Customs Administrative Order (CAO) 01-2022 - Customs Bonded Warehouses PDF

# CUSTOMS ADMINISTRATIVE ORDER (CAO) ## NO. 01-2022 ### SUBJECT: CUSTOMS BONDED WAREHOUSES **Introduction.** This Customs Administrative Order (CAO) implements Sections 301 and 303, Chapter 2, Title III, and Sections 801 to 813, Chapter 2, Title VIII, in relation to Section 204 and other relevant s...

# CUSTOMS ADMINISTRATIVE ORDER (CAO) ## NO. 01-2022 ### SUBJECT: CUSTOMS BONDED WAREHOUSES **Introduction.** This Customs Administrative Order (CAO) implements Sections 301 and 303, Chapter 2, Title III, and Sections 801 to 813, Chapter 2, Title VIII, in relation to Section 204 and other relevant sections of Republic Act No. 10863, otherwise known as the Customs Modernization and Tariff Act (CMTA), and consolidates all existing CAOs dealing on Customs Bonded Warehouses (CBWs). **Section 1. Scope.** This CAO applies to all types of CBWs listed in the CMTA and those that may be created by the Secretary of Finance, upon the recommendation of the Commissioner pursuant to Section 803 of the CMTA. **Section 2. Objectives.** - To provide the guidelines for the establishment, operation, supervision, and control of CBWs; - To protect revenue through the institution of safeguard and control measures over CBWs; - To define the rights and corresponding obligations of operators of CBWs accredited sub-contractors and members; - To improve the level of compliance of CBW operators with customs warehousing laws and regulations and provide penalties for non-compliance; - To establish, develop and implement a CBW raw materials management system making full use of information and communications technology and more transparent procedures which would aid the Bureau in the monitoring, supervision and control of CBW operations; and - To align Customs regulations on CBWs with international standards and best practices. **Section 3. Definition of Terms.** For purposes of this CAO, the following terms are defined accordingly: | Term | Definition | |---|---| | Accessories | Shall refer to goods which are neither raw materials nor supplies which enhance the finished products to be exported. | | Accountable Officer | Shall refer to a responsible official of the CBW named and designated by the operator as the person, other than himself, answerable and liable to the Bureau for all the operational aspects of the warehouse. | | Accredited Client/End-User | Shall refer to a natural or juridical person authorized by the Bureau to be a client/end-user of Industry-specific CBW (ICBW). | | Accredited Client-Exporter | Shall refer to client-exporters accredited by the Bureau to receive finished goods manufactured by MCBWs to be used in their registered export activities. | | Airlines Customs Bonded Warehouse and Airlines Catering Customs Bonded Warehouse | Shall refer to an Industry-Specific Customs Bonded Warehouses (ICBW) where supplies, spare parts, in-flight duty-free items and such other goods necessary for the reasonable requirements of the aircraft, its crew and passengers are stored. | | Alert Order | Shall refer to a written Order issued by the Commissioner, District Collector¹, or other customs officers authorized in writing by the Commissioner after the Lodgement of Goods Declaration and before their actual release from customs custody, on the basis of derogatory information regarding possible non-compliance with the CMTA and other laws, rules and regulations enforced by the Bureau.2 | | Authority to Operate | Shall refer to the authority given by the Bureau allowing persons, natural or juridical, to establish and operate a CBW. | | Authority to Transfer or Sell (ATS) | Shall refer to the document issued by the District Collector allowing transfer or sale of imported raw materials, semi-finished products, or finished products to another CBW, Client-Exporter, Client/End-User, or Freeport Zone locator for subsequent export. Transfers to sub-contractors or members of CCBW shall be covered by Authority to Transfer only. | | Automated Inventory Management System (AIMS) | Shall refer to the automated system to be adopted by the CBW operator as a tool to determine and monitor the stock inventory of imported raw materials from the time of its entry into the CBW up to liquidation of the covering warehousing entry. | | Automated Bonds Management System (ABMS) | Shall refer to the automated system to be utilized by the Bureau as a tool in the effective monitoring and cancellation of bonds for the liquidation of raw materials/entries. | | Bureau | Shall refer to the Bureau of Customs. | | Certificate of Authority to Operate | Shall refer to the document signed by the Commissioner of Customs and issued by the Bureau to persons, natural or juridical, duly authorized to operate a CBW, to be an accredited member, accredited subcontractor or accredited client/end-user stating its name, authority (license) number, exact office and warehouse address, date of grant and expiry of authority and type of the approved warehouse, renewable every three (3) years, after proper re-evaluation and favorable recommendation by the CBWC. | | Certificate of Identification (CI) | Shall refer to the document certifying that the finished products to be exported is from a particular warehousing entry, and also to determine whether or not a particular entry is partially or fully consumed. | | Certificate of Importer Accreditation | Shall refer to the document issued by the Bureau to an entity registered as importer and recognized to electronically lodge goods declaration in the Bureau's existing registration system. | | Certificate of Inspection and Loading (CIL) | Shall refer to the document issued by the Bureau certifying the conduct of inspection over the cargo for export and its actual loading on the exporting carrier. | | Client-Exporter | Shall refer to a natural or juridical person engaged in the manufacture or export of products utilizing goods, raw materials, accessories and packing materials sourced from a CBW and members subject to the condition that finished products shall be exported within the period prescribed by existing laws and regulations. | | Client Profile Registration System (CPRS) | Shall refer to the system of registration provided for Bureau stakeholders adopted under Customs Memorandum Order (CMO) No. 39-2008. | | Compliance Rate System (CRS) | Shall refer to a procedure to be adopted by the Bureau in assessing the degree of compliance of a warehouse operator with relevant CBW rules and regulations and in taking any action on the CBW's Authority to Operate or any extension thereof. The CRS shall be developed by The Bureau subject to review by the Department of Finance (DOF) and consultation with concerned stakeholders. CRS may be applied to accredited members of CCBWs and accredited subcontractors. | | Customs Bonded Warehouse (CBW) | Shall refer to a warehouse authorized/licensed by the Bureau to import, receive, and store, without payment of duties and taxes and under bond, goods, raw materials, accessories and packing materials either for manufacture into finished products for export or storage for the account of accredited exporter/client. | | Customs Bonded Warehouse Committee (CBWC) | Shall refer to the committee created to act on applications for the establishment and operation of CBW, renewal of Authority to Operate CBWs, application as member of a CCBW, application as subcontractor of a CBW and other related matters pertaining to the operation of a CBW. | | Customs Bonded Warehouse Operator | Shall refer to a natural or juridical person who has a duly approved Authority to Operate a CBW issued by the Bureau. For CCBWS, CBW operator shall refer to the mother warehouse. | | Customs Premises | Shall include customs offices, facilities, warehouses, ports, airports, wharves, infrastructure and other premises over which the Bureau shall have exclusive control, direction, and management for customs purposes³. | | Diversion | Shall refer to a violation of customs law committed when an imported material entered through the warehousing scheme and destined for transit to a particular CBW, Free Zone locator/enterprise, or from the CBW to the port or airport for exportation, is brought to some place other than its intended destination. | | Entry | Shall refer to the act, documentation, and process of bringing imported goods into the customs territory, including goods coming from the Free Zones4. | | Examination and Storage Area | Shall refer to an area of a CCBW and ICBW with sufficient space for examination and storage of goods. | | Exportation | Shall refer to the act, documentation, and process of bringing goods out of Philippine Territory5. | | Extension Warehouse | Shall refer to a separate warehouse authorized by the Bureau to form part of an already existing CBW to optimize capacity and efficiency in its operations. | | Free Zone | Shall refer to special economic zones registered with the Philippine Economic Zone Authority (PEZA) under Republic Act No. 7916, as amended, duly chartered or legislated special economic zones and freeports such as Clark Freeport Zone; Poro Point Freeport Zone; John Hay Special Economic Zone and Subic Bay Freeport Zone under Republic Act No. 7227, as amended by Republic Act No. 9400; the Aurora Special Economic Zone under Republic Act No. 9490, as amended; the Cagayan Special Economic Zone and Freeport under Republic Act No. 7922; the Zamboanga City Special Economic Zone under Republic Act No. 7903; the Freeport Area of Bataan under Republic Act No. 9728; and such other freeports as established or may be created by law.6 | | Formula of Manufacture (FOM) | Shall refer to the formula of conversion issued by the Industrial Technology Development Institute (ITDI) to the CBW operator and members, determining the raw material usage and wastages of a particular finished product for export and subsequent liquidation. | | Garments and Textile Industry Development Office (GTIDO) | Shall refer to the government agency attached to the Department of Trade and Industry mandated to assist the Bureau in