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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

2 EFA

Seventeenth Congress
Second Regular Session

HOUSE BILL NO. 7126

Introduced by Representative Fredenil H. Castro

EXPLANATORY NOTE

This bill seeks to abolish the Bureau of Customs, creating for the purpose
the Customs Development Authority.

In 1902, during the American regime, the Philippine Customs Service
was established under Philippine Administrative Act No. 355 to collect all the
revenue warranted by law. Then, under the same regime and pursuant to Public
Act No. 430, the Philippine Customs Service was transferred to the Bureau of
Customs and Immigration under the supervision and control of the Department
of Finance and Justice. When the Department of Justice became a separate
office from the Department of Finance, the customs service remained under the
Department of Finance.

Through the years, the Bureau of Customs has undergone several
reorganizations pursuant to several customs laws and amendments and the
reorganization of the Bureau of Customs arising from the reorganization of the
different bureaus, offices and agencies of the government. In 1957, Republic
Act No. 1937, otherwise known as the “Tariff and Customs Code of the
Philippines” was passed into law and took effect on July 1, 1957.

Many changes in global and regional trade policies, rules and processes
have since then given effect and addressed through legislative amendments and
administrative issuances on piecemeal bases. Consequently, on 30 May 2016,
Republic Act No. 10863, otherwise known as the “Customs Modernization and

RECEIVED %

i”!



Tariff Act (CMTA)” was signed into law. The CMTA amended the Tariff and
Customs Code of the Philippines. It aims to modernize the customs laws, rules
and procedures to improve customs service delivery and supply chain for faster
trade, and reduce the opportunities for corruption.

The Bureau of Customs is the second biggest revenue earner among
government agencies. Through the years, the Bureau of Customs had
significantly contributed to the economic development and progress of the
country. However, it has been reported that corruption at the Bureau of Customs
has become a malady without a cure. Corruption seems to have been part of the
Bureau’s culture. Surveys on the most bureaucratic and corrupt government
offices have consistently placed the Bureau of Customs at the top. It is much
publicized that the government is losing a huge amount of much needed revenue
due to corruption at the Bureau of Customs.

This bill abolishes the Bureau of Customs and replaces it with a new
entity with a corporate structure to be known as the Customs Development
Authority to enhance customs efficiency and administration. Under this
measure, the Customs Development Authority will be allowed to outsource or
privatize some administrative functions of the Authority, subject to some terms
and conditions to curtail customs bureaucracy and corruption. This measure also
intends to promote competition and encourage private participation in customs
operations.

In view of the foregoing, approval of this bill is earnest!



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Seventeenth Congress
Second Regular Session

HOUSE BILL NO. 7126

Introduced by Representative Fredenil H. Castro

AN ACT
ABOLISHING THE BUREAU OF CUSTOMS, CREATING FOR THE
PURPOSE THE CUSTOMS DEVELOPMENT AUTHORITY AND
APPROPRIATING FUNDS THEREFOR

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

SECTIONI. Short Title. — This Act shall be known as the “Customs
Development Authority Act.”

SEC. 2. Declaration of Policy. — It is the policy of the State to enhance
the development and efficiency of customs administration to ensure the efficient
collections of customs duties and taxes.

The State also recognizes the need to reorganize and streamline the
operations and functions of the Bureau of Customs, and create an entity with
appropriate structure to improve the efficiency of customs operations and

services. It recognizes the indispensable role of the participation of private


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sector to bring about maximum efficiency in the collection of customs revenue
and eliminate graft and corruption in the government. Towards this end, the
Customs Development Authority shall replace the Bureau of Customs to carry
out the desired objectives of the government in customs administration and
management.

SEC. 3. Customs Development Authority. — The Bureau of Customs
is hereby abolished. To replace the Bureau of Customs, there is hereby created
a corporate body to be known as the Customs Development Authority,
hereinafter referred to as the Authority, with principal office in Metro Manila.
The Authority shall have general jurisdiction and control over all customs
services and shall supervise, regulate and exercise its powers in accordance with
the provisions of this Act. For purposes of policy coordination, it shall be an
attached agency of the Department of Finance.

