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NGRESS OF THE R 
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OF THE PHILIPPINE 
First Regular Session 
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. No. 
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Introduced by Senator S. R. OsmeAa 111 
EXPLANATORY NOTE 
Smuggling has existed for as long as humans have exchanged goods and 
crossed borders, and will continue to do so for the foreseeable future. 
Put 
simply, smuggling is a response to the tariff and non-tariff restrictions that are 
imposed on the international trade of goods. It is a natural response by certain 
businesses to rules that they find too restraining and tariffs that are too high. 
Smuggling has been a long-standing issue in the Philippines. It does not 
only deprive the government of vital revenues but also kills local industries. 
Smuggling is costing the government billions of pesos in unpaid duties and taxes 
at the same time poses unfair competition to local manufacturers that leave 
thousands of Filipinos jobless due to plant closures. Smuggled and pirated items 
continue to proliferate in retail outlets and flea markets all over the country 
despite increased efforts of the Bureau of Customs to curb smuggling. Industries 
badly affected 
by rampant smuggling and dumping include cement, 
petrochemicals, automotive, steel, among others. 
All these have combined to continually increase the budget deficit, forcing 
the government to resort to borrowing from domestic and foreign sources. The 
increased demand for domestic loans increases interest rates making Philippine 
companies less competitive. 
No amount of laws or policies will solve the economic ills of the country if 
smuggling in all forms is not stopped. It is high time that we recognize that 
smuggling is as dangerous to the economy as illegal drugs, kidnapping, and 
other heinous crimes. 
This bill declares that any act of smuggling is considered as a form of 
economic sabotage because of its inimical effects on the national interest, 
economic growth and development. 
To properly contend with the issue, 
distinction is made between technical smuggling and outright smuggling. 
Technical smuggling refers to the act of importing goods into the 
Philippines through fraudulent, falsified or erroneous declarations in order to 
evade payment of applicable duties and taxes as well as existing rules and 
regulations. Meanwhile, direct or outright smuggling refers to the act of importing 
goods into the Philippines without the corresponding documents, permits or 
licenses when these are required by existing law or rules and regulations. 


Those found guilty of smuggling shall be penalized with hefty fines, 
imprisonment, confiscation and cancellation of business permits. If the offender 
is a government official or employee acting in connivance with private or public 
individuals or entities, he shall in addition, be disqualified from holding public 
office. 
The Bureau of Customs will be given additional powers such as re- 
exportation, donation and destruction of the confiscated articles. 
All stakeholders, however, should recognize that the government is 
unlikely to win the "war against smuggling" outright. In essence, smuggling is a 
long-standing response by select businesses to tariff and non-tariff costs and 
restrictions that are imposed when moving products across international borders. 
Smuggling bleeds our economy and society and we should stop the bleeding 
now. 
In view of the foregoing, the approval of this bill is earnestly requested. 
. & " L  
SERGIO OSMENA 111 
Senator 
Ail 


THIRTEENTH CO GRESS OF TflE REPUBLIC 
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OF THE PHILIPPINE 
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First Regular Session 
1 
s. No. 
I 
Introduced by Senator S. R. Osmeiia 111 
AN ACT 
DECLARING DIRECT AND TECHNICAL SMUGGLING AS ACTS OF 
ECONOMIC SABOTAGE, PRESCRIBING PENALTIES THEREFOR AND FOR 
OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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SECTION 1. Shod Title. - It shall be the policy of the State to contain 
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economic growth and development. The State therefore, declares that any act of 
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smuggling is inimical to national interest and derails economic growth and 
development. To this end, the State shall institute measures to ensure that any 
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SEC. 2. Declaration of Terms. - Under this Act: 
act of smuggling shall be contained and penalized. 
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(a) 
"Economic Sabotage" refers to any and all activities that 
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undermines, weakens or renders into disrepute the economic system or viability 
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of the country or tends to bring about such effects. 
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(b) 
"Smuggling" also known as direct or outright smuggling, refers to 
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the act of importing or bringing into or assisting in importing or bringing into the 
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Philippines, any article, good or product without the corresponding documents, 
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permits or licenses when these are required by existing laws, order, rules and 
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regulations including the receipt, concealment, purchase or sale or in any 
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manner facilitating the transportation, concealment, or sale of such article, after 
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importation, knowing the same to have been imported contrary to law. 