granting authority to an operator or to be a member or subcontractor of a warehouse involved in the manufacture of garments or textile for export. | | Goods | Shall refer to articles, wares, merchandise and any other items which are subject of importation or exportation7. | | Goods Declaration | Shall refer to a statement made in the manner prescribed by the Bureau and other appropriate agencies, by which the persons concerned indicate the procedure to be observed in the application for the entry or admission of imported goods and the particulars of which the customs administration shall requires. | | Importation | Shall refer to the act of bringing in of goods from a foreign territory into Philippine territory, whether for consumption, warehousing, or admission.9 | | Liquidation of Raw Materials | Shall refer to the process of accounting the usage of bonded raw materials, including wastages, in the manufacture of finished products for export as against the importation by CBWs of raw materials using the FOM. | | Lodgement | Shall refer to the registration of a goods declaration with the Bureau10. | | Member | Shall refer to an entity accredited to operate under an existing CCBW established for the manufacture of products using imported duty and tax-free raw materials or components subject to the condition that finished products shall be exported within the period prescribed by existing laws and regulations. Members may either be accredited by the Bureau alone or jointly with the GTIDO in case of entities engaged in the manufacture of garments. | | Multinational Regional Bonded Warehouse | Shall refer to an Industry-Specific CBW authorized by the Board of Investments (BOI) in proper cases, to serve as the supply depot for the storage, deposit, safe-keeping of spare parts components, semi-finished products and raw materials including the packing, covering, putting-up, marking, labelling, cutting or altering to customer's satisfaction, mounting and/or packaging into kits or marketable lots thereof to fill up transactions and sales made by its officers of parent companies and to serving as a storage of goods purchase locally by the home office of the multinational for export abroad under the supervision of the Bureau. | | Multi-Purpose Declaration | Shall refer to a customs single administrative document accomplished by the importer, or his duly licensed broker, under oath and submitted to the Bureau for purposes of declaring and identifying among others the nature of the article/s being imported, its value, volume, weight, and any relevant description thereof, whether entered through consumption or through warehousing which will assist the Bureau in assessing the taxes and duties due on the imported article. | | Perishable Goods | Shall refer to goods liable to perish11 such as agricultural products, flavorings, chemicals with maximum shelf life of six (6) months or other similar items. | | Physical Security Feature | Shall refer to a system to secure and monitor premises, storage and production areas of CBWs including the safety of personnel. | | Raw Material Liquidation System (RMLS) | Shall refer to an automated system to be adopted and utilized by the Bureau in determining the volume and value of the raw materials exported and subject for liquidation, including the duties and taxes due on the allowable residues/wastages/by-products and other portion of the imported article/s, entered through warehousing, no longer usable for the manufacture of the goods to be exported. | | Security | Shall refer to any form of guaranty, such as a surety bond, cash bond, standby letter of credit or irrevocable letter of credit, which ensures the satisfaction of an obligation to the Bureau12. | | Semi-finished products | Shall refer to imported raw materials or goods that have undergone processing which shall be used in the further manufacture of finished products for export. They are also termed as "intermediate products." | | Sub-contractor | Shall refer to a person or company accredited by the Bureau, and GTIDO in case of garments, to undertake or perform, for a definite period, certain manufacturing operations or activities incidental to the manufacture of bonded raw materials into finished products in behalf of a CBW and members in cases where the latter's facilities are insufficient to address its immediate requirements or due to lack of material time to meet export commitments. | | Supplies | Shall refer to imported consumable and disposable indirect materials that are needed in the maintenance, operation and production of the MCBW. Such materials are not included in FOM of the finished products and are not duty/tax-free unless authorized by the BOI or exempted by the DOF. | | Transfer Note | Shall refer to a customs document that accompanies the transfer or transit underguard of bonded imported goods to a Free Zone locator/enterprise or to another CBW and serves as proof of delivery or receipt of the goods at its intended destination duly acknowledged on its face by the Collector of Customs