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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
Nineteenth Congress 
First Regular Session 
House Bill No. 
Introduced by Representative PAUL R. DAZA 
EXPLANATORY NOTE 
ARTICLE XII, Section 1 of the Constitution mandates that, “The goals of the national 
economy are a more equitable distribution of opportunities, income, and wealth; … The State 
shall promote industrialization and full employment based on sound agricultural development 
and agrarian reform, through industries that make full and efficient use of human and natural 
resources, and which are competitive in both domestic and foreign markets. However, the State 
shall protect Filipino enterprises against unfair foreign competition and trade practices.” 
Particularly in a world that is getting smaller due to digital technologies and online 
commerce, the commitment toward equality, equity, efficiency, transparency, and fairness 
must always be promoted and protected. If the Philippine economy must become robust and 
competitive, then it must be ready to modernize and improve its trade practices. Such an 
expectation includes significant reforms in customs-related policies, practices, systems, and 
transactions. 
According to estimates by the World Bank, customs reforms implemented by other 
countries increased duty and tax collections by anywhere from 11% to 300%.1 Meanwhile, the 
Bureau of Customs (BoC) is always perennially seen as among the most corrupt agencies in 
the Philippines. A study revealed that BoC is consistently ranked the “least sincere in fighting 
corruption since 2005” and the following are the reasons for this erosion of public trust (K. 
Abante, 2019)2: 
1. Customs inspects one in every four transactions, but only one percent yields derogatory
findings. There is too much discretion with very little yield. Importers complain that
this process is too unpredictable.
2. Importers would rather pay bribes than incur the massive costs of being held at port by
customs officials. This environment encourages collusion, tax evasion, and smuggling.
1 World Bank as cited in Laforga, B. (2021, 26 Mar). World Bank sees Customs modernization as tax-free 
way to boost gov’t revenue. Available at https://www.bworldonline.com/economy/2021/03/26/353091/world-
bank-sees-customs-modernization-as-tax-free-way-to-boost-govt-revenue/ 
2 Abante, K.I.I. (2019). Minimizing Smuggling and Restoring Public Trust in the Philippine Bureau of 
Customs. Available at 
https://www.hks.harvard.edu/sites/default/files/degree%20programs/MPAID/files/Abante%2C%20Ken_P
olicy%20Brief.pdf 
August 18, 2022
2:05 pm
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3. Dishonest officials live impossibly lavish lifestyles and are seldom prosecuted, while
honest officials are seldom rewarded for good behavior. A rank-and-file customs clerk
can flaunt a Porsche. The culture of bribery is so ingrained that there are a dictionary
of words and a classic action film about it.
4. Around P12 billion in illegal drugs and contraband has slipped past porous customs
border control in the past two years. This has endangered public safety.
5. Top leadership changes too fast to build long-term systemic reforms. Since World War
II, the median tenure of customs commissioners has been just one year.
Clearly, reforms must be urgently done. The urgency becomes more critical as we 
rebuild the economy from the impact of the Covid-19 pandemic. 
In view of the foregoing, the passage of this bill is earnestly sought. 
PAUL R. DAZA 
Representative, 1st District of Northern Samar 


3 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
Nineteenth Congress 
First Regular Session 
House Bill No. ___ 
Introduced by Representative PAUL R. DAZA 
AN ACT  
AMENDING SECTIONS  102, 104, 119(b), 201, 209, 307, 402, 407, 423, 427,  
431, 800(g), 802, 806, 900, 1100, 1111, 1117, 1118, 1129, 1131, 1135, 1138, 1141, 1147(a), 
1204, 1226, 1400, 1505 AND 1512;  REPEALING SEC. 709; AND ADDING SECTION 
440-A  ALL UNDER REPUBLIC ACT NO. 10863, OTHERWISE KNOWN AS  THE
CUSTOMS MODERNIZATION AND TARIFF ACT 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled: 
SECTION  1.  Section 102 of RA No. 10863 is hereby amended to read as follows: 
“SEC. 102. Definition of Terms. - As used in this Act: 
x x x 
[(qq) Tentative Release refers to a case where the assessment is disputed and pending 
review, an importer may put up a cash bond equivalent to the duties and taxes due on goods 
before the importer can obtain the release of said goods;] 
[(rr)] (QQ) Transit refers to the customs procedure under which goods, in [its] THEIR 
original form, are transported under customs control from one customs office to another, or to 
a free zone; 
[(ss)] (RR) Transshipment refers to the customs procedure under which goods are 
transferred under customs control from the importing means of transport to the exporting means 
of transport within the area of one customs office, which is the office of both importation and 
exportation; 
[(tt)] (SS) Traveler refers to any person who temporarily enters the territory of a 
country in which he or she does not normally reside (non-resident), or who leaves that territory, 
and any person who leaves the territory of a country in which he or she normally resides 
(departing resident) or who returns to that territory (returning resident); and 
[(uu)] (TT) Third Party refers to any person who deals directly with the Bureau, for 
and on behalf of another person, WHICH MAY ALSO INCLUDE IMPORTERS, 
EXPORTERS, LOGISTICS PROVIDERS, CARRIERS, AIRLINES, SHIPPING 
LINES, 
SHIPPING 
AGENTS, 
FORWARDERS, 
CONSOLIDATORS, 
AND 
WAREHOUSE OPERATORS, IF SUCH PERSONS OR ENTITIES TRANSACT WITH 
THE BUREAU ON MATTERS relating to the importation, exportation, movement or storage 
of goods.  
3789


