CHAPTER 2 GENERAL AND COMMON PROVISIONS

Section 101. Declaration of Policy. - It is hereby declared the policy of the State to protect and enhance government revenue, institute fair and transparent customs and tariff management that will efficiently facilitate international trade, prevent and curtail any form of customs fraud and illegal acts, and modernize customs and tariff administration. Towards this end, 

The State shall:

• Develop and implement programs for the continuous enhancement of customs systems and processes that will harmonize customs procedures;

• Adopt clear and transparent customs rules, regulations, policies and procedures, consistent with international standards and customs best practices;

• Establish a regime of transparency of and accessibility to customs information, customs laws, rules, regulations, administrative policies, procedures and practices, in order to ensure informed and diligent compliance with customs practices and procedures by stakeholders;

• Consult, coordinate and cooperate with other government agencies and the private sector in implementing and developing customs policy;

• Provide a fair and expeditious administrative and judicial appellate remedy for customs related grievances and matters;

• Employ modern practices in customs administration and utilize information and communications technology in the implementation of customs functions; and

• Institute professionalism and meritocracy in customs tax administration by attracting and retaining competent and capable customs officers and personnel to enforce the provisions of this Act.

Section 102. Definition of Terms:

• Abatement - shall refer to the reduction or diminution, in whole or in part, of duties and taxes where payment has not been made;

• Actual or Outright Exportation - shall refer to the customs procedure applicable to goods which, being in free circulation, leave the Philippine territory and are intended to remain permanently outside it;

• Admission - shall refer to the act of bringing imported goods directly or through transit into a free zone;

• Airway Bill (AWB) - shall refer to a transport document for airfreight used by airlines and international freight forwarders which specify the holder or consignee of the bill who has the right to claim delivery of the goods when they arrive at the port of destination. It is a contract of carriage that includes carrier conditions, such as limits of liability and claims procedures. In addition, it contains transport instructions to airlines and carriers, a description of the goods, and applicable transportation charges;

• Appeal - shall refer to the remedy by which a person who is aggrieved or adversely affected by any action, decision, order, or omission of the Bureau, seeks redress before the Bureau, the Secretary of Finance, or competent court, as the case may be;

• Assessment - shall refer to the process of determining the amount of duties and taxes and other charges due on imported and exported goods

• Authorized Economic Operator (AEO) - shall refer to the importer, exporter, customs broker, forwarder, freight forwarder, transport provider, and any other entity duly accredited by the Bureau based on the World Customs Organization (WCO) Framework of Standards to Secure and Facilitate Global Trade, the Revised Kyoto Convention (RKC), the WCO Supply Chain Management Guidelines and the various national best practices to promote trade facilitation and to provide a seamless movement of goods across borders through secure international trade supply chains with the use of risk management and modern technology;

• Bill of Lading (B/L) - shall refer to a transport document issued by shipping lines, carriers and international freight forwarders or non-vessel operating common carrier for water-borne freight. The holder or consignee of the bill has the right to claim delivery of the goods at the port of destination. It is a contract of carriage that includes earner conditions, such as limits of liability and claims procedures. In addition, it contains transport instructions to shipping lines and carriers, a description of the goods, and applicable transportation charges;

• Bureau - shall refer to the Bureau of Customs

• Carrier - shall refer to the person actually transporting goods or in charge of or responsible for the operation of the means of transport such as airlines, shipping lines, freight forwarders, cargo consolidators, non-vessel operating common carriers and other international transport operators;

• Clearance - shall refer to the completion of customs and other government formalities necessary to allow goods to enter for consumption, warehousing, transit or transshipment, or to be exported or placed under another customs procedure;

• Commission - shall refer to the Tariff Commission;

• Conditional Importation - shall refer to the customs procedure known under the RKC as temporary admission in which certain goods can be brought into a customs territory conditionally relieved, totally or partially, from payment of import duties and taxes; such goods must be imported for a specific purpose and must be intended for re exportation within a specified period and without having undergone any substantial change except due to normal depreciation.

