Customs Modernization and Tariff Act

State policy and Act objectives

Section 101 declares State policy to protect and enhance government revenue through fair and transparent customs and tariff management.
The State must implement programs that continuously enhance customs systems and processes and harmonize customs procedures.
The State must adopt clear and transparent customs rules, regulations, policies, and procedures consistent with international standards and best practices.
The State must establish transparency and accessibility to customs information and practices to ensure informed and diligent compliance.
The State must provide a fair and expeditious administrative and judicial appellate remedy for customs-related grievances.
Customs administration must use modern practices and information and communications technology and must follow professionalism and meritocracy in customs tax administration.

Core definitions and key terms

Section 102 defines “Abatement” as the reduction or diminution of duties and taxes where payment has not been made.
Section 102 defines “Actual or Outright Exportation” as the export procedure for goods in free circulation leaving the Philippines to remain permanently outside it.
Section 102 defines “Assessment” as the process of determining the amount of duties and taxes and other charges due.
Section 102 defines “Authorized Economic Operator (ABO)” as entities accredited by the Bureau under recognized WCO frameworks and conventions for trade facilitation through secure supply chains using risk management and modern technology.
Section 102 defines “Bureau” as the Bureau of Customs.
Section 102 defines “Clearance” as completion of customs and other government formalities allowing goods to enter for specified customs purposes or to be exported/placed under another procedure.
Section 102 defines “Customs Territory” as areas in the Philippines where customs and tariff laws may be enforced.
Section 102 defines “Customs Broker” as a person with a valid Certificate of Registration/Professional Identification Card issued under Republic Act No. 9280.
Section 102 defines “Customs Officer” as a person whose duty involves discretion in performing Bureau functions (not clerical or manual), or an employee authorized to perform specific functions under the Act.
Section 102 defines “Importation,” “Exportation,” “Entry,” “Lodgement,” “Release of Goods,” “Refund,” “Security,” “Smuggling,” “Technical Smuggling,” “Outright Smuggling,” “Perishable Good,” “Tentative Release,” “Transit,” “Transshipment,” and “Third Party” for purposes of customs rules and enforcement.
Section 102 defines “Flexible Clause” as the President’s tariff adjustment powers based on NEDA recommendation, including tariff rate adjustments, quotas/bans, and additional duty up to 10% ad valorem, with a cap not exceeding 100% ad valorem for protective tariff adjustments.
Section 102 defines “Free Zone” by enumerating specific laws and zones, including Republic Act No. 7916, Republic Act No. 7227 (as amended), Republic Act No. 9400, Republic Act No. 9490, Republic Act No. 7922, Republic Act No. 7903, Republic Act No. 9728, and other freeports created by law.

When import starts and when duties accrue

Section 103 provides that importation begins when the carrying vessel or aircraft enters Philippine territory with intention to unload.
Section 103 states importation is deemed terminated when:
- (a) duties, taxes, and other charges due are paid or secured to be paid at the port of entry (unless goods are free of such charges and withdrawal is legally permitted); or
- (b) for goods deemed free of duties and taxes, the goods have legally left Bureau jurisdiction.
Section 104 requires that imported goods are subject to duty upon importation, unless otherwise provided by the Act or other laws.
Section 104 requires legal interest for unpaid duties and taxes at 20% per annum, computed from the date of final assessment under Section 429, when payment becomes due and demandable.
Section 104 states legal interest likewise accrues on any fine or penalty imposed.
Section 104 requires the Bureau to issue the necessary receipt or document as proof of payment upon payment of duties, taxes, and other charges.

