Forfeiture Procedure of Customs Bonds

The Bureau prescribes a structured, time-bound process for pre-forfeiture handling of customs bond records and forfeiture evaluation and court filing.
The District Collector of Customs must notify obligors and sureties upon maturity of the bonds for payment and/or document submission to satisfy bond conditions.
For outstanding bond liabilities, the Bonds Division must submit evaluation materials to the Commissioner of Customs and the District Collector.
When warranted, the Bureau proceeds to court action within specified timelines.
The Bureau must require a specific agreement clause in future bond policies as a preventive measure.

The Bonds Division must reproduce, retrieve/recall, and forward bond-related records and documents for evaluation and possible court action.
The Liquidation & Billing Division (LBD) must reproduce and provide necessary entries/supporting documents at the time of importation upon issuance of the surety bond.
The WDRD must support handling and storage for warehousing entries under restricted areas.
The District Collector of Customs at the port of entry must notify the obligor and surety at bond maturity and proceed to forfeiture proceedings when conditions are not satisfied.
The Commissioner of Customs (Attn.: Chief Legal Service) and the District Collector (Attn.: Chief, Law Division) evaluate, review, and determine possible court action.
The Law Division of the port of entry and/or the Legal Service, Office of the Commissioner evaluate and make a recommendation within prescribed time limits.

Upon the time of importation and upon issuance of the surety bond, all necessary entries and/or supporting documents must be reproduced by the Liquidation & Billing Division.
Copies of reproduced entries and supporting documents must be furnished to the Bonds Division and the Collection Service.
The original copy of all entries must be treated as security documents and kept in a security storage area:
- For consumption entry, the storage is at the Liquidation & Billing Division; and
- For warehousing entry, the storage is at the WDRD.
Storage handling must be controlled by an officer solely designated to manage the restricted area for those security documents.
Upon maturity of the bond, the Bonds Division must retrieve/recall:
- The entry and supporting documents for consumption entries from the LBD; and
- The entry and supporting documents for warehousing entries from the WDRD.

Where entries and/or supporting documents are lost, the Bureau must follow the procedure in CMO 70-89.
Otherwise, the Bureau must initiate the reconstitution of said documents motu proprio.
Alternatively, where applicable, the Bureau must produce the customs copy of the bond policy.

The District Collector of Customs must notify both the obligor and the surety about the maturity of the bonds for:
- payment; and/or
- submission of documents to satisfy bond conditions for cancellation.
If settlement or submission of required documents is not made, forfeiture proceedings shall follow.
The forfeiture proceedings must follow the relevant administrative and legal provisions referenced in CMO 70-89, specifically the segment described as “II Administrative and Legal Provisions of CMO No. 70-89 to the District Collector of Customs.”

The Bonds Division must submit a report of bonds for forfeiture to:
- the Commissioner of Customs (Attn.: Chief Legal Service) and
- the District Collector of Customs (Attn.: Chief, Law Division)
  for evaluation, review, and possible court action.
Bonds must be reported for forfeiture only after they remain outstanding after ninety (90) days from maturity.
The report submission must be done within ten (10) working days from the lapse of the ninety (90) days from maturity period.
The Bonds Division must forward with the report:
- copies of the entries and supporting documents retrieved/recalled in the pre-forfeiture steps; and
- copies of the bonds or surety contract/policy.
The Law Division of the port of entry and/or the Legal Service, Office of the Commissioner must evaluate and review the bonds forfeiture report and documents.
The Law Division or Legal Service must make its recommendation to the District Collector or the Commissioner of Customs, as applicable, within ten (10) working days from receipt of the report and necessary documents.
If court action is warranted, the court action must be filed within thirty (30) days from receipt of the recommendation for forfeiture of the bonds.
Court action does not prevent the Commissioner/Collector of Customs from suspending the operation of a customs bonded warehouse in conformity with CMO 83-89, as amended.

If a surety company ceased to exist before the obligation with the Bureau is extinguished, specified claims must be filed based on whether the surety is domestic or foreign.
For a domestic surety a, the Law Division of the port of entry and/or the Legal Service, Office of the Commissioner must file a claim within three (3) year period from dissolution of the surety company.
The claim for a domestic surety must be filed under Section 77 or 78 of the Corporation Law or under Rule 104 and 66 of the Revised Rules of Court.
For a foreign entry a, the Bureau must inquire from the Office of the Insurance Commissioner regarding the withdrawal of the foreign surety company.
For a foreign surety, prosecution of the claim must follow Sections 202-A, 202-B, 202-C, 202-D and 202-E of the Insurance Act.

As a preventive measure, the Bureau requires that all bonds include the following agreement on the bond policy:
- “The herein surety company hereby agrees to settle immediately upon maturity the monetary value of the bond should the importer fail to fulfill the conditions herein guaranteed even without the production of the original entry and its supporting documents”

All Customs Memorandum Orders that are not consistent with Customs Memorandum Order No. 28-90 are considered amended and/or superseded accordingly.