Declaration of the Value of Imported Goods in Shipping and Airline Documents

Senate an Offse of the sundary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 SEP 16 P6:24 First Regular Session SENATE RECEIVED BY: S. No1397 Introduced by Senator Rodante D. Marcoleta AN ACT REQUIRING THE DECLARATION OF THE VALUE OF IMPORTED GOODS IN SHIPPING AND AIRLINE DOCUMENTS, AND PROHIBITING FRAUDULENT ALTERATION OF CARGO MANIFEST, BILL OF LADING AND AIRWAY BILL, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 10863, OTHERWISE KNOWN AS THE CUSTOMS MODERNIZATION AND TARIFF ACT EXPLANATORY NOTE

Section 13, Article XII of the 1987 Constitution of the Philippines provides that

"[t]he State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity." Moreover, Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act, declares as a State policy the protection and enhancement of government revenue and the institution of fair and transparent customs and tariff management to efficiently facilitate international trade, prevent and curtail any form of customs fraud and illegal acts, and modernize customs and tariff administration Despite the procedures and requirements laid down by law, illegal importation activities still abound in the Philippine ports. Many smuggled and prohibited items get through customs scrutiny using spurious commercial and shipping documents. The fraud is perpetuated by the fact that cargo manifests of vessels from a foreign port, airway bills, and bills of lading do not indicate the value of the goods and articles being imported. Actual purchase and customs fees that need to be collected are not required to be declared in these commercial documents, thus, giving the importer and consignee the opportunity to misdeclare, undervalue and misclassify the goods or articles.

This measure seeks to curb these illicit trading practices. By requiring common carriers to declare the value of the goods and articles in the cargo manifest of vessels/aircrafts from a foreign port, bill of lading, and airway bill as it appears in the commercial invoice and letters of credit, the Bureau of Customs (BOC) can have adequate basis in assessing and collecting correct taxes, duties and other charges. This eliminates the use of personal discretion to lower tax assessment. This eliminates the use of personal discretion to lower tax assessment. Lowering revenue assessment of imported goods/articles through benchmarking practice will defraud more or less thirty (30) percent of the annual gross revenues of the BOC, affecting our fiscal policy and uncontrolled trade gap deficit. This measure prohibits making any changes in the electronic cargo manifest already transmitted electronically to the Bureau of Customs computer system by the accredited value added service provider (VASP). To ensure consistency of commercial documents transmitted and presented to the Bureau of Customs, Philippine Ports Authority and Arrastre Contractors, Pier Inspection Division or the Aircraft Operations Division, and the District Collector of the Port are tasked to reconcile the hard copy of the inward cargo manifest with the electronic cargo manifest of a carrying vessel/aircraft. Adjunct to this, a Technical Working Group is necessary if not indispensable. The group should be composed of representatives from Value-Added Service Provider, Bureau of Customs, Philippine Ports Authority, Shipping lines/airlines, Arrastre Contractors, Customs Brokers, Association of Importers, and the Bureau of Internal Revenue. In view of the foregoing, the passage of this bill is earnestly sought. Дише? RODANTE D. MARCOLETA

senate Bitier of the circlarp TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) SEP 16 P6:24 First Regular Session ) SENATE RECEIVED BY: S. No. 1397 Introduced by Senator Rodante D. Marcoleta AN ACT REQUIRING THE DECLARATION OF THE VALUE OF IMPORTED GOODS IN SHIPPING AND AIRLINE DOCUMENTS, AND PROHIBITING FRAUDULENT ALTERATION OF CARGO MANIFEST, BILL OF LADING AND AIRWAY BILL, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 10863, OTHERWISE KNOWN AS THE CUSTOMS MODERNIZATION AND TARIFF ACT Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Section 1204 of Republic Act No. 10863, otherwise known as the

