDER SECTIONS 3601 AND 3602 OF 
9 
THIS CODE: 
10 
"(A) BREAKING OF CUSTOMS SEALS OR UNAUTHORIZED REMOVAL OF 
11 
ARTICLES FROM BONDED W AREHPUSES; 
12 
"(B) SUBMISSION OF INCORRECT OR FALSE INFORMATION BY THE BONDED 
13 
WAREHOUSE; 
14 
"(C) WAREHOUSING OF THE FOLLOWING SHIPMENTS: 
15 
"1. FINISHED ARTICLES, EXCEPT IN THE TEXTILE AND GARMENTS INDUSTRIES 
16 
AND SEMI-CONDUCTOR AND ELECTRONICS INDUSTRIES. - FINISHED ARTICLES, 
17 
AS 
USED 
IN 
THIS 
SECTION, 
SHALL 
REFER 
TO 
SCIENTIFICALLY 
OR 
18 
TECHNOLOGICALLY PROCESSED ARTICLES IN FINAL STATE SUCH THAT NO 
19 
OTHER PRODUCT CAN BE MANUFACTURED THEREFROM UNLESS ITS PRINCIPAL 
• 
20 
CHARACTER IS FIRST DESTROYED. 
21 
"2. ARTICLES NOT DECLARED IN THE IMPORT ENTRIES OR IN EXCESS OF THE 
22 
VOLUME AND QUANTITY ALLOWED UNDER THE LICENSE OF THE CUSTOMS 
23 
BONDED WAREHOUSE. 
24 
"3. PROHIBITED ARTICLES AND REGULATED ARTICLES WITHOUT THE 
25 
CORRESPONDING CLEARANCE AND/OR IMPORT AUTHORITY DULY ISSUED BY A 
26 
COMPETENT AUTHORITY. 
27 
"(D) 
UNAUTHORIZED 
TRANSFERS 
FROM 
THE 
CUSTOMS 
ZONE 
OF 
28 
WAREHOUSING ARTICLES IMPORTED BY THE BONDED WAREHOUSE. 
27 


1 
"(E) UNAUTHORIZED WITHDRAWAL FROM A BONDED WAREHOUSE WITHOUT 
2 
PAYMENT OF DUTIES AND TAXES. 
3 
"(F) EXCEPT FOR THE GARMENTS AND THE SHIPBUIDING INDUSTRIES, 
4 
FAILURE TO LIQUIDATE IMPORTED ARTICLES WITHDRAWN FROM THE BONDED 
5 
WAREHOUSE WITHIN SIX (6) MONTHS, EXTENDIBLE FOR ANOTHER THREE (3) 
6 
MONTHS, FROM ISSUANCE BY THE BUREAU OF THE CERTIFICATE OF LOADING IN 
7 
A VESSEL DESTINED TO A FOREIGN PORT." 
8 
"(G) FAILURE TO PAY DUT\,ES AND TAXES ON THE REMAINING (NOT 
9 
EXPORTED) IMPORTED MATERIALS WITHIN THIRTY (30) DAYS FROM LAPSE OF 
10 
THE PERIOD FOR RE-EXPORTATION. 
11 
"IMPORTATIONS MADE IN VIOLATION OF THE ABOVE PROVISIONS IN THIS 
12 
SECTION SHALL IPSO FACTO BE FORFEITED IN FAVOR OF THE GOVERNMENT TO 
13 
BE DISPOSED OF PURSUANT TO THE PROVISIONS OF THIS CODE." 
14 
SEC. 33. A new section to be known as Section 1911 is hereby inserted in Part 1, Title V, 
15 
Book II ofthe Tariff and Customs Code of the Philippines, as amended, to read as follows: 
16 
"SEC. 
1911. 
VERIFICATION 
OF RECORDS KEPT IN CUSTOMS BONDED 
17 
WAREHOUSES. - A CAREFUL ACCOUNT SHALL BE KEPT BY THE COLLECTOR OF 
18 
ALL ARTICLES DELIVERED TO ANY BONDED WAREHOUSE, AND A SWORN 
19 
MONTHLY RETURN, DULY VERIFIED BY THE CUSTOMS OFFICIAL IN CHARGE, 
20 
SHALL BE MADE BY THE BONDED WAREHOUSE CONTAINING A DETAILED 
21 
STATEMENT OF ALL IMPORTED ARTICLES STORED THEREIN. 
22 
"ALL DOCUMENTS, BOOKS AND RECORDS OF ACCOUNTS CONCERNING THE 
23 
OPERATION OF ANY BONDED WAREHOUSE SHALL, UPON DEMAND OF THE 
24 
SECRETARY OF FINANCE, BE MADE AVAILABLE TO THE COLLECTOR OR HIS 
25 
REPRESENTATIVE OR THE INDUSTRY ASSOCIATION OR INDUSTRY SECTOR 
26 
AFFECTED AND SOUGHT TO BE SERVICED BY THE BONDED WAREHOUSE, FOR 
27 
PURPOSES OF EXAMINATION AND/OR AUDIT." 
28 
SEC. 34. Section 2001 of the Tariff and Customs Code of the Philippines, as amended, is 
29 
hereby further amended to read as follows: 
28 


1 
"SEC. 2001. Establishment of Bonded Manufacturing Warehouses. -
All articles 
2 
manufactured in whole or in part of imported materials, and intended for exportation without 
3 
being charged with duty, shall, in order to be so manufactured and exported, be made and 
4 
manufactured in manufacturing warehouses under such rules and regulations as the 
5 
Commissioner of Customs with the approval of the Secretary of Finance, shall prescribe: 
6 
Provided, That the manufacturer of such articles shall first file a satisfactory bond for the faithful 
7 
observance of all laws, rules and regulations applicable thereto: PROVIDED, FURTHER, THAT 
8 
BONDED MANUFACTURING WAREHOUSES SHALL LIKEWISE BE SUBJECT TO THE 
9 
PROVISIONS UNDER TITLE V, PART 1 OF THIS CODE, AS AMENDED: PROVIDED, 
10 
FINALLY, THAT THESE REQUIREMENTS SHALL EXTEND TO REGISTERED 
11 
LOCATORS OPERATING UNDER THE CHARTERS OF THE PHILIPPINE ECONOMIC 
12 
ZONE AUTHORITY (PEZA), THE SUBIC BAY METROPOLITAN AUTHORITY (SBMA), 
13 
AND OTHER FREEPORTS AND ECOZONES." 
14 
SEC. 35. Section 2002 of the Tariff and Customs Code of the Philippines, as amended, is 
15 
hereby further amended to read as follows: 
16 
"SEC. 2002. Exemptionfrom Duty. -
17 
a. Whenever articles manufactured in any bonded manufacturing warehouse established under 
18 
the provisions of the preceding section shall be exported directly therefrom or shall be duly laden 
19 
for immediate exportation under the supervision of the proper official, such articles shall be 
20 
exempt from duty. 
21 
b. Any imported material used in the manufacture of such articles, and any package, covering, 
22 
brand and label used in putting up the same may, under the regulation prescribed by the 
23 
Commissioner, with the approval of the Secretary of Finance, be conveyed without the payment 
24 
of duty into any bonded manufacturing warehouse, and imported articles may, under the 
25 
aforesaid regulations, be transferred without the payment of duty from any bonded warehouse 
26 
into any 
bonded manufacturing warehouse, or to duly accredited sub-contractors of 
27 
manufacturers who shall process the same into finished products for exports and deliver such 
28 
finished products back to the bonded manufacturing warehouse, therefrom to be exported; but 
29 
this privilege shall not be held to apply to implements, machinery or apparatus to be used in the 
29 


1 
construction or repair of any bonded manufacturing warehouse: PROVIDED, HOWEVER, 
2 
THAT THE IMPORTED MATERIAL TRANSFERRED OR CONVEYED INTO ANY 
3 
BONDED WAREHOUSE OR DIRECTLY INTO ANY MANUFACTURING BONDED 
4 
WAREHOUSE, PRIOR TO ITS UNLOADING, SO AS NOT TO BE SUBJECT TO THE 
5 
PAYMENT OF DUTY, SHALL BE SO MARKED, INDICATED AND IDENTIFIED WITH 
6 
THE 
LETTERS 
"CBW" 
PRINTED 
BOLDL Y, 
LEGIBLY, 
INDELIBLY, 
AND 
7 
PERMANENTLY ON THE COVERING OF THE PACKAGE OR SACK OF THE 
8 
IMPORTED 
MATERIAL, 
SUBJECT 
TO 
THE 
LIMITATIONS 
MENTIONED 
IN 
9 
SUBPARAGRAPHS A, B, C, D AND H OF PARAGRAPH 3, SECTION 303 OF THIS 
10 
CODE: Provided, {however] FURTHER, That the materials transferred or conveyed into any 
11 
bonded manufacturing warehouse shall be used in the manufacture of articles for exportation 
12 
within a period of [nine (9) months] THIRTY (30) DAYS from date of such transfer or 
13 
conveyance into the bonded manufacturing warehouse, which period may for sufficient reasons 
14 
be further extended for not more than 
[three (3) months] THIRTY (30) DAYS by the 
15 
Commissioner. Materials not used in the manufacture of articles for exportation within the 
16 
prescribed period shall pay the corresponding duties REFUNDABLE UPON PROOF OF 
17 
LIQUIDATION OF THE IMPORTED ARTICLES 
AFTER EXPORTATION: Provided, 
18 
ffurther] FINALLY, That the operation of embroidery and apparel firms shall continue to be 
19 
governed by Republic Act Numbered Thirty-one hundred and thirty-seven." 
20 
SEC. 36. Section 2003 of the Tariff and Customs Code of the Philippines, as amended, is 
21 
hereby further amended to read as follows: 
22 
"SEC. 2003. 
Procedure for Withdrawal. -
Articles received into such bonded 
23 
manufacturing warehouse or articles manufactured therein may be withdrawn or removed 
24 
therefrom for direct shipment and for immediate exportation in bond under the supervision of the 
• 
25 
proper customs officer, who shall certify to such shipment and exportation, or lading for 
26 
immediate exportation as the case may be, describing the articles by their mark or otherwise, the 
27 
quantity, the date of exportation, in the name of the vessel or aircraft: Provided, That the waste 
28 
and by-products incident to the process of manufacture in said bonded warehouse may be 
29 
withdrawn for domestic consumption upon payment of duty equal to the duty which would be 
30 


