01-16-1991 Customs Administrative Order No.

002-91

January 16, 1991

CUSTOMS ADMINISTRATIVE ORDER NO. 002-91

SUBJECT : Rules and Regulations for the Establishment, Operations, Supervision, and
Control of Customs Bonded Warehouses

By authority of Section 608 and pursuant to the provisions of Sections 1901, 1909, and Sections 2001-
2004 of the ICCP, as amended; L.O.I. 1040; E.O. 226; R.A. 3137, as amended by E.O. 823, the following
rules and regulations for the establishment, operation, control and supervision of all types of Customs
Bonded Warehouses are hereby promulgated.

TITLE I

GENERAL PROVISIONS

SECTION 1. The Bureau of Customs is responsible for the licensing, supervision, and control of all
Customs Bonded Warehouses.

SECTION 2. Articles that are manufactured by any bonded manufacturing warehouse shall be
exported exempted from payment of duties and taxes. Such exportation shall be supervised by assigned
customs officials.

SECTION 3. Imported materials and/or accessories used in the manufacture of articles that are
transferred to other bonded manufacturing warehouses of members of a common bonded manufacturing
warehouse for processing into finished products or for its own manufacture and thereafter exported shall
also be exempted from paying any duties and taxes. This privilege, however, shall not apply to
implements, machineries or apparatuses to be used to construct, repair or operate any bonded
manufacturing warehouse unless otherwise authorized by law. aisadc

SECTION 4. Imported raw materials, accessories, and the like, if sold or used for domestic
consumption shall be subject to duties, taxes, and other charges.

SECTION 5. All imported articles or finished products shall either be exported or withdrawn for
domestic consumption within the period prescribed in Section 1908 or 2002 of TCCP, as amended; R.A.
3137, as amended by E.O. 823, or E.O. 226.

SECTION 6. Customs Bonded Warehouses are classified as follows: 1. Customs Bonded Manufacturing
Warehouses, which are further divided into:

a. Garment/Textile Manufacturing Bonded Warehouse

b. Miscellaneous Manufacturing Bonded Warehouse

c. Common Bonded Manufacturing Warehouse

2. Public/Private Bonded Warehouse

3. Customs Bonded Trading Warehouse

4. Multi-national Regional Warehouse

SECTION 7. A bonded warehouse includes the premises, rooms, compartments, and other areas
necessary for storing, processing, repacking, and manufacturing imported raw materials and the by-
products or wastage incident to such activities.

SECTION 8. The visitorial power of the Bureau of Customs over Customs Bonded Warehouses shall
extend to subcontractors, as well as the accredited members of Customs Common Bonded Manufacturing
Warehouses.

SECTION 9. During the transition period from the present system to the open bonded warehouse
system, the Bureau of Customs shall, as far as practicable, adopt new methods and techniques in the
supervision and control of Customs Bonded Warehouses. These shall include, but are not limited to, the
computerization of all bonded warehouse activities and transactions in order to render operational the
open bonded warehouse system.

TITLE II

DEFINITIONS

SECTION 10. An Account Officer is a customs personnel responsible for documentary monitoring the
performance of a customs bonded warehouse from importation to liquidation of its imported raw
materials so as to ensure its compliance to customs rules and regulations relative to its operations.

SECTION 11. An Accountable Officer is a responsible official of the bonded warehouse named and
designated by the operator as the person, aside from him, bound and liable to the Bureau of Customs for
all the operational aspects of the warehouse.

SECTION 12. An Accredited Member is a person or company accredited by the Bureau of Customs and
also by the Garments and Textile Export Board (GTEB), in case of garments/textile, to be a member of a
Common Bonded Manufacturing Warehouse.

SECTION 13. A Common Bonded Manufacturing Warehouse (CBMW) is a warehouse licensed by the
Bureau of Customs and also by the GTEB, in case of garments/textiles. It is duly authorized to import,
receive, and store raw materials and accessories either for its own or for the account of its members
without paying duties and taxes on condition that these materials are manufactured into finished
products for subsequent exportation within a specified period.