or his duly authorized representative. It is also commonly referred to as a "boatnote". | | Transit | Shall refer to the customs procedure under which goods are transported under customs control from one customs office to another or to a Free Zone locator/enterprise. | | Unauthorized Repacking | Shall refer to the act of fraudulent concealment, removal, or repacking merchandise in any CBW; or fraudulent alteration, defacement, or obliteration of any markings or numbers placed upon packages deposited in such warehouse, or aiding or abetting any such acts13. | | Unauthorized Withdrawal | Shall refer to the withdrawal of any material/goods stored in a CBW without the duly processed withdrawal or requisition slip, or the substitution of materials or finished products with local materials or goods. Unauthorized withdrawal shall also include the act of directly transferring the imported materials to an Accredited Member or Subcontractor without passing through the physical facility of the CBW, or the transfer of such materials to a non-accredited member or subcontractor. | | Wastage Valuation Data Base (WVDB) | Shall refer to a bank of information and reference values which shall be utilized by the Bureau in assessing the taxes and duties due on the allowable residue/wastage/by-products or other portion of the imported article/s which can no longer be used for the manufacture of the goods to be exported. | **Section 4. General Provisions.** 4.1. **Establishment of Customs Warehouses.** When the business of the port and trade requires such facilities, the District Collector, subject to the approval of the Commissioner, shall designate and establish customs warehouses for the storage of imported goods or for other special purposes. A CBW includes the surrounding premises within its perimeter fence per approved application, rooms, compartments, and other areas necessary and exclusively used for storing, processing, re-packing, and manufacturing imported raw materials and the finished product, by-products, wastages and rejects incident to such activities as applied for and approved by the Bureau. No other establishment shall be allowed thereat except upon proper approval of the Bureau and under such conditions as may be imposed by the Bureau. 4.2. **Licensing, Supervision and Control over CBWs.** The Bureau is responsible for the licensing of all CBWs. For the protection of government revenue, all CBWs shall be considered as extension of the customs premises insofar as the dutiable goods stored and introduced thereat. CBWs, including their expansion, extensions and additional facilities and the goods stored thereat, shall be subject to the supervision and control of the District Collector. The supervision and control of the District Collector over warehouses shall extend to the warehouse and facilities of duly authorized members, Client/End-Users, Client-Exporters, and sub-contractors of CBWs. In cases where the Client/End-User, Client-Exporter or sub-contractor is also a Free Zone locator/enterprise14, the exercise of supervision and control shall be made in coordination with the government agency concerned. The Bureau however, shall not be liable for any loss or damage of the goods stored in any CBW. 4.3 **Types of Customs Bonded Warehouse.** 4.3.1. **Manufacturing Customs Bonded Warehouse (MCBW).**15 It is a warehouse established for the manufacture of products utilizing raw materials or components that are imported duty and tax-free conditioned on the exportation of the finished products within the period prescribed herein or withdrawal for domestic consumption upon payment of duties and taxes, provided that raw materials entered for consumption shall not exceed thirty percent (30%) of the volume of raw materials entered for warehousing. Withdrawal for consumption beyond thirty percent (30%) may be allowed by the Bureau under meritorious circumstances such as but not limited to cancelled orders, closure of CBW, or cessation of operations due to a state of calamity. 4.3.2. A MCBW shall include: - **a. Miscellaneous Manufacturing Bonded Warehouse (MMBW).** It is a warehouse established and duly authorized to import, receive, and store, duty and tax free and under bond, raw materials, except garments and textile, for manufacture into finished products, including accessories, packaging and packing materials for export within a specified period. - **b. Garments and Textile Manufacturing Bonded Warehouse (GTMBW).** It is a warehouse established and jointly authorized by the Bureau and the GTIDO to import, receive, and store duty and tax free and under bond, raw materials and accessories, for the manufacture of garments or textile, including packaging and packing materials for export within a specified period. - **c. Customs Common Bonded Warehouse (CCBW).** It is a warehouse established and duly authorized by the Bureau alone or jointly with GTIDO, in case of garments industry, to import, receive, and store, duty free and under bond, raw materials and accessories, for the account of its accredited members for manufacture into finished products for export including packaging and packing materials. - **d. Industry-Specific Customs Bonded Warehouse (ICBW).