1 
assessed and collected pursuant to law if such waste or by-products were imported from a 
2 
foreign country: Provided, further, That all waste materials may be [disposed] DESTROYED 
3 
under government supervision. All labor performed and services rendered under these provisions 
4 
shall be under the supervision of a proper customs official and at the expense of the 
5 
manufacturer. 
6 
"VIOLATION OF THE FOREGOING PROVISION SHALL BE DEEMED AS 
7 
SMUGGLING WHICH SHALL BE PUNISHABLE UNDER SECTIONS 3601 AND 3602 OF 
8 
THIS CODE. 
9 
"THE ARTICLES SUBJECT OF' THE VIOLATION SHALL IPSO FACTO BE 
10 
FORFEITED IN FAVOR OF THE GOVERNMENT TO BE DISPOSED OF PURSUANT TO 
11 
THE PROVISIONS OF THIS CODE." 
12 
SEC. 37. Section 2005 of the Tariff and Customs Code of the Philippines, as amended, is 
13 
hereby further amended to read as follows: 
• 
14 
"SEC. 2005. Bonded Smelting Warehouses. - The plants of manufacturers engaged in 
15 
smelting or refining, or both, of ores and crude metals, may, upon the filing of CASH bonds, be 
16 
designated as bonded smelting warehouses. Ores or crude metals may be removed from the 
17 
vessel or aircraft in which imported, or from a bonded warehouse, into a bonded smelting 
18 
warehouse without the payment of duties thereon, and there smelted or refined, or both, together 
19 
with ores or crude metals of home or foreign productions: Provided, That the CASH BOND 
20 
SHALL BE IN a sum equal in amount to the regular duties which would have been payable on 
21 
such ores and crude metals if entered for consumption at the time of their importation, and the 
22 
several charges against such bond shall be cancelled upon the exportation or delivery to bonded 
23 
manufacturing warehouse established under section twenty hundred and one hereof of a quantity 
24 
of the same kind of metal equal to the quantity of metal contained in such ores or crude metals, 
25 
due allowance being made of the smelter wastage as ascertained from time by the Commissioner: 
26 
Provided, further, That the said metals so producible or any portion thereof, may be withdrawn 
27 
for RE-EXPORTATION UPON PROOF THAT THE ORDER TO IMPORT THE SUBJECT 
28 
METALS HAS BEEN CANCELLED AND THAT THE METALS TO BE WITHDRAWN DO 
29 
NOT AMOUNT TO MORE THAN FIFTY PERCENT (50%) OF THE TOTAL INVENTORY 
31 


1 
OF THE BONDED SMELTING WAREHOUSE: Provided, further, That on the arrival of the 
2 
ores or crude metals at such establishments they shall be sampled and assayed according to 
3 
commercial methods under the supervision of proper government officials: Provided, further, 
4 
That all labor performed and services rendered pursuant to this section shall be under the 
5 
supervision of the proper customs official and at the expenses of the manufacturer: Provided, 
6 
further, That all regulations for carrying out the provisions of this section shall be prescribed by 
7 
the Commissioner with the approval of the department head: Provided, FURTHER, That the 
8 
several charges against the bond of any smelting warehouse established under the provisions of 
9 
this section may be cancelled upon the exportation or transfer to a bonded manufacturing 
10 
warehouse from any bonded smelting warehouse established under this section of a quantity of 
11 
the same kind of metal, in excess of that covered by open bonds, equal to the amount of metal 
12 
producible from the smelting or refining, or both, of the dutiable metal contained in the imported 
13 
ores or crude metals, due allowance being made of the smelter wastage as ascertained from time 
14 
to time by the Commissioner with the approval of the department head: PROVIDED, FINALLY, 
IS 
THAT BONDED SMELTING WAREHOUSES SHALL LIKEWISE BE SUBJECT TO THE 
16 
PROVISIONS UNDER TITLE V, PART 1 OF THIS CODE, AS AMENDED." 
17 
SEC. 38. 
A new section to be knoyvn as Section 2007 is hereby inserted in the Tariff and 
18 
Customs Code of the Philippines, as amended, to read as follows: 
19 
"SEC. 2007. BUREAU OF CUSTOMS AND BUREAU OF INTERNAL REVENUE DIRECT 
20 
RECORD LINKAGE. -
TO ASSURE THE PROPER COORDINATION OF THEIR 
21 
RESPECTIVE AUDIT AS WELL AS IN THE INVESTIGATION AND PROSECUTION OF 
22 
TAX AND DUTY RELATED CASES: A REAL-TIME LINKAGE VIA COMPUTER OF THE 
23 
RECORDS OF BOTH THE BUREAU OF CUSTOMS AND THE BUREAU OF INTERNAL 
24 
REVENUE SHALL BE IMMEDIATELY MADE. 
25 
SEC. 39. Section 2317 of the Tariff and Customs Code of the Philippines, as amended, is 
26 
hereby further amended to read as follows: 
27 
"SEC. 2317. 
Government's Right of Compulsory Acquisition. - In order to protect the 
28 
government revenues against the undervaluation of goods subject to ad valorem duty, the 
29 
Commissioner of Customs may acquire imported goods under question for a price equal to their 
32 


1 
declared customs value plus any duties already paid on the goods, payment for which shall be 
2 
made within ten (10) working days from issuance of a warrant signed by the Commissioner of 
3 
Customs for the acquisition of such goods. 
4 
"ANY INDUSTRY ASSOCIATION OR INDUSTRY SECTOR MAY LIKEWISE POST A 
5 
LETTER OF CREDIT, SURETY BOND OR SOME OTHER APPROPRIATE INSTRUMENT 
6 
IN FAVOR OF THE BUREAU OF CUSTOMS IN THE AMOUNT EQUAL TO TWO 
7 
HUNDRED PERCENT (200%) OF THE DECLARED CUSTOMS VALUE OF THE GOODS 
8 
UNDER QUESTION, PLUS ANY DUTIES, TAXES, FEES OR OTHER CHARGES WHICH 
9 
HAVE ALREADY BEEN PAID THEREON, IN WHICH CASE THE COMMISSIONER OF 
10 
CUSTOMS SHALL ACQUIRE SUCH IMPORTED GOODS, PAYMENT FOR WHICH 
11 
SHALL BE MADE WITHIN TEN (1") WORKING DAYS FROM THE ISSUANCE OF A 
12 
WARRANT SIGNED BY THE COMMISSIONER OF CUSTOMS FOR THE ACQUISITION 
13 
OF SUCH GOODS: PROVIDED, THAT THE PROVISIONS OF SECTION 201 OF THIS 
14 
CODE SHALL APPLY IN THE CASE OF SURETY BONDS AND SURETY COMPANIES. 
15 
"An importer who is dissatisfied with a decision of the Commissioner of Customs pertaining 
16 
to this section may, within twenty (20) working days after the date on which notice of the 
17 
decision is given, appeal to the Secretary of Finance and thereafter if still dissatisfied, to the 
18 
Court of Tax Appeals as provided for in Section 2402 of the Tariff and Customs Code of the 
19 
Philippines, as amended. 
20 
"Where no appeal is made by the importer, or upon reaffirmation of the Commissioner's 
21 
decision during the appeals process, the Bureau of Customs or its agent shall sell the acquired 
22 
goods pursuant to existing laws and, regulations. 
IN CASES WHERE COMPULSORY 
23 
ACQUISITION WAS INITIATED BY THE INDUSTRY ASSOCIATION OR INDUSTRY 
24 
SECTOR, THE COMMISSIONER SHALL CLAIM ON THE LETTER OF CREDIT, SURETY 
25 
BOND OR WHATEVER INSTRUMENT POSTED OR USED FOR THE PURPOSE AND 
26 
THEREUPON 
RELEASE 
THE 
ACQUIRED 
ARTICLES 
TO 
THE 
INDUSTRY 
27 
ASSOCIATION OR INDUSTRY SECTOR WHICH POSTED THE INSTRUMENT. 
28 
"Nothing in this Section limits or affects any other powers of the Bureau of Customs with 
29 
respect to the disposition of the goods or any liability of the importer or any other person with 
33 


