CAO 12-2003: Warehousing Bonds & Entries

• Customs Administrative Order (CAO) No. 12-2003 concerns the performance of obligations under warehousing bonds and the liquidation of warehousing entries, including penalties.

Objectives

• Provides a mechanism to ensure obligations guaranteed by warehousing bonds are met by the importer and/or surety company.
• Ensures immediate liquidation of the warehousing entry upon fulfillment of obligations and subsequent bond cancellation.
• Empowers the Bureau of Customs (BOC) to take action against importers or surety companies for non-performance of obligations.

Scope

• Applies to all warehousing shipments with bonds issued as a guarantee for the importer's obligations to the BOC.

General Provisions

• Bonds issued by BOC-accredited surety companies guarantee the export or manufacture of raw materials into finished products for export.
• Bonds also cover the payment of taxes/duties, as per Secs. 1901-1909/Secs. 2001-2103 of the Tariff and Customs Code of the Philippines (TCCP), as amended.
• Upon the importer's performance of obligations to the BOC, the warehousing entry is liquidated to the extent of the performance.
• Full liquidation leads to the cancellation of the corresponding bond.
• Performance by the importer includes exporting imported goods/finished products within the prescribed period.
• Performance also includes the payment of taxes and duties on goods imported under bond, in accordance with existing laws and regulations.
• Payment/performance by the surety company extinguishes the importer's obligations, serving as grounds for bond cancellation.
• Importations are subject to Sec. 1508, TCCP, and other sanctions if the importer fails to perform the obligation within the prescribed period.
• The Operating Division liquidates the warehousing entry within 15 days of receiving the Statement of Liquidation for partial liquidation.
• The Operating Division liquidates the warehousing entry within 30 days for complete liquidation.

Performance by Exportation & Liquidation of Entry

• For obligation performance via exportation within the prescribed period, the importer must liquidate the warehousing entry within 30 days from said exportation.
• Liquidation should match the extent of exportation by filing a Statement of Liquidation.
• The Statement of Liquidation, filed with the Operating Division, must detail the warehousing entry number, articles, and their quantity, volume, and value subject to liquidation.
• The Statement of Liquidation should include supporting documents showing the exportation of goods/finished products made with materials covered by the warehousing entry.
• Upon receiving the Statement of Liquidation, the Operating Division retrieves the warehousing entry and supporting documents from the WDRD.
• The operating Division verifies with the concerned export division the exportation of the goods covered by the warehousing entry.
• Upon confirmation of exportation, the Operating Division liquidates the warehousing entry according to the extent of exportation.
• For partial liquidation, the Operating Division returns the warehousing entry to the WDRD until completion of Liquidation
• The Operating Division informs the Bonds Division of the extent of liquidation to update records and determine bond eligibility for cancellation.

Cancellation of Bonds

• If the warehousing entry is fully liquidated, the Operating Division forwards the warehousing entry, Statement of Liquidation, and supporting documents to the Bonds Division within five (5) days.
• The Chief, Bonds Division, cancels the corresponding bond within five (5) days of receiving the documents, notifying the importer and surety company in writing.
• Within five (5) days of bond cancellation, the Bonds Division sends a copy of the cancelled bond, warehousing entry, Statement of Liquidation, and supporting documents to the Liquidation and Billing Division.
• The Liquidation and Billing Division reviews the documents for final liquidation within five (5) days of receipt from the Bonds Division.
• The Bonds Division posts the notice of bond cancellation on the Bonds Division Bulletin Board and notifies the Operating Division and WDRD in writing.
• The Bonds Division maintains records of all cancelled bonds, liquidated entries, and Statements of Liquidation.

Issuance of Demand Letter/Imposition of Sec. 1508, TCCP

• The Operating Division issues a Demand Letter, signed by the District Collector, to the importer if, during liquidation, the exportation was outside the prescribed period.
• The amount of taxes/duties shall be stated as payable on the warehousing entry in said demand letter.
• A Demand Letter from the liquidation and Billing Division, signed by the District Collector, arises out of the final liquidation, if there arise certain discrepancies.
• The Demand Letter will state the amount of the discrepancy.
• The District Collector must sign the Demand Letter and ensure it is properly delivered to the importer at the earliest opportunity.
• If payment isn't made within the Demand Letter's prescribed period, the District Collector will implement Sec. 1508 of the TCCP.
• Implementation shall be witholding the current/future importations of the importer concerned due to an outstanding and demandable account with the BOC.

Penalties and Surcharges

• Exportation outside the prescribed period requires payment of taxes/duties payable on the warehousing entry.
• Exportation within the prescribed period but with liquidation documents submitted beyond the 30-day period incurs a monthly surcharge of P1,000 or 2% of taxes/duties, whichever is higher, until document submission.
• If document submission occurs more than 30 days past the exportation period, taxes and duties on the warehousing entry are fully paid.

Other Actions/Sanctions

• The District Collector may recommend to the Commissioner of Customs a course of action to ensure payment .
• May include the collection case and/or forfeiture of the bonds, suspension/cancellation of accreditation, or non-renewal of the accreditation of the surety company.
• The Chief, Collection Service, shall take action as needed. This includes coordination with the Legal Service in pursuing collection cases and/or bond forfeiture.

Accountability

• The District Collector is responsible for implementing this Order smoothly and effectively within their jurisdiction.
• All Customs personnel must perform their duties as required by the Order.
• Violations by Customs personnel may result in administrative or criminal charges with penalties ranging from suspension to dismissal.

Repeal Clause

• CAO 5-91, specific sections, and other orders/rules inconsistent with this Order are repealed or modified.

Effectivity Clause

• This Order takes effect 15 days after publication in at least two newspapers of general circulation.