** It is a warehouse duly authorized by the Bureau to import under bond and under its name and account, goods or raw materials (except fibers, yarns, fabrics and accessories for the manufacture of garments) for storage and subsequent sale and transfer to its accredited Client/End User either for export of the bonded goods or for manufacturing into export products, in case of raw materials. CBWs previously granted Authority to Operate either as Multinational Regional Bonded Warehouse, Airlines Customs Bonded Warehouse or Airlines Catering Customs Bonded Warehouse shall be re-classified as ICBWs pursuant to this CAO. The Bureau shall provide for the guidelines and parameters for the accreditation of end-user/clients of ICBWs, such as those engaged in international aviation, etc. 4.3.3. **Nonmanufacturing Customs Bonded Warehouse (NCBW).** It is a warehouse where goods are stored duty-and-tax-free conditioned on the eventual withdrawal of the goods for consumption and shall only be withdrawn within the period prescribed upon payment of the corresponding duties, taxes and other charges whether or not the goods are in the same state as imported. Example of an NCBW are Private Customs Bonded Warehouses (PCBWs) which are authorized by the Bureau to import, receive and store goods for their own accounts intended for domestic consumption. 4.4. **Reclassification of Public Bonded Warehouse in Airports.** To ensure compliance with the requirements and conditions specified in CAO No. 9-2019, all existing public bonded customs warehouses are hereby reclassified as Customs Facilities and Warehouse (CFW) without prejudice to all the rights, conditions, and obligations already acquired or vested prior to the effectivity of this CAO. 4.5. **Examination and Storage Area.** A CCBW or an ICBW operator shall likewise have an examination and storage area which is secured and with sufficient space for the inspection and subsequent storage and safekeeping of imported goods prior to their delivery to Accredited Members or Client/End-User, as the case may be. It shall also have the necessary logistical support needed for the proper handling of such imported goods. 4.6. **Non-Transferability of Authority.** The Authority to Operate a CBW is personal to the warehouse operator and shall not be transferred or assigned for whatever reason. 4.7. **Creation or Dissolution of Types of CBW.** The Secretary of Finance may, upon the recommendation of the Commissioner, create or dissolve certain types of warehouses subject to consultation with the National Economic and Development Authority (NEDA) and the Department of Trade and Industry (DTI) based on prevailing economic circumstances16. 4.8. **Accreditation of Free Zone Locator/Enterprise as Sub-contractor.** A Free Zone Locator/Enterprise may be accredited by the Bureau as a Sub-contractor of a MMBW, GTMBW or of an accredited member of a CCBW. 4.9. **Operation without a CBW Authority.** Any person, natural or juridical, found to be operating as a bonded warehouse without a valid customs authority, shall be barred from being granted any warehousing privileges. 4.10. **Misrepresentation of Material Information.** Any misrepresentation, false statement or non-disclosure of any material information required in any application shall be a ground for its disapproval without prejudice to any administrative/criminal charge as may be deemed proper. 4.11. **Terms and Conditions of Authority to Operate a CBW.** 4.11.1. **Exemption from Duty and Tax of Goods in CBWs.** Goods duly entered for warehousing in CBWs shall be exempt from duty and tax within the prescribed period for storage17 and must be withdrawn from the warehouse either for manufacture into export products; for repacking; for distribution to foreign markets; for sale to MCBW; for transfer to subcontractors or members of CCBWs; or transfer to accredited clients/end user. Goods entered for warehousing shall include imported raw materials, accessories, spare parts, labels, hangers, cartons, packaging materials and the like used in the manufacture of goods. Withdrawals for domestic consumption shall be subject to payment of duties and taxes. Exportation of goods manufactured by any MCBW shall be supervised by assigned customs officials. 4.11.2. **Exclusion from Exemptions.** The privilege of exemption from payment of duties and taxes, however, shall not apply to implements, machineries, spare parts and apparatus, supplies and tools to be used to construct, repair or operate any MCBW unless these supplies and spare parts are indispensably needed in the production of finished products for exports subject to presentation of a Certificate of Qualification from BOI and/or the corresponding exemption from the DOF. 4.11.3. **Period to Liquidate.