• Customs Broker - shall refer to any person who is a bona fide holder of a valid Certificate of Registration/Professional Identification Card issued by the Professional Regulatory Board and Professional Regulation Commission pursuant to Republic Act No. 9280, as amended, otherwise known as the "Customs Brokers Act of 2004";

• Customs Office - shall refer to any customs administrative unit that is competent and authorized to perform all or any of the functions enumerated under customs and tariff laws;

• Customs Officer - as distinguished from a clerk or employee, refers to a person whose duty, not being clerical or manual in nature, involves the exercise of discretion in performing the function of the Bureau. It may also refer to an employee authorized to perform a specific function of the Bureau as provided in this Act;

• Customs Territory - shall refer to areas in the Philippines where customs and tariff laws may be enforced;

• Entry - shall refer to the act, documentation and process of bringing imported goods into the customs territory, including goods coming from free zones;

• Exportation - shall refer to the act, documentation, and process of bringing goods out of Philippine territory;

• Export Declaration refers to a statement made in the manner prescribed by the Bureau and other appropriate agencies, by which the persons concerned indicate the procedure to be observed for taking out or causing to be taken out any exported goods and the particulars of which the customs administration shall require.

• Flexible Clause - shall refer to the power of the President upon recommendation of the National Economic and Development Authority (NEDA), to increase, reduce or remove existing protective tariff rates of import duty, but in no case shall be higher than one hundred percent (100%) ad valorem, to establish import quota or to ban importation of any commodity as may be necessary, and to impose additional duty on all import not exceeding ten percent (10%) ad valorem, whenever necessary;

• Foreign Exporter - shall refer to one whose name appears on documentation attesting to the export of the product to the Philippines regardless of the manufacturer's name in the invoice.

• Free Zone - shall refer to special economic zones registered with the Philippine Economic Zone Authority (PEZA) under Republic Act No. 7916, as amended, duly chartered or legislated special economic zones and freeports such as Clark Freeport Zone; Poro Point Freeport Zone; John Hay Special Economic Zone and Subic Bay Freeport Zone under Republic Act No. 7227, as amended by Republic Act No. 9400; the Aurora Special Economic Zone under Republic Act No. 9490, as amended; the Cagayan Special Economic Zone and Freeport under Republic Act No. 7922; the Zamboanga City Special Economic Zone under Republic Act No. 7903; the Freeport Area of Bataan under Republic Act No. 9728; and such other freeports as established or may be created by law;

• Goods - shall refer to articles, wares, merchandise and any other items which are subject of importation or exportation;

• Goods Declaration - shall refer to a statement made in the manner prescribed by the Bureau and other appropriate agencies, by which the persons concerned indicate the procedure to be observed in the application for the entry or admission of imported goods and the particulars of which the customs administration shall require;

• Importation - shall refer to the act of bringing in of goods from a foreign territory into Philippine territory, whether for consumption, warehousing, or admission as defined in this Act.

• Freight Forwarder - shall refer to a local entity that acts as a cargo intermediary and facilitates transport of goods on behalf of its client without assuming the role of a carrier, which can also perform other forwarding services, such as booking cargo space, negotiating freight rates, preparing documents, advancing freight payments, providing packing/crating, trucking and warehousing, engaging as an agent/representative of a foreign non-vessel operating as a common carrier/cargo consolidator named in a master bill of lading as consignee of a consolidated shipment, and other related undertakings;

• International Freight Forwarder - shall refer to persons responsible for the assembly and consolidation of shipments into single lot, and assuming, in most cases, the full responsibility for the international transport of such shipment from point of receipt to the point of destination.

• Jurisdictional Control - shall refer to the power and rights of the Bureau in exercising supervision and police authority over all seas within the jurisdiction of the Philippine territory and over all coasts, ports, airports, harbors, bays, rivers and inland waters whether navigable or not from the sea;

• Lodgement - shall refer to the registration, of a goods declaration with the Bureau.

• Non-Vessel Operating Common Carrier (NVOCC) - shall refer to an entity, which may or may not own or operate a vessel that provides a point-to-point service which may include several modes of transport and/or undertakes group age of less container load (LCL) shipments and issues the corresponding transport document;

• Outright Smuggling - shall refer to an act of importing goods into the country without complete customs prescribed importation documents, or without being cleared by customs or other regulatory government agencies, for the purpose of evading payment of prescribed taxes, duties and other government charges;

• Perishable Good - shall refer to goods liable to perish or goods that depreciate greatly in value while stored or which cannot be kept without great disproportionate expense, which may be proceeded to, advertised and sold at auction upon notice if deemed reasonable;

• Port of Entry - shall refer to a domestic port open to both domestic and international trade, including principal ports of entry and sub ports of entry.