Rates, declarant role, and goods declarations

Section 105 provides that imported goods are subject to import duty rates effective at the date of importation or upon withdrawal from the warehouse for consumption.
Section 105 provides that where goods are withdrawn from free zones for introduction to the customs territory, the duty rate at the time of withdrawal applies to goods originally admitted, whether withdrawn in original or advanced form.
Section 105 states that for goods sold at customs public auction, the duty rates at the date of auction apply for purposes of implementing Section 1143(a).
Section 106 defines “Declarant” as a consignee or a person with the right to dispose of the goods.
Section 106 requires the declarant to lodge a goods declaration and allows the declarant to be:
- (a) the importer (holder of the bill of lading);
- (b) the exporter (owner of goods to be shipped out);
- (c) a customs broker acting under authority; or
- (d) a person duly empowered as agent or attorney-in-fact for each holder.
Section 106 allows a juridical person to authorize a responsible officer to sign the goods declaration as declarant.
Section 106 grants a transition period of two (2) years from effectivity during which subparagraph (d) shall not be implemented by the Bureau; after two (2) years, subparagraph (d) takes effect consistent with international standards and customs best practices.
Section 107 requires the declarant to be responsible for the accuracy of the goods declaration and for the payment of duties, taxes, and other charges.
Section 107 states that a licensed customs broker is responsible for the accuracy of the goods declaration but not for payment of duties, taxes, and other charges.
Section 107 requires the declarant to sign the goods declaration even when assisted by a licensed customs broker, and it likewise requires the broker to sign.
Section 108 directs that the Bureau shall not impose substantial penalties for errors that are inadvertent with no fraudulent intent or gross negligence.
Section 108 allows a penalty to discourage repetition but requires it not be excessive.

Technology, transparency, binding rulings, appeals

Section 109 requires the Bureau to utilize information and communications technology to enhance customs control and support paperless customs operations.
Section 109 requires the Bureau to communicate, exchange, and process trade- and logistics-related information for efficient and prompt clearance using a technology-neutral and secured infrastructure.
Section 109 requires data and communications security consistent with applicable local and internationally accepted standards.
Section 109 requires disaster preparedness and recovery planning to ensure business continuity and maintain an uptime goal for electronic and online services.
Section 109 states that for customs procedures, electronic documents, permits, licenses, or certificates have legal effect, validity, or enforceability as other documents when requirements are complied with.
Section 109 requires the Bureau to recognize authenticity and reliability of electronic documents, transmit approvals through electronic data messages or electronic documents, and accept payments and issue receipts through electronic systems when requirements are met.
Section 109 requires implementation of ICT with due consultation with directly affected parties and stakeholders.
Section 110 provides that parties may transact business with the Bureau directly or through a designated third party, and transactions through a designated third party must not be treated less favorably or subject to more stringent requirements.
Section 110 provides that a designated third party has the same rights and obligations as the designating party when transacting with the Bureau.
Section 110 requires the Secretary of Finance to issue necessary guidelines for the Bureau–third party relationship.
Section 111 requires publication of all laws, decisions, rulings, circulars, memoranda, and orders of the Bureau in accordance with law.
Section 111 requires the Bureau to ensure readily accessible availability of relevant non-confidential general information on customs operations and procedures.
Section 111 requires new information or amendments/changes to be made readily available prior to effective implementation, unless advance notice is precluded.
Section 112 requires the Bureau to provide non-confidential information of specific nature to interested parties for legitimate use.
Section 112 allows the Bureau to require a reasonable fee for providing such information and to release it within a reasonable time from filing and payment.
Section 113 requires the Bureau to issue binding and advance decisions and rulings at the request of an interested party on matters pertaining to importation or exportation of goods, consistent with Section 1502.
Section 113 requires written notification within the period specified in the Act or by regulation, and when adverse, it requires stating reasons and advising the right of appeal.
Section 113 requires issuance of the ruling/decision within thirty (30) days from submission of necessary documents and information.
Section 114 grants the right of appeal to any party adversely affected by a Bureau decision or omission on importation, exportation, or other legal claim.
Section 114 requires filing an appeal within fifteen (15) days from receipt of the questioned decision or order.
Section 114 requires the appeal to be written, specify grounds, and allow reasonable time for supporting evidence if the Bureau allows it.

Import types, entry treatment, and import/export permissions

Section 115 provides that imported goods are deemed entered for consumption when the goods declaration is electronically lodged, with required supporting documents, with the pertinent customs office.
Section 116 provides that, unless otherwise provided by law or regulation, all goods may be freely imported and freely exported without import/export permits, clearances, or licenses.
Section 117 requires regulated goods to be imported/exported only after securing the necessary goods or export declarations, clearances, licenses, and other requirements prior to importation or exportation.
Section 117 allows submission of requirements after arrival but prior to release from customs custody only in cases provided by governing laws or regulations.

