Customs Modernization and Tariff Act Summary

Policy and guiding objectives

The State protects and enhances government revenue through fair and transparent customs and tariff management under Section 101.
The State institutes customs controls to efficiently facilitate international trade and prevent and curtail customs fraud and illegal acts under Section 101.
The State must develop continuous enhancements of customs systems and processes that harmonize customs procedures under Section 101(a).
The State must adopt clear and transparent customs rules, regulations, policies, and procedures consistent with international standards and best practices under Section 101(b).
The State must establish transparency and accessibility to customs information and rules to ensure informed compliance by stakeholders under Section 101(c).
The State must consult, coordinate, and cooperate with other agencies and the private sector in implementing and developing customs policy under Section 101(d).
The State must provide fair and expeditious administrative and judicial appellate remedies for customs grievances under Section 101(e).
The State must employ modern practices and information and communications technology for customs functions under Section 101(f).
The State must institute professionalism and meritocracy in customs tax administration by attracting and retaining competent customs officers and personnel under Section 101(g).

Core definitions in the CMTA

Abatement is the reduction or diminution, in whole or in part, of duties and taxes where payment has not been made under Section 102(a).
Actual or Outright Exportation is the customs procedure where goods leave Philippine territory and are intended to remain permanently outside it under Section 102(b).
Admission is bringing imported goods directly or through transit into a free zone under Section 102(c).
Airway Bill (AWB) is the airfreight transport document specifying the holder/consignee and including carrier conditions and transport instructions under Section 102(d).
Appeal is the remedy by which a party aggrieved by an action/decision/order/omission of the Bureau seeks redress before the Bureau, the Secretary of Finance, or a competent court under Section 102(e).
Authorized Economic Operator (ABO) covers accredited entities under WCO and international trade facilitation standards, promoting secure supply chains with risk management and modern technology under Section 102(g).
Bill of Lading (B/L) is the water-borne transport document giving the holder/consignee the right to claim delivery and including carrier conditions under Section 102(h).
Bureau means the Bureau of Customs under Section 102(i).
Clearance is the completion of customs and other government formalities needed to allow goods for consumption, warehousing, transit, transshipment, or export under Section 102(k).
Commission refers to the Tariff Commission under Section 102(l).
Conditional Importation is the RKC concept of temporary admission with conditional relief from duties/taxes for a specific purpose and with intended reexport within a specified period, without substantial change except normal depreciation under Section 102(m).
Customs Broker refers to a bona fide holder of a valid Certificate of Registration/Professional Identification Card issued under Republic Act No. 9280 under Section 102(n).
Customs Officer is a person (not a clerk or manual worker) whose duty involves discretion in performing Bureau functions, or an employee authorized to perform a specific function under the Act under Section 102(p).
Customs Territory is areas in the Philippines where customs and tariff laws may be enforced under Section 102(q).
Entry is the act, documentation, and process of bringing imported goods into customs territory, including goods coming from free zones under Section 102(r).
Exportation is the act, documentation, and process of bringing goods out of Philippine territory under Section 102(s).
Export Declaration is the statement of required procedure and particulars for taking out exported goods and as required by customs administration under Section 102(t).
Flexible Clause authorizes the President, upon recommendation of NEDA, to (1) increase/reduce/remove protective tariff rates of import duty but not higher than 100% ad valorem, (2) establish import quota or ban importation, and (3) impose additional duty on all import not exceeding 10% ad valorem when necessary under Section 102(u).
Free Zone covers registered special economic zones and freeports under named laws, including Republic Act No. 7916 and other cited statutes under Section 102(w).
Goods are articles, wares, merchandise, and items subject of importation or exportation under Section 102(x).
Goods Declaration is a statement required to indicate the procedure for entry/admission of imported goods and the particulars required by customs administration under Section 102(y).
Importation is bringing goods from foreign territory into Philippine territory for consumption, warehousing, or admission under the Act’s definition under Section 102(z).
Freight Forwarder is a cargo intermediary that facilitates transport for its client without assuming the role of a carrier (with related forwarding undertakings) under Section 102(aa).
International Freight Forwarder is the entity assembling and consolidating shipments and typically assuming responsibility for international transport from receipt to destination under Section 102(bb).
Jurisdictional Control is the Bureau’s power and rights to supervise and exercise police authority over seas and coasts, ports, airports, harbors, bays, rivers, and inland waters whether navigable or not from the sea under Section 102(cc).
Lodgement is the registration of a goods declaration with the Bureau under Section 102(dd).
Non-Vessel Operating Common Carrier (NVOCC) provides point-to-point service (may use several modes) and issues corresponding transport documents under Section 102(ee).
Outright Smuggling is importing without complete customs prescribed importation documents or without customs clearance (or clearance by other regulatory agencies) for evading duties/taxes/charges under Section 102(ff).
Perishable Good includes goods liable to perish, depreciate greatly in value while stored, or cannot be kept without disproportionate expense, which may be advertised and sold at auction upon notice if reasonable under Section 102(gg).
Port of Entry includes principal ports and subports, and it includes airport of entry under Section 102(hh).
Port of Discharge (Port of Unloading) is the place where a vessel/ship/aircraft/train unloads shipments before dispatch to consignees under Section 102(ii).
Reexportation means exporting goods that were imported under Section 102(jj).
Release of Goods is the action by the Bureau permitting goods undergoing clearance to be placed at the disposal of the party concerned under Section 102(kk).
Refund is the return, in whole or in part, of duties and taxes paid under Section 102(ll).
Security is a guaranty (surety bond, cash bond, standby letter of credit, or irrevocable letter of credit) ensuring satisfaction of an obligation to the Bureau under Section 102(mm).
Smuggling is fraudulent importing into the Philippines, assisting in receiving/concealing/buying/selling/disposing/transporting smuggled goods with full knowledge, or fraudulent exportation under Section 102(nn).
Taxes are all taxes, fees, and charges imposed under the Act and the National Internal Revenue Code (NIRC) of 1997 (as amended) and collected by the Bureau under Section 102(oo).
Technical Smuggling is importing by fraudulent, falsified, or erroneous declaration of nature/kind/quality/quantity/weight to reduce or avoid payment under Section 102(pp).
Tentative Release is when assessment is disputed and pending review, and an importer may post a cash bond equivalent to duties/taxes due before release under Section 102(rr).
Transit is transport of goods under customs control from one customs office to another or to a free zone in original form under Section 102(rr).
Transshipment is transfer under customs control within the area of one customs office from importing means of transport to exporting means of transport under Section 102(ss).
Traveler includes non-residents temporarily entering or departing residents leaving/returning under Section 102(tt).
Third Party is any person dealing directly with the Bureau for and on behalf of another person relating to importation/exportation/movement/storage of goods under Section 102(uu).

