Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

Eighteenth Congress
Second Regular Session

HOUSE BILL No. _ 1387

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 Tariff Act (CMTAY” 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 ms operations.

In view of the foregoing, approval of this bill is earnestly sou

FREDENIL H. CASTRO
Representative, 2" District - Capiz


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

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 1387

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. —Itis 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 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.


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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, hereinafier 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:

(@) 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;"

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

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

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

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

(© 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 contraband;

(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;

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(i) Conduet 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;

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

(m) Provide training programs and training fac

ies 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:

(@) Succeed in its corporate name;

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

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

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

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

(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.


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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;

(© Commissioner of Internal Revenue;

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

(©) Secretary of Trade and Industry;

(Secretary of Public Works and Highways;

(g) Secretary of Environment ad Newel 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 altemates 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. In 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;


(© 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;

(4) 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

(©) 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:

(@) 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;

(©) 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;

(4) 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;


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

(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;

(@) Exclusive and original jurisdiction to interpret the provisions ofthis 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;

@ 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);

(&) 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;

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


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(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 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 {rom 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 tariffs
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;


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

trade;

(©) Examine, classify and value imported goods;

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

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

() 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.

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

nctions, 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.


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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:

(@) Enforce compliance of regulated goods with customs laws, rules and regulations
to facilitate the flow of legitimate trade;

(b) Prevent importation and exportation of prohibited goods;

(©) Prevent smuggling and other customs fraud; and

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

(©) 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.


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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:

(@ 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 ,

(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. —

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(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) Alll 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.

(©) 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.

(©) All interests paid or payable by the Authority on its loans or other forms of
indebtedness are exempt from taxes of whatsoever nature.

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. —

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(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 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,


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ports, airports, harbors, bays, tivers 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.

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 entty shall be located in Aparri, San
Femando, Manila, Manila Intemational Container Port, Ninoy Aquino International Airport,
Subic, Clark, Batangas, Legaspi, Ioilo, 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

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ports and airport operators shall provide suitable 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.

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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 prejudice 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 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

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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 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 200! 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.

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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 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 papers to their 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 ofticer 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.

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

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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 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.

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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 ifnot eligible for retirement,
be given gratuities equivalent to one (1) month 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 Il, 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 afier its publication
in the Official Gazette or in a newspaper of general circulation.

Approved,

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