** The importer shall, within a non-extendible period of sixty (60) days from the date of complete and full exportation, submit the complete documents required for the liquidation of the entry. The same period shall likewise be given an importer for the submission of the complete documents required for the liquidation of the warehousing entry even in cases where complete exportation is made before the expiration of the period prescribed. Notwithstanding the foregoing, the maximum period within which to submit complete liquidation documents is thirty (30) days from the expiration of the storage period. Submission of documents after the thirty (30) day period shall be considered as late submission of documents and shall be subject to the penalties prescribed under this CAO. The imposition of the periods herein prescribed shall be without prejudice to existing rules and regulations 4.11.4. **Raw Materials Importation.** CBWs, including its members, if applicable, may import goods based on its approved SMRMIR as duly authorized by the Bureau. 4.11.5. **Compliance Rating System.** The Commissioner shall establish a CRS which shall be used to measure and assess the compliance and performance levels of all CBWs especially with regard to applicable laws, rules and regulations and other performance factors such as import-export and economic viability, among others, in consultation with stakeholders. The system shall be utilized by the Bureau as a risk management mechanism in its evaluation of any application or used as basis in any action which may be taken by the Bureau for or against a CBW. Periodic audits shall be conducted on a CBW for the purpose of monitoring its operations as well as to determine its compliance with governing rules and regulations. For record purposes, all documents shall be kept for three (3) years18. 4.12. **Requirements Prior to Operation.** Before the bonded warehouse shall be allowed to operate, the following pre-operating requirements must be complied: 4.12.1. **Assignment of Customs Officers and Personnel.** The assignment of Bureau personnel shall take into account the extent of operations of the CBW and the number of accredited members in case of CCBW. 4.12.2. **Provision for a Suitable Working Space for Bureau Personnel.** The CBW operator shall provide Bureau personnel with suitable working areas complete with office equipment and supplies necessary to perform their basic functions. 4.12.3. **Locks and Keys.** The door and entrance to a CBW and the designated compartments for new materials, finished goods and wastages, rejects and by-products shall have a secured locking system which complies with the standard and specification set by the Bureau. Access to the areas shall be limited to personnel duly authorized by both the Bureau and the CBW operator. 4.12.4. **Assignment of Warehouse Number.** Before the bonded warehouse shall be allowed to operate, the Office of the Deputy Commissioner, AOCG shall assign a warehouse number for all CBWs including accredited members of CCBWs for all Authority to Operate granted after the effectivity of this CAO. All existing CBWs whose warehouse number were previously assigned by the District Collector having jurisdiction over the same shall be retained. 4.12.5. **Payment of Warehouse Supervision Fee.** Proof of payment of the Warehouse Supervision Fee in the amount prescribed by the Bureau must be copy furnished the CBWC for record purposes. 4.12.6. **Installation of Required Signages.** The Authority to Operate issued by the Commissioner must be posted or displayed in conspicuous places in the office of the CBW Operator and at the entrance to the CBW. 4.12.7. **Conduct of Final Inspection for Compliance Check.** The District Collector shall cause the final inspection of the CBW by the Warehousing Inspection Division or equivalent unit for compliance to the requirements before the CBW begins actual operations. 4.12.8. **Registration in CPRS of CBW Operators including Members of CCBW.** CBW Operators must register in the CPRS as warehouse operators. Members of CCBWs must, in addition to its accreditation as importer should also register as warehouse operator with its warehouse code. 4.12.9. **Posting of the General Warehousing Bond, Performance Bond and General Transportation Surety Bond (GTSB).** The General Warehousing Bonds, Performance Bond and the GTSB must be filed with the Bonds Division or equivalent unit of the port concerned. The CBW operator should likewise create a Bond Account in the Bureau's ABMS for automatic debiting of the assessed duties and taxes to the bonds filed during the lodgement of the Warehousing Goods Declaration or Transit Goods Declaration. 4.13. **Requirements During Operation.** 4.13.1. **Principal Books of Accounts.** The Bureau and the CBW operator shall keep and maintain Principal Books of Accounts containing the records of importation and exportation of all goods delivered to and withdrawn from a CBW. As far as practicable, the Bureau and CBW operator shall utilize an ICT-enabled inventory and liquidation system of all goods delivered to and withdrawn from a CBW, which may serve as the principal books of accounts. 