SECTION 14. Constructive Exportation/Importation involves the sale and delivery of products from one
bonded manufacturing warehouse to another bonded manufacturing warehouse or Export Processing
Zone enterprise.
SECTION 15. A Customs Bonded Warehouse Operator is a person natural or juridical who has duly
approved license to operate a Customs Bonded Warehouse. cdt

SECTION 16. A Garments/Textile Manufacturing Bonded Warehouse (GTMBW) is a warehouse licensed

by the GTEB and the Bureau of Customs. It is duly authorized to receive and store without paying duties
and taxes imported garments and textiles, raw materials, including packings and labels for processing into
finished products for subsequent exportation within a specified period.

SECTION 17. A Miscellaneous Manufacturing Bonded Warehouse (MMBW) is a warehouse licensed by

the Bureau of Customs. It is duly authorized to receive, and store without payment of duties and taxes
imported materials, except garments and textiles, but including packings and labels for the purpose of
processing them into finished produces for subsequent exportation within a specified period.

SECTION 18. A Multinational Regional Bonded Warehouse (MRBW) is a warehouse operated by a

multinational company having its regional or area headquarters in the Philippines pursuant to E.O. 226. It
is licensed by the Board of Investments and the Bureau of Customs to serve as a supply depot for the
storage, deposit, and safekeeping of spare parts or manufactured components, and raw materials,
including any packages, coverings, brands and labels, and warehouse equipment as may be allowed by
the Department of Trade and Industry (DTI) for use exclusively on the stored goods which are to be
reexported directly therefrom under the supervision of the Collector of Customs for distribution to its
Asian-Pacific markets.

SECTION 19. Open Bonded Warehousing is the operation of a duly established customs bonded
warehouse wherein the tracking, monitoring and accounting of the import shipments that are
conditionally duty/tax free pursuant to Sections 2001-2004 of the TCCP, as amended, is done by means
of computers, obviating the need to assign customs personnel at the warehouse.

SECTION 20. Operating Warehouse Division is the Bonded Warehouse Division/Office in each Port
supervising the bonded warehouse operations. For Port of Manila, there are three different Divisions:
Public/Private bonded Warehouse Division (PPBWD), Garment and Textile Manufacturing Bonded
Warehouse Division (GTMBWD), and Miscellaneous Manufacturing Bonded Warehouse Division
(MMBWD).

SECTION 21. Ordinary Customs Bonded Warehouse is the traditional warehouse wherein a Customs
Bonded Warehouseman, Sr. Storekeeper and CBW Guards are assigned to supervise its activities and
transaction with the Bureau of Customs.

SECTION 22. A Private Bonded Warehouse (PBW) is a warehouse licensed by the Bureau of Customs to
receive, store and release its own importations only.

SECTION 23. A Public Bonded Warehouse (PuBW) is a warehouse licensed by the Bureau of Customs
to receive, handle, take custody and deliver general imported cargoes and baggage either for local
consumption, reexportation, transfer under bond to another bonded warehouse; handling locally
produced articles for export, as well as store seized, abandoned and/or unclaimed merchandise, and to
collect legal charges thereon.

SECTION 24. A Bonded Trading Warehouse (BTW) is a warehouse operated by a Registered Export
Trading Company (RETC) duly registered with the BOI and licensed by the Bureau of Customs to receive
imported cargoes, except fabrics and accessories in the manufacture of garments, for storage and
subsequent sale to an export producer operating a Customs Bonded Manufacturing Warehouse, or for
transfer to a duly accredited export producer.

SECTION 25. Semi-finished products are imported materials or articles used in bonded manufacturing
warehouses which have undergone processing, hence, considered as finished products by that
warehouse. Notwithstanding, said articles or materials may be utilized by another bonded manufacturing
warehouse as raw materials in its manufacturing process and therefore still subject to further processing
before these may be reexported.

SECTION 26. A Sub-contractor is a person or company accredited by the Bureau of Customs to

undertake or perform, for a definite period, certain manufacturing operations or activities incident to the
manufacture of raw materials into finished products of a bonded manufacturing or trading warehouse
due to the latter's insufficiency of operational facilities or material time to meet export commitments. cd

TITLE III

ADMINISTRATIVE PROVISIONS

SECTION 27. Application to Establish a Bonded Warehouse. The Application to operate a customs
bonded warehouse shall be submitted to the Commissioner of Customs through the District Collector,
except the following:

a. The application to operate a garments bonded manufacturing warehouse shall be originally filed
with the Garments and Textile Export Board (GTEB). Upon approval of the license, this application is
endorsed to the Bureau of Customs.

b. The application to operate a Multinational Bonded Warehouse shall be filed with the Board of
Investments (BOI). The approval of the application, upon recommendation of the Bureau of Customs, shall
be in accordance with the Board's rules and regulations.