SEC. 4. | Powers and Functions. — The Authority shall have the
following powers and functions:

(a) Assess and collect customs revenues from imported goods and
other dues, fees, charges, fines and penalties accruing under Republic Act (RA)
No. 10863, otherwise known as the “Customs Modernization and Tariff Act;”

(b) Simplify and harmonize customs procedures to facilitate movement
of goods in international trade;

(c) Prevent entry of smuggled goods through border control;

(4) Prevent and suppress smuggling and other customs fraud;


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(e) Ensure security of international trade and commerce through an
informed compliance program;

(f) Supervise and control the entrance and clearance of vessels and
aircrafts engaged in foreign commerce;

(g) Supervise and control the handling of foreign mails arriving in the
Philippines for the purpose of collecting revenues and preventing the entry of
coneabandl

(h) Supervise and control all import and export cargoes, landed or
stored in piers, airports, terminal facilities, including container yards and freight
stations for the protection of government revenue and prevention of entry of
contraband;

(i) Conduct a compensation study for developing and recommending
to the President a competitive compensation and remuneration system to attract
and retain highly qualified personnel, while ensuring that the Authority remains
financially sound and sustainable;

@) Exercise exclusive original jurisdiction over forfeiture cases under
this Act;

(k) Enforce this Act and all other laws, rules and regulations related to
customs administration;

(1) Construct or maintain facilities or properties under the jurisdiction
or belonging to the Authority, and supervise, control and regulate their

operations; and


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(m) Provide training programs and training facilities for its staff and
stakeholders for the efficient discharge of its functions, duties and
responsibilities, including the adoption of necessary measures for efficient
assessment and collection of customs revenues in coordination with the other
government agencies.

SEC. 5. Corporate Powers of the Authority. — The Authority shall have
the following corporate powers:

(a) Succeed in its corporate name;

(b) Sue and be sued in such corporate name;

(c) Adopt, alter and use a corporate seal;

(d) Adopt, amend or repeal its by-laws;

(e) Enter into contracts, transactions and undertakings of whatever
nature to enable it to discharge its functions;

(f) Exercise all the powers of a corporation under the Corporation Law
insofar as they are not inconsistent with the provisions of this Act; and

(g) Perform such acts or provide such services as may be deemed
proper or necessary to carry out and implement the provisions of this Act.

SEC. 6. Board of Directors.—The corporate powers of the Authority shall
be exercised by and vested in a Board of Directors, hereinafter referred to as the
Board, which is composed of the following:

(a) Secretary of Finance, as chairperson;

(b) General manager of the Authority, as vice-chairperson;


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(c) Commissioner of Internal Revenue;

(d) Director-General of the National Economic and Development
Authority;

(e) Secretary of Trade and Industry;

(f) Secretary of Public Works and Highways;

(g) Secretary of Environment and Natural Resources; and

(h) A representative from the private sector who shall be appointed by
the President of the Philippines; as members.

The representative from the private sector shall hold office for a period
of three (3) years from the date of appointment and shall be eligible for
reappointment upon completion of the term.

The members of the Board or their respective alternates are entitled to
receive compensation, per diem, allowances, and incentives in accordance with
the guideline promulgated by the Governance Commission for Government-
Owned or -Controlled Corporations.

SEC. 7. Functions of the Board.—\n addition to the powers vested in the
Authority under this Act, the Board shall exercise the following functions:

(a) Define and approve the programs, plans, policies, procedures and
guidelines for the development and operation of the Authority and customs
districts;

(b) Recommend the general manager of the Authority who shall be the

chief executive officer of the Authority;


(c) Approve the Authority’sorganizational and administrative
structure, staffing pattern, operating and capital expenditures, and financial
budgets upon recommendation of the general manager, subject to existing laws,
rules and regulations;

(d) Approve salary ranges, benefits and other terms and conditions of
service for all officers and employees of the Authority, upon recommendation
of the general manager, which shall, as far as possible, be competitive with
those offered in the private sector, subject to existing laws, rules and
regulations; and

(e) Exercise all the functions and powers necessary or incidental to
attain the purposes and objectives of this Act.