 
4 
 
SEC. 2.  Section 104 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 104. When Duty and Tax are Due on Imported Goods. – Except as otherwise 
provided for in this Act or in other laws, all goods, when imported into the Philippines, shall 
be subject to duty upon importation, including goods previously exported from the Philippines. 
 
Unpaid duties, taxes and other charges shall incur legal interest of twenty percent 
(20%) per annum computed from the date of final assessment under Section 429 of this Act 
OR UPON RECEIPT OF THE DEMAND TO PAY DEFICIENCIES IN DUTIES AND 
TAXES ISSUED BY THE COMMISSIONER IN CASE OF POST CLEARANCE 
AUDIT, when payment becomes due and demandable. The legal interest shall likewise accrue 
on any fine or penalty imposed. 
 
Upon payment of the duties, taxes and other charges, the Bureau shall issue the 
necessary receipt or document as proof of such payment. 
 
SEC. 3.  Section 119 (b) of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 119.  Restricted Importation, and Exportation.— Except when authorized by 
law or regulation, the importation and exportation of the following restricted goods are 
prohibited: 
 
(a) 
x x x 
 
(b) 
Roulette wheels[,]; gambling outfits[,]; [loaded dice, marked cards,] machines, apparatus 
or mechanical devices used in gambling;  or the distribution of money, cigars, cigarettes 
or other goods when such distribution is dependent on chance, including jackpot and 
pinball machines or similar contrivances, or parts thereof; 
 
   x x x.” 
 
SEC. 4.   Section 201 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 201.   Powers and Functions of the Commissioner.— The Commissioner shall 
have the following powers and functions: 
 
(a)  x x x; 
(b)  x x x; 
(c)  x x x; 
(d) Review and decide disputed assessments and other matters related thereto, subject 
to [review by the Secretary of Finance and] the exclusive appellate jurisdiction of the Court of 
Tax Appeals (CTA); 
(e) x x x 
(f) Assignment or reassignment of any customs officer subject to the approval of the 
Secretary of Finance: [Provided, That District Collectors and other customs officers that 
perform assessment functions shall not remain in the same area of assignment for more than 
three (3) years;] PROVIDED, THAT THE MOVEMENT OF A CUSTOMS OFFICER 
WITH SALARY GRADE 24 AND ABOVE OR THOSE DESIGNATED AS DIVISION 
CHIEF 
SHALL 
BE 
BASED 
ON 
REVENUE 
TARGET 
COLLECTION 
PERFORMANCE; 
 (g) x x x.” 
 
SEC. 5.   Section 209 of RA No. 10863 is hereby amended to read as follows: 


 
5 
 
 
“SEC. 209. Assignment of Customs Officers and Employees to other Duties. – The 
Commissioner[, with the approval of the Secretary of Finance,] may assign any employee of 
the bureau to any port, service, division or office of the Bureau within the Bureau's staffing 
pattern or organizational structure, or may assign any employee other duties, SUBJECT TO 
SECTION 201 (F) OF THIS ACT: Provided, That such assignment shall not affect the 
employee's tenure of office nor result in a change of status, demotion in rank [and/] or [salary 
deduction] REDUCTION IN SALARY: 
 
PROVIDED FURTHER, THAT DISTRICT COLLECTORS AND OTHER 
CUSTOMS OFFICERS PERFORMING ASSESSMENT FUNCTIONS SHALL 
REMAIN IN THE SAME AREA OF ASSIGNMENT FOR A MINIMUM PERIOD OF 
SIX (6) MONTHS FROM THE DATE OF ASSUMPTION, CONSISTENT WITH 
SECTION 3 OF REPUBLIC ACT NO. 9335, OTHERWISE KNOWN AS THE 
ATTRITION ACT OF 2005, AND A MAXIMUM PERIOD OF THREE (3) YEARS, 
EXCEPT FOR DUE CAUSE, SUCH AS VIOLATION OF ANTI-GRAFT AND 
CORRUPT PRACTICES AND OTHER RELEVANT LAWS.” 
 