I 
respect to an offense committed in the importation of the goods. 
2 
SEC. 40. Section 2401 of the Tariff and Customs Code of the Philippines, as amended, is 
3 
hereby further amended to read as follows: 
4 
"SEC. 240 I. Supervision and Control Over Criminal and Civil Proceedings. - Civil and 
5 
criminal actions and proceedings instituted in behalf of the govermnent under the authority of 
6 
this Code or other law enforced by the Bureau shall be brought in the name of the government 
7 
[of the Philippines) and shall be [conducted) INVESTIGATED, PROSECUTED AND 
8 
HANDLED EXCLUSIVELY by [customs officers) LA WYERS OF THE BUREAU OF 
9 
CUSTOMS, [but) AND no civil or criminal action for the recovery of duties or the enforcement 
10 
of any fine, penalty or forfeiture under this Code shall be filed in court without the approval of 
II 
the Commissioner. 
FOR THIS PURPOSE, THE BUREAU OF CUSTOMS SHALL BE 
12 
PRIMARILY 
AND 
EXCLUSIVELY 
RESPONSIBLE 
FOR 
THE 
CONDUCT 
OF 
13 
PRELIMINARY INVESTIGATION AND PROSECUTION OF CUSTOMS-RELATED 
14 
CASES, AS WELL AS THE PROSECUTION AND DEFENSE OF CUSTOMS-RELATED 
15 
CIVIL CASES, TO THE EXCLUSION OF ALL OTHER GOVERNMENT AGENCIES 
16 
INVOLVED THEREIN. 
THE BUREAU OF CUSTOMS SHALL HAVE EXCLUSIVE 
17 
AUTHORITY TO FILE ANY CRIMINAL OR CIVIL CASE DIRECTLY WITH THE 
18 
PROPER COURT FOR PROSECUTION OF VIOLATORS OF THE TARIFF AND 
19 
CUSTOMS CODE, AND THE COLLeCTION, RECOVERY OR ENFORCEMENT OF ANY 
20 
FINE, PENALTY OR FORFEITURE UNDER THE CODE." 
21 
SEC. 41. Section 2503 of the Tariff and Customs Code of the Philippines, as amended, is 
22 
hereby further amended to read as follows: 
23 
"SEC. 2503. Undervaluation, Misclassification and Misdeclaration in Entry. - When the 
24 
dutiable value of the imported articles shall be so declared and entered that the duties, based on 
25 
the declaration of the importer on the face of the entry would be less by ten percent (10%) than 
26 
should be legally collected, or when the imported articles shall be so described and entered that 
27 
the duties based on the importer's description on the face of the entry would be less by ten 
28 
percent (10%) than should be legally collected based on the tariff classification, or when the 
29 
dutiable weight, measurement or quantity of imported articles is found upon examination to 
34 


1 
exceed by ten percent (10%) or more than the entered weight, measurement or quantity, a 
2 
surcharge shall be collected from the importer in an amount of not less than the difference 
3 
between the full duty and the estimated duty based upon the declaration of the importer, nor 
4 
more than twice of such difference: Provided, That an undervaluation, MISCLASSIFICATION, 
5 
misdeclaration in weight, measurement or quantity of more than thirty percent (30%) between 
6 
the value, weight, measurement or quantity declared in the entry, and the actual value, weight, 
7 
quantity, or measurement shall constitute a prima facie evidence of fraud penalized under 
8 
Section 2530 AND SECTION 3q02 of this Code: 
Provided, further, 
That any 
9 
UNDERVALUED, misdeclared, MISCLASSIFIED or undeclared imported articles/items found 
10 
upon examination shall ipso facto be forfeited in favor of the Govermnent to be disposed of 
11 
pursuant to the provisions of this Code: PROVIDED, FURTHERMORE, THAT THE LICENSE, 
12 
PERMIT AND THE BUSINESS NAME OF THE SUBJECT IMPORTER MAY BE 
13 
REVOKED AFTER DUE PROCESS. 
14 
"When the undervaluation, misdescription, misclassification or misdeclaration in the import 
15 
entry is intentional, the importer shall be subject to penal provisions under Section 3602 of this 
16 
Code." 
17 
SEC. 42. A new section to be known as Section 2503-A is hereby inserted in Part 4, Title 
18 
VI, Book II of the Tariff and Customs Code of the Philippines, as amended, to read as follows: 
19 
"SEC. 2503-A. NON-IMPOSITION OF SURCHARGE. -
EXEMPTION FROM THE 
20 
SURCHARGE SHALL BE ALLOWED ONLY IN CASES WHEN THE DECLARED OR 
21 
ENTERED CLASSIFICATION IS BASED ON RULINGS BY THE TARIFF COMMISSION 
22 
PURSUANT TO SUBSECTION (A) OF SECTION 1313 OF THIS CODE: 
PROVIDED, 
23 
THAT THE DESCRIPTION OF tHE ARTICLE IS 
FOUND 
CORRECT UPON 
24 
EXAMINATION: 
PROVIDED, FINALLY, THAT BASED ON THE RESULT OF THE 
25 
EXAMINATION, THE ARTICLE IS FOUND ESSENTIALLY THE SAME AS THAT 
26 
DESCRIBED IN THE RULING." 
27 
"SEC. 43. Section 2601 of the Tariff and Customs Code of the Philippines, as amended, is 
28 
hereby further amended to read as follows: 
35 


• 
, 
1 
"SEC. 2601. Property Subject to [Sale} DISPOSITION - Property in customs custody shall 
2 
be subject to [sale] DISPOSITION under the conditions hereinafter provided: 
3 
"a. Abandoned articles; 
4 
"b. Articles entered under warehousing entry not withdrawn nor the duties and taxes paid 
5 
thereon within the period prescribed under Sections 1908 ofthis Code; 
6 
"c. Seized property, other than contraband, after liability to sale shall have been established by 
7 
proper administrative [or judicial] proceedings in conformity with the provision of this Code; 
8 
and 
9 
"d. Any article subject to a valid lien for customs duties, taxes or other charges collectible by 
10 
the Bureau of Customs, after the expiration of the period allowed for the satisfaction of the 
11 
same." 
12 
SEC. 44. Section 2602 of the Tariff and Customs Code of the Philippines, as amended, is 
13 
hereby further amended to read as follows: 
14 
"SEC. 2602. [Place of Sale or Other Disposition of Property} MODES OF DISPOSITION 
15 
OF PROPERTY UNDER CUSTOMS CUSTODY. - Property within the purview of this part of 
16 
this Code shall be [sold, or otherwise disposed of, upon the order of the Collector of the port 
17 
where the property is found, unless the Commissioner shall direct its conveyance for such 
18 
purpose to some other port.] DISPOSED OF THROUGH THE FOLLOWING MODES OF 
19 
DISPOSITION: 
20 
"(A) WHEN SUBJECT PROPERTY HAS EXPORT POTENTIAL, THE SAME SHALL BE 
21 
EXPORTED THROUGH A GOVERNMENT ENTITY WHICH SHALL BE DESIGNATED 
22 
TO PERFORM SAID TASK; 
23 
"(B) WHEN THE PROPERTY IS NOT EXPORTED, AND UPON RECOMMENDATION 
24 
OF THE COMMISSIONER OF CUSTOMS, THE SECRETARY OF FINANCE MAY 
25 
AUTHORIZE THE OFFICIAL USE OF THE ARTICLES TO PROMOTE THE INTENSIVE 
26 
COLLECTION OF TAXES AND/OR TO HELP PREVENT OR SUPPRESS SMUGGLING 
27 
AND OTHER FRAUDS UPON THE CUSTOMS; 
. 
28 
"(C) WHEN THE ARTICLE IS NOT SUITABLE FOR EXPORTATION OR FOR USE 
29 
AGAINST SMUGGLING OR OTHER FRAUDS UPON CUSTOMS, THEN IT MAY BE 
36 