SEC. 8. General Manager. ~The President of the Philippines shall, upon
the recommendation of the Board, appoint the general manager of the Authority.
The general manager shall be directly responsible to the Board, and shall have
the following powers and duties:

(a) Implement, enforce and apply the policies, programs, guidelines,
procedures, decisions, rules and regulations promulgated, prescribed, issued or
adopted by the Authority;

(b) Manage the day-to-day affairs of the Authority and ensure the

operational efficiency of the customs districts;


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(c) Sign contracts, approve expenditures and payments within the
budget provisions, and generally do any and all acts or things for the proper
operations of the Authority or any of the customs districts and services;

(d) Submit an annual budget to the Board for recurrent income and
expenditure and the estimated capital expenditure at its option not later than two
(2) months before the commencement of the ensuing fiscal year;

(e) Undertake research, studies, investigations, and other activities and
projects and submit comprehensive reports and appropriate recommendations to
the Board for its information and approval;

(f) Determine and recommend to the Board for approval the staffing
pattern and the number of personnel of the Authority, define the duties,
responsibilities, and fix the salaries and emoluments of personnel. For
professional and technical positions, the general manager shall recommend
salaries and emoluments that are comparable to those of similar positions in
other government-owned and -controlled corporations, and in accordance with
the provisions of existing rules and regulations on wage and position
classification;

(g) Exclusive and original jurisdiction to interpret the provisions of
this Act and RA 10863 in collaboration with other relevant government
agencies, subject to review by the Secretary of Finance;

(h) Exercise any customs power, duties and functions, directly or

indirectly;


(i) Review any action or decision of any customs officer performed
pursuant to the provisions of this Act;

(j) _ Review and decide disputed assessments and other matters related
thereto, subject to review by the Secretary of Finance and exclusive appellate
jurisdiction of the Court of Tax Appeals (CTA);

(k) Delegate the powers vested under this Act to any customs officer
with the rank equivalent to division chief or higher, except the following powers
and functions: (1) promulgation of rules and regulations; (2) issuance,
revocation or modification of rulings; and (3) assignment or reassignment of
any customs officer subject to the approval of the Secretary of Finance;

(1) Appoint and remove personnel below the rank of assistant general
manager; and

(m) Perform such other duties as the Board may delegate or assign and
such acts as may be necessary for the effective implementation of this Act.

SEC. 9. Salaries. — The general manager of the Authority shall receive a
salary to be determined by the Board and approved by the President of the
Philippines.

SEC. 10. Assistant General Managers. ~The President of the Philippines
shall, upon the recommendation of the Board, appoint two (2) assistant general
managers of the Authority, one for operations and another for border control
and customs compliance. The assistant general managers are entitled to receive

a salary as determined by the Board and approved by the President of the


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Philippines. They shall be responsible to the general manager of the Authority.
The assistant general managers shall exercise the following powers and
functions:

(a) Assist the general manager in implementing, enforcing, and
applying the policies, programs, guidelines, procedures, decisions, rules and
regulations promulgated, prescribed, issued or adopted by the Authority; and

(b) Perform such other duties as the general manager may assign from
time to time.

SEC. 11.Assessment, Collections and Operations Department. — There
shall be created a Collections and Operations Department which shall be headed
by the Assistant Manager for Operations. The Assessment, Collections and
Operations Department shall exercise all the powers and perform the duties
pertaining to the assessment and collection of customs tariff and corresponding
fees, charges and penalties accruing to the National Government under RA
10863. Twenty-five per centum (25%) of the monthly total revenues collected
shall be retained by the Authority to constitute as its additional fund for the
continuity of its task in maximizing the efficiency in the collection of customs
revenue, as mandated by this Act.

The Collections and Operations Department shall perform the following
customs operations and services:

(a) Ensure entry of all imported goods at the customs office;


(b) Ensure legal compliance of regulated goods and facilitate the flow
of legitimate trade;

(c) Examine, classify and value imported goods;

(a) Assess and collect duties, taxes and other charges on imported
goods;

(e) Dispose of or hold imported goods in accordance with this Act and
RA 10863; and

(f) Perform other necessary duties that may be assigned by the general
manager for the effective implementation of this Act.

