Of the Customs Modernization and Tarrift Act: Hear these people, first

Mike (not his real name) has her girlfriend working in one of Dubais

five-star hotels. Apparently, now, his face is not the same as when he first

knew about his loves promised rubber shoes as an anniversary gift. He

heard news about Customs personnel charging duties before release of

Balikbayan boxes. But its not just about the fact of the need for payment;

he cries foul thinking about the money hell spend to be given to the Bureau

albeit its reputation.

He is not the only one. A survey of businessmen conducted by Social

Weather Stations released, August 27, showed the Bureau of Customs as the

most corrupt government agency. The BoC was rated very bad with a

score of -55 in terms of its sincerity in fighting corruption. The BoC

received a similar rating in 2013 with a score of -63. In 2012, the agency

got a rating one grade higher with a score of -45 or "bad". The BOC's worst

ratings from the SWS survey were during 2005 to 2009, when it got an

"execrable" rating.1

Alongside the purpose of improving collection growth and facilitation of

trade, this is what Senate Bill No. 168 or the Customs Modernization and

Tariff Act (CMTA) seeks to mitigate: to further transform the Customs from
1 Mikas Matsuzawa, Customs top list of most corrupt agencies again SWS.
Cnnphilipines.com. Accessed September 3, 2015. Available from
http://cnnphilippines.com/news/2015/08/27/SWS-Customs-tops-most-corrupt-
Philippine-government-agencies-list.html
what was once perceived as one of the most corrupt and underperforming

agencies into a pioneer of governance innovation and technology in the

region.2

With the current hullabaloo on the Balikbayan box issue and with the

history of BOCs tainted reputation, is it high time for the SBN 168 to be

passed? Or are there other points to consider before making it part of the

law of the land? With this article, I give a Yes to the latter question.

SBN 168 at First Sight

It cant be gainsaid that the purpose of the CMTA is very admirable.

The objectives of the CMTA are quite clear. It seeks to update the existing

tariff and customs law of the Philippines which dates back to 1957, to more

effectively address modern business and trade practices. This is also in line

with our countrys compliance to the Revised Kyoto Convention (Convention

on the Simplification and Harmonization of Customs Procedure) of the

World Customs Organization, to which the Philippine became a signatory in

2010. The RKC is the blueprint for modern and efficient customs procedure

2 Chino Leyco, DOF urges Congress to pass Customs Modernization Act.

Mb.com.ph. Accessed September 3, 2015. Available from
http://www.mb.com.ph/dof-urges-congress-to-pass-customs-modernization-act/
for the 21st century and adopts the best practices in international trade

facilitation and regulatory control.3

The modernization of customs will also encourage more trade and

investments from all sectors due to the reduced costs of doing business due

to trade facilitation which will also reduce trade transaction costs by 2-3%

of the value of traded goods. This in turn, will translate to lower domestic

prices of goods. Ease of doing business means faster release of goods and

efficient inspection and collections plus less face-to-face exchanges due to

full automation will also reduce the opportunities for corruption and

technical smuggling.4

At first sight, the CMTA envisions a good Bureau of Customs. Especially now

that the economic integration of the Association of Southeast Asian Nations

(ASEAN) is gaining pace, seamless, efficient, and transparent trading

procedures are indispensable. However, contrary to popular vote, we cannot

let the CMTA be enacted notwithstanding its inconsistencies with existing

laws.5

Delving Deeper

3 Laurice Yasmin V. Ramos-Mejia, Briefer on the Customs Modernization and Tariff

Act. Aambis.com. Accessed September 21, 2015. Available from
http://www.aambis.com/sites/default/files/legislation-attachments/Briefer%20on
%20CMTA_CSSG.pdf

4 Ibid.
Again, this article does not seek to discredit the perceived goodness of the

CMTA. But let us not be oblivious of this fact: the CMTA has certain

provisions which are detrimental to the customs brokerage profession, to

wit:

Section 108. Declarant A declarant is a person who makes and

submits to Customs goods declaration or in whose name such declaration

is made. Any person who possesses the right to dispose of the goods shall

be entitled to directly as a declarant. However, when he authorizes an agent

to make a declaration in his behalf, he can only do so through an

accredited customs broker except in case when the declarant is a

juridical person in which case it may authorize its employee or officer

to make the declaration in behalf of the juridical person. (underscoring

supplied)

Section 1330. Supervision and Regulation of Third Parties.