4.13.2. **Stock Inventory Report.** All CBWs shall establish and maintain a computer-based AIMS for bonded goods with linkage to the Bureau. The stock inventory report must be submitted at the end of every calendar year. Non-submission of stock inventory report may be a ground for the suspension or cessation of operations of the CBW. A coding system acceptable to the Bureau shall be adopted by CBW operators and utilized to identify and track goods entered for warehousing and withdrawn for export from CBW compartments. **Section 5. Administrative Provisions.** 5.1. **Application for the Issuance of Authority to Operate.** 5.1.1. **Application for Authority to Operate a CBW.** The application for authority to operate a CBW, including applications for accreditation as member, subcontractor, Client-Exporter, or Client/End-User of an existing warehouse, shall be filed with the District Collector where the CBW is located, describing the premises, location, capacity, and purpose of such establishment. 5.1.2. **Documentary Requirements.** Any person or firm desiring to establish and operate a CBW shall submit the following documents: - Certificate of Accreditation as importer; - Lease contract or Certificate of Title to the real property where the proposed CBW is located; - Warehouse location or vicinity map showing the area and means of access; - Warehouse layout showing and describing the following: - Floor plan and building structure; - Storage areas for raw materials, finished products and wastages; - Production area; - Office spaces for both CBW and customs personnel; and - Physical security feature - List of machineries and equipment; - Feasibility study; - Monthly requirement of the list of materials to be imported; and - Formula of Manufacture or Conversion, if applicable. Other documentary requirements which have been submitted during the application for accreditation as importer may be dispensed with, unless otherwise required. 5.1.3. **Evaluation of the Application.** The District Collector of the Port shall: - Determine the completeness of the documents submitted in support of the application; - Cause the conduct of physical inspection and taking of photographs of the premises; - Evaluate and review the documents including the physical inspection report; and - Recommend to the Commissioner the approval of the application upon compliance with all the requirements. The District Collector may reject the application at any stage of the evaluation process in cases where the application is attended with fraud, misrepresentation or non-disclosure of material information, or the applicant does not meet the regulatory requirements to operate a CBW. This is without prejudice to any administrative/criminal charge as may be deemed proper. 5.1.4. **Action by the District Collector.** The District Collector shall recommend to the Customs Bonded Warehouse Committee (CBWC) the approval of the application within five (5) working days from issuance of clearances and inspection report by concerned offices; 5.1.5. **Notice of Rejection of Application.** In case of rejection, the District Collector shall send a Notice of rejection to the applicant stating clearly the grounds for the rejection of the application. 5.1.6. **Reconsideration from the Rejection of the Application by the District Collector.** The applicant may request for reconsideration of his/her application upon completion of the lacking documents and/or when the grounds for rejection has ceased to exist. 5.1.7. **Deliberation by the Customs Bonded Warehouse Committee (CBWC).** The Commissioner of Customs shall constitute a CBWC to be headed by the Deputy Commissioner for Assessment and Operation Coordinating Group (AOCG) for purposes of evaluating, reviewing and consolidating all applications for the establishment and renewal of CBW Authority to Operate and other related matters pertaining to the operations of the CBW. The CBWC in recommending the approval of an application for issuance of an Authority to Operate shall specify the following: - The type of CBW; - The specific raw materials, with their corresponding H.S. tariff lines the CBW Operator is allowed to import; - The volume/quantity of said raw materials, in the particular unit of measure (e.g. square meters, kilograms, liters), it is authorized to import, taking into account the storage capacity of the CBW; and - In the case of CCBWs and ICBWs, the members or clients/end-user for whom said raw materials, identified according to their corresponding H.S. tariff lines, may be transferred/sold; and the quantities/volumes, in the particular unit of measure (e.g. square meters, kilograms, liters), allowed per member or client/end-user. The CBWC shall forward its recommendation to the Commissioner within twenty (20) days upon receipt of the records from the District Collector together with complete supporting documents. 5.1.8. **Action by the Commissioner.** The Commissioner shall act on the application within twenty (20) working days from receipt of the recommendation by the CBWC. 5.1.9. **Certificate of Authority to Operate.