SEC. 6.   Section 307 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 307. Temporary Storage of Goods.— Subject to the rules and regulations to 
be issued by the Secretary of Finance, the Commissioner shall establish a system for temporary 
storage of imports prior to THE LODGMENT OF goods declaration [in cases of abandoned 
or overstaying goods].” 
 
SEC. 7.   Section 402 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 402. Goods Declaration for Consumption.— All goods declaration for 
consumption shall be cleared through a formal entry process except for the following goods 
which shall be cleared through an informal entry process: 
 
(a) x x x; and 
            (b) Personal and household effects or goods, not in commercial quantity [imported in a 
passenger’s baggage or mail]. 
 
x x x 
x x x.” 
 
SEC. 8.   Section 407 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 407. Goods Declaration and Period of Filing.—  
 
 
 
 
 
x x x  
 
 
 
 
 
x x x 
 
 
Goods declaration [must] SHALL be lodged within fifteen (15) days from the date 
of discharge of the last package from the vessel or aircraft AND THE CORRESPONDING 
DUTIES, TAXES, AND OTHER CHARGES SHALL BE PAID UPON LODGEMENT. 
[The period to file the goods declaration may, upon request, be extended on valid grounds for 
another fifteen (15) days: Provided, That the request is made before the expiration of the 
original period within which to file the goods declaration: Provided, However, That the] THE 
period of the lodgement of the goods declaration may be adjusted by the Commissioner.” 
 
SEC. 9.   Section 423 (2) of RA No. 10863 is hereby amended to read as follows: 


 
6 
 
 
“SEC. 423. Determination of the De Minimis Value.— No duties and taxes shall be 
collected on goods with an FOB or FCA value of ten thousand pesos (₱10,000.00) or below. 
The Secretary of Finance [shall adjust] MAY INCREASE OR DECREASE the de minimis 
value as provided herein, every three (3) years after the effectivity of this Act. [The value herein 
stated shall be adjusted to its present value using the CPI, as published by the PSA].” 
 
SEC. 10.   Section 427 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 427.   Readjustment of Appraisal, Classification or Return. - Such appraisal, 
classification or return, as finally passed upon and approved or modified by the 
District Collector, shall not be altered or modified in any manner, except:  
 
 
 
 
 
       
(1) x x x 
            (2) Within fifteen (15) days after such payment, upon request for reappraisal or 
reclassification addressed to the Commissioner by the District Collector, if the appraisal or 
classification is [deemed to be low] INCORRECT; 
(3) x x x;  
(4) x x x.” 
 
SEC. 11.  Section 431 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 431. Release of Goods after Payment of Duties and Taxes.— Goods declared 
shall be released when duties and taxes and other [lawful] charges                          AS FINALLY 
ASSESSED BY THE BUREAU  have been paid or secured and all the pertinent laws, rules 
and regulations have been complied with. 
 
 
 
 
 
x x x.” 
 
SEC. 12.  A new Section 440-A in RA No. 10863 is hereby inserted to read as follows: 
 
SEC. 440-A.  PRE-SHIPMENT INSPECTION. – THE BUREAU SHALL 
ESTABLISH 
AND 
IMPLEMENT 
A 
PRE-SHIPMENT 
INSPECTION 
OF 
CONTAINERIZED 
CARGOES: 
PROVIDED, 
THAT 
THE 
PRE-SHIPMENT 
INSPECTION SHALL DEPEND ON RISK  PARAMETERS AS DETERMINED BY 
THE 
BUREAU 
AND 
OTHER 
COMPETENT 
AUTHORITIES: 
PROVIDED 
FURTHER, THAT PRE-SHIPMENT INSPECTION SHALL NOT BE USED FOR 
CLASSIFICATION AND VALUATION PURPOSES PURSUANT TO SECTION  5  OF 
THE WORLD TRADE ORGANIZATION (WTO) AGREEMENT ON TRADE 
FACILITATION.  
 
