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Customs Administrative Order No. 01-2021 provides new guidelines on the posting and use of all forms of security to guarantee payment of duties and taxes and other obligations
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Security may be in the form of surety bond, cash bond, standby letter of credit or irrevocable letter of credit, or any other acceptable forms of security
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The required amount of security should be the lowest possible and not exceed the imposable duties, taxes, and other charges
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Instead of requiring separate special securities for numerous transactions of a particular party, the district collector may accept a one-time general security covering such transactions
The Bureau of Customs (BOC) has issued new guidelines on the posting and utilization of all forms of security to guarantee the payment of duties and taxes and other obligations.
Customs Administrative Order (CAO) No. 01-2021 applies to all forms of security required to guarantee payment of duties and taxes and other obligations provided for under the Customs Modernization and Tariff Act (CMTA) as well as other existing rules and regulations.
CAO 01-2021 implements Sections 1506 (General Security) and 1507 (Security) and other relevant provisions of the CMTA. It was signed by Customs commissioner Rey Leonardo Guerrero on January 13, 2021 and Finance secretary Carlos Dominguez III on January 27, 2021.
According to former BOC deputy commissioner Atty. Agaton Teodoro Uvero’s book Understanding International Trade, Tariff & Customs, Section 1506 should “particularly benefit importations under the CBW [customs bonded warehouse] system, which presently requires individual security for every import transaction.” The section should allow the posting of a general security to cover all import transactions for a particular CBW.
Section 1507, meanwhile, is a new provision that also specifically allows importers to post a general security covering numerous transactions.
Under CAO 01-2021, any party required to provide security to guarantee the payment of duties and taxes and other obligations may choose from surety bond, cash bond, standby letter of credit or irrevocable letter of credit, and any other acceptable forms of security such as written commitment in case of low-risk or low-value goods.
The required amount of security should be the lowest possible and should not exceed the imposable duties, taxes, and other charges, unless otherwise provided under CAO 01-2021 or other existing rules and regulations.
If securities are required under CAO 01-2021 and related customs laws, the district collector, instead of requiring separate special securities for the numerous transactions of a particular party, may accept a one-time general security extending over such period of time and covering such transactions of the said party as may satisfy the district collector.
The district collector may accept a general security only from declarants who regularly declare goods at different offices under customs territory. The district collector may do this if satisfied that an obligation to BOC will be fulfilled, and under such terms and conditions as may be prescribed by regulation.
The general security may also be accepted to cover for duties and taxes due on lost or damaged goods while in transit or stored inside an off-dock or off-terminal customs facilities and warehouse (CFW), in accordance with CAO 09-2019, which provides the guidelines for the establishment, maintenance, and operations of CFWs.
When the obligation that required the security has been satisfied, the security should be cancelled immediately.
Requirements for posting security
The district collector requires the posting of security with BOC under the following circumstances:
- Release of shipment under provisional declaration
- Release of goods pending the ascertainment of the accuracy of the declared value and classification
- Express shipment
- Shipment under warehousing entries
- Carrier’s security
- Transit of goods under the Foreign Ships Co-Loading Act
- Release of conditionally taxed and/or duty-free importations
- Conditional release of shipments of returning overseas Filipino workers arriving in advance
- Release of traveler’s accompanied baggage with dutiable goods
- Posting of performance bond with BOC
Cash bonds should be deposited immediately not later than the day following the date when received in a trust fund account to be managed by BOC.
If the completed assessment or the final decision arising from a dispute settlement favors the importer, or if the conditions that required the case bond have been satisfied, the amount should be released to the importer in the form of a check issued by BOC.
Standby letter of credit or irrevocable letters of credit, meanwhile, should only be issued by BOC authorized agent banks (AAB).
Also, only surety companies granted the authority to transact business as surety company (ATBAS) by BOC are allowed to issue surety bonds.
Penalties for late re-export of goods
When temporarily admitted goods are re-exported late, they will be levied the following penalties:
- Up to 30 days from the date of expiration of the bond to date of actual exportation or payment of duties and taxes – a penalty of P5,000 or 2% of the collectible duties and taxes, whichever is higher, plus a surcharge of 10% of the total collectible duties, taxes, and other charges and can be increased to 25% if the delinquency lasts for more than one year
- Beyond 30 days to one year – P10,000 or 10% of the collectible duties and taxes, whichever is higher, plus a surcharge of 10% of the total collectible duties, taxes, and other charges
- Beyond one year – P10,000 or 20% of the collectible duties and taxes , whichever is higher, plus a surcharge of 25% of the collectible duties, taxes, and other charges
Penalties for breach of warehousing bonds will be governed by the CAO on CBWs.
If the bonded obligations are not settled despite issuance of demand letters, the chief of the Bonds Division or its equivalent unit will recommend to the Customs commissioner through the Legal Service director the immediate issuance of order of forfeiture of the bonds.
The district collector may also recommend a course of action or take such other action that will ensure the importer pays the obligation. These actions include the filing of the collection case and/or forfeiture of the bonds, suspension or cancellation of accreditation, or non-renewal of the accreditation of the surety company.
Existing rules and regulations on the application and issuance of ATBAS and accreditation of AABs will remain in force and effect until a new relevant customs memorandum order is issued. – Roumina Pablo