** Upon approval of the CBW application, the Commissioner shall issue a Certificate of Authority to Operate a CBW, which shall be conspicuously displayed at all times at the CBW and its extension offices. 5.1.10. **Amendment of Certificate of Authority.** Upon the request of the CBW operator, the Commissioner may upon the recommendation of the CBWC amend the Certificate of Authority based on any of the following grounds: - Change of company name; - Change of the name of the street or building number without actual change of the physical location of the CBW; or - Such other changes which do not substantially alter the conditions specified in the existing Authority to Operate CBW. 5.1.11. **Post Approval Requirements.** CBWs granted Authority to Operate shall submit annually their ITRs duly filed with the BIR, CTC of Mayor's Permit, Audited Financial Statement, Export and Import Performance, and Year-end Stock Inventory Report. Non-submission of these requirements is a ground for the suspension or cessation of operations of the CBW. 5.2. **Application for Authority to Establish and Operate a CCBW.** The Application to Establish and Operate a CCBW must be filed jointly with the application for accreditation of its proposed members. 5.3. **Validity of Authority to Operate or its Renewal.** The Authority to Operate a CBW, including warehouse extensions and additional facilities issued pursuant to this CAO shall be valid for three (3) years counted from the date of the approval of the application for establishment, as stated in the Certificate of Authority to Operate. If the term of the lease contract submitted during the application is less than three (3) years, the validity of the Authority to Operate shall be co-terminus with the lease contract unless a new Contract of Lease with a longer period is submitted. In such case, the Authority to Operate shall be amended to its maximum period of three (3) years counted from its date of original issuance. In case of renewal and where the Authority to Operate was issued after the lapse or after the expiration of the existing authority, the 3-year effectivity period of the renewed Authority to Operate shall retroact to the date immediately after the expiration of the previous authority. 5.4. **Renewal of Authority to Operate CBW.** The application for renewal of Authority to Operate a CBW shall be filed not later than ninety (90) days but not earlier than one hundred twenty (120) days before its expiration. 5.4.1. **Requirements for Renewal.** The application for renewal of Authority to Operate CBW shall be supported by the following: - Certificate of Accreditation as importer; - Income Tax Return (ITR) and Latest Audited Financial Statement, if applicable; - Certificate of Clearance/No Outstanding Accountability from Bureau offices concerned; - Import/export performance for the past three (3) years; - Copy of the certificate of title to the real property or, if applicable, copy of renewal of lease contract; - Updated Statement of Monthly Raw Materials Importation Requirements (SMRMIR); and - Updated Formula of Manufacture, if applicable. Where there are no changes in the circumstances relative to paragraphs g, h, i, j and k above, the CBW operator shall merely submit an Affidavit of No Change in Circumstances in lieu of said requirements. In case of MCBW and ICBW, the joint application for renewal shall be supported with all of the above requirements to be complied by the MCBW or ICBW and its sub-contractor, member, Client-Exporter, and Client/End-User, respectively, if applicable. 5.4.2. **Late Filing of Application for Renewal of Authority to Operate.** Non-filing within the prescribed period shall cause the imposition of penalties, which may take the form of fines, suspension, or revocation of the Authority to Operate, as may be warranted, in accordance with Sections 10.1.c. and 13.9 5.5. **Application for Structural Changes or Additional Facilities within the CBW.** 5.5.1. The CBW Operator and an accredited member may introduce structural changes or additional facilities in the CBWs provided that the ingress and egress or the physical security feature of the CBW shall not be altered or compromised; 5.5.2. The CBW Operator or accredited member shall file the application with the District Collector prior to the introduction of any structural changes or additional facilities; 5.5.3. The application shall be supported by the following documents: - Building permit, if applicable; - Description of the proposed structural changes or additional facilities; - CBW layout, estimated capacity and physical security features after the introduction of the proposed changes; and - Such other documents that may be required by the District Collector in the exercise of power of supervision and control. 5.6. **Application for Extension Warehouse.** 5.6.1. The CBW Operator may apply for an extension warehouse which should be located within the territorial jurisdiction of the District Collector who