• Principal port of entry is the chief port of entry of the Customs District wherein it is situated and is the permanent station of the District Collector of such port.

• Subports of entry are under the administrative jurisdiction of the District Collector of the principal port of entry of the Customs District. Port of entry as used in this Act shall include airport of entry;

• Port of Discharge, also called Port of Unloading - shall refer to a place where a vessel, ship, aircraft or train unloads its shipments, from where they will be dispatched to their respective consignees.

• Re-exportation - means exportation of goods which have been imported;

• Release of Goods - shall refer to the action by the Bureau to permit goods undergoing clearance to be placed at the disposal of the party concerned;

• Refund - shall refer to the return, in whole or in part, of duties and taxes paid on goods.

• Security - shall refer to any form of guaranty, such as a surety bond, cash bond, standby letter of credit or irrevocable letter of credit, which ensures the satisfaction of an obligation to the Bureau;

• Smuggling - shall refer to the fraudulent act of importing any goods into the Philippines, or the act of assisting in receiving, concealing, buying, selling, disposing or transporting such goods, with full knowledge that the same has been fraudulently imported, or the fraudulent exportation of goods. Goods referred to under this definition shall be known as smuggled goods;

• Taxes - shall refer to all taxes, fees and charges imposed under this Act and the National Internal Revenue Code (NIRC) of 1997, as amended, and collected by the Bureau;

• Technical Smuggling - shall refer to the act of importing goods into the country by means of fraudulent, falsified or erroneous declaration of the goods to its nature, kind, quality, quantity or weight, for the purpose of reducing or avoiding payment of prescribed taxes, duties and other charges;

• Tentative Release - shall refer 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;

• Transit - shall refer to the customs procedure under which goods, in its original form, are transported under customs control from one customs office to another, or to a free zone;

• Transshipment - shall refer 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.

• Traveler - shall refer to any person who temporarily enters the territory of a country in which he or she does not normally resides (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);

• Third Party - shall refer to any person who deals directly with the Bureau, for and on behalf of another person, relating to the importation, exportation, movement or storage of goods.

Section 103. When Importation Begins and Deemed Terminated. 

• Importation begins:

when the carrying vessel or aircraft enters the Philippine territory with the intention to unload therein. 

• Importation is deemed terminated: 

When the duties, taxes and other charges due upon the goods have been paid or secured to be paid, at the port of entry unless the goods are free from duties, taxes and other charges and 

Legal permit for withdrawal has been granted: or

• In case the goods are deemed free of duties, taxes and other charges, 

The goods have legally left the jurisdiction of the Bureau.

Section 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, 

• 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.

Section 105. Effective Date of Rate of Import Duty. - Imported goods shall be subject to the import duty rates under the applicable tariff heading that are:

• Effective at the date of importation or upon withdrawal from the warehouse for consumption. 

• In case of withdrawal from free zones for introduction to the customs territory, the duty rate at the time of withdrawal shall be applicable on the goods originally admitted, whether withdrawn in its original or advanced form. 

• In case of goods sold at customs public auction, the duty rates at the date of the auction, shall apply for purposes of implementing Section 1143(a) of this Act.

Section 106. Declarant. - A declarant may be a consignee or a person who has the right to dispose of the goods. The declarant shall lodge a goods declaration with the Bureau and may be:

• The importer, being the holder of the bill of lading; or

• The exporter, being the owner of the goods to be shipped out; or

• A customs broker acting under the authority of the importer or from a holder of the bill; or

• A person duly empowered to act as agent or attorney-in-fact for each holder.

In case the consignee or the person who has the right to dispose of the goods is a juridical person, 

• It may authorize a responsible officer of the company to sign the goods declaration as declarant on its behalf. 

