Republic of the Philippines ¥ o. “a
RECEIVED “
HOUSE OF REPRESENTAT! f 2 owed 4 NOV 2014

Quezon, City Wie:

oY:
SIXTEENTH CONGRESS \e
Second Regular Session x

House Bill No.__ 0179

Introduced by Representative ESTRELLITA “GING” B. SUANSING

EXPLANATORY NOTE

The Philippines has constantly grappled with the problem of rampant
smuggling. It has plagued the Philippine economy, depriving the country of
its much needed revenue and crippling key programs of the government.

The report of the Global Financial Integrity finds that the Philippine
government has lost at least $19.3 billion since 1990 in tax revenue due to
customs duties evasion through import under-invoicing alone. Combined
with an additional $3.7 billion in tax revenue lost through export under-
invoicing, the Philippine government has lost at least $23 billion in customs
revenue due to trade misinvoicing since 1990."

In 2011 alone, the Philippines lost an estimated $3.85 billion in tax
revenues due to smuggling, “more than double the size of the fiscal deficit
and also constituted 95 per cent of the Philippines’ total government
expenditures on social benefits during the same year.”? In the 52-year period
covered by the study, the Philippines lost $177 billion through capital
flight.?

From 2002 to 2011, the government lost more than P1.33 trillion in
revenue due to smuggling through the country’s ports, according to the
Federation of Philippine Industries.‘

Even with the reported gains in the first half of this year as compared
with the same period last year, the Bureau of Customs (BOC) still did not
meet its collection target. From January to June 2014, the BOC collected

* Kar, Dev and LeBlanc, Brian. ilicit Financial Flows to and from the Philippines: A Study in Dynamic Simulation,
1960-2011: Global Financial Integrity. February 2014. Online.

bid.

5 ibid,

“ Esplanada, Jerry E. Gov't lost P1.3T to smugglers in 9 years: Inquirer.net. 14 January 2014. Online.


P173.401 billion, higher than last year’s P145.132 billion collection, but still
short of its P198.949 billion target for the period.>

Aside from the revenue losses, smuggling constantly poses as a
hindrance to the growth of the domestic industries. It fosters unfair
competition with the local producers and manufacturers, including licensed
distributors, wholesalers and retaile:

Considering its detrimental effect on the Philippine economy and the
problems it presents to the Filipino people, this bill seeks to define any form
of smuggling, which involves goods with an aggregate value of P1 million, as
an act of economic sabotage.

This bill aims to ward off such illegal activities by providing
appropriate punishments and penalties.

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

ESTRELLITA B. SUANSING
1 District, Nueva Ecij

* BOC revenues grow 17.5% in June 2014. 21 July 2014, Online.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

House Bill No. 5179

Introduced by Representative ESTRELLITA “GING” B. SUANSING

AN ACT
AMENDING PRESIDENTIAL DECREE NO, 1464, OTHERWISE KNOWN AS
THE TARIFF AND CUSTOMS CODE OF THE PHILIPPINES, TO DEFINE
SMUGGLING AS AN ACT OF ECONOMIC SABOTAGE, TO PROVIDE THE
APPROPRIATE PUNISHMENT AND PENALTIES, AND FOR OTHER
PURPOSES

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

SECTION 1. Section 3514 of the Tariff and Customs Code of the Philippines
is hereby amended to read as follows:

“SEC. 3514. Words and Phrases Defined. - As used in
this Code:

“Foreign port” means a port or place outside the jurisdiction
of the Philippines.

“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 Collector of such port.
Subports of entry are under the administrative jurisdiction of
the Collector of the principal port of entry of the district.
Whenever the term "Port of entry" is used herein, it shall
include "airport of entry".

“Person” whether singular or plural refers to an individual,
corporation, partnership, association, company or any other
kind of organization.

“ECONOMIC SABOTAGE” REFERS TO ANY AND ALL
ACTIVITIES THAT UNDERMINES, WEAKENS OR RENDER


INTO DISREPUTE THE ECONOMIC SYSTEM OR VIABILITY
OF THE COUNTRY OR TENDS TO BRING ABOUT SUCH
EFFECTS. FOR THE PURPOSE OF THIS ACT, ANY
VIOLATION OF SECTION 3601 AND 3602 OF THIS ACT,
WHICH INVOLVES GOODS AND/OR ARTICLES WITH THE
AGGREGATE VALUE OF ONE MILLION PESOS
(P1,000,000.00), SHALL CONSTITUTE AS ‘ECONOMIC
SABOTAGE,’

SECTION 2. Section 3601 of the Tariff and Customs Code of the Philippines
is hereby amended to read as follows:

“SEC. 3601. Unlawful Importation. — Any person who
shall fraudulently import or bring into the Philippines, or
assist in so doing, any article, contrary to law, or shall
receive, conceal, buy, sell, or in any manner facilitate the
transportation, concealment, or sale of such article after
importation, knowing the same to have been imported
contrary to law, shall be punished by a fine of not less than
Six Hundred Pesos (P600.00) nor more than Five Thousand
Pesos (P5,000.00) and imprisonment for not less than six (6)
months nor more than two (2) years and, if the offender is an
alien, he shall be deported after serving the sentence.