2 Customs Modernization and Tariff Act, 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 names of the consignees. 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 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 ADVANCE ELECTRONIC 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 SAME SHALL TRANSMIT ELECTRONICALLY TO AN ACCREDITED VALUE-ADDED SERVICE PROVIDER WITHIN TWENTY (24) HOURS BEFORE THE ARRIVAL OF THE CARRYING VESSELS/ AIRCRAFT. THE VALUE STATED THEREIN SHALL SERVE AS ADDITIONAL DOCUMENTARY SUPPORT IN ASCERTAINING THE CORRECT DUTIES, TAXES AND OTHER CHARGES DUE THEREON UNDER TITLE VII, CHAPTER 1 OF THIS ACT. A true and complete copy of the cargo manifest shall be electronically sent in advance by the shipping OR AIRLINE 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 OR AIRCRAFT at the port of entry. Upon arrival of the carrying vessel OR AIRCRAFT, 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 only in the case of the other ports of entry. THE PIERS INSPECTION DIVISION OR AIRCRAFT OPERATIONS DIVISION SHALL RECONCILE HARD COPIES OF THE CARGO MANIFEST AGAINST THE ADVANCE ELECTRONIC CARGO MANIFEST AND THE SAME SHALL FURNISH THE FOLLOWING UNITS UNDER THE BUREAU OF CUSTOMS: CUSTOMS INTELLIGENCE AND INVESTIGATION SERVICE, MANAGEMENT INFORMATION SYSTEM AND TECHNOLOGY GROUP (MISTG), AND ASSESSMENT AND OPERATIONS COORDINATING GROUP. ALL UNMANIFESTED

CARGOES SHALL BE REPORTED TO THE DISTRICT COLLECTOR OF THE PORT TO INSTITUTE SEIZURE AND FORFEITURE PROCEEDINGS PURSUANT TO

SECTION 1113 OF THIS ACT.

AFTER THE TRANSMISSION OF THE ADVANCE ELECTRONIC CARGO MANIFEST TO THE BUREAU OF CUSTOMS COMPUTER SYSTEM AND AFTER THE SUBMISSION OF THE HARD COPY OF THE CARGO MANIFEST UPON ENTRY OF THE VESSEL OR AIRCRAFT, NO CHANGE OR ALTERATION SHALL BE ALLOWED [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. AFTER THE ARRIVAL OF THE CARRYING VESSEL OR AIRCRAFT, THE MISTG AND THE DEPUTY COLLECTORS SHALL NOT ACCEPT ANY COMPACT DISK, DISKETTE, FLASH DRIVE, MEMORY CARD OR OTHER FORMS OF DATA STORAGE DEVICE FROM SHIPPING OR AIRLINE AGENTS FOR NVOCC, FREIGHT FORWARDER, CARGO CONSOLIDATOR, OR THEIR AGENTS TO INCORPORATE A CHANGE OR ALTERATION IN THE ELECTRONIC CARGO MANIFEST AT THE PORT OF ENTRY WITHOUT THE APPROVAL OF THE DISTRICT COLLECTOR OF THE PORT."

Sec. 2. Transmission/Submission. - Value-Added Service Provider (VASP) upon

receipt of the advance electronic cargo manifest from the shipping lines/airlines after verifications of the contents therein, the same shall transmit electronically to the portal of the Bureau of Customs, Philippine Ports Authority, Arrastre Contractors, and the

Bureau of Internal Revenue, and duly acknowledged electronically by the above- mentioned government offices or companies. Any discrepancy found shall be officially recorded by both sender and receiver.

Sec. 3. Penalties. - Any person or entity who violates any of the provisions of

this Act shall be punished in accordance with the penalties prescribed in Title XIV of Republic 21 Act No. 10863.

Sec. 4. Implementing Rules and Regulations. - Within thirty (30) days from the

effectivity of this Act, the Department of Finance shall, upon the recommendation of the Bureau of Customs, promulgate the necessary rules and regulations for the effective implementation of this Act.

Sec. 5. Separability Clause. - If any provision or part of this Act is declared

invalid or unconstitutional, the remainder thereof not otherwise affected shall remain in full force and effect.

Sec. 6. Repealing Clause. - All laws, presidential decrees, executive orders,

letters of instructions, proclamations or administrative regulations that are inconsistent with the provisions of this Act are hereby repealed, amended, or modified accordingly.

Sec. 7. Effectivity. - This Act shall take effect fifteen (15) days following its

publication in the Official Gazette or in a newspaper of general circulation. Approved,