Third parties transacting with Customs in importers and consignees

shall be treated equally as if they are themselves the importers or

consignees. Third parties transacting with Customs shall be liable for

acts committed in violation of this Act and related laws. Upon the

recommendation of the Commissioner of Customs, the Secretary of Finance

shall issue rules Customs and regulations for the Bureau of Customs to
5 Gilberto M. Llanto, et.al., How should we move forward in customs brokerage and
trade facilitation?Policy Notes. January 2014 issue. Dirp3.pids.gov.ph. Accessed
September 21, 2015. Available from
http://dirp3.pids.gov.ph/webportal/CDN/PUBLICATIONS/pidspn1401.pdf
supervise and regulate all third parties dealing directly with the Bureau

for and in behalf of another person in relation to the importation,

exportation, movement, storage and exportation, and clearance of

goods. Third parties as provided in this, section may refer to, among

others, logistics providers, importers, exporters, customs brokers, carriers,

airlines, shipping lines, shipping agents, forwarders, agents, forwarders,

consolidators, port and terminal consolidators, port and terminal

operators and operators and warehouse operator. The rules and regulations

shall regulations shall provide for specific conditions when third parties

may or may not directly transact with Customs and shall provide a

written notice in case such third parties are, for valid reasons, barred from

transacting with customs.

What do the aforementioned sections of the bill in question tell us?

The CMTA fails to recognize the vital role that customs brokers play in and

their significant contributions to effective, efficient, and secure international

trade. This confirms the fear of custom brokers that their role in the

envisioned modern customs modernization in the country will be

significantly diminished, if not permanently eliminated.6

In the current institutional setup, cargoes undergo mandatory assessments

by licensed customs brokers. Moreover, only customs brokers can sign the

import and export entry declarations. However, as implied in the definition

6 Supra at Note 5.
of declarant in Section 108 in the proposed bill, anyoneincluding

importers and exporterscan now declare their goods or can designate a

person to declare the cargo on their behalf. The brokers argue that this will

not only endanger their jobs but will also jeopardize the processes, integrity

of transactions, and the revenue collections targets of the BOC.7

This declarant provision, according to officials of the Philippine Society of

Filipino Customs Brokers Inc. (The Society), which is affiliated with the

Chamber of Customs Brokers Inc. (CCBI), will abolish mandatory use of the

Customs broker profession, which was respected in the World Trade

Organization-Bali Ministerial Declaration adopted on December 7, 2013 that

asked legislators to modernize the Philippine Customs and tariff

administration without prejudice to the conduct of profession of Filipino

Customs brokers.8

Another provision that the customs brokers are wary of is the reference to

and definition of third parties in Section 1330 of the bill. Any of those

enumerated in the bill as third parties is entitled to release the shipment as

long as they are entrusted with the job and are authorized by the importer.

This provision, according to the brokers, is an infringement of their rights

7 Ibid.

8 Joel M. Sy Egco, 8,000 Customs bureau brokers may lose jobs. Manilatimes.net.
Accessed September 22, 2015. Available from http://www.manilatimes.net/8000-
customs-bureau-brokers-may-lose-jobs/201730/
as a learned profession that should be protected by an existing law, i.e.,

RA 9280 (the Customs Brokers Act of 2004)9

This fear of customs brokers are not founded on shaky grounds. Theres no

arguing that customs brokers are professionals in the contemplation of

existing Customs laws and the Professional Regulations Commission

Modernization Act. They underwent a four-year baccalaureate program, the

Bachelor of Science in Customs Administration, and had passed rigorous

licensure examinations.10

Not just the job

This is not just about the brokers being alienated from the domain of their

profession. Economic ramifications of the passage of the bill without taking

into account this concern of the custom brokers, are virtually certain to

happen. With the society having about 8,000 members nationwide, it will be

detrimental not only to the brokers or their families, but to students and

educations institutions that are offering Customs-related courses.

Certainly, like Mike, Filipinos give downbeat remarks to the Bureau of

Customs not from baseless accusations. The roll of issues in the bureau has

9 Supra at Note 5.

10 Supra at Note 8.
been continually lengthening, giving to the Government the duty to devise a

law which will modernize and streamline its operations. The Customs

Modernization and Tariff Act has long been envisioned to be that device; its

promises give hope for a better, more effective Customs. However, the

pressing need for reform and modernization does not permit lawmakers to

forget the interest of professional whose rights to practice their profession

are protected by the law. The Senators must hear the cry of customs

brokers before the CMTA finally forms part of the law of the land.