THE RULES AND REGULATIONS SHALL BE ISSUED BY THE BUREAU 
UPON CONSULTATION WITH THE CONCERNED SECTORS AND APPROVED BY 
THE SECRETARY OF FINANCE. 
             
SEC.  13.   Section 709 of RA No. 10863 is hereby repealed. 
 
SEC.  14. Section 800 (g) of RA No. 10863 is hereby amended to read as follows: 
“SEC. 800. Conditionally Tax and/or Duty-Exempt Importation. – x x x  
(a)  x x x 
(b)  x x x 
(c)  x x x 
(d)  x x x 


 
7 
 
(e)  x x x 
(f)  x x x 
 
(g) [Residents of the Philippines,] OFWs or other Filipinos while residing abroad or 
upon their return to the Philippines shall be allowed to bring in or send to their families or 
relatives in the Philippines balikbayan boxes which shall be exempt from applicable duties and 
taxes imposed under the NIRC of 1997, as amended: Provided, That balikbayan boxes shall 
contain personal and household effects only and shall neither be in commercial quantities nor 
intended for barter, sale or for hire and that the FCA value of which shall not exceed one 
hundred fifty thousand pesos (₱150,000.00); Provided, Further, That every three (3) years after 
the effectivity of this Act, the Secretary of Finance shall adjust the amount herein stated to its 
present value using the CPI as published by the PSA;  Provided, Finally, That [residents of the 
Philippines,] OFWs or other Filipinos  WHILE RESIDING ABROAD  can only avail of this 
privilege up to [three times] A MAXIMUM  FCA VALUE OF THREE HUNDRED 
THOUSAND PESOS (PHP300,000.00) in a calendar year.  Any amount in excess of the 
allowable non-dutiable value shall be subject to the applicable duties and taxes; 
 
                 1)  x x x.” 
 
SEC. 15.   Section 802 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 802. Types of Customs Bonded Warehouses (CBWs).— x x x. 
Manufacturing customs bonded warehouse may be of the following types; (a) miscellaneous 
customs bonded warehouse; (b) customs common bonded warehouse; [or] (c) industry-specific 
bonded warehouse; OR (D) GARMENTS AND TEXTILES BONDED WAREHOUSE. 
 
                                              x x x.” 
 
SEC. 16.   Section 806 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 806. Customs Control Over CBWs and CFWs.— The Bureau shall, for 
customs purposes, exercise control over, direct and manage CBWs and CFWs pursuant to 
Section 303 of this Act and [likewise] over the goods thereat pursuant to Section 301 of this 
Act.[:] THE BUREAU SHALL MAINTAIN THE NUMBER OF OFF-DOCK 
CONTAINER YARD OR CONTAINER FREIGHT STATION (CY/CFS) AND CBWS 
OPERATING IN A PORT TO A NUMBER CONSISTENT WITH THE  BUSINESS  
REQUIREMENT OF THE PORT. THE UTILIZATION RATE, SERVICES 
PROVIDED, AND FACILITIES OF THE EXISTING OFF-DOCK CY/CFS SHALL BE 
CONSIDERED IN THE  APPLICATION AND RENEWAL FOR AUTHORITY TO 
OPERATE AN OFF-DOCK CY/CFS: Provided, That the Bureau shall not be liable for any 
loss or damage of the goods stored for safekeeping in any CBW, CFW, yard or premises.” 
 
SEC. 17.   Section 900 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 900. Basis of Duty Drawback. (A)  x x x 
(B) x x x 
(C) x x x 
 
(1) x x x 
 
(2) x x x 
 
(3) x x x 
(4) The exportation shall be made within one (1) year after the importation of 
materials used, and THE claim of refund or tax  
credit shall be filed within [six (6) months] ONE (1) YEAR  
from the date of exportation; and 


 
8 
 
(5)   x x x” 
 
SEC. 18.   Section 1100 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 1100. Classification Ruling.— An importer or exporter may file a written 
application for an advance ruling on the tariff classification of goods with the Commission. The 
Commission shall render a ruling within thirty (30) days from receipt of a properly documented 
application. 
 
 
 
When a declared tariff classification of goods, WHICH IS not THE subject of a 
pending application for advance ruling, is in dispute AND THE DISTRICT COLLECTOR 
DETERMINES THAT IT INVOLVES A HIGHLY TECHNICAL QUESTION OF 
TARIFF CLASSIFICATION, [the importer, exporter, or] the Bureau shall submit the matter 
to the Commission for a ruling, without prejudice to the application of Section 1106 of this Act 
on “protest”: Provided, That such rulings of the Commission on commodity classification shall 
be binding upon the Bureau, unless the Secretary of Finance [shall] rules otherwise. 
 