• The goods declaration submitted to the Bureau shall be processed by the declarant or by a licensed customs broker: 

• Provided, That for importations, a transition period of two (2) years from the effectivity of this Act is hereby provided during which subparagraph (d) of this section shall not be implemented by the Bureau: 

• Provided, further, That after two (2) years from the effectivity of this Act, subparagraph (d) of this section shall take into effect consistent with international standards and customs best practices.

Section 107. Rights and Responsibilities of the Declarant. 

• The declarant shall be responsible for the accuracy of the goods declaration and for the payment of all duties, taxes and other charges due on the imported goods. 

• The licensed customs broker shall likewise be responsible for the accuracy of the goods declaration but shall not be responsible for the payment of duties, taxes and other charges due on the imported goods. 

• The declarant shall sign the goods declaration, even when assisted by a licensed customs broker, who shall likewise sign the goods declaration.

Section 108. Penalties for Errors in Goods Declaration. - The Bureau shall not impose substantial penalties for errors when such errors are inadvertent and there was no fraudulent intent or gross negligence in the commission thereof: Provided, That in order to discourage repetition of such errors, a penalty may be imposed but shall not be excessive.

Section 109. Application of Information and Communications Technology. - In accordance with international standards, 

• The Bureau shall utilize information and communications technology to enhance customs control and to support a cost-effective and efficient customs operations geared towards a paperless customs environment. 

• The Bureau shall communicate, exchange and process trade- and logistics-related information in the national and regional level for the efficient and prompt clearance of goods and commodities in a technology-neutral and secured infrastructure for business, industries, and government. 

• The security of data and communication shall be in a manner that is consistent with applicable local and internationally accepted standards on information security. 

• The Bureau shall likewise include as part of its systems and processes, a disaster preparedness and recovery plan to ensure business continuity by maintaining its uptime goal for its electronic and online services. 

For purposes of customs procedures, electronic documents, permits, licenses or certificates shall be acceptable and shall have the legal effect, validity or enforceability as any other document or legal writing: Provided, That when the prescribed requirements are duly complied with, the Bureau shall:

• Recognize the authenticity and reliability of electronic documents;

• Transmit approval in the form of electronic data messages or electronic documents; and

• Require and/or accept payments and issue receipts acknowledging such payments through systems using electronic data messages or electronic documents. 

• The introduction and implementation of information and communications technology shall be undertaken with due consultation with directly affected parties and stakeholders.

Section 110. Relationship Between the Bureau and Third Parties. - Parties may transact business with the Bureau either directly or through a designated third party to act on their behalf. 

• The customs transactions directly transacted by a party shall not be treated less favorably or be subject to more stringent requirements than those transacted through a designated third party. 

• A designated third party shall have the same rights and obligations as the designating party when transacting business with the Bureau. 

• Subject to the provisions of existing laws, treaties, convention and international agreements, the Secretary of Finance shall make the necessary guidelines for the defined relationship of the Bureau and third parties.

Section 111. Information of General Application. - All laws, decisions, rulings, circulars, memoranda and orders of the Bureau shall be published in accordance with law. To foster an informed compliance regime, 

• The Bureau shall ensure that all relevant and available information of general application pertaining to customs operations and procedures which are not confidential or intended for the Bureau's internal use only, shall be readily accessible to any interested person. 

• Any new information, amendment or changes in customs law, administrative procedures or requirements, shall, as far as practicable, be made readily available prior to its effective date of implementation unless advance notice is precluded.

Section 112. Information of a Specific Nature. - The Bureau shall provide information, not otherwise confidential or for the Bureau's internal use only, relating to a specific matter as may be requested by an interested party for legitimate use. 

• The Bureau may require the payment of a reasonable fee in providing such information. 

• The requested information shall be released within reasonable time from the filing of the request and payment of the required fee.

Section 113. Decision and Ruling. - The Bureau shall, consistent with Section 1502 of this Act, issue binding and advance decision and ruling at the request of an interested party on matters pertaining to importation or exportation of goods. Upon written request of the interested party, 

• The Bureau shall notify the party of its decision in writing within the period specified in this Act or by regulation. 

• Should the decision be adverse to the requesting interested party, the reasons thereof shall be indicated and the party shall be advised of the party's right of appeal. 

• The ruling and decision shall be issued by the Bureau within thirty (30) days from the submission of the necessary documents and information.