• 
1 
CHANNELED TO THE OFFICIAL USE OF OTHER OFFICES OF THE NATIONAL 
2 
GOVERNMENT; AND 
3 
"(D) IF THE ARTICLE IS SUITABLE FOR SHELTER OR CONSISTS OF FOODSTUFFS 
4 
OR CLOTHING MATERIALS, THEN THAT ARTICLE MAY BE GIVEN TO THE 
5 
APPROPRIATE GOVERNMENT AGENCY: PROVIDED, 
THAT THIS AGENCY USES 
• 
6 
THIS ONLY FOR OFFICIAL PURPOSE, OR FOR CHARITY. 
7 
"THE COST OF EXPORTATION OF SUBJECT PROPERTY UNDER THIS SECTION, 
8 
INCLUDING ALL ATTENDANT COSTS THERETO, SHALL BE SHOULDERED BY THE 
9 
IMPORTER/CONSIGNEE WHO UNLA WFULL Y BROUGHT IN THE IMPORTED 
10 
ARTICLE, AND/OR THE BROKER THEREOF, AS THE CASE MAY BE; WHEN BOTH 
11 
THE IMPORTER/CONSIGNEE WHO UNLAWFULLY BROUGHT IN THE IMPORTED 
12 
ARTICLE AND THE BROKER CAN NOT BE LOCATED THEN THE GOVERNMENT 
13 
ENTITY WHICH IS DESIGNATED TO EXPORT SUBJECT PROPERTY SHALL 
14 
SHOULDER THE COST OF EXPORTATION: 
PROVIDED, THAT ARTICLES TO BE 
15 
EXPORTED UNDER THIS SECTION SHALL BE TRANSFERRED BY THE BUREAU OF 
16 
CUSTOMS TO THE GOVERNMENT ENTITY THAT IS MANDATED TO EXPORT THE 
17 
ARTICLES WITHIN FIFTEEN (15) DAYS FROM THE TIME THE FORFEITURE HAS 
18 
BECOME FINAL AND EXECUTORY: PROVIDED, FURTHER, THAT ARTICLES THAT 
19 
ARE CHANNELED OR AUTHORIZED FOR OFFICIAL USE OR FOR CHARITABLE 
20 
PURPOSES BY GOVERNMENT ENTITIES SHALL NOT BE SOLD NOR EXCHANGED IN 
21 
ANY MANNER WHATSOEVER FOR OTHER ARTICLES: PROVIDED, FURTHERMORE, 
22 
THAT THE COST OF HANDLING, STORAGE, TRANSPORTATION AND OTHER 
23 
CHARGES INCIDENTAL TO THE UPKEEP AND TRANSPORTATION OF SUBJECT 
24 
ARTICLE SHALL BE BORNE BY THE RECIPIENT GOVERNMENT AGENCY: 
• 
25 
PROVIDED, 
FINALLY, THAT IF SUBJECT ARTICLE CANNOT BE EXPORTED 
26 
THROUGH THE GOVERNMENT ENTITY DESIGNATED FOR THE PURPOSE OR IS NOT 
27 
SUITABLE EITHER FOR OFFICIAL USE OR CHARITY, THE SAME SHALL BE BURNED 
28 
OR DESTROYED IN SUCH MANNER AS THE CASE MAY REQUIRE AS TO RENDER 
29 
THEM ABSOLUTELY WORTHLESS, IN THE PRESENCE OF A REPRESENTATIVE 
37 


"' 
1 
EACH FROM THE COMMISSION ON AUDIT, THE DEPARTMENT OF JUSTICE, THE 
2 
BUREAU OF CUSTOMS, AND FROM THE PRIVATE SECTOR." 
3 
SEC. 45. 
Section 2603 of the Tariff and Customs Code of the Philippines, as amended, is 
4 
hereby further amended to read as follows: 
5 
"SEC. 2603. 
{Mode of Sale} DISPOSITION OF PROCEEDS IN CASE OF 
6 
EXPORTATION. - [In the absence of any special provision, subject to the provisions of Section 
7 
2601 above provided, property subject to sale by the customs authorities shall be sold at public 
8 
auction within thirty (30) days after ten (10) days notice of such sale shall have been 
9 
conspicuously posted at the port and such other advertisement as may appear to the Collector to 
10 
be advisable in the particular case.] THE FOLLOWING CHARGES SHALL BE PAID FROM 
11 
THE PROCEEDS OF THE EXPORTATION OF ARTICLES WITHIN THE PURVIEW OF 
12 
THIS PART OF THIS CODE: 
13 
"(A) EXPORTATION EXPENSES INCURRED BY THE GOVERNMENT ENTITY 
14 
DESIGNATED FOR THE PURPOSE; 
15 
"(B) TAXES AND OTHER CHARGES, AS THE CASE MAY BE, DUE THE 
16 
GOVERNMENT; 
17 
"(C) STORAGE CHARGES; 
18 
"(D) ARRASTRE CHARGES; AND 
19 
"(E) FREIGHT, LIGHTERAGE AND OTHER EXPENSES INCIDENTAL TO THE 
20 
EXPORTATION." 
21 
SEC. 46. 
Section 2604 of the Tariff and Customs Code of the Philippines, as amended, is 
22 
hereby further amended to read as follows: 
23 
"SEC. 2604. 
{Disqualification to Participate in Auction Sale} DISPOSITION OF 
24 
SURPLUS FROM THE PROCEEDS OF EXPORTATION OF PROPERTY WITHIN THE 
25 
PURVIEW OF THIS PART OF THIS CODE. - [No customs official or employee shall be 
26 
allowed to bid directly or indirectly, in any customs auction.] ANY SURPLUS REMAINING 
27 
AFTER THE SATISFACTION OF ALL LAWFUL CHARGES AS PROVIDED FOR IN 
28 
SECTION 2603 OF THIS CODE SHALL BE DEPOSITED IN A SPECIAL TRUST FUND 
29 
WHICH SHALL BE USED SOLELY FOR THE PURPOSE OF FINANCING THE 
38 


I 
COMPULSORY ACQUISITION OF IMPORTED GOODS BY THE GOVERNMENT AS 
2 
PROVIDED FOR IN SECTION 2317 OF THIS CODE." 
• 
3 
SEC. 47. Section 2607 of the Tariff and Customs Code of the Philippines, as amended, is 
4 
hereby further amended to read as follows: 
5 
"SEC. 2607. Disposition of Articles Liable to Deterioration. - Perishable articles shall be 
6 
deposited in any appropriate bonded warehouse; and, if not immediately entered for export or for 
7 
transportation from the vessel or aircraft in which imported or entered for consumption and the 
8 
duties and the taxes paid thereon, such articles SHALL [may] be sold at auction [,after such 
9 
public notice, not exceeding three days,) as the necessities of the case permit. 
10 
"When seizure shall be made of property which, in the opinion of the Collector, is liable to 
11 
perish or be wasted or to depreciate greatly in value by keeping, or which cannot be kept without 
12 
great disproportionate expense, whether such property consists of live animals or of any article, 
13 
the appraiser shall so certifY his appraisal, the Collector SHALL [may) proceed to advertise and 
14 
sell the same at auction, upon notice as lie shall deem to be reasonable. 
IS 
"The same disposition SHALL [may) be made of any warehoused article when in the opinion 
16 
of the Collector it is likely that the cost of depreciation, damage, leakage or other causes, may so 
17 
reduce its value as to be insufficient to pay the duties, taxes and other charges thereon, if it 
18 
should be permitted to be so kept and be subjected to sale in the usual course. 
19 
"PROVIDED, 
THAT IN 
ALL CASES 
INVOLVING ARTICLES 
LIABLE TO 
20 
DETERIORATION, THE DETERMINATION THEREON SHALL BE EXCLUSIVE TO THE 
21 
COLLECTOR AND SHALL BE FINAL ON THE MATTER: PROVIDED, FURTHER, THAT 
22 
THE AUCTION SALE SHALL BE HELD NOT LATER THAN TWO (2) DAYS AFTER THE 
23 
PUBLIC NOTICE SET BY THE COLLECTOR." 
24 
SEC. 48. Section 2610 of the Tariff and Customs Code of the Philippines, as amended, is 
25 
hereby further amended to read as follows: 
26 
"SEC. 2610. Disposition of Unsold Articles of Want of Bidders. - Articles subject to sale at 
27 
public auction by customs authorities shall be sold at a price not less than the wholesale value 
28 
price in the domestic market of these or similar articles in the usual wholesale quantities and in 
39 


I 
the ordinary course of trade as determined in accordance with section twenty-three hundred and 
2 
five ofthis code. 
3 
"When any article remains unsold in 'at least two public biddings for want of bidders or for 
4 
lack of an acceptable bid, and the article is perishable and/or suitable for official use, then the 
5 
Collector shall report the matter immediately to the Commissioner of Customs who SHALL 
6 
[may, subject to the approval of the Secretary of Finance,] authorize the official use of that 
7 
article by the Bureau of Customs to promote the intensive collection of taxes and/or to help 
8 
prevent or suppress smuggling and other frauds upon the Customs, and if the article is not 
9 
suitable for such use, then it may be channeled to the official use of other offices of the National 
10 
Government AS THE COMMISSIONER OF CUSTOMS MAY DETERMINE. If the article is 
II 
suitable for shelter or consists of foodMuffs, clothing materials or medicines then that article 
12 
shall be given to government charitable institutions through the Department of Social 
13 
WELFARE [Services] and Development. AGRICULTURAL PRODUCTS SHALL BE GIVEN 
14 
TO THE DEPARTMENT OF AGRICULTURE FOR PROPER DISPOSITION. 
15 
"If the article offered for sale is not suitable either for official use or charity, then the same 
16 
may be re-exported as government property, through the Department of Trade AND INDUSTRY 
17 
or any other government entity through barter or sale. If the article cannot be disposed of as 
18 
provided above, the Collector shall report the matter immediately to the Commissioner who 
19 
SHALL [may, subject to the approval of the Secretary of Finance] dispose of the article to the 
20 
best advantage of the government in a negotiated private sale which shall be consnmmated in the 
21 
presence of a representative of the Commission of Audit., in the manner provide for by this 
22 
Code." 
23 
SEC. 49. Section 2612 of the Tariff and Customs Code of the Philippines, as amended, is 
24 
hereby further amended to read as follows: 
25 
"SEC. 2612. Disposition a/Smuggled Articles. -
26 
"Smuggled articles, after liability to seizure or forfeiture shall have been established by proper 
27 
administrative [or judicial] proceedings in conformity with the provisions of this Code, shall be 
28 
disposed of as provided for in section twenty-six hundred and ten: PROVIDED, THAT 
29 
SENSITIVE ARTICLES SO CONSIDERED BY THE PHILIPPINES UNDER LAWS, 
40 