Prohibited and restricted import/export goods

Section 118 prohibits the importation and exportation of goods including:
- (a) written or printed goods advocating/inciting treason, rebellion, insurrection, sedition, forcible resistance, or containing threats of life or bodily harm to any person in the Philippines;
- (b) goods/instruments/drugs/substances designed or intended/adapted for unlawful abortion and printed matter advertising or giving information on how/where/by whom unlawful abortion is committed;
- (c) written/printed goods, negatives, cinematographic films, photographs, engravings, lithographs, objects, paintings, drawings, or other representation of obscene or immoral character;
- (d) goods manufactured wholly or partly in gold, silver, or precious metals/alloys when the stamp/brand/mark does not indicate actual fineness;
- (e) adulterated or misbranded food for human consumption or adulterated or misbranded drug in violation of relevant laws and regulations;
- (f) infringing goods as defined under the Intellectual Property Code and related laws; and
- (g) any other goods whose importation and exportation are explicitly prohibited by law or rules and regulations issued by the competent authority.
Section 119 prohibits restricted goods unless authorized by law or regulation, including:
- (a) dynamite, gunpowder, ammunition, explosives, firearms and weapons of war, or parts thereof;
- (b) roulette wheels, gambling outfits, loaded dice, marked cards, gambling machines/apparatus/devices, including jackpot and pinball machines or similar contrivances, or parts thereof;
- (c) lottery and sweepstakes tickets, except advertisements and lists of drawings;
- (d) marijuana, opium, poppies, coca leaves, heroin or other narcotics or synthetic drugs declared habit-forming by the President, or compounds/salts/derivatives/preparations, except when imported by the Government of the Philippines or a person duly authorized by the Dangerous Drugs Board for medicinal purposes;
- (e) opium pipes or parts thereof, of whatever material; and
- (f) any other goods whose importation and exportation are restricted.
Section 119 requires that the restriction also includes restriction on transit of the restricted goods.

Relief consignment and calamity priority

Section 120 treats relief consignment as goods such as food, medicine, equipment, and materials for shelter donated or leased to government institutions and accredited private entities for free distribution to or use of calamity victims.
Section 120 requires that upon declaration of a state of calamity, clearance of relief consignment is a matter of priority and subject to a simplified customs procedure.
Section 120 requires the Bureau to provide simplified procedures including:
- (a) lodging a simplified goods declaration or provisional/incomplete declaration subject to completion within a specified period;
- (b) lodging/registering/checking goods declarations and supporting documents prior to arrival and releasing upon arrival;
- (c) clearance beyond designated business hours or away from customs offices and waiver of corresponding charges; and
- (d) examination and/or sampling only in exceptional circumstances.
Section 120 requires joint issuance by the Department of Finance (DOF) and the Department of Social Welfare and Development (DSWD) of the rules and regulations for implementation.
Section 121 exempts relief consignment imported during a state of calamity and intended for a specific calamity area for use by calamity victims from duties and taxes.

Bureau of Customs organization and commissioner powers

Section 200 provides that the Bureau of Customs is headed by a Commissioner assisted by at least four (4) but not more than six (6) Deputy Commissioners.
Section 200 requires the Commissioner to be appointed by the President of the Philippines.
Section 200 requires Deputy Commissioners to be appointed by the President and that at least a majority must come from the ranks of the Bureau.
Section 201 gives the Commissioner exclusive and original jurisdiction to interpret provisions of the Act in collaboration with relevant agencies, subject to review by the Secretary of Finance.
Section 201 authorizes the Commissioner to exercise customs powers and to review actions/decisions of customs officers and disputed assessments, subject to review by the Secretary of Finance and the exclusive appellate jurisdiction of the Court of Tax Appeals (CTA).
Section 201 allows the Commissioner to delegate vested powers to customs officers with rank equivalent to division chief or higher, but excludes delegation of:
- (1) promulgation of rules and regulations;
- (2) issuance/revocation/modification of rulings; and
- (3) compromise or abatement of customs obligations.
Section 201 requires District Collectors and other assessment-function customs officers not to remain in the same area of assignment for more than three (3) years, with assignment/reassignment subject to approval by the Secretary of Finance.