FOR THIS PURPOSE, TARIFF CLASSIFICATION SHALL BE 
CONSIDERED AS A HIGHLY TECHNICAL QUESTION WHEN THE GOODS 
ARE CLASSIFIABLE UNDER MORE THAN ONE ASEAN HARMONIZED 
TARIFF 
NOMENCLATURE 
(AHTN) 
CHAPTER, 
HEADING, 
OR 
SUBHEADING; OR THE PRODUCT DESCRIPTION IS NOT PROVIDED 
UNDER ANY AHTN HEADING OR SUBHEADING.” 
 
SEC. 19.   Section 1111 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 1111. Alert Orders. – Alert orders are written orders issued by customs 
officers as authorized by the Commissioner on the basis of derogatory information regarding 
possible noncompliance with this Act. An alert order will result in the suspension of the 
processing of the goods declaration and the conduct of [physical or nonintrusive] inspection of 
the goods within forty-eight (48) hours from issuance of the order: PROVIDED, THAT THE 
TERMINAL OPERATORS SHALL ENSURE THAT THE INSPECTION IS 
SCHEDULED AND CONDUCTED WITHIN THE SAID PERIOD. Within forty-eight 
(48) hours or, in the case of perishable goods, within twenty-four (24) hours from inspection, 
the alerting officer shall recommend the continuance of processing of goods in case of a 
negative finding, or issuance of a warrant of seizure and detention if a discrepancy between the 
declaration and actual goods is found. The Bureau's information system shall immediately 
reflect the imposition or lifting of an alert order. 
 
x x x 
 
 
 
(a) x x x 
 
 
 
(b) x x x 
 
 
 
(c) x x x  
 
 
 
(d) x x x 
 
 
 
 
 
 
x  x  x 
 
An alert order may be issued [only after lodgement of the goods declaration and] prior 
to the release of goods from customs custody. Under no circumstances shall the suspension of 
the processing of goods declaration be allowed except through an alert order issued by an 
authorized customs officer. 
 
x  x  x.” 


 
9 
 
 
SEC. 20.   Section 1117 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 1117.  Warrant of Seizure or Order of Release. – The District Collector shall 
have the authority to issue a warrant of seizure of the goods upon determination of the existence 
of probable cause and in case of nonexistence thereof, [the issuance of the order of release] 
RECOMMEND THE LIFTING OF THE ALERT ORDER.  In case the District Collector 
[issued an order of release,] RECOMMENDS THE LIFTING OF THE ALERT ORDER, 
the District Collector shall immediately transmit all the records to the Commissioner, who shall 
automatically review THE LIFTING OF THE ALERT ORDER within forty-eight (48) 
hours, or IN CASE OF PERISHABLE GOODS, within twenty-four (24) hours. [, in case of 
perishable goods.] When no decision is made by the Commissioner within the prescribed 
period, the imported goods shall be deemed lifted. 
 
The ORDER TO RELEASE [lifting of the alert order] shall be issued by the District 
Collector only upon the affirmation of [the] THIS decision [of the District Collector] by the 
Commissioner, or after the lapse of the period of review by the Commissioner, whichever is 
earlier.” 
 
SEC. 21.   Section 1118 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 1118.  Sale of Perishable Goods During Forfeiture Proceedings. – [Upon 
motion of the importer of the perishable goods, the] PERISHABLE goods may be sold at a 
public auction during the pendency of the forfeiture proceedings. The proceeds of the auction 
shall be held in escrow until the final resolution of the proceedings.” 
 
SEC. 22.   Section 1129 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 1129.  Abandonment, Kinds and Effects of. - Imported goods are deemed 
abandoned under any of the following circumstances: 
 
(a) x x x; or 
 
(b) When the owner, importer, consignee, or interested party after due notice, fails to 
[file] LODGE the goods declaration AND PAY THE DUTIES AND TAXES BASED ON 
SELF-ASSESSMENT   within the prescribed period in Section 407 of this Act: Provided, 
That the term goods declaration shall include provisional or incomplete goods declaration 
deemed valid by the Bureau as provided in Section 403 of this Act. For this purpose, it is the 
duty of the District Collector to post a list of all packages discharged and their consignees, 
whether electronically or physically in the District Office, or send a notice to the consignee 
within five (5) days from the date of discharge; or 
 
