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REBUCLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE
BUREAU OF CUSTOMS
MANILA

CUSTOMS ADMINISTRATION ORDER


NO. 2-91

SUBJECT: Rules and Regulation for the Establishment, Operations, Supervision,


and Control of Customs Bonded Warehouses.
By Authority of Section 608 and pursuant to the provision of Section 1901, 1909, and
Sections 2001-2004 of the TCCP, as amended; L.O.I. 1040; E.O. 226; and R.A. 3137, as
amended by E.O. 823, the following rules and regulations for the establishment, operation,
control and supervision of all type of customs bonded warehouse are hereby promulgated.

TITLE I
General Provision

Section 1. The Bureau of Customs is responsible for the licensing, supervision, control of all
customs bonded warehouse.
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 use in the manufacture of articles that are
transferred to other bonded manufacturing warehouses or 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.
Section 4. Imported raw materials, accessories, and the like, of sold or used for domestic
consumption shall be subject to duties, taxes and other charges.
Section 5. All imported articles of finished products shall either be exported or withdrawn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:

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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 of wastage incident to such activities.
Section 8. The visitorial power of the Bureau of Customs over customs bonded warehouses
shall extend to sub-contractors, 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. The Account Officer is customs personnel responsible for the 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 officer of the bonded warehouse named
by designated by the operator of the person, aside from his, 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 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

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taxes on condition that these materials are manufactured into finished products for
subsequent exportation without 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 a
duly approved license to operate a Customs Bonded Warehouse.
Section 16. A Garment/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 packing 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 there from
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 where in 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).

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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, re-exportation, and 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 garment, 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 re-exported.
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 product of a
bonded manufacturing or trading warehouse due to the latters insufficiency of
operational facilities or material time to meet export commitments.

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 garment bonded manufacturing
warehouse shall be originally filed with the Garments and Textile Export

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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 Boards 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 Warehouse, and submit his recommendation 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 the approval, subject to the Bureaus 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 warehouses 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 of
safekeeping.

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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 the 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 warehouse at least once a year, unless sooner
directed by the Commissioner 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.
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 the request of the operator.
The license of the Common Bonded Manufacturing Warehouse may also be
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
OPERATIONALS 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

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the covering boat note 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 the customs bonded warehouse
without the duly processed withdrawal or requisition slip shall constitute of the
General Bond and shall be a ground for the bonds confiscation.
Section 48. Any imported or finished article which is illegally withdrawn from the Customs
Bonded Warehouse shall be subject to forfeiture in accordance with Section 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 material or
article shall constitute illegal withdrawal.
Section 49. Any person who enters a Customs Bonded Warehouse and unlawfully removes
there from any merchandized or baggage shall be punished with a fine of not
more than twenty thousand pesos (Php20,000) 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 receive or transport s any
merchandise unlawfully removed from such warehouse, or aids or abate 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 the TCCP, as amended.

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Section 50. Materials or articles not exported or withdrawn within the period allowed shall
pay duties and taxes, otherwise, the District Collector shall sell then at public
auction in order to satisfy the duties and taxes and other charges due from then.
Section 51. Violation of any provision of this order for which delinquency no specific penalty
is provided by law shall be to the penalty provided in Section 3610 of the TCCP,
as amended. Ant violation of the terms and conditions of this order by the
operator shall be sufficient caused for the revocation or suspension of his license
to operate.
Section 52. The license to operate of any Customs Bonded Warehouse operator or responsible
official thereof who shall knowingly allow the use of the bonded warehouse
facilities for illegal activities shall be suspended or revoked. The violation of such
penalty shall not prejudice criminal prosecution.
Section 53. The above penalties, not withstanding, 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 individual
concerned.

TITLE IV
REPEALING CLAUSE

Section 54. The following Administrative Orders are hereby repealed,


CAO 2-79 Rules and Regulation 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 Operation and Activities of
Multinational Regional Warehouses.
CAO 5-80 Rules and Regulations Governing Customs Recommendation,
Supervision and Control of Private/Public Bonded Warehouses.
CAO 4-81 Rules and Regulations Governing Customs Recommendation,
Supervision and Control of Customs Bonded Trading Warehouses.
Other Custom Administrative Orders, Memorands, Circulars, and
rules and regulations inconsistent herewith are also superseded or
amended accordingly.

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TITLE VII
EFECTIVITY CLAUSE

Section 55. This order shall take effect upon the approval of the Secretary of Finance.

SALVADOR N. NISON
Commissioner

APPROVED,

JESUS P. ESTANISLAO
Secretary of Finance
Date: January 16, 1991

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