Section 114. Right of Appeal, Forms and Ground. - Any party adversely affected by a decision or omission of the Bureau pertaining to an importation, exportation, or any other legal claim shall have the right to appeal within fifteen (15) days from receipt of the questioned decision or order. 

• An appeal in writing shall be filed within the period prescribed in this Act or by regulation and shall specify the grounds thereof. 

• The Bureau may allow a reasonable time for the submission of supporting evidence to the appeal.

CHAPTER 3 TYPES OF IMPORTATION

Section 115. Treatment of Importation. - Imported goods shall be deemed "entered" in the Philippines for consumption when the goods declaration is electronically lodged, together with any required supporting documents, with the pertinent customs office.

Section 116. Free Importation and Exportation- Unless otherwise provided by law or regulation, all goods may be freely imported into and exported from the Philippines without need for import and export permits, clearances or licenses.

Section 117. Regulated Importation and Exportation. - Goods which are subject to regulation shall be imported or exported only after securing the necessary goods declaration or export declaration, clearances, licenses, and any other requirements, prior to importation or exportation. In case of importation, submission of requirements after arrival of the goods but prior to release from customs custody shall be allowed but only in cases provided for by governing laws or regulations.

Section 118. Prohibited Importation and Exportation:

• Written or printed goods in any form containing any matter advocating or inciting treason, rebellion, insurrection, sedition against the government of the Philippines, or forcible resistance to any law of the Philippines, or written or printed goods containing any threat to take the life of, or inflict bodily harm up on any person in the Philippines;

• Goods, instruments, drugs and substances designed, intended or adapted for producing unlawful abortion, or any printed matter which advertises, describes or gives direct or indirect information where, how or by whom unlawful abortion is committed;

• Written or printed goods, negatives or cinematographic films, photographs, engravings, lithographs, objects, paintings, drawings or other representation of an obscene or immoral character;

• Any goods manufactured in whole or in part of gold, silver or other precious metals or alloys and the stamp, brand or mark does not indicate the actual fineness of quality of the metals or alloys;

• Any adulterated or misbranded food or goods for human consumption or any adulterated or misbranded drug in violation of relevant laws and regulations;

• Infringing goods as defined under the Intellectual Property Code and related laws; and

• All other goods or parts thereof which importation and exportation are explicitly prohibited by law or rules and regulations issued by the competent authority.

Section 119. Restricted Importation and Exportation:

• Dynamite, gunpowder, ammunitions and other explosives, firearms and weapons of war, or parts thereof;

• 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;

• Lottery and sweepstakes tickets, except advertisements thereof and lists of drawings therein;

• Marijuana, opium, poppies, coca leaves, heroin or other narcotics or synthetic drugs which are or may hereafter be declared habit forming by the President of the Philippines, or any compound, manufactured salt, derivative, or preparation thereof, except when imported by the government of the Philippines or any person duly authorized by the Dangerous Drugs Board, for medicinal purposes;

• Opium pipes or parts thereof, of whatever material; and

• Any other goods whose importation and exportation are restricted. 

The restriction to import or export the above stated goods shall include the restriction on their transit.

CHAPTER 4 RELIEF CONSIGNMENT

Section 120. Relief Consignment. - Goods such as food, medicine, equipment and materials for shelter, donated or leased to government institutions and accredited private entities for free distribution to or use of victims of calamities shall be treated and entered as relief consignment. Upon declaration of a state of calamity, clearance of relief consignment shall be a matter of priority and subject to a simplified customs procedure. 

The Bureau shall provide for:

• Lodging of a simplified goods declaration or of a provisional or incomplete goods declaration subject to completion of the declaration within a specified period;

• Lodging, registering and checking of the goods declaration and supporting documents prior to the arrival of the goods, and their release upon arrival;

• Clearance beyond the designated hours of business or away from customs offices and waiver of any corresponding charges; and

• Examination and/or sampling of goods only in exceptional circumstances.

The Department of Finance (DOF) and the Department of Social Welfare and Development (DSWD) shall jointly issue the rules and regulations for the implementation of tins provision.

Section 121. Duty and Tax Treatment. - Relief consignment, as defined in Section 120, imported during a state of calamity and intended for a specific calamity area for the use of the calamity victims therein, shall be exempt from duties and taxes.