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(c) 
“Technical Smuggling” refers to the act of importing or bringing into 
the Philippines, any article, good or product through fraudulent, falsified or 
erroneous declarations for the purpose of, or which shall result into, evasion of 
payment of the applicable duties and taxes and/or evasion of the rules and 
regulations of the Bureau of Customs, the Bureau of Product Standards and the 
Tariff and Customs Code. 
(d) 
“Revision Order” refers to a document issued by the Bureau of 
Customs indicating the latest values of a productk arrived at after consultation 
with industry representatives. 
SEC. 3. Smuggling and Technical Smuggling as Acfs o f  Economic 
Sabofage.- The acts of smuggling and technical smuggling are acts inimical to 
national interest, economic growth and development. Any person regardless of 
nationality or citizenship found guilty of engaging in smuggling or technical 
smuggling or technical smuggling of a minimum aggregate amount of One million 
pesos (P1,000,000.00) worth of foods or articles as valued by the Bureau of 
Customs utilizing methods of value verification such as but not limited to Revision 
Orders and/or appropriate agencies and entities identified, accredited or certified 
by the Bureau of Customs, shall be guilty of economic sabotage. 
SEC. 4. Offenses and Penalfies- Any person, natural or juridical, 
regardless of nationality or citizenship, found guilty of engaging in smuggling or 
technical smuggling of a minimum aggregate amount of One million pesos 
(PI ,000,000.00) worth of goods or articles shall suffer the following penalties: 
(a) Fine equal to twice the fair value of the smuggled articles; 
(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 or death; and 
(d) Confiscation of the smuggled articles. 


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If the violator is a juridical person, the penalties shall be imposed on the 
president or chairman 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 importing person or entity shall likewise be liable and 
shall be charged as principal. 
If the offender is a government official or employee acting in connivance 
with private individuals or entities or other government officials or employees, he 
shall be imposed the same penalty as the principal offender. In addition, he shall 
be absolutely disqualified from holding any public office, whether by election or 
appointment. 
SEC. 5. Power of fhe Bureau of Customs.- In addition to the existing 
powers of the Bureau of Customs under the Tariff and Customs Code, as 
amended, in relation to the disposition of confiscated articles, the following shall 
apply in the case of confiscated goods or articles under this Act in the following 
order: 
(a) Re-exportation of the confiscated articles to the point of origin at the 
expense of the importer; 
(b) Donation of the confiscated articles to the Department of Social 
Welfare and Development except where prohibited by law, and/or to the Armed 
Forces of the Philippines if the articles are finished products, or to the domestic 
industry that can make use of the articles, if these are raw materials; or 
(c) Destruction of the articles in the presence of representatives from the 
Bureau of Customs, Bureau of Product Standards, Tariff Commission and the 
relevant industries, if neither of the above-mentioned options are practicable. 
SEC. 6. lmplernenfing Rules.- The Bureau of Customs in coordination 
with the appropriate agencies shall promulgate the implementing rules and 
regulations of this Act within thirty (30) days after its effectivity. 


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SEC. 7. Repealin 
Ciause.- All laws, decrees, orders, rules and 
regulations, or portions thereof, inconsistent with this Act are hereby repealed or 
modified accordingly . 
SEC. 8. Separability Clause.- If for any reason, any provision of this Act 
is declared unconstitutional or invalid, the other parts or provisions hereof which 
are not thereby affected shall continue to be in full force and effect. 
SEC. 9. Effectivity Clause.- This Act shall take effect fifteen (15) days 
after its complete publication in the Official Gazette or in at least two (2) 
newspapers of general circulation. 
Approved,