I 
REGULATIONS OR EXISTING INTERNATIONAL AGREEMENTS SHALL BE DISPOSED 
2 
ACCORDING TO THE RECOMMENDATIONS, RULES OR ORDERS SET BY THE 
3 
APPROPRIATE REGULATORY AGENCY: Provided, FURTHER, That articles whose 
4 
importations is prohibited under Section One hundred two sub-paragraphs b, c, d, e and j shall 
5 
upon order to the Collector in writing, be burned or destroyed, in such manner as the case may 
6 
require as to render then absolutely worthless, in the presence of a representative each from the 
7 
Commission on Audit, Ministry of Justice, Bureau of Customs, and if possible, any 
8 
representative ofthe private sector. 
9 
SEC. 50. Section 3513, Book II, Title VII, Part II of P.D. 1464, otherwise known as the 
10 
Tariff and Customs Code of the Philippines, is hereby amended to read as follows: 
11 
"SEC. 3513. Reward to Persons Instrumental in the Discovery and Seizure of or Recovery of 
12 
Revenue on Smuggled Goods and Successful Prosecution of Offenders. - The provisions of 
13 
general and special laws to the contrary notwithstanding, a cash reward equivalent to twenty per 
14 
centum (20%) of the [fair market value of] REVENUE RECOVERED FROM the [smuggled 
15 
and) SEIZED OR confiscated goods shall be given to the officers and men and informers who 
16 
are instrumental in the discovery and seizure of such goods [in accordance with the rules and 
17 
regulations to be issued by the Secretary of Finance.): PROVIDED, THAT IN CASE OF 
18 
SUCCESSFUL PROSECUTION OF SMUGGLERS OR SEIZURE AND FORFEITURE 
19 
CASES, THE AMOUNT EQUIVALE/'fT TO TEN PER CENTUM (10%) THEREOF SHALL 
20 
BE GIVEN TO BUREAU OF CUSTOMS LAWYERIS WHO ACTIVELY PROSECUTED 
21 
THE CASE THAT RESULTED IN THE RECOVERY OF REVENUE, SURCHARGES, AND 
22 
FEES, OR IMPOSITION OF FINE OR PENALTY OR OFFER OF COMPROMISE BY THE 
23 
OFFENDER, OR CONVICTION OF THE OFFENDER: PROVIDED, FURTHER, THAT IN 
24 
CASE OF CONVICTION, WHERE THE PENALTY IS INCAPABLE OF PECUNIARY 
25 
ESTIMATION, THE AMOUNT OF REWARD SHALL BE EQUIVALENT TO TWENTY 
26 
PER CENTUM (20%) OF THE CIVIL LIABILITY INCLUDING FINES, PENALTIES AND 
27 
SURCHARGES IMPOSED BY THE. COURT: PROVIDED, FINALLY, THAT WHERE NO 
28 
CIVIL LIABILITY IS AWARDED BY THE COURT, THE SUM OF P250,000.00 OR 
41 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
P500,000.00 SHALL BE GRANTED WHERE THE CASE IS RESOLVED WITH FINALITY 
IN THE TRIAL COURT OR THE APPELLATE COURTS, RESPECTIVELY. 
SEC. 51. 
Section 3519 of the Tariff and Customs Code of the Philippines, as amended, is 
hereby further amended to read as follows: 
"SEC. 3519. 
Words and Phrases Defined. - As used in this Code: 
"Foreign Port" means a port or place outside the jurisdiction of the Philippines. 
"FOREIGN TRANSSHIPMENT" SHALL REFER TO THE TRANSPORT OF GOODS 
FROM A FOREIGN COUNTRY ThlTO THE PHILIPPINES FOR SHIPMENT TO A 
FOREIGN DESTINATION WITHOUT INTRODUCING THE SAME INTO THE PHILIPPINE 
CUSTOMS TERRITORY. 
"Port of Entry" is a domestic port open to both foreign and coastwise trade. 
The term 
includes principal ports of entry and subports of entry. A "principal port of entry" is the chief 
port of entry of the collection district wherein it is situated and is the permanent station of the 
14 
Collector of such port. 
Subports of 'entry are under the administrative jurisdiction of the 
15 
Collector of the principal port of entry of the district. Whenever the term "Port of Entry" is used 
16 
herein, it shall include "airport of entry". 
17 
"Coastwise ports" are such domestic ports as are open to coastwise trade only. These include 
18 
all ports, harbors and places not ports of entry. 
19 
"Vessels" includes every sort of boat, craft or other artificial contrivance used, or capable of 
20 
being used, as a means of transportation on water. 
21 
"Aircraft" includes any weight-carrying devise or structure for the navigation of the air. 
22 
"Bill of Lading" includes airway bill of lading. 
23 
"Articles", when used with reference to importation or exportation, includes goods 
24 
merchandise and in general anything that may be made the subject of importation or exportation. 
25 
"Transit cargo" is article arriving at any port from another port or place noted in the carrier's 
26 
manifest and destined for transshipment to another local port or to a foreign P9rt. 
27 
"Seized propelty" means any property seized or held for the satisfaction of any administrative 
28 
fine or for the enforcement of any forfeiture under the Tariff and Customs Code. 
42 


I . 
"Tariff and customs laws" includes not only the provisions of this Code and regulations 
2 
pursuant thereto but all other laws and regulations which are subject to enforcement by the 
3 
Bureau of Customs or otherwise within its jurisdiction. 
4 
"Taxes" includes all taxes, fees and charges imposed by the Bureau of Customs and the 
5 
Bureau ofInternal Revenue. 
6 
"Secretary" or "Department head" refers, unless otherwise specified, to the Secretary of 
7 
Finance. 
8 
"Commission" refers to the Tariff Commission. 
, 
9 
"Person" whether singular or plural refers to an individual, corporation, partnership, 
10 
association, company or any other kind of organization. 
II 
"Dutiable value" refers to the value defined in section two hundred one. 
12 
"Bulk cargo" refers to products in a mass of one commodity not packaged, bundled, bottled or 
13 
otherwise packed. 
14 
"Smuggling" is an act of any person who shall fraudulently import or bring into the 
15 
Philippines, or assist in so doing, any article, contrary to law or shall receive, conceal, buy, selI 
16 
or in any manner facilitate the transportation, concealment, or sale of such article after 
17 
importation, knowing the same to have been imported contrary to law. It includes the exportation 
18 
of articles in a manner contrary to law. Articles subject to this paragraph shall be known as 
19 
smuggled articles: PROVIDED, THAT THE ACT OF RECEIVING ARTICLES THAT ARE 
20 
SUPPOSED TO BE EXPORTED BUT ARE SUBSEQUENTLY RETURNED AND 
21 
REJECTED BY THE IMPORTING COUNTRY SHALL NOT BE CONSIDERED 
22 
SMUGGLING." 
23 
"TECHNICAL SMUGGLING" IS AN ACT OF ANY PERSON WHO MAKES OR 
24 
ATTEMPTS TO MAKE ENTRY OF IMPORTED OR EXPORTED ARTICLE BY MEANS OF 
25 
ANY FALSE OR FRAUDULENT INVOICE, DECLARATION, AFFIDAVIT, LETTER 
26 
PAPER OR BY ANY MEANS OF ANY FALSE STATEMENT, WRITTEN OR VERBAL, OR 
27 
BY ANY MEANS OF ANY FALSE OR FRAUDULENT PRACTICE WHATSOEVER, OR 
, 
28 
EFFECTS ANY ENTRY OF GOODS, WARES OR MERCHANDISE, AT LESS THAN THE 
29 
TRUE WEIGHT OR MEASURES THEREOF OR UPON A FALSE CLASSIFICATION AS 
43 