Bureau functions, reporting, and customs rules

Section 202 requires the Bureau to assess and collect customs revenues and enforce payment of dues, fees, charges, fines, and penalties accruing under the Act.
Section 202 requires simplification and harmonization of customs procedures and border control to prevent smuggled goods.
Section 202 requires prevention and suppression of smuggling and customs fraud.
Section 202 requires facilitation and security of international trade through an informed compliance program.
Section 202 requires supervision and control over entrance and clearance of vessels/aircraft in foreign commerce and over foreign mails for revenue protection and contraband prevention.
Section 202 requires supervision and control over import/export cargo handling (landed/stored in piers, airports, terminal facilities, container yards, and freight stations) to protect revenue and prevent contraband.
Section 202 requires a compensation study to recommend a competitive compensation system to attract and retain personnel while ensuring the Bureau remains financially sound.
Section 202 grants exclusive original jurisdiction over forfeiture cases under the Act and requires enforcement of the Act and related laws.
Section 203 requires the Commissioner to submit an annual report to the President, Congress, and NEDA on or before March 31 of the following year.
Section 204 requires the Commissioner, subject to approval of the Secretary of Finance, to promulgate rules and regulations to enforce the Act and to regularly prepare and publish an updated customs manual and updated rules/decisions.
Section 204 requires furnishing the Congress, NEDA, and the Tariff Commission with electronic copies of department orders, administrative orders, circulars, and rules/regulations.
Section 205 requires the Commissioner to furnish NEDA, PSA, BIR, and the Tariff Commission electronic copies of all customs goods declarations processed and cleared, and to maintain electronic records supporting those declarations.

Customs districts, ports, and staffing control

Section 206 divides the Philippines into as many Customs Districts as necessary, with limits that may be changed by the Commissioner with Secretary of Finance approval.
Section 206 provides that each Customs District is supervised by one District Collector, assisted by as many Deputy District Collectors as necessary.
Section 207 provides that all ports of entry are under the supervision and control of a Customs District.
Section 207 provides that principal ports of entry have a District Collector assigned, while other ports may have a Deputy District Collector.
Section 207 enumerates principal ports including Aparri, San Fernando, Manila, Manila International Container Port, Ninoy Aquino International Airport, Subic, Clark, Batangas, Legaspi, Iloilo, Cebu, Tacloban, Surigao, Cagayan de Oro, Zamboanga, Davao, Limay, and such other ports created pursuant to the Act.
Section 207 requires sea ports, airport authorities, and private port/airport operators to provide suitable areas for examination and customs equipment free of charge within a definite period agreed with operators.
Section 208 requires the President, upon recommendation of the Secretary of Finance, to open or close any port of entry, and requires reassignment of existing personnel by the Commissioner subject to Secretary of Finance approval.
Section 209 allows the Commissioner, with Secretary of Finance approval, to assign employees to ports/services/divisions/offices or to other duties without affecting tenure, status, or causing demotion and/or salary deduction.
Section 210 requires District Collectors to ensure entry of imported goods at the customs office, prevent prohibited importation/exportation, ensure regulatory compliance for restricted goods, examine/classify/value goods, assess/collect duties/taxes/charges, hold and dispose imported goods in accordance with the Act, prevent smuggling/customs fraud, and perform other assigned duties.

Acting succession and customs records

Section 211 provides that in the absence or disability of a District Collector, or in case of vacancy, the Deputy District Collector temporarily discharges District Collector duties.
Section 211 requires that if there is no Deputy District Collector, the District Collector designates a senior ranking customs officer in writing to temporarily perform duties, with drawing of lots if two or more senior officers have equal length of service.
Section 211 requires the District Collector to report the designation to the Commissioner within twenty-four (24) hours after designation.
Section 212 requires District Collectors, Deputy District Collectors, and customs officers acting in such capacities to maintain permanent records of official transactions and turn over records/papers to successors or authorized officials.
Section 212 requires records to be available for inspection by other authorized Bureau officials.
Section 212 authorizes the District Collector to affix the Bureau’s official dry seal on documents/records requiring authentication.
Section 213 requires the District Collector to report probable or initiated litigation and to submit regular monthly reports of all district transactions to the Commissioner.