When importation starts and ends; duties

Importation begins when the carrying vessel or aircraft enters Philippine territory with intention to unload thereunder Section 103(a).
Importation is deemed terminated when either: (a) duties, taxes, and other charges due are paid or secured at the port of entry (unless free from such charges and legal permit for withdrawal is granted), or (b) in case goods are deemed free, the goods have legally left Bureau jurisdiction under Section 103(b).
All imported goods are subject to duty upon importation under Section 104(a).
Goods previously exported from the Philippines remain subject to duty upon importation unless a law provides otherwise under Section 104(a).
Unpaid duties, taxes, and other charges incur legal interest of 20% per annum computed from the date of final assessment under Section 429 when payment becomes due and demandable under Section 104(b).
Legal interest also accrues on any fine or penalty imposed under Section 104(b).
Upon payment, the Bureau issues the necessary receipt or document as proof of payment under Section 104(c).
Import duty rates follow the applicable tariff heading effective at the date of importation or upon withdrawal from the warehouse for consumption under Section 105(a).
For withdrawal from free zones for introduction to customs territory, the duty rate at the time of withdrawal applies on goods originally admitted under Section 105(a).
For goods sold at customs public auction, duty rates apply based on the date of the auction for implementing Section 1143(a) under Section 105(a).

Declarant obligations and electronic lodgement

A declarant may be a consignee or a person who has the right to dispose of the goods under Section 106(a).
A declarant may lodge the goods declaration if one of the following: (a) the importer as holder of the bill of lading, (b) the exporter as owner of goods to be shipped out, (c) a customs broker acting under authority of the importer or bill holder, or (d) a person empowered as agent/attorney-in-fact for each holder under Section 106(b).
If the consignee or person with right to dispose is a juridical person, it may authorize a responsible officer to sign the goods declaration on its behalf under Section 106(c).
The goods declaration is processed by the declarant or by a licensed customs broker under Section 106(d).
For two (2) years from the Act’s effectivity, subparagraph (d) of Section 106 is not implemented by the Bureau, and after two (2) years it takes effect consistent with international standards and best practices under Section 106(d)-(e).
The declarant is responsible for accuracy of the goods declaration and payment of all duties, taxes, and other charges due on imported goods under Section 107(a).
The licensed customs broker is responsible for accuracy of the goods declaration but not responsible for payment of duties/taxes due under Section 107(b).
The declarant signs the goods declaration even if assisted by a licensed customs broker, and the customs broker also signs under Section 107(c).
The Bureau imposes no substantial penalties for errors that are inadvertent and involve no fraudulent intent or gross negligence, but it may impose a penalty to discourage repetition without making it excessive under Section 108(a).
The Bureau must use information and communications technology to enhance customs control and support paperless customs operations under Section 109(a)-(b).
The Bureau must ensure secure data and communications consistent with applicable local and internationally accepted information security standards under Section 109(c).
The Bureau must include disaster preparedness and recovery planning to maintain business continuity and uptime goals for electronic and online services under Section 109(d).
Electronic documents, permits, licenses, or certificates have legal effect, validity, or enforceability as other documents when prescribed requirements are complied with under Section 109(e).
When requirements are complied with, the Bureau must recognize authenticity and reliability of electronic documents, transmit approvals as electronic messages/documents, and require/accept payments and issue receipts through electronic data messages/documents under Section 109(e)(a)-(c).
Technology introduction and implementation requires due consultation with directly affected parties and stakeholders under Section 109(f).

Bureau information access and binding rulings

Parties may transact business with the Bureau directly or through a designated third party acting on their behalf under Section 110(a).
Transactions directly transacted by a party must not be treated less favorably or subject to more stringent requirements than those transacted through a designated third party under Section 110(b).