SECTION 28. Evaluation of the Application. The District Collector shall pass upon the merits of the
application to operate a customs bonded warehouse, including applications for membership and
subcontracting to a common bonded manufacturing warehouse. The District Collector shall also evaluate
the application to operate Multinational Regional Warehouses, and submit his recommendations to the
Board of Investments.

SECTION 29. Approval of the Application. The Commissioner of Customs shall approve the
application as endorsed by the District Collector.
SECTION 30. Operational Requirements. Before the bonded warehouse shall be allowed to operate,
it shall be registered with the Customs Collection district having jurisdiction over it. The District Collector
shall assign to it a warehouse number, and inform the operator of the approval, subject to the Bureau's
additional requirements before actual operation.

SECTION 31. Warehousing Fee. Before commencing operations, bonded warehouses shall pay the
current prescribed warehousing fee.

SECTION 32. Assignment of Customs Personnel. Unless the Commissioner provides otherwise, the
District Collector having jurisdiction shall assign such number of customs personnel necessary to supervise
the operation of the customs bonded warehouse. The operator shall provide the customs personnel with
suitable working areas complete with office equipment and supplies.

SECTION 33. Work Hours. Customs employees assigned to customs bonded warehouse shall strictly
observe regular office hours and record their attendance in accordance with Civil Service rules and
regulations. The operator shall promptly report to the District Collector any absences. The services of the
customs personnel requested by the operator which are performed outside the regular hours, including
Sundays and holidays, shall be considered overtime.

SECTION 34. Locks. The entrance to the Customs Bonded Warehouse shall have two (2) locks. The
key to one shall be kept by the customs personnel assigned to the warehouse. The duplicates of all keys
shall be submitted to the District Collector for safekeeping.

SECTION 35. Principal Books and Documents. The Commissioner of Customs shall require the
operator of the bonded warehouse to maintain a principal book at a designated place for a period of five
(5) years. The book shall contain information relevant to the operation of the warehouse. In addition, the
operator shall keep in file for the same period of five years all documents on its operations. Where there
are customs personnel assigned to the warehouse, the books and documents shall be kept and maintained
by them.

SECTION 36. Central Office Principal Book. A principal book shall also be maintained and kept at the
Bonded Warehouse Division concerned.

SECTION 37. Audits. An audit team from the Office of the District Collector shall conduct regular
audits of customs bonded warehouses at least once a year, unless sooner directed by the Commissioner
of Customs or the District Collector. The audit team shall monitor the operations of the bonded
warehouses, as well as determine compliance with rules and regulations governing them. aisadc

SECTION 38. Renewal of Licenses. Licenses of customs bonded warehouses shall be renewed every
two (2) years.

SECTION 39. Suspension/Revocation of Licenses. The District Collector may suspend, discontinue or
revoke the license to operate a customs bonded warehouse either for any violation committed by the
operator, or upon request of the operator. The license of the Common Bonded Manufacturing Warehouse
may also be the suspended or revoked for any violation committed by any of its members, unless the
operator informs the Bureau within 48 hours upon learning of the illegal activities of the member.

TITLE IV

OPERATIONAL PROVISIONS

SECTION 40. Customs bonded warehouses may import articles as authorized by the Bureau of Customs
and/or other government regulating agencies.

SECTION 41. Unless the Commissioner of Customs allows direct transfer, articles imported by bonded
warehouses shall be examined, appraised and bonds filed before these are transferred.

SECTION 42. Transfers of articles to the bonded warehouses shall be through a warehousing or
transshipment permit. In the case of transshipments, the operator shall file the warehousing entry within
five (5) days from date of transfer, which period may be extended for another five days by the District
Collector. The transfer of imported articles from the Customs zone to the warehouse shall be under
continuous guarding by customs guard(s) until delivery at the warehouse is acknowledged in the covering
boatnote by the customs personnel assigned thereat or by the duly designated accountable officer of the
operator.