 
(c) Having [filed] LODGED such goods declaration AND PAID THE DUTIES AND 
TAXES BASED ON SELF-ASSESSMENT, the owner, importer, consignee or interested 
party after due notice, fails to pay the [assessed] READJUSTED duties, taxes and other 
charges thereon, or, if the OWNER, IMPORTER, CONSIGNEE, OR INTERESTED 
PARTY OF THE regulated goods [failed] FAILS  to comply with Section 117 of this Act[,]  
within fifteen (15) days from the date of final assessment: Provided, That if such regulated 
goods are the subject of an alert order and the assessed duties, taxes and other charges thereof 
are not paid within fifteen (15) days from notification by the Bureau of the resolution of the 
alert order, the same shall also be deemed abandoned; or 
 
[(d) Having paid the assessed duties, taxes and other charges, the owner, importer or 
consignee or interested party after due notice, fails to claim the goods within thirty (30) days 


 
10 
 
from payment. For this purpose, the arrastre or warehouse operator shall report the unclaimed 
goods to the District Collector for disposition pursuant to the provisions of this Act; or] 
 
[(e)] (D) When the owner or importer fails to claim goods in customs bonded 
warehouses within the prescribed period. 
 
x x x.” 
 
SEC. 23.   Section 1131 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 1131. Authority of the Commissioner to [Make] Compromise. – [Subject to the 
approval of the Secretary of Finance,] The Commissioner may compromise any CIVIL OR 
administrative case arising under this Act involving the imposition of fines and surcharges, 
including those arising from the conduct of a post clearance audit, unless otherwise specified 
by law. 
 
Cases involving forfeiture proceedings shall, however, not be subject to any 
compromise UNLESS APPROVED BY THE COURT, ON APPEAL. PROVIDED, THAT 
ANY 
COMPROMISE 
INVOLVING 
THE 
IMPOSITION 
OF 
FINES 
AND 
SURCHARGES AMOUNTING TO TEN MILLION PESOS (PHP10,000,000.00) AND 
ABOVE SHALL BE SUBJECT TO THE APPROVAL OF THE SECRETARY OF 
FINANCE.” 
 
SEC. 24.   Section 1135 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 
1135.  
Supervision 
and 
Control 
over 
Criminal 
and 
Civil 
Proceedings.— Civil and criminal actions and proceedings instituted on behalf of the 
Government under the authority of this Act or other laws enforced by the Bureau shall be 
brought in the name of the [g]Government of the Philippines  and shall be prosecuted and 
handled by the Bureau with the assistance of the Department of Justice (DOJ) OR OFFICE 
OF THE SOLICITOR GENERAL (OSG): Provided, That the determination of the existence 
of probable cause and the subsequent filing of any criminal [or civil] case with the proper court 
against violators of this Act shall exclusively belong to the DOJ:  Provided, however, That no 
civil or criminal action for the recovery of duties or the enforcement of any fine, penalty, 
forfeiture [under] OR ANY VIOLATION OF  this Act shall be filed in court without the 
approval of the Commissioner.” 
 
SEC. 25.   Section 1138 of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 1138.   Fraud Investigation and Prosecution. – No criminal case for 
violation of this [title] ACT shall be instituted without the approval of the Commissioner. 
[pursuant to the provisions of this Act.] 
 
x x x.” 
 
SEC. 26.   Section 1141 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 1141. Mode of Disposition. – x x x. 
 
x x x. 
THE  BUREAU MAY ENGAGE  PRIVATE SERVICE PROVIDERS TO 
CONDUCT PUBLIC AUCTIONS PURSUANT TO SECTION 1513 OF THIS ACT:  
PROVIDED, 
THAT 
THE 
SERVICE 
PROVIDER 
ENGAGED 
SHALL 
BE 
RESPONSIBLE FOR UNDERTAKING ALL THE PUBLIC AUCTIONS OF THE 


 
11 
 
BUREAU: PROVIDED FURTHER, THAT ACTIVITIES OF THE SERVICE 
PROVIDER SHALL BE LIMITED TO NON-SOVEREIGN AND ANCILLARY 
FUNCTIONS OF THE BUREAU: PROVIDED FINALLY, THAT THE BUREAU 
SHALL RETAIN JURISDICTIONAL CONTROL AND SUPERVISION OVER THESE 
GOODS AS WELL AS THE OPERATIONS OF THE SERVICE PROVIDER SO 
CONTRACTED.” 
 