A designated third party has the same rights and obligations as the designating party when transacting with the Bureau under Section 110(c).
The Secretary of Finance issues necessary guidelines governing the Bureau and third-party relationship, subject to existing laws, treaties, conventions, and international agreements under Section 110(d).
The Bureau publishes laws, decisions, rulings, circulars, memoranda, and orders in accordance with law under Section 111(a).
The Bureau makes relevant and available non-confidential information of general application readily accessible to interested persons under Section 111(b).
New information, amendments, or changes in customs law and administrative procedures or requirements are made readily available before effective implementation unless advance notice is precluded under Section 111(c).
The Bureau provides information relating to a specific request when not confidential or for internal use and for legitimate use under Section 112(a).
The Bureau may require payment of a reasonable fee for providing such specific information under Section 112(b).
The Bureau releases requested information within reasonable time from filing the request and payment of the required fee under Section 112(c).
The Bureau issues binding and advance decisions and rulings on request of an interested party for matters pertaining to importation or exportation of goods under Section 113(a).
On written request, the Bureau notifies the party of its decision in writing within the period specified in the Act or by regulation, and adverse decisions must state reasons and advise the right of appeal under Section 113(b).
The ruling and decision must be issued by the Bureau within thirty (30) days from submission of required documents and information under Section 113(c).
Any party adversely affected by a Bureau decision or omission relating to an importation, exportation, or other legal claim may appeal within fifteen (15) days from receipt of the questioned decision or order under Section 114(a).
An appeal in writing must specify grounds and is filed within the period prescribed by the Act or by regulation under Section 114(b).
The Bureau may allow a reasonable time for submission of supporting evidence to the appeal under Section 114(c).

Clearance categories and prohibited restrictions

Goods are deemed entered for consumption when the goods declaration is electronically lodged with required supporting documents with the pertinent customs office under Section 115.
Unless otherwise provided by law or regulation, all goods may be freely imported and exported without need for import/export permits, clearances, or licenses under Section 116.
Regulated goods may be imported or exported only after securing the required goods declaration or export declaration, clearances, licenses, and other requirements prior to importation or exportation under Section 117(a).
Requirements for importation may be submitted after arrival but before release from customs custody only in cases provided by governing laws or regulations under Section 117(b).
Prohibited importation/exportation includes: materials advocating/inciting treason, rebellion, insurrection, sedition, forcible resistance; written goods containing threats to take life or inflict bodily harm; goods/instruments/drugs adapted for unlawful abortion; printed matter advertising abortion procedures; obscene or immoral representation items; goods manufactured in whole or part of precious metals without indicating actual fineness; adulterated or misbranded food or drugs; infringing goods under the Intellectual Property Code and related laws; and any other explicitly prohibited goods under competent authority rules under Section 118(a)-(g).
Restrictions include the rule that restriction to import/export the enumerated restricted goods includes restriction on their transit under Section 119(b).
Prohibited restricted goods include: dynamite, gunpowder, ammunitions, other explosives, firearms and weapons of war (or parts); roulette wheels/gambling outfits/loaded dice/marked cards or machines used in gambling and chance-based distribution (including jackpot and pinball machines or similar contrivances) or parts; lottery and sweepstakes tickets except advertisements and lists of drawings; marijuana, opium, poppies, coca leaves, heroin or other narcotics or synthetic drugs declared habit forming by the President or compounds/derivatives/preparations except government-authorized medicinal importation; opium pipes or parts; and any other goods whose importation/exportation are restricted under Section 119(a)(a)-(f).
Relief consignments are treated as relief consignment when donated or leased for free distribution to victims of calamities to government institutions and accredited private entities under Section 120(a).