SECTION 43. Imported articles may be withdrawn from the warehouse either for manufacture into
export products; for repacking for distribution to foreign markets; for sale to manufacturing bonded
warehouse; for transfer to subcontractors or members of common bonded manufacturing warehouses,
or for domestic consumption. Those articles withdrawn for domestic consumption shall be subject to
payment of duties and taxes.

SECTION 44. Export products which are manufactured in customs bonded manufacturing warehouses
or are repacked in a multinational regional warehouse shall be exported within the prescribed period;
otherwise the operator shall pay duties, taxes and other charges for articles not exported, or the
remaining materials shall be surrendered to the Bureau of Customs.

SECTION 45. Wastages and by-products in the manufacture of export products shall be properly
accounted for and disposed of in accordance with existing rules and regulations.

SECTION 46. Before bonds are canceled, the raw materials shall have to be liquidated first together
with the entry within the prescribed period.

TITLE V

PENALTIES

SECTION 47. The withdrawal of any material/article stored in a Customs Bonded Warehouse without
the duly processed withdrawal or requisition slip shall constitute a violation of the conditions of the
General Bond and shall be a ground for the bond's confiscation.
SECTION 48. Any imported material or finished article which is illegally withdrawn from the Customs
Bonded Warehouse shall be subject to forfeiture in accordance with Sections 2530 of TCCP, as amended,
or in case of payment of duties, taxes and other charges, surcharges shall be additionally imposed under
Section 2501-A of TCCP. The unauthorized substitution of materials or finished products with local
materials or articles shall constitute illegal withdrawal. cda

SECTION 49. Any person who enters a Customs Bonded Warehouse and unlawfully removes therefrom
any merchandise or baggage shall be punished with a fine of not more than twenty thousand pesos
(P20,000.00) or imprisonment of not more than five (5) years or both as provided in Section 3609 of the
TCCP, as amended. The same penalties shall be imposed on any person who receives or transports any
merchandise unlawfully removed from such warehouse, or aids or abets such removal. The operator of a
Customs Bonded Warehouse who illegally withdraws such merchandise, and any customs personnel who
fails to report such illegal withdrawal shall both be liable under Section 3604 of TCCP, as amended.

SECTION 50. Materials or articles not exported or withdrawn within the period allowed shall pay duties
and taxes; otherwise, the District Collector shall sell them at public auction in order to satisfy the duties
and taxes and other charges due from them.

SECTION 51. Violation of any provision of this Order for which delinquency no specific penalty is
provided by law shall be subject to the penalty provided in Section 3610 of the TCCP, as amended. Any
violation of the terms and conditions of this Order by the operator shall be sufficient cause for the
revocation or suspension of his license to operate.

SECTION 52. The license to operate of any bonded warehouse operator or responsible official thereof
who shall knowingly allow the use of the bonded warehouse of facilities for illegal activities shall be
suspended or revoked. The imposition of such penalty shall not prejudice criminal prosecution.

SECTION 53. The above penalties, notwithstanding, shall be without prejudice to the suspension or
revocation of the license to operate and/or the institution of appropriate administrative or criminal
proceedings against the individuals concerned.

TITLE VI

REPEALING CLAUSE

SECTION 54. The following Administrative Orders are hereby repealed:

CAO 2-79 Rules and Regulations for the Establishment, Operation, Supervision and Control of Bonded
Manufacturing Warehouse

CAO 1-80 Amendment to CAO 2-79

CAO 4-80 Rules and Regulations Governing Customs Recommendation, Supervision and Control of
Operations and Activities of Multinational Regional Warehouses.
CAO 5-80 Rules and Regulations for the Establishment, Operations, Supervision and Control of
Private/Public Bonded Warehouses

CAO 4-81 Rules and Regulations for the Establishment, Operations, Supervision and Control of Customs
Bonded Trading Warehouses

Other Customs Administrative Orders, Memoranda, Circulars and rules and regulations inconsistent
herewith are also deemed superseded or amended accordingly.

TITLE VII

EFFECTIVITY CLAUSE

SECTION 55. This Order shall take effect upon the approval of the Secretary of Finance.

(SGD.) SALVADOR M. MISON

Commissioner

APPROVED:

(SGD.) JESUS P. ESTANISLAO

Secretary of Finance

Note:

This Order shall take effect fifteen (15) days after its publications in a newspaper of general circulation,
which publication shall be initiated immediately by that Bureau.