Senate President Pro Tempore Ralph G. Recto has filed a bill seeking to declare big-time smuggling as a capital offense by imposing the penalty of life imprisonment to anyone who will engage in unlawful importation of goods valued more than P1 million.

“Smuggling continues to bleed our nation of much-needed taxes, which is considered to be the country’s lifeblood. It directly deprives the Filipino people of resources that could have been used to improve their quality of life,” Recto said.

“I therefore consider smuggling, especially those in unconscionable proportions, to be a grave offense against the nation.”

In filing Senate Bill 456, the senator took note of a recent statement made by a former finance secretary that the total value of smuggled commodities in the Philippines is estimated at almost $20 Billion (P800 billion) annually.

“The figures are staggering. Imagine how many billions of pesos in taxes can be collected and put to better use if we can curb smuggling,” Recto said.

Aside from losing potential government revenues to smugglers and their cohorts at the Bureau of Customs (BOC), Recto said that smuggling also hinders the economy’s growth.

“The business sector considers smuggling as a major concern because it weakens the domestic market for manufacturers and for importers who pay duties and taxes,” he said.

“Experts said that for as long as smuggling provides better profits than manufacturing, the economy will be one of traders and smugglers rather than manufacturers.”

Entitled “Anti-Smuggling Act of 2013,” the bill seeks to address the smuggling problem in the country by amending pertinent provisions of Presidential Decree No. 1464 or the Tariff and Customs Code.

First and foremost, the measure aims to make smuggling a much more serious offense by imposing a maximum penalty of life imprisonment if the amount of goods smuggled into the country exceeds P1 million, plus a fine in an amount equal to the appraised value plus fifty percent thereof.

It also provides for graduated penalties to be imposed depending on the value of the goods illegally imported.

Furthermore, the bill empowers the Commission on Audit (COA) to ensure transparency and accountability in the BOC by conducting a post-entry audit on the operational processes, collection and financial reporting, fiscal and personnel performance, system efficiency, internal control, information and communication flow, and fraudulent and illegal practices upon the recommendation of the Bureau or petition duly made by the local industry.

The COA, in the conduct of its audit and investigations, is also given the authority to issue subpoenas duces tecum and ad testificandum or require the production of documents and require Bureau personnel to respond to its inquiries.

The bill also increases the penalties for statutory offenses of government officials and employees by increasing the fine to a maximum of P1 Million, imprisonment to a maximum of 12 years and forfeiture of separation and retirement benefits.

On the other hand, the measure also provides rewards and incentives to be given to BOC lawyers who actively prosecuted a smuggling case that resulted in the recovery of revenue, surcharges, and fees, or imposition of fine or penalty or offer of compromise by the offender, or conviction of the offender.

“This piece of legislation also updated the list of acts that constitute smuggling and expanded the definition of technical smuggling to include other acts not otherwise defined and punished under present laws,” Recto said.

Under the bill, the following acts are deemed as smuggling punishable under Sections 3601 and 3602 of the Tariff and Customs Code:

• Breaking of customs seals or unauthorized removal of articles from bonded warehouses;
• Submission of incorrect or false information by the bonded warehouse;
• Warehousing of the following shipments:
  1. Finished articles, except in the textile and garments industries and semi-conductor and electronics industries. – finished articles, as used in this section, shall refer to scientifically or technologically processed articles in final state such that no other product can be manufactured therefrom unless its principal character is first destroyed.
  2. Articles not declared in the import entries or in excess of the volume and quantity allowed under the license of the customs bonded warehouse.
  3. Prohibited articles and regulated articles without the corresponding clearance and/or import authority duly issued by a competent authority.
• Unauthorized transfers from the customs zone of warehousing articles imported by the bonded warehouse;
• Unauthorized withdrawal from a bonded warehouse without payment of duties and taxes;
• Except for the garments and the shipbuilding industries, failure to liquidate imported articles withdrawn from the bonded warehouse within six (6) months, extendible for another three (3) months, from issuance by the bureau of the certificate of loading in a vessel destined to a foreign port;” and
• Failure to pay duties and taxes on the remaining (not exported) imported materials within thirty (30) days from lapse of the period for re-exportation.

Other amendments include an array of new stringent requirements for surety companies and bonded warehouses doing business in the BOC, as well as the creation of a valuation library which is to be updated at all times and be made available for public viewing.

“A real-time linkage via computer of the records of both the BOC and the Bureau of Internal Revenue shall be immediately made to ensure proper coordination of their respective audit as well as in the investigation and prosecution of tax and duty related cases,” Recto said.

Also under the bill, civil and criminal actions and proceedings shall be investigated, prosecuted and handled exclusively by lawyers of the BOC, and no civil or criminal action for the recovery of duties or the enforcement of any fine, penalty or forfeiture shall be filed in court without the approval of the Commissioner.

“Any undervalued, misdeclared, misclassified or undeclared imported articles/items shall be forfeited and disposed of. Such actions shall be grounds