SEC. 27.   Section 1147 (a) of RA No. 10863 is hereby amended to read as follows: 
 
 
“SEC. 1147.  Disposition of Restricted Goods.— Restricted goods as described in 
Section 119 of this Act shall be disposed as follows: 
 
(a) Dynamite, gunpowder, ammunitions and other explosives, firearms and weapons 
of war, and parts thereof shall be turned over to the [AFP] PHILIPPINE NATIONAL 
POLICE (PNP); 
(b) x x x; 
(c) x x x; 
(d) x x x; 
(e) x x x;  
(f) x x x.” 
 
SEC. 28.   Section 1204 of RA No. 10863 is hereby amended to read as follows:  
 
“SEC. 1204.   Manifest Required of Vessel from Foreign Port. — Every vessel from a 
foreign port must have on board a complete manifest of all its cargoes. 
 
All cargoes intended to be landed at a port in the Philippines must be described in 
separate manifests for each port of call. Each manifest shall include the port of departure and 
the port of delivery with the marks, numbers, quantity, and description of the packages and the 
ULTIMATE consignees COVERED BY THE BILL OF LADING OR AIRWAY BILL.   
Every vessel from a foreign port must have on board complete manifests of passengers and 
baggage, in the prescribed form, setting forth the destination and all particulars required by 
immigration laws. Every vessel shall present to the proper customs officers upon arrival in ports 
of the Philippines a complete list of all sea stores then on board.  If the vessel does not carry 
[cargo] CARGOES or passengers, the manifest must show that no cargo or passenger is carried 
from the port of departure to the port of destination in the Philippines. 
 
IN ADDITION,   A VESSEL OR AIRCRAFT FROM A FOREIGN PORT MUST 
DECLARE IN THE INWARD CARGO MANIFEST, BILL OF LADING OR AIRWAY 
BILL THE VALUE OF THE ARTICLES OR GOODS AS THEY APPEAR IN THE 
COMMERCIAL INVOICE OR LETTER OF CREDIT, OR BOTH.   THE VALUE 
STATED THEREIN MAY BE THE BASIS FOR RISK ASSESSMENT.  
 
A true and complete copy of the cargo manifest shall be electronically sent in advance 
by the shipping company, NVOCC, freight forwarder, cargo consolidator, or their agents within 
the cut-off period as may be determined by the Bureau before the arrival of the carrying vessel 
at the port of entry.  
 
Upon arrival of the carrying vessel, the shipping company, NVOCC, freight forwarder, 
cargo consolidator, or their agents shall provide two (2) hard copies of the cargo manifest to 
the Bureau in case the port of entry is either the Port of Manila (PoM) or the Manila 
International Container Port (MICP), and one (1) copy in the case of the other ports of entry. 
 


 
12 
 
A cargo manifest shall in no case be changed or altered after entry of vessel, except by 
means of an amendment, under oath, by the master, consignee or agent thereof, which shall be 
attached to the original manifest: Provided, That after the invoice and/or goods declaration 
covering an importation have been received and recorded in the office of the appraiser, no 
amendment of the manifest shall be allowed, except when it is obvious that a clerical error or 
any other discrepancy has been committed in the preparation of the manifest, without any 
fraudulent intent, the discovery of which would not have been made until after examination of 
the importation has been completed.” 
 
SEC. 29.   Section 1226 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC 1226. Supervision and Regulation of Third Parties. – Third parties transacting 
with the Bureau on behalf of importers and consignees shall be treated equally as true importers 
or consignees[.Third parties transacting with the Bureau] AND shall LIKEWISE be liable for 
acts committed in violation of this Act and related laws. 
 
A. [Upon the recommendation of the] THE Commissioner, WITH THE APPROVAL OF 
the Secretary of Finance, shall issue rules and regulations to govern and regulate the 
conduct of all third parties dealing directly with the Bureau in relation to the importation, 
exportation, movement, storage and clearance of goods for and on behalf of another person.   
The rules and regulations shall provide for specific conditions when third parties may or 
may not directly transact with the Bureau WHICH SHALL INCLUDE A RISK 
MANAGEMENT SYSTEM FOR THIRD PARTIES, TAKING INTO ACCOUNT 
THEIR CAPITALIZATION, VOLUME OF TRANSACTIONS, TRACK RECORD, 
AND ANY OTHER FACTOR AFFECTING THEIR CAPABILITY TO IMPORT, 
EXPORT, MOVE, STORE OR CLEAR GOODS. [shall provide a written notice in case 
such third parties are, for valid reasons, barred from transacting with the Bureau]  
 