SEC. 12. Outsourcing of Customs Services— Subject to the approval of
the Secretary of Finance, the Authority may engage the services of a private
entity or corporation to perform specific customs operations and services and
the general manager is authorized to call for bids in open public competition
from prospective investors for this purpose.

A prospective investor is qualified to offer its bid and tender for the
outsourcing of specific customs functions or services if it offers to pay the
national government the minimum bid price which is fixed by the Board. The
contract of outsourcing shall be awarded to the highest qualified bidder whose
bid as evaluated complies with all the terms and conditions in the call for the

bid.

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A bidder must be a Philippine corporation registered and created under
the provisions of Batas Pambansa Blg. 68, otherwise known as the Corporation
Code of the Philippines.

Without prejudice to prosecution for violation of criminal laws, the
authority granted herein shall be forfeited by the President of the Philippines, if,
after due notice and hearing, it is found that the outsourcing company or
operator causes, authorizes, or sanctions, wilfully or with gross negligence, the
entry into Philippine customs territory of prohibited drugs, guns, ammunition,
explosives and similar contraband as defined under R.A. 10863.

For purposes of this Act, specific customs operation and services refer to
customs administrative functions which may be delegated to private entity
under specific terms, conditions and standards without prejudice to the exercise
of powers and functions of the Authority to implement and enforce customs
laws and regulation, customs control and supervision under its jurisdiction.

SEC. 13. Border Control, Compliance and Law Enforcement
Department. — There shall be created a Border Control, Compliance and Law
Enforcement Department of the Authority which shall be headed by the
Assistant General Manager for Border Control and Customs Compliance. The
Border Control, Compliance and Law Enforcement Department is in charge of
customs law enforcement, and border and trade security. It shall:

(a) Enforce compliance of regulated goods with customs laws, rules

and regulations to facilitate the flow of legitimate trade;


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(b) Prevent importation and exportation of prohibited goods;

(c) Prevent smuggling and other customs fraud; and

(d) Exercise police power and control to ensure compliance with
customs laws and regulations.

(e) SEC. 14. Customs Adjudication Board. — There shall be
established a Customs Adjudication Board which shall be composed of the
general manager as chairperson and of the two (2) assistant managers as
members.

The Customs Adjudication Board shall perform the quasi-judicial
function and the adjudication mandate of the Authority under this Act and RA
10863. It shall exercise original and exclusive jurisdiction in custom’s forfeiture
cases, assessment dispute settlement, and other customs-related cases.

All the present powers and functions of the Custom’s Commissioner
under Title XI of RA 10863, entitled “Title XI Administrative and Judicial
Procedures” shall be transferred to the general manager of the Authority.

SEC. 15. Capital. — The Authority shall have an authorized capital stock
equal to and consisting of:

(a) The value of fixed assets, including facilities and equipment and
such other properties, movable and immovable, currently belonging to the
Bureau of Customs as valued on the date of the effectivity of this Act and after
deducting or taking into account their loans and other liabilities at the time of

the transfer of their assets and other properties to the Authority; and


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(b) Government contribution in such amount as may be deemed an
appropriate initial amount. Such initial amount, as approved by the President of
the Philippines, which is more or less equivalent to the six (6) months working
capital requirement of the Authority, is hereby authorized to be appropriated in
the General Appropriations Act of the year following the passage of this Act.

Thereafter, the government contribution to the capital of the Authority
shall be provided for in the annual General Appropriations Act.

SEC. 16. Creation of Reserves. — The balance of any revenue or income
of the Authority remaining at the end of each year shall be applied to the
creation of a general reserve or such other reserves as the Authority may deem
appropriate.

SEC. 17. Investment of Funds. —The Authority may, from time to time,
invest any of its funds not immediately required to be expended in meeting its
obligations or in the discharge of the functions of the Authority, in such
government securities approved by the Board.

SEC. 18. Borrowing Powers. —

(a) The Authority may, after consultation with the Bangko Sentral ng
Pilipinas and the Department of Finance, and with the approval of the President
of the Philippines, raise funds, either from local or international sources, by way
of loans, credits or indebtedness or issue bonds, notes, debentures, securities,

and other borrowing instruments, including the power to create pledges,


mortgages, and other voluntary liens or encumbrances on any of its assets or
properties.