ANY VIOLATION OF THIS PROVISION THAT
CONSTITUTES AS ECONOMIC SABOTAGE, AS DEFINED IN
THIS ACT, SHALL BE PUNISHED AS FOLLOWS:

(a) FINE EQUAL TO TWICE THE FAIR MARKET VALUE
OF THE ARTICLES INVOLVED;

(b) FINE EQUAL TO THE AGGREGATE AMOUNT OF THE
TAXES, DUTIES AND OTHER CHARGES AVOIDED;

(c) IMPRISONMENT OF A MINIMUM OF EIGHT (8) YEARS
AND ONE (1) DAY UP TO LIFE IMPRISONMENT; AND

(d) CONFISCATION OF THE ARTICLES INVOLVED.

IF THE PERSON VIOLATING THIS PROVISION IS A
JURIDICAL ENTITY, THE PENALTY OF IMPRISONMENT
SHALL BE IMPOSED ON THE PRESIDENT AND THE
RESPONSIBLE OFFICERS THEREOF. IN ADDITION, THE
BUSINESS PERMITS AND LICENSES OF THE BUSINESS
ENTITY SHALL BE REVOKED OR CANCELLED,

THE BROKER OF THE VIOLATOR OF THIS PROVISION
SHALL BE PUNISHED AS A PRINCIPAL.


When, upon trial for a violation of this section, the
defendant is shown to have or to have had possession of the
article in question, such possession shall be deemed
sufficient evidence to authorize conviction, unless the
defendant shall explain the possession to the satisfaction of
the court.”

SECTION 38. Section 3602 of the Tariff and Customs Code of the Philippines
is hereby amended to read as follows:

“SEC, 3602. Various Fraudulent Practices Against
Customs Revenue. — Any person who makes or attempts to
make any entry of imported or exported article by means of
any false or fraudulent invoice, declaration, affidavit, letter,
paper, or by means of any false statement, written or verbal,
or by means of any false or fraudulent practice whatsoever,
or shall be guilty of any willful act or omission by means of
whereof the Government might be deprived of the lawful
duties, taxes and other charges, or any portion thereof,
accruing from the article or any portion thereof, embraced or
referred to in h invoice, declaration, affidavit, letter,
paper, or statement, or affected by such act or omission,
shall, for each offense, be punished by a fine of not less than
Six Hundred Pesos (P600.00) nor more than Five Thousand
Pesos (P5,000.00) and imprisonment for not less than six (6)
months nor more than two (2) years and if the offender is an
alien, he shall be deported after serving the sentence.

ANY VIOLATION OF THIS PROVISION THAT CONSTITUTES
AS ECONOMIC SABOTAGE, AS DEFINED IN THIS ACT,
SHALL BE PUNISHED AS FOLLOWS:

(a) FINE EQUAL TO TWICE THE FAIR MARKET VALUE
OF THE ARTICLES INVOLVED;

(b) FINE EQUAL TO THE AGGREGATE AMOUNT OF THE
TAXES, DUTIES AND OTHER CHARGES AVOIDED;

(c) IMPRISONMENT OF A MINIMUM OF EIGHT (8) YEARS
AND ONE (1) DAY UP TO LIFE IMPRISONMENT; AND

(d) CONFISCATION OF THE ARTICLES INVOLVED.

IF THE PERSON VIOLATING THIS PROVISION IS A
JURIDICAL ENTITY, THE PENALTY OF IMPRISONMENT
SHALL BE IMPOSED ON THE PRESIDENT AND THE
RESPONSIBLE OFFICERS THEREOF. IN ADDITION, THE
BUSINESS PERMITS AND LICENSES OF THE BUSINESS
ENTITY SHALL BE REVOKED OR CANCELLED.


THE BROKER OF THE VIOLATOR OF THIS PROVISION
SHALL BE PUNISHED AS A PRINCIPAL.”

SECTION 4. Repealing Clause. All laws, presidential decrees, executive
orders, rules and regulations or part thereof, contrary to or inconsistent
with the provisions of this Act are hereby repealed or modified accordingly.

SECTION 5. Separability Clause. If any provision of this Act is
subsequently declared unconstitutional or invalid, such parts or provisions
not so declared shall remain valid and subsisting.

SECTION 6. Effectivity Clause. This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in at least two (2) newspapers
of general circulation.

Approved,