Relief consignment during calamities

Upon declaration of a state of calamity, clearance of relief consignments is a priority matter subject to a simplified customs procedure under Section 120(b).
Relief consignments use simplified processes including: lodging a simplified goods declaration or provisional/incomplete declaration with completion within a specified period under Section 120(c)(a).
The Bureau provides for lodging, registering, and checking declarations and supporting documents prior to arrival and releasing upon arrival under Section 120(c)(b).
Relief consignments allow clearance beyond designated business hours or away from customs offices and waive corresponding charges under Section 120(c)(c).
Examination and/or sampling of relief consignment goods occurs only in exceptional circumstances under Section 120(c)(d).
The Department of Finance (DOF) and the Department of Social Welfare and Development (DSWD) jointly issue implementing rules and regulations under Section 120(d).
Relief consignments imported during a calamity and intended for a specific calamity area for use by calamity victims are exempt from duties and taxes under Section 121.

Bureau organization and district structure

The Bureau is headed by a Commissioner assisted by at least four (4) but not more than six (6) Deputy Commissioners under Section 200(a).
The Commissioner is appointed by the President under Section 200(b).
Deputy Commissioners are also appointed by the President and at least a majority come from the ranks of the Bureau under Section 200(c).
The Commissioner has exclusive and original jurisdiction to interpret the Act in collaboration with other relevant agencies subject to review by the Secretary of Finance under Section 201(a).
The Commissioner exercises customs powers and functions and reviews actions/decisions of customs officers under Sections 201(b)-(c).
The Commissioner reviews and decides disputed assessments and related matters, subject to review by the Secretary of Finance and exclusive appellate jurisdiction of the Court of Tax Appeals (CTA) under Section 201(d).
The Commissioner may delegate powers under the Act to customs officers with rank equivalent to division chief or higher, but cannot delegate: (1) promulgation of rules and regulations, (2) issuance/revocation/modification of rulings, and (3) compromise or abatement of customs obligations under Section 201(e)(1)-(3).
The Commissioner may assign or reassign customs officers subject to Secretary of Finance approval, and district collectors and other assessment-function officers must not remain in the same area of assignment for more than three (3) years under Section 201(f).
The Bureau performs functions including assessment and collection, simplification and harmonization of procedures, border control, prevention and suppression of smuggling, facilitation and security of trade via informed compliance, supervision over entrance/clearance of vessels and aircraft, and supervision/control over cargoes for revenue protection and contraband prevention, plus exclusive original jurisdiction over forfeiture cases under Section 202(a)-(j).
The Commissioner must submit an annual report to the President, Congress, and NEDA on or before March 31 of the following year under Section 203.
The Commissioner, subject to approval of the Secretary of Finance, promulgates rules and regulations for enforcement and regularly prepares and publishes an updated customs manual and publishes rules/regulations/decisions; it must furnish Congress, NEDA, and the Tariff Commission electronic copies of department orders and other issuances under Section 204.
The Commissioner furnishes NEDA, PSA, BIR, and the Tariff Commission electronic copies of customs goods declarations processed and cleared under Section 205(a).
Upon request, the Tariff Commission accesses liquidated goods declarations and supporting documents as finally filed in COA, and the Bureau maintains electronic records for this purpose under Section 205(b)-(c).
The Philippines is divided into as many Customs Districts as necessary with limits changed as needed by the Commissioner with Secretary of Finance approval under Section 206(a).
Each Customs District has one District Collector supervised with Deputy District Collectors as necessary, and district office location, business hours, and staffing pattern are based on district requirements under Section 206(b).
All ports of entry are under a Customs District’s supervision and control; principal ports of entry have a District Collector and other ports may have a Deputy District Collector under Section 207(a).
Principal ports include those enumerated by location and include other ports created pursuant to the Act under Section 207(b).
Sea ports and airport operators must provide suitable areas for examination and other customs equipment free of charge within a definite period agreed with operators to avoid hampering operations under Section 207(c).

