A new law has recently been enacted, which effectively regulates the practice of the customs brokers profession and prohibits corporate practice of customs brokerage.
Republic Act No. 9280, entitled “An Act Regulating the Practice of Customs Brokers Profession in the Philippines, Creating for the Purpose a Professional Regulatory Board for Customs Brokers, and Appropriating Funds Therefor”, was officially enacted last March 30, 2004 and will take effect fifteen days from its publication in major newspapers. A Profession, Not a Business.
For many years, the practice of customs brokerage has been the subject of debates and discussions – whether it is a business or a profession.
Many in the trading community simply consider customs brokerage as an ancillary or support service necessary for customs facilitation and release of imported and exported goods. Thus, not a few are surprised when informed that customs brokers take licensure examinations, which are administered by the Professional Regulation Commission (PRC).
RA 9280 now puts an end to this issue by defining the practice of the custom broker as a professional service. Section 6 of RA 9280 provides that the practice of customs broker profession involves:
- consultation, preparation of customs requisite documents for imports and exports;
- declaration of customs duties and taxes;
- preparation signing, filing, lodging and processing of import and export entries;
- representing importers and exporters before any government agency and private entities in cases related to valuation and classification of imported articles; and
- rendering other professional services in matters relating to customs and tariff laws, its procedures and practices.
Prohibition Against Corporate Practice – Section 29 of RA 9280 specifically provides that the customs broker practice is a professional service and as such, “no firm, company, or association may be registered or licensed as such for the practice of customs broker profession”. In addition, Section 28 provides that no person shall practice or offer to practice the profession, or use the title unless one is a registered licensed customs broker.
Thus, can an existing customs brokerage company continue to engage in the business of customs brokerage? Can such company continue to advertise itself as a customs brokerage?
Section 33 of RA 9280 provides the answer: “customs brokers who are registered and licensed at the time of this Act takes effect shall automatically be registered” with the Professional Regulatory Board for Customs Brokers (Board), which is attached to PRC. A close reading of the above section seems to provide more questions rather than answers.
First, are existing customs brokerage companies obliged to register with the Board – an office which regulates individuals and not companies? If yes, can the Board or PRC regulate and supervise these customs brokerage companies?
Second, are individual customs brokers allowed to replace the principal or alternate brokers of companies once the latter are no longer available (e.g. physical or mental incapacity)? Third, will the Code of Ethics and other standards for customs brokers apply for these companies?
Prohibition Against Financing Activities – One benefit for customs brokers under the law is that customs brokers are now prohibited from advancing and financing in behalf of their client-importers the payment of duties and taxes, arrastre charges, wharfage dues, storage fees and other port charges. In other words, importers can no longer ask their customs brokers to advance their duties, taxes and related costs.
Many importers normally require a minimum credit line prior to accrediting customs brokers. With this practice now prohibited, the financial standing of a customs broker will become less of a consideration when companies bid out their customs brokerage requirements.
New Qualifications for Licensure – Under the law, existing licensed and registered customs broker are automatically registered under the law. For those who intend to take the licensure examination, a more stringent set of qualification standards has been provided.
Specifically, only graduates with a bachelor degree or master’s degree in customs administration shall be qualified to take the exam. In the case of those with a master’s degree, they will only be allowed to take the licensure exam within the next 5 years from effectivity of the law.
In other words, by year 2009, only those with a bachelor degree in customs administration can be allowed to take the licensure examination. Implications on Current Corporate Practice.
To date, the President has yet to appoint the members of the Professional Regulatory Board, which is tasked to issue the implementing rules and regulations including the Code of Ethics for customs broker profession. As mentioned above, there are certainly many outstanding issues that must be clarified in the implementing rules.
One main concern is how the rules will apply on the corporate practice of customs brokerage. We certainly do not expect different rules for individuals and for corporations, although the latter may be exempt from certain requirements applicable to professionals.
On the other hand, the application of the same set of rules can pose some problems for corporate customs brokers. By and large, we foresee future administrative roadblocks for the continuing registration and operations of corporations engaged in customs brokerage.
The reason for this is that the real intention of the law is to regulate the practice of the profession, to the exclusion of corporations. Considering that many logistics providers consider customs brokerage as part of their integrated service, these companies will now have to rethink their strategic plans to ensure that existing operations do not constitute as a practice of the profession.
The author is an international trade and customs consultant, and a licensed customs broker. He is also a Partner of the Law Firm of David Leabres Uvero Gaticales Mosquera Samson. Please contact email@example.com or (632) 4050021 / 29 for your comments.