Legal Bases and Incorporated Penalty Sources
- The circular is expressly issued to implement Letter Circular AO-2K2-12-001 as amended.
- The circular is issued in coordination with Memorandum Circular AO-2K3-12-002, Memorandum Circular No. AO-2K5-01-001, and Memorandum Circular AO-2K5-11-003.
- The circular also covers other circulars/regulations on FAI/Private Sector Rice Importation Program that may be promulgated later.
- The circular focuses specifically on penalty provisions arising from rice import violations.
Who Must Comply and When
- The circular governs the NFA’s imposition process for penalties involving rice imports under the FAI/Private Sector Rice Importation Program.
- When rice cargo is still with Bureau of Customs (BOC), BOC and the NFA field office jointly implement the penalty and custody transfer process.
- When rice shipment is already released by BOC, responsibility shifts to BRD to refer legal collection matters to Department of Legal Affairs (DLA).
- The circular applies upon triggering events such as non-payment proof delays and non-compliance tied to the advance information and loadport/disport surveyor requirements.
Penalty Process: Cargo Still at BOC
- BOC requires the importer (farmers’ organization or other sector) to present proof of payment of corresponding penalties (NFA Official Receipt) within three (3) banking days from the date of arrival of rice cargo.
- If the importer fails to present proof of payment within the prescribed period, BOC must hold shipment corresponding to ten percent (10%) and/or the corresponding graduated rate of the landed cost of cargo depending on the violations committed.
- For violations involving late arrival beyond the deadline date, BOC must hold the total cargo.
- BOC must immediately notify the concerned NFA field office in writing, indicating:
- the name of importer;
- quantity of rice imported;
- actual date of arrival;
- name of vessel;
- invoice price;
- port of discharge; and
- quantity withheld; and
- provide NFA a copy of the bill of lading, commercial invoice, and surveyor’s certificate, if any.
- NFA must commence, within 24 hours if possible, from receipt of the written notice/advice, the withdrawal and transfer of the rice cargo to the nearest NFA warehouse for storage.
- NFA must properly receive the rice cargo from the BOC District Collector (or authorized representative) and the importer (or duly authorized representative), indicating the volume or number of bags.
Storage, Forfeiture, and Settlement Windows
- NFA must hold the rice until the importer settles penalty and all transfer expenses, evidenced by an NFA Official Receipt.
- The NFA Official Receipt evidencing settlement must be secured within 30 calendar days from the final transfer of stocks.
- If the importer does not settle within the 30 calendar days window, the held cargo must be forfeited in favor of NFA.
- If the forfeiture is due to late arrival beyond the deadline date, the total rice cargo that is forfeited is automatically under NFA accountability, and follows documentation procedures such as issuance of a Warehouse Stock Receipt (WSR).
- The importer may settle within 30 days from receipt of rice shipment by NFA, covering penalty (with the stated exception) and transfer cost through the following modes:
- Cash
- Manager’s check
- Demand Bank draft
- The importer’s settlement under the 30-day from receipt by NFA option does not extend to total cargo forfeited in favor of NFA for late arrival beyond the deadline date because such total cargo is automatically under NFA accountability.
- Storage is free for 30 days reckoned from final transfer of cargo.
- If the importer pays dues to NFA within the 30-day free storage period but fails to withdraw fully or partially during the prescribed period, the remaining stocks at the warehouse incur a storage fee of PHP 0.50 per bag per day.
- After lapse of the 30-day grace period, if the importer fails to pay dues, the forfeited stocks remain under NFA accountability and follow documentation procedures such as issuance of WSR, similar to documentation for total cargo forfeited in favor of NFA.
- NFA must dispose of the stocks, including the total rice cargo forfeited, through the usual mode of disposition.
Disposition of Forfeited Stocks and Disposition Trigger
- NFA disposes of the stocks after the forfeiture and documentation/accountability steps, including the total cargo forfeited due to late arrival.
- NFA disposal of the stocks includes stocks under NFA accountability after the payment or non-payment timelines run out.
- NFA disposal must use the usual mode of disposition for the forfeited rice stocks.
Referral for Released Shipments and Legal Collection
- Upon receipt of notice from BOC that the shipment is no longer in their custody, BRD must refer the matter to Department of Legal Affairs (DLA) for collection and/or other legal activities that NFA deems appropriate.
- The BRD-to-DLA referral process applies specifically after BOC confirms release from custody.
Advance Information and Loadport/Disport Surveyor Compliance
- The Department of Marketing Operations must provide BOC and BRD with the name/lists of importers who fail to comply with:
- submission of advance information, and
- use of loadport/disport surveyors.
- The lists provided by the Department of Marketing Operations support BOC and BRD compliance and enforcement actions tied to these requirements.
Transitory Effect and Strict Compliance
- The circular provides that the guidelines and procedures take effect immediately.
- The circular requires strict compliance with the outlined procedures and timelines for penalty imposition and NFA custody handling.