B. THE 
BUREAU 
SHALL 
CREATE 
A 
COMMITTEE 
COMPOSED 
OF 
REPRESENTATIVES FROM THE BUREAU OF CUSTOMS AND THE 
DEPARTMENTS OF FINANCE, TRADE AND INDUSTRY, TRANSPORTATION, 
AND THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY, AND 
OTHER GOVERNMENT AGENCIES REGULATING THIRD PARTIES THAT 
TRANSACT WITH THE BUREAU. THE COMMITTEE, WHICH SHALL BE 
CHAIRED BY THE SECRETARY OF  FINANCE,  SHALL PRESCRIBE AND 
REGULATE RATES AND OTHER CHARGES FOR THE SERVICES RENDERED 
BY THESE THIRD PARTIES IN ACCORDANCE WITH THE TRADE 
FACILITATION PLANS AND PROGRAMS OF THE COUNTRY.  
 
Third party is defined under Section 102 [(uu)] (TT) of this Act. [For purposes of this 
section, third parties may also refer to logistics providers, importers, exporters, carriers, 
airlines, shipping lines, shipping agents, forwarders, consolidators, port and terminal operators, 
and warehouse operators, if such persons or entities transacted with the Bureau.]” 
 
SEC. 30.   Section 1400 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 1400.  Misdeclaration, Misclassification, Undervaluation in Goods 
Declaration.— Misdeclaration as to quantity, quality, description, weight, or measurement of 
the goods, or misclassification through insufficient or wrong description of the goods or use of 
wrong tariff heading resulting to a discrepancy in duty and tax to be paid between   what is 
legally determined upon assessment and what is declared, shall be subject to a surcharge 
equivalent to two hundred fifty percent (250%) of the duty and tax due. No surcharge shall be 
imposed when the discrepancy in duty AND TAX is less than ten percent (10%), or when the 


 
13 
 
declared tariff heading is rejected in a formal customs dispute settlement process involving 
[difficult or]   A highly technical question of tariff classification, or when the tariff classification 
declaration relied on an official government ruling.” 
 
 
 
 
 
x  x  x 
 
SEC. 31.   Section 1505 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 1505.  Authority of Official to Administer Oaths and Take Testimony. – The 
Commissioner, District Collectors and their deputies, and other customs officers especially 
deputized by the COMMISSIONER OR THE District Collector shall have authority to 
administer oaths and take testimony in connection with any matter within the jurisdiction of the 
Bureau and, in connection therewith, ISSUE SUBPOENA DUCES TECUM REQUIRING 
THE PRODUCTION [may require the production] of relevant papers, documents, books and 
records in accordance with law.” 
 
SEC. 32.  Section 1512 of RA No. 10863 is hereby amended to read as follows: 
 
“SEC. 1512. Reward to Persons Instrumental in the Actual Collection of Additional 
Revenues Arising from the Discovery of Violations of this Act. – A cash reward equivalent to 
twenty percent (20%) OR TEN MILLION PESOS                     (PHP 10,000,000.00), 
WHICHEVER IS LOWER, of the actual proceeds from the sale of smuggled goods and 
confiscated goods or actual collection of additional revenues shall be given to the [customs and] 
non-customs informers or whistleblowers  who are instrumental in the collection of additional 
revenues arising from the discovery of violations of this Act in accordance with the rules and 
regulations to be issued by the Secretary of Finance:  PROVIDED, THAT THE NON-
CUSTOMS INFORMERS OR WHISTLEBLOWERS ARE NOT RELATED TO ANY 
CUSTOMS OFFICER OR EMPLOYEE WITHIN THE FOURTH CIVIL DEGREE OF 
CONSAGUINITY OR AFFINITY.” 
 
SEC.  33.   Implementing Rules and Regulations. -  The Secretary of Finance shall, upon the 
recommendation of the Commissioner of Customs, promulgate the necessary rules and regulations for 
the effective implementation of this Act.  
 
SEC. 34. Separability Clause. - If any provision of this Act shall be held unconstitutional or 
invalid, the other provisions not otherwise affected shall remain in full force and effect. 
 
SEC. 35.  Repealing Clause. - All laws, decrees, executive orders, rules and regulations or parts 
thereof which are contrary to or inconsistent with this Act are hereby repealed, amended or modified 
accordingly. 
 
SEC.   36.   Effectivity.  -    This Act   shall   take   effect   fifteen (15) days after its 
publication either in the Official Gazette or in a newspaper of general circulation. 
 
Approved,