Presidential port changes and collector duties

The President may open or close any port of entry upon recommendation of the Secretary of Finance, and existing personnel are reassigned by the Commissioner subject to Secretary of Finance approval under Section 208.
With Secretary of Finance approval, the Commissioner may assign Bureau employees to ports, services, divisions, or offices within the staffing pattern, or assign other duties, without affecting tenure, status, demotion, or causing salary deduction under Section 209.
The District Collector ensures entry of imported goods at the customs office; prevents importation and exportation of prohibited goods; ensures regulatory compliance; examines, classifies, and values imported goods; assesses and collects duties/taxes/charges; holds and disposes imported goods per the Act; prevents smuggling/customs fraud; and performs other assigned duties under Section 210(a)(1)-(8).
District Collector duties may be delegated to the Deputy District Collector, with a sub-port Deputy District Collector under supervision/control of the corresponding principal port District Collector under Section 210(b).
In absence or disability of a District Collector, or in case of vacancy, the Deputy District Collector discharges District Collector duties temporarily; if no Deputy District Collector exists, the District Collector designates a senior ranking customs officer in writing, and if two or more senior officers have equal service length, lots are drawn; the District Collector reports designation to the Commissioner within twenty-four (24) hours under Section 211.
District Collectors, Deputy District Collectors, and customs officers acting in such capacities keep permanent records of official transactions and turnover records to successors or authorized officials, and records are available for inspection by authorized Bureau officials; the District Collector affixes the Bureau official dry seal when required for authentication under Section 212.
District Collectors report probable or initiated litigation and submit regular monthly reports on district transactions to the Commissioner under Section 213.

Customs police authority and search powers

The following persons may effect search, seizure, and arrest for effective implementation of the Act: Bureau officials (including district collecters and deputies), police officers and Bureau agents/inspectors/guards; AFP and national law enforcement officers upon authorization of the Commissioner; and BIR officials in cases involving internal revenue tax payment under regular performance of duties under Section 214(a)-(c).
Authorized police authority officers must coordinate with the Commissioner at all times under Section 214(d).
Seized goods by deputized officers must be physically turned over immediately to the Bureau unless existing laws provide otherwise under Section 214(e).
Mission orders must indicate the specific name carrying out the mission and tasks to be carried out under Section 214(f).
The Commissioner defines, subject to Secretary of Finance approval, the scope, areas, procedures, conditions for police authority including custody and responsibility for seized goods; rules must be furnished to concerned agencies and personnel under Section 214(g).
Seizures must follow the seizure proceedings rules in Chapters 3 and 4 of Title XI under Section 214(h).
Police authority may be exercised only within customs premises as provided in Section 303 and within limits granted by the Commissioner under Section 215(a).
Port and airport authorities in ports of entry must provide authorized customs officers unhampered access to premises within their administrative jurisdiction under Section 215(b).
Police authority includes power and duty to seize any vessel, aircraft, cargo, goods, animal, or movable property subject to forfeiture or subject to a fine under the Act under Section 216.
Authorized persons must disclose the nature of the authority when questioned and exhibit the written authority issued by the Commissioner under Section 217.
Any person exercising police authority may demand assistance and request information from the PNP, AFP, and other national law enforcement agencies when necessary; police officers and enforcers must give lawful assistance under Section 218.
Police authority allows entering, passing through, and searching lands, enclosures, warehouses, stores, buildings, and structures not principally used as dwellings; structures used for storage where a security person or employee lives are not treated as dwelling houses for this purpose under Section 219.
Entry and search of a dwelling house require a warrant issued by a competent court judge, based on a sworn application showing probable cause and particularly describing place to be searched and goods to be seized under Section 220.
Police authority allows boarding, inspecting, and searching vessels/aircraft and containers on board; it also allows physical search of persons thereon, and seizure upon probable violation; it also authorizes removal of false bottoms/partitions/bulkheads/obstructions to uncover concealed dutiable or forfeitable goods