(b) All loans contracted by the Authority under this section, together with
all interests and other sums payable in respect thereof, constitute a charge upon
all the revenues and assets of the Authority and rank pari passu with one
another, but shall have priority over any other claim or charge on the revenue
and assets of the Authority. This provision shall not be construed as a
prohibition or restriction on the power of the Authority to create pledges,
mortgages and other voluntary liens or encumbrances on any property of the
Authority.

(c) Except as expressly authorized by the President of the Philippines, the
total outstanding indebtedness of the Authority in the principal amount in local
and foreign currency shall not at any time exceed the net worth of the Authority
at the relevant time.

(d) The President of the Philippines, or a duly authorized representative,
shall guarantee in the name and on behalf of the Republic of the Philippines, the
payments of the loans or other indebtedness of the Authority up to the amount
herein authorized.

(e) All interests paid or payable by the Authority on its loans or other

forms of indebtedness are exempt from taxes of whatsoever nature.


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SEC. 19. Annual Budget. — The Board shall adopt annual estimates of
income and expenditures and estimates of capital expenditure of the Authority
for the ensuing year.

Supplementary estimates may be adopted at any of the meetings of the
Board.

SEC. 20. Annual Accounts. —

(a) The Board shall cause to be kept proper accounts and other records of
the Authority. An annual statement of account shall be rendered in respect to
each year. The Authority shall maintain such accounts and other records under a
commercial system of accounting.

(b) The accounts of the Authority shall be kept and made up to the last
day of December in each year.

(c) The annual statement of accounts of the Authority shall present a true
and fair value of the financial position of the Authority and of the results of the
operations of the Authority for the year to which it relates.

SEC. 21. Annual Report. — On or before March 31 of the following year,
the general manager shall submit to the President, Congress of the Philippines
and NEDA an annual report on the performance of the Authority.

SEC. 22. Auditor. — The Commission on Audit shall appoint a
representative who shall be the auditor of the Authority, together with the
necessary personnel to assist the representative in the performance of duties.

The number and salaries of the auditor and said personnel shall be determined


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by the Chairperson of the Commission on Audit, subject to the rules and
regulations of the Commission on Audit.

The auditor shall, as soon as practicable, but not later than three (3)
months after the accounts have been submitted for audit, send an annual report
to the Board. The auditor may also submit such periodical or special reports as
the Board may deem necessary.

The auditor shall be paid such remuneration, compensation or expenses
as the Board may determine out of the revenues of the Authority.

The Board may engage the services of any person or firm, duly
authorized by law for the audit of accounts, to audit the accounts of the
Authority.

SEC. 23. Customs Jurisdiction. — For the effective implementation of
this Act, the Authority shall exercise jurisdiction over all seas within Philippine
territory and all coasts, ports, airports, harbors, bays, rivers and inland waters
whether navigable or not from the sea and any means of conveyance.

The Authority shall pursue imported goods subject to seizure during its
transport by land, water and air and shall exercise jurisdiction as may be
necessary for the effective enforcement of this Act and RA10863. When a
vessel or aircraft becomes subject to seizure for violation of this Act or RA
10863, a pursuit of such vessel or aircraft which begins within the territorial
waters or air space may continue beyond the same, and the vessel or aircraft

may be seized in the high seas or international air space.


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SEC. 24. Enforcement Authority. — The Authority shall have the power
to exercise enforcement authority within the customs jurisdiction administered
by it, as may be necessary to carry out its powers and functions and attain its
purposes and objectives, without prejudice to the exercise of the functions of
other law enforcement agencies within the area.

SEC. 25. Customs Districts. — For administrative purposes, the general
manager of the Authority shall, subject to the approval of the Secretary of
Finance, divide the country into as many customs districts as necessary, the
respective limits of which may be changed from time to time.

All ports of entry shall be under the supervision and control of the
Authority. The choice of the location of a district office, its business hours and
the staffing pattern thereof shall be based on particular requirements of each
district.

SEC. 26. Ports of Entry, — The principal ports of entry shall be located in
Aparri, San Fernando, Manila, Manila International Container Port, Ninoy
Aquino International Airport, Subic, Clark, Batangas, Legaspi, Iloilo, Cebu,
Tacloban, Surigao, Cagayan de Oro, Zamboanga, Davao, Limay and such other

ports that may be created pursuant to this Act.