1 
TO QUALITY OR VALUE, OR BY THE PAYMENT OF LESS THAN THE AMOUNT 
2 
LEGALLY DUE, OR FILES ANY FALSE OR FRAUDULENT ENTRY OR CLAIM FOR 
3 
THE PAYMENT OF DRAWBACK OR REFUND OF DUTIES UPON THE EXPORTATION 
4 
OF MERCHANDISE, OR MAKES OR FILES ANY AFFIDAVIT, ABSTRACT, RECORD, 
5 
CERTIFICATE OR OTHER DOCUMENT, WITH A VIEW TO SECURING THE PAYMENT 
• 
6 
TO HIMSELF OR OTHERS OF ANY DRAWBACK, ALLOWANCE, OR REFUND OF 
7 
DUTIES ON THE EXPORTATION OF MERCHANDISE, GREATER THAN THAT 
8 
LEGALLY DUE THEREON, OR WHO SHALL BE GUILTY OF ANY ACT OF OMISSION 
9 
SHALL, FOR EACH OFFENSE, BE PUNISHABLE UNDER THIS CODE.". 
10 
"Contrabands" are articles of prohibited importation or exportation. 
11 
"Duly Registered" as used in this Act, refers to a person, natural or juridical, which is 
12 
registered with the proper government agencies, such as the DEPARTMENT OF TRADE AND 
13 
INDUSTRY [Bureau of Commerce], Securities and Exchange Commission, [NACIDA], Board 
14 
ofInvestments, DEPARTMENT OF ENERGY[Export Incentives Board or Oil Commission] as 
15 
now or may hereafter be required by law. (RA 9135, April 27, 2001) 
16 
SEC. 52. Section 3601 of the Tariff and Customs Code of the Philippines, as amended, is 
17 
hereby further amended to read as follows: 
18 
"SEC. 3601. fUnlawful Importation] SMUGGLING.-
(1) Any person who shall 
19 
fraudulently import or bring into the Philippines, or assist in so doing, any article, contrary to 
20 
law, SHALL BE GUILTY OF SMUGGLING AND SHALL BE PUNISHABLE AS HEREIN 
21 
PROVIDED, (2) ANY PERSON [or] WHO shall receive, conceal, buy, sell, or in any manner 
22 
facilitate the transportation, concealment, or sale of such article after importation, knowing the 
23 
same to have been imported contrary to law, shall be DEEMED guilty of smuggling and shall 
24 
LIKEWISE be [punished with] PUNISHABLE AS HEREIN PROVIDED, (3) 
ANY 
• 
25 
IMPORTATION OF ARTICLES THAT DO NOT PASS THROUGH THE PORTS OF ENTRY 
26 
SHALL BE CONSIDERED AS UNLAWFUL IMPORTATION PUNISHABLE UNDER 
27 
SECTION 3601 OF THIS CODE, AND (4) ANY IMPORTATION WHICH IS NOT 
28 
COVERED BY A LETTER OF CREDIT AND/OR PERMIT FROM THE BANGKO 
29 
SENTRAL NG PILIPINAS TO IMPORT SAID PRODUCT, SHALL BE CONSIDERED AS 
44 


I 
ILLEGALLY IMPORTED AND SHALL BE DISPOSED OF IN THE MANNER AS 
2 
PROVIDED FOR IN SECTION 2602 OF THIS CODE. 
3 
1. A fine [of not less than] IN AN AMOUNT EQUAL TO THE APPRAISED VALUE 
4 
PLUS fifty [pesos nor more than two hundred pesos] PERCENT (50%) THEREOF and 
5 
imprisonment of not less than [five] SIX MONTHS AND ONE day[s] nor more than [four 
6 
years] TWENTY DAYS, if the appraised value, to be determined in the manner prescribed 
7 
under this Code, including duties and taxes, of the article unlawfully imported EXCEEDS FIVE 
8 
THOUSAND PESOS (P5,000.00) BUT does not exceed [twenty-five] FIFTY THOUSAND 
9 
pesos (P50,000.00); 
10 
2. A fine [of not less than eight hundred pesos nor more than five thousand pesos] IN AN 
II 
AMOUNT EQUAL TO THE APPRAISED VALUE PLUS FIFTY PERCENT (50%) 
12 
THEREOF and imprisonment of not less than [six months] FOUR YEARS and one day nor 
13 
more than [four] EIGHT years, if the appraised value, to be determined in the manner prescribed 
14 
under this Code, including duties and taxes, of the article unlawfully imported [exceeds twenty-
15 
five] 
IS MORE THAN FIFTY THOUSAND pesos (P50,000.00) but does not exceed ONE 
16 
HUNDRED fifty thousand pesos (PI50,000.00); 
17 
3. A fine [of not less than six thousand pesos nor more than eight thousand pesos] IN AN 
18 
AMOUNT EQUAL TO THE APPRAISED VALUE PLUS FIFTY PERCENT (50%) 
19 
THEREOF and imprisonment of not less than [five] EIGHT years and one day nor more than 
20 
[eight] TWELVE years, if the appraised value, to be determined in the manner prescribed under 
21 
this Code, including duties and taxes, of the article unlawfully imported [is more than] 
22 
EXCEEDS ONE HUNDRED fifty thousand pesos (PI50,000.00) but does not exceed [one] 
23 
TWO hundred fifty thousand pesos (P250,000.00); 
24 
4. A fine [of not less than eight thousand pesos nor more than ten thousand pesos] IN AN 
25 
AMOUNT EQUAL TO THE APPRAISED VALUE PLUS FIFTY PERCENT (50%) 
26 
THEREOF and imprisonment of not less than [eight ] TWELVE years and one day nor more than 
27 
[twelve] FIFTEEN years, if the appraised value, to be determined in the manner prescribed under 
28 
this Code, including duties and taxes, .of the article unlawfully imported exceeds [one] TWO 
45 


I 
hundred fifty thousand pesos (P250,000.00) BUT DOES NOT EXCEED FIVE HUNDRED 
2 
THOUSAND PESOS (P500,000.00); 
3 
5. A FINE IN AN AMOUNT EQUAL TO THE APPRAISED VALUE PLUS FIFTY 
4 
PERCENT (50%) THEREOF AND IMPRISONMENT OF NOT LESS THAN FIFTEEN 
5 
YEARS AND ONE DAY NOR MORE THAN TWENTY YEARS, IF THE APPRAISED 
6 
VALUE, TO BE DETERMINED IN THE MANNER PRESCRIBED UNDER THIS CODE, 
7 
INCLUDING DUTIES AND TAXES, OF THE ARTICLE UNLAWFULLY IMPORTED 
8 
EXCEEDS FIVE HUNDRED THOUSAND PESOS (P500,000.00) BUT DOES NOT EXCEED 
9 
ONE MILLION PESOS (PI,OOO,OOO.OO); 
10 
6. A FINE IN AN AMOUNT EQUAL TO THE APPRAISED VALUE PLUS FIFTY 
II 
PERCENT (50%) THEREOF AND LIFE IMPRISONMENT, IF THE APPRAISED VALUE, 
12 
TO BE DETERMINED IN THE 
MANNER PRESCRIBED UNDER THIS CODE, 
13 
INCLUDING DUTIES AND TAXES, OF THE ARTICLE UNLA WFULL Y IMPORTED 
14 
EXCEEDS ONE MILLION PESOS (Pl',OOO,OOO.OO); 
15 
7. The penalty of prison [mayor] TO RECLUSION TEMPORAL shall be imposed when the 
16 
crime of serious physical injuries shall have been committed and the penalty of reclusion 
17 
perpetua to death shall be imposed when the crime of homicide shall have been committed by 
18 
reason or on the occasion ofthe unlawful importation. 
19 
"In applying the above scale of penalties, if the offender is an alien and the prescribed penalty 
20 
is not death, he shall be deported after serving the sentence without further proceedings for 
21 
deportation. If the offender is a government official or employee, the penalty shall be a 
22 
maximum as hereinabove prescribed 'and the offender shall suffer and additional penalty of 
23 
perpetual disqualification from public office, to vote and to participate in any public election. HE 
24 
SHALL ALSO LOSE ALL THE BENEFITS DUE HIM AS A RESULT OF HIS SERVICE IN 
25 
THE GOVERNMENT, INCLUDING THE FORFEITURE OF HIS SEPARATION AND 
26 
RETIREMENT BENEFITS. 
27 
"When, upon trial for violation of this section, the defendant is shown to have had possession 
28 
of the article in question, possession shall be deemed sufficient evidence to authorize conviction 
29 
unless the defendant shall explain the possession to the satisfaction of the court: Provided, 
46 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
however, That payment of the tax due after apprehension shall not constitute a valid defense in 
any prosecution under this section." 
SEC. 53. Section 3602 of the Tariff and Customs Code of the Philippines, as amended, is 
hereby further amended to read as follows: 
"SEC. 3602. 
Various Fraudulent Practices Against Customs Revenue. - Any person 
who makes or attempts to make entry of imported or exported article by means of any false or 
fraudulent invoice, declaration, affidavit, letter, paper or by any means of any false statement, 
written or verbal, or by any means of any false or fraudulent practice whatsoever, or [knowingly] 
effects any entry of goods, wares or merchandise, at less than the true weight or measures thereof 
or upon a false classification as to quality or value, or by the payment of less than the amount 
legally due, or [knowingly and willful1y] files any false or fraudulent entry or claim for the 
payment of drawback or refund of duties upon the exportation of merchandise, or makes or files 
any affidavit, abstract, record, certificate or other document, with a view to securing the payment 
to himself or others of any drawback, allowance, or refund of duties on the exportation of 
merchandise, greater than that legally due thereon, or who shall be guilty of any [willful] act of 
omission shall, for each offense, BE GUILTY OF TECHNICAL SMUGGLING AND SHALL 
be [punished in accordance with the penalties prescribed in the preceding section] 
PUNISHABLE AS FOLLOWS: 
"1. A FINE OF NOT LESS THAN THREE HUNDRED THOUSAND PESOS 
(P300,000.00) NOR MORE THAN FIVE HUNDRED THOUSAND PESOS (P500,000.00) 
AND IMPRISONMENT OF PRISION CORRECIONAL, IF THE DIFFERENCE BETWEEN 
THE VALUE, WEIGHT, MEASUREMENT OR QUANTITY DECLARED IN THE ENTRY 
AND THE TRUE AND ACTUAL VALUE, WEIGHT, QUANTITY OR MEASUREMENT OF 
THE ARTICLE UNLA WFULL Y IMPORTED DOES NOT EXCEED ONE HUNDRED 
THOUSAND PESOS (PlOO,OOO.OO); 
"2. A FINE OF NOT LESS THAN FIVE HUNDRED THOUSAND PESOS (P500,OOO.00) 
NOR MORE THAN EIGHT HUNDRED THOUSAND PESOS (P800,OOO.OO) AND 
IMPRISONMENT OF PRISION MAYOR, IF THE DIFFERENCE BETWEEN THE VALUE, 
WEIGHT, MEASUREMENT OR QUANTITY DECLARED IN THE ENTRY AND THE 
47 


