SOMETIME September last year, the Department of Finance (DoF) issued CAO 6-2008 which provides for the accreditation of third-party surveyors that will be allowed to conduct port load inspection and survey of bulk and break-bulk cargo. Thereafter, the Bureau of Customs (BoC) issued CMO 35-2008 providing for the “procedures for the bulk and break bulk cargo clearance enhancement program”. Said CMO also created an accreditation committee primarily tasked to select cargo surveyors.
AO 243-A dated 16 September 2009
Sometime October last year, the Office of the President issued AO 243 which transferred the function of accrediting the cargo surveyors directly under said Office. Subsequently, the Presidential Adviser on Revenue Enhancement (Secretary Jun Santiago) was appointed to head the Committee. Last month, Secretary Santiago announced the issuance of AO 243-A which now provides for additional rules on the implementation of the cargo survey program.
Bulk and Break-Bulk Cargo
Bulk cargo generally refers to cargoes in a mass of one commodity not packaged, bundled, bottled or otherwise packed; those cargoes (dry or liquid) which are loaded (shoveled, scooped, forked, mechanically conveyed or pumped) in volume directly into a vessel’s hold or cargo that is unbound as loaded; and without count in a loose unpackaged form. Shipments of commodities (e.g. corn, wheat) and petroleum products fall within this category.
Break-bulk cargo, on the other hand, refers to non-containerized cargo grouped or consolidated for shipment and broken down, sub-divided into unitized cargo such as in pallets or packed in bags, boxes or other individual units to be loaded into or discharged from vessels. These cargoes loaded individually and described in terms of quantity and weight, (e.g. steel coils, logs, sacks of rice) and not in shipping containers nor in bulk as with oil or grain.
Cargo surveying of bulk and break-bulk cargo involves the inspection, analysis and computation of bulk or break-bulk cargo. The main purpose of surveying is to confirm and verify the quantity and quality of the shipment in relation to the goods specifications agreed upon between the buyer and the seller. Surveying confirms the agreements and provides support for the final settlement of the price as agreed between the parties.
From a customs perspective, cargo surveying serves as supporting basis for determining the correct dutiable weight, quantity, description of goods in tariff terms, and/or cargo make or quality.
In the Philippines and in most countries, cargo surveying is performed by third parties. The cargo survey report is submitted to customs to support the declarations made upon importation.
Among the controversial provisions of AO 243-A are as follows:
- that the port load survey report should contain specific details to include quantity, quality and price/value of the cargo (sec. 10.1);
- that the declarations in the import entries are subject to confirmation by the port load surveyor (sec. 10.4);
- that the report and findings of accredited surveying companies shall be used by Customs/Examiners in the determination of dutiable weight, volume, description, valuation…(sec. 10.5); and
- that shipments without a port load survey report or accompanied by a Survey Report from a non-accredited surveyor will be subject to a comprehensive cargo survey by an accredited surveying company chosen by the Bureau (sec. 10.6).
Industry Issues and Concerns
With the planned implementation of the cargo survey program by January 2010, private sectors have raised several issues and concerns.
One, cargo surveyors are not privy to the agreed price and value of the cargo and any price or value provided should be for reference purpose only and should be consistent with existing customs valuation rules.
Second, the rules should allow the use of cargo survey conducted at the port of discharge (instead of just at the port of loading) to prevent double expenses on the part of the shippers. What has been proposed (and obviously not considered) by the private sector is the alternative use of either the port load survey (inspection and survey in the port of destination or loading) or the discharge port survey (inspection and survey upon arrival in a Philippine port). Unfortunately, the rules only allow the submission of a port load survey report.
The author is the legal director of AFPI, PISFA and PUC. He is a lecturer on logistics, indirect tax and customs, and a trainor of Ateneo and BayanTrade on International Supply Chain Management. Please contact firstname.lastname@example.org for your