Police authority: search, seizure, arrest

Section 214 authorizes specified persons to effect search, seizure, and arrest to implement the Act, including Bureau officials and deputized law enforcement components.
Section 214 requires coordination with the Commissioner for officers authorized to exercise police authority.
Section 214 requires deputized officers to physically turn over seized goods immediately to the Bureau, subject to existing laws/rules.
Section 214 requires mission orders to state the specific name of the carrying out mission and tasks to be carried out.
Section 214 requires the Commissioner, subject to Secretary of Finance approval, to define scope, areas, procedures, conditions, and rules on custody/responsibility for seized goods, and to furnish those rules to concerned agencies and personnel.
Section 214 requires that all seizures must follow the seizure proceedings provisions in Chapters 3 and 4 of Title XI of the Act.
Section 215 limits police authority to customs premises as provided in Section 303 and within the Commissioner’s granted limits.
Section 215 requires port and airport authorities in ports of entry to provide authorized customs officers unhampered access to all premises within administrative jurisdiction.
Section 216 grants power and duty to seize any vessel, aircraft, cargo, goods, animal, or movable property when subject to forfeiture or when subject to a fine imposed under the Act.
Section 217 requires an authorized officer, when questioned, to disclose authority’s nature and exhibit the written authority issued by the Commissioner.
Section 218 allows demanding assistance and requesting information from PNP, AFP, and other national law enforcement agencies when necessary, and makes it the duty of police officers and enforcers to provide lawful assistance.
Section 219 allows entry/search of land, enclosure, warehouse, store, building, or structure not principally used as a dwelling house.
Section 220 allows entry/search of a dwelling house only upon a warrant issued by a judge on sworn application showing probable cause and particularly describing place to be searched and goods to be seized.
Section 221 authorizes boarding, inspecting, searching, examining vessels/aircraft and containers, and physically searching persons on board, and allows seizure of goods/vessel/aircraft in case of probable violation; it also authorizes removal of false compartments to uncover concealed goods.
Section 221 states the authorized proceeding does not give rise to claims for damage unless there is gross negligence or abuse of authority.
Section 222 authorizes, upon reasonable cause, opening/examining containers and searching vehicles/carriers, persons, and animals suspected of holding or conveying dutiable or prohibited goods.
Section 223 allows reasonable-cause search and detention of travelers arriving from foreign countries while respecting dignity of the person; it allows female inspectors for examining/searching persons of their own sex.
Section 224 authorizes the Commissioner or an authorized customs officer to demand evidence of payment of duties/taxes for imported goods openly for sale or kept in storage; if evidence is not produced within fifteen (15) days, goods may be seized and subjected to forfeiture proceedings, with opportunity to prove source/payment during proceedings.
Section 224 requires that if a warrant of seizure has been issued and authentic documents showing proper payment are later produced, the District Collector shall release seized goods immediately within fifteen (15) days from receipt of a motion to quash or recall the warrant, subject to Commissioner clearance, and release must not be contrary to law.

Customs jurisdiction, customs control, and premises authority

Section 300 requires the Bureau to exercise jurisdiction over all seas within Philippine territory and all coasts, ports, airports, harbors, bays, rivers, and inland waters, and over any means of conveyance.
Section 300 directs the Bureau to pursue imported goods subject to seizure during transport by land, water, and air.
Section 300 provides that if a vessel or aircraft becomes subject to seizure for violation beginning within territorial waters/air space, pursuit may continue beyond and the vessel/aircraft may be seized in the high seas or international air space.
Section 301 requires customs control over all goods, including means of transport, entering or leaving customs territory regardless of duties/taxes liability.
Section 301 requires customs control using audit-based controls and risk management systems, automation to the fullest extent possible, and a compliance measurement strategy to support risk management.
Section 301 requires cooperation and mutual administrative assistance agreements with other customs administrations and consultation/coordination with other government agencies, free zone authorities, and stakeholders.
Section 302 requires cooperation with quarantine authorities in enforcing Bureau of Quarantine port quarantine regulations insofar as connected with shipping and navigation.
Section 303 grants the Bureau exclusive control, direction, and management over customs offices, facilities, warehouses, ports, airports, wharves, infrastructure, and other premises in Customs Districts, without prejudice to general police powers of LGUs, Philippine Coast Guard, and law enforcement agencies within their functions.
Section 304 authorizes the President, by executive order when public interest requires, to declare public wharf/landing place/infrastructure/street/land in a port of entry under Bureau jurisdiction as necessary for customs purposes and/or authorize a port/terminal operator to transfer overstaying cargoes in an inland depot/terminal.
Section 305 prohibits entering or obstructing customs premises (customs office, warehouse, port, airport, wharf, or other controlled premises, including streets/alleys) without prior authority.
Section 306 requires special surveillance by the Bureau on vessels/aircraft entering Philippine territory and on imported goods entering the customs office, while expressly continuing the Philippine Coast Guard Law of 2009 role under Republic Act No. 9993.
Section 307 directs the Commissioner to establish, subject to Secretary of Finance rules and regulations, a system for temporary storage of imports prior to goods declaration in cases of abandoned or overstaying goods.