For the effective enforcement of the Authority’s functions and without
hampering business and commercial operations of the ports, sea ports and

airport authorities and private ports and airport operators shall provide suitable


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areas for examination and for other customs equipment free of charge within a
definite period of time, as agreed with private port and airport operations, if any.

SEC. 27. Power of the President. When public interest requires, the
President may, by executive order, declare any public wharf, landing place,
infrastructure, street or land, in any port of entry, under the jurisdiction of the
Authority for customs purposes or to authorize a port or terminal operator to
transfer overstaying cargoes in an inland depot or terminal.

SEC. 28. Power of the President to Open and Close Any Port.— Upon
the recommendation of the Secretary of Finance, the President may open or
close any port of entry. Upon closure of a port of entry, the existing personnel
shall be reassigned by the general manager, subject to the approval of the
Secretary of Finance.

SEC. 29. Control Over Premises Used for Customs Purposes. — The
Authority shall, for customs purposes, have exclusive control, direction and
management of customs offices, facilities, warehouses, ports, airports, wharves,
infrastructure and other premises in the customs districts, in all cases without
Prejinlics to the general police powers of the local government units (LGUs),
the Philippine Coast Guard and of law enforcement agencies in the exercise of
their respective functions.

SEC. 30. Customs Control Over Goods. — All goods, including means of

transport, entering or leaving the customs territory, regardless of whether they


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are liable to duties and taxes, shall be subject to customs control to ensure
compliance with customs laws.

In the application of customs control, the Authority shall employ audit-
based controls and risk management systems, use automation to the fullest
extent possible, and adopt a compliance measurement strategy to support risk
management.

The Authority shall seek to cooperate and conclude mutual administrative
assistance agreements with other customs administrations to enhance customs
control. The Authority shall consult, coordinate, and cooperate with other
government regulatory agencies, free zones authorities, and the customs
stakeholders, in general, to enhance customs control.

SEC. 31. Enforcement of Port Regulation of the Bureau of
Quarantine. — Customs officials and employees of the Authority shall
cooperate with the quarantine authorities in the enforcement of the port
quarantine regulations promulgated by the Bureau of Quarantine and shall give
effect to the same insofar as connected with matters of shipping and navigation.

SEC. 32. Trespass or Obstruction of Customs Premises.— No person
shall enter or obstruct a customs office, warehouse, port, airport, wharf, or other
premises under the control of the Authority without prior authorization by the
Authority including the streets or alleys where these facilities are located.

SEC. 33. Special Surveillance for the Protection of Customs Revenue

and Prevention of Smuggling. — The Authority shall conduct surveillance on


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Vessels or aircrafts entering Philippine territory and on imported goods entering
the customs office. The function of the Philippine Coast Guard to prevent and
suppress the illegal entry of these goods, smuggling and other forms of customs
fraud and violations of maritime law and its proper surveillance of vessels
entering or leaving Philippine territory as provided in RA 9993, otherwise
known as the “Philippine Coast Guard Law of 2009,” shall continue to be in
force.

SEC. 34. Temporary Storage of Goods.— Subject to the rules and
regulations to be issued by the Secretary of Finance, the general manager shall
establish a system for temporary storage of imports prior to goods declaration in
case of abandoned or overstaying-goods.

SEC. 35. Police Authority. — The Authority shall have such police
authority within the customs districts and premises administered by it as may be
necessary to carry out its powers and functions and attain its purposes and
objectives, without prejudice to the exercise of the functions of other law
enforcement agencies.

SEC. 36. Assignment of Customs Officers and Employees to Other
Duties. — With the approval of the Secretary of Finance, the general manager,
may assign any employee to any customs district, port, service, division or
office within the staffing pattern or organizational structure of the Authority, or

may assign any employee other duties. Such assignment shall not affect the

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employee's tenure of office nor result in a change of status, demotion in rank or
salary deduction.