I 
TRUE AND ACTUAL VALUE, WEIGHT, QUANTITY OR MEASUREMENT OF THE 
2 
ARTICLE UNLA WFULL Y IMPORTED EXCEEDS ONE HUNDRED THOUSAND PESOS 
3 
(PIOO,OOO.OO) BUT DOES NOT EXCEED ONE MILLION PESOS (PI,OOO,OOO.OO); 
4 
"3. A FINE OF NOT LESS THAN EIGHT HUNDRED THOUSAND PESOS 
5 
(P800,OOO.OO) NOR MORE THAN ONE MILLION PESOS 
(PI,OOO,OOO.OO) 
AND 
6 
IMPRISONMENT OF RECLUSION TEMPORAL, IF THE DIFFERENCE BETWEEN THE 
7 
VALUE, WEIGHT, MEASUREMENT OR QUANTITY DECLARED IN THE ENTRY AND 
8 
THE TRUE AND ACTUAL VALUE, WEIGHT, QUANTITY OR MEASUREMENT OF THE 
9 
ARTICLE UNLA WFULL Y IMPORTED EXCEEDS ONE MILLION PESOS (PI,OOO,OOO.OO) 
10 
BUT DOES NOT EXCEED FIVE MILLION PESOS (P5,000,000.00); 
11 
"4. A FINE OF NOT LESS THAN ONE MILLION PESOS (PI,OOO,OOO.OO) NOR MORE 
12 
THAN TWO MILLION PESOS (P2,000,OOO.00) AND IMPRISONMENT OF RECLUSION 
13 
PERPETUA, IF THE DIFFERENCE BETWEEN THE VALUE, WEIGHT, MEASUREMENT 
14 
OR QUANTITY DECLARED IN THE ENTRY AND THE TRUE AND ACTUAL VALUE, 
15 
WEIGHT, QUANTITY OR MEASUREMENT OF THE ARTICLE UNLAWFULLY 
16 
IMPORTED EXCEEDS FIVE MILLION PESOS (P5,000,OOO.OO). 
17 
"IN APPLYING THE ABOVE SCALE OF PENALTIES, IF THE OFFENDER IS AN 
18 
ALIEN, HE SHALL BE DEPORTED AFTER SERVING THE SENTENCE WITHOUT 
19 
FURTHER PROCEEDINGS FOR. DEPORTATION. 
IF THE OFFENDER IS 
A 
20 
GOVERNMENT OFFICIAL OR EMPLOYEE, THE PENALTY IN ITS MAXIMUM PERIOD 
21 
SHALL 
BE 
IMPOSED 
IN 
ADDITION 
TO 
THE 
PENALTY 
OF 
PERPETUAL 
22 
DISQUALIFICATION FROM PUBLIC OFFICE, TO VOTE AND TO PARTICIPATE IN 
23 
ANY PUBLIC ELECTION. IF THE OFFENDER FAILS TO PAY THE FINE, HE SHALL 
24 
SUFFER SUBSIDIARY IMPRISONMENT. HE SHALL ALSO LOSE ALL THE BENEFITS 
25 
DUE HIM AS A RESULT OF HIS SERVICE IN THE GOVERNMENT, INCLUDING THE 
26 
FORFEITURE OF HIS SEPARATION AND RETIREMENT BENEFITS." 
27 
SEC. 54. Section 3603 of the Tariff and Customs Code of the Philippines, as amended, is 
28 
hereby further amended to read as follows: 
48 


I 
"SEC. 3603. Failure to Report Fraud - Any master, pilot in command or other officer, owner 
2 
or agent of any vessel or aircraft trading with or within the Philippines and any employee of the 
3 
Bureau of Customs who, having cognizance of any fraud on the customs revenue, shall fail to 
4 
report all information relative thereto to the Collector as by law required, shall be punished by a 
5 
fine of not [more) LESS than [five) ONE HUNDRED thousand pesos (PIOO,OOO.OO) BUT NOT 
6 
MORE THAN ONE MILLION PESOS (PI,OOO,OOO.OO) and imprisonment [for) OF not [more) 
7 
LESS than [one) EIGHT yearS BUT NOT MORE THAN TWELVE YEARS. If the offender is 
8 
an alien, he shall be deported after serving the sentence. If the offender is a public official or 
9 
employee, he shall suffer additional penalty of perpetual disqualification to hold public office, to 
10 
vote and to participate in any election. HE SHALL ALSO LOSE ALL THE BENEFITS DUE 
11 
HIM AS A RESULT OF HIS SERVICE IN THE GOVERNMENT, INCLUDING THE 
12 
FORFEITURE OF HIS SEPARATION AND RETIREMENT BENEFITS." 
13 
SEC. 55. Section 3604 of the Tariff and Customs Code of the Philippines, as amended, is 
14 
hereby further amended to read as follows: 
15 
"SEC. 3604. Statutory Offenses of Officials and Employees. - Every official, agent or 
16 
employee of the Bureau or any agency 'of the government charged with the enforcement of the 
17 
provisions of this Code, who is guilty of any delinquency herein below indicated shall be 
18 
punished with a fine of not less than [five) ONE HUNDRED thousand pesos (p100,000.00) [nor) 
19 
BUT NOT more than [Fifty thousand) qNE MILLION pesos (Pl,OOO,OOO.OO) and imprisonment 
20 
[for) OF not less than [one) EIGHT yearS [nor) BUT NOT more than [ten) TWELVE years and 
21 
perpetual disqualification to hold public office, to vote and to participate in any public office 
22 
election. HE SHALL ALSO LOSE ALL THE BENEFITS DUE HIM AS A RESULT OF HIS 
23 
SERVICE IN 
THE 
GOVERNMENT, INCLUDING THE FORFEITURE 
OF 
HIS 
24 
SEPARATION AND RETIREMENT BENEFITS: 
25 
"(a) Those guilty of extortion or willful oppression under color oflaw; 
26 
"(b) Those who knowingly demand other or greater sums than are authorized by law or 
27 
receive any fee, compensation, or reward except as by law prescribed, for the performance of any 
28 
duty; 
49 


I 
"(c) Thos who willfully neglect to give receipts, as required by law for any sum collection in 
2 
the performance of duty, or who willfully neglect to perform any of the duties enjoined by law; 
3 
"(d) Those who conspire or collude with another or others to defraud the customs revenue or 
4 
otherwise violate the law; 
5 
"(e) Those who willfully make opportunity for any person to defraud the customs revenue or 
6 
who do or fail to do any act with intent to enable any person to defraud said revenue; 
7 
"(t) Those who negligently or designedly permit the violation of the law by any other person; 
8 
"(g) Those who make or sign any fals,e entry or entries in any book, or make or sign any false 
9 
certificate or return in any case where the law requires the making by them of such entry, 
10 
certificate or return; 
II 
"(h) Those who, having knowledge or information of a violation of the Tariff and Customs 
12 
Law or any fraud committed on the revenue collectible by the Bureau, fail to report such 
13 
knowledge or information to their superior official or to report as otherwise required by law; 
14 
"(i) Those who, without the authority of law, demand or accept or attempt to collect directly 
15 
or indirectly as payment of otherwise, any sum of money or other thing of value for the 
16 
compromise, adjustment, or settlement of any charge or complaint for any violation or alleged 
• 
17 
violation oflaw; or 
18 
"0) Those who, without authority oflaw, disclose confidential information gained during any 
19 
investigation or audit, or use such information for personal gain or to the detriment of the 
20 
government, the Bureau or third parties" (R.A. 9135, April 27, 2001) 
21 
SEC. 56. Section 3605 of the Tariff and Customs Code of the Philippines, as amended, is 
22 
hereby further amended to read as follows: 
23 
"SEC. 3605. Concealment or Destruction of Evidence of Fraud. - Any person who willfully 
24 
conceals or destroys any invoice, book or paper relating to any article liable to duty after an 
25 
inspection thereof has been demanded by the Collector of any collection district or at any time 
26 
conceals or destroys any such invoice, book or paper for the purpose of suppressing any evidence 
27 
of fraud therein contained, shall be punished with a fine of not [more] LESS than [five] ONE 
28 
HUNDRED thousand pesos (PIOO,OOO.OO) BUT NOT MORE THAN ONE MILLION PESOS 
29 
(PI,OOO,OOO.OO) and imprisonment [for] OF NOT LESS THAN EIGHT YEARS BUT not more 
50 


1 
than [two] TWELVE years." 
2 
SEC. 57. 
Section 3606 of the Tariff and Customs Code of the Philippines, as amended, is 
3 
hereby further amended to read as follows: 
4 
"SEC. 3606. Affixing Seals. - Any person who, without authority affixes or attaches a 
5 
customs seal, fastening, or mark or any seal, fastening or mark purporting to be a customs seal, 
• 
6 
fastening or mark to any vessel, vehicle on land, sea or air, warehouse, or package, shall be 
7 
punished with a fine of not LESS THAN ONE HUNDRED THOUSAND PESOS (PIOO,OOO.OO) 
8 
BUT NOT more than [twenty thousand] ONE MILLION pesos (Pl,OOO,OOO.OO) [or] AND 
9 
imprisonment of not [more] LESS than [five] EIGHT years[, or both] BUT NOT MORE THAN 
1 0 
TWELVE YEARS. If the offender is an alien, he shall be deported after serving the sentence. If 
11 
he is a public official or employee,' he shall suffer an additional penalty of perpetual 
12 
disqualification to hold public office, to vote and participate in any election. HE SHALL ALSO 
13 
LOSE ALL THE BENEFITS DUE HIM AS A RESULT OF HIS SERVICE IN THE 
14 
GOVERNMENT, 
INCLUDING THE FORFEITURE OF 
HIS 
SEPARATION AND 
15 
RETIREMENT BENEFITS. 
16 
SEC. 58. Section 3610 of the Tariff and Customs Code of the Philippines, as amended, is 
17 
hereby further amended to read as follows: 
18 
"SEC. 3610. 
Failure to Keep Importation Records and Give Full Access to Customs 
19 
Officers. - Any person who fails to keep all the records of importations and/or books of 
20 
accounts, business and computer systems and all customs commercial data in the manner 
21 
prescribed in Part 2, Section 3514 of this Title shall be punished with a fine of not less than 
22 
[One] TWO hundred thousand pesos (P [1]200,000.00) but not more than [Two] FIVE hundred 
23 
thousand pesos (P [2]500,000.00) and [lor] imprisonment of not less than [two] FOUR ([2]4) 
24 
years and one day but not more than [six] EIGHT ([6]8) years. This penalty shall likewise be 
25 
imposed against importersibrokers who deny an authorized customs officer full and free access 
26 
to such records, books of accounts, business and computer systems, and all customs commercial 
27 
data including payment records. This is without prejudice to the administrative sanctions that the 
28 
Bureau of Customs may impose against contumacious importers under existing laws and 
29 
regulations including the authority to hold delivery or release of their imported articles." 
51 


1 
SEC. 59. Section 3612 of the Tariff and Customs Code of the Philippines, as amended, is 
2 
hereby further amended to read as follows: 
3 
"SEC. 3612. Violations of Tariff and Customs Laws and Regulations in General. - Any 
4 
person who violates a provision of this Code or regulations pursuant thereto, for which 
5 
delinquency no specific penalty is provided, shall be punished by a fine of not LESS THAN 
6 
TWENTY THOUSAND PESOS (P20,000.00) BUT NOT more than one HUNDRED thousand 
7 
pesos (PI00,000.00) [or) AND by imprisonment for not LESS THAN TWO YEARS AND ONE 
8 
DAY BUT NOT more than [one) FIVE yearS[, or both). If the offender is an alien, he shall be 
9 
deported after serving the sentence and if the offender is a public official or employee, he shall 
10 
suffer disqualification to hold public office, to vote and participate in any public election for ten 
11 
years. HE SHALL ALSO LOSE ALL THE BENEFITS DUE HIM AS A RESULT OF HIS 
12 
SERVICE IN 
THE 
GOVERNMENT, 
INCLUDING THE FORFEITURE OF 
HIS 
13 
SEPARATION AND RETIREMENT BENEFITS." 
14 
SEC. 60. A new section to be known as Section 3613 is hereby inserted to the Tariff and 
15 
Customs Code of the Philippines, as amended, to read as follows: 
16 
"SEC. 3613. 
SUMMARY PROCEDURE FOR 
SEIZURE AND FORFEITURE. 
-
17 
NOTWITHSTANDING THE PROVISIONS OF TITLE VI OF THIS CODE, ARTICLES 
18 
WHICH ARE FRAUDULENTLY IMPORTED OR BROUGHT INTO THE PHILIPPINES 
19 
WITHOUT BEING ENTERED THROUGH THE CUSTOMSHOUSE, OR WITHOUT 
20 
PAYMENT OF THE CORRECT AND APPLICABLE DUTIES, TAXES, FEES AND 
21 
CHARGES SHALL BE SUMMARILY SEIZED AND FORFEITED IN FAVOR OF THE 
22 
GOVERNMENT 
WHEN 
WARRANTED 
OR 
DETERMINED 
IN 
THE 
SEIZURE 
23 
PROCEEDINGS. SUBJECT TO THE PROVISIONS OF SECTIONS 2530 AND 2531 OF 
24 
THIS CODE, ANY VESSEL OR AIRCRAFT WHICH IS LEASED TO FRAUDULENTLY 
25 
BRING IN SAID IMPORTED ARTICLES INTO THE PHILIPPINES SHALL LIKEWISE BE 
26 
SUBJECT TO SUMMARY SEIZURE AND FORFEITURE. 
27 
"THE 
DECISION 
OF 
THE 
SECRETARY 
OF 
FINANCE, 
UPON 
THE 
28 
RECOMMENDATION OF THE COMMISSIONER OF CUSTOMS, UNDER THIS SECTION 
29 
SHALL BE FINAL AND UNAPPEALABLE. 
52 


1 
"NO COURT, EXCEPT THE COURT OF TAX APPEALS AND THE SUPREME COURT, 
2 
SHALL ISSUE ANY TEMPORARY RESTRAINING ORDER OR ANY INJUNCTIVE 
3 
RELIEF AGAINST THE SEIZURE, FORFEITURE OR DISPOSITION OF THE SUBJECT 
4 
ARTICLES COVERED BY THIS SECTION. 
5 
"THE OWNER OR OPERATOR OF ANY SEIZED VESSEL OR AIRCRAFT UNDER 
6 
THIS SECTION SHALL BE BLACKLISTED FROM OPERATING AND/OR FROM 
7 
ENGAGING IN TRADE IN THE PHILIPPINES." 
8 
SEC. 61. Transitory Provision. - All existing customs bonded warehouses established under 
9 
Section 1901 of the Tariff and Customs Code ofthe Philippines, as amended, shall have one year 
10 
from approval of the law to convert themselves to manufacturing customs bonded warehouses 
11 
under Section 2001 of the Code or register themselves in special economic zones or freeports. 
12 
After the lapse of the one year period, any importation by these customs bonded warehouses 
13 
shall be treated as regular importations to be covered by ordinary consumption entries only, 
14 
unless such customs bonded warehouse in the meantime has transferred to a special economic 
15 
zone or PEZA zone, which in such case the said importation shall be treated as a PEZA 
16 
shipment. 
17 
SEC. 62. Separability Clause. - If any provision of this Act is subsequently declared 
18 
unconstitutional, the validity of the remaining provisions hereof shall remain in full force and 
19 
effect. 
20 
SEC. 63. 
Rules and Regulations. -
The Secretary of Finance shall, upon the 
21 
recommendation of the Commissioner of Customs and meaningful consultation of the local 
• 
22 
industry, promulgate the necessary rules and regulations for the effective implementation of this 
23 
Act. 
24 
SEC. 64. Repealing Clause. - All laws, decrees, executive orders, rules and regulations and 
25 
other issuances or parts thereof which are inconsistent with this Act are here by repealed or 
26 
modified accordingly. 
27 
The provision of this Act, not those of Republic Act No. 2338, shall govern the giving of 
28 
reward cases covered by the former. 
53 


.. 
.. 
1 
SEC. 67. Effectivity. - This Act shall take effect fifteen (15) days after its publication in any 
2 
two (2) newspapers of general circulation. 
Approved, 
54