SEC. 37. Records to be Kept.— District collectors, deputy district
collectors, and customs officers acting in such capacities shall maintain
permanent records of official transactions and turn-over all records and official
panera torthets respective successors or other authorized officials. The records
shall be made available for inspection by other authorized officials of the
Authority.

SEC. 38. Copies of Goods Declaration. ~ The general manager shall
regularly furnish the NEDA, Philippine Statistics Authority (PSA), Bureau of
Internal Revenue (BIR) and Tariff Commission electronic copies of all customs
goods declaration processed and cleared by the Authority.

The Tariff Commission shall have access to, and the right to be furnished
with copies of liquidated goods declaration and other documents supporting the
goods declaration as finally filed in the Commission on Audit (COA).

For this purpose, the Authority shall maintain electronic records of goods
declaration and other documents supporting the declaration.

SEC. 39. Reports of the Custom Officer.— The custom officer shall
report to the general manager any probable or initiated litigation within the
customs district and shall submit regular monthly reports on all district

transactions.

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SEC. 40. Promulgation of Rules and Regulations.— The general
manager shall, subject to the approval of the Secretary of Finance, promulgate
rules and regulations for the enforcement of this Act. The general manager
shall regularly prepare and publish an updated customs manual, and the rules,
regulations and decisions of the Authority. The general manager shall furnish
the Congress of the Philippines, NEDA and Tariff Commission with electronic
copies of department orders, administrative orders, circulars, and rules and
regulations promulgated pursuant to this Act or RA 10863.

SEC. 41. Applicability of Civil Service Laws. — The Authority and its
officials and employees are subject to the civil service laws and other existing
rules and regulations.

All other officials and employees of the Authority shall be selected and
appointed on the basis of merit and fitness based on a comprehensive and
progressive merit system to be established by the Authority immediately upon
its organization and consistent with civil service rules and regulations. All
professional and technical positions are considered policy determining,
primarily confidential and highly technical in nature. The recruitment, transfer,
promotion, and dismissal of all personnel of the Authority, including temporary
workers, are governed by such merit system.

SEC. 42. Transfer of Existing Facilities and Intangible Assets. — All
existing facilities within the territorial jurisdiction of the Bureau of Customs,

buildings and other properties, movable or immovable, belonging to or

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presently administered by the Bureau of Customs; and all assets, powers, rights,
interest and privileges relating to their customs or operations, including all
equipment, are hereby transferred to the Customs Development Authority.

SEC. 43. Assumption of Rights and Obligations. —The Authority shall
be subrogated to all the rights and assume all the obligations of the Bureau of
Customs. The transfer of powers and functions includes all applicable funds,
personnel record, properties and equipment as may be necessary and all powers
and obligations under the Customs Modernization and Tariff Act and other
customs laws and regulations.

Upon the transfer to and acceptance by the Authority of the existing
physical facilities, intangible assets and completed projects referred to in the
preceding sections, all debts, liabilities and obligations of the Bureau of
Customs in respect of such physical facilities, tangible assets and completed
projects within the ports shall likewise be assumed by the Authority.

SEC. 44.Separation Pay. ~The Commissioner of Customs shall perform
all powers and functions of the Authority until such time as the general manager
of the Authority is appointed to ensure the smooth transfer of responsibility
from the abolished entities to the Authority.

Qualified personnel of the Bureau of Customs may be retained by the
Authority. All officials and employees who are separated from the service shall,

if not eligible for retirement, be given gratuities equivalent to one (1) month

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salary for every year of service on the basis of the highest salary received, in
addition to other benefits accorded to them by existing laws.

SEC. 45. Repealing Clause. — Title II, Chapter 1 of Republic Act No.
10863, otherwise known as the “Customs Modernization and Tariff Act” is
hereby repealed. All other laws, decrees, executive orders, proclamations, rules
and regulations, and other issuances or parts thereof which are inconsistent with
the provisions of this Act are hereby amended or modified accordingly.

SEC. 46. Separability Clause. — If any part or provision of this Act is
declared unconstitutional or invalid, the remaining provisions or parts which are
not affected shall continue to be in full force and effect.

SEC. 47. Effectivity. — This Act shall take effect fifteen (15) days after
its publication in the Oficial Gazette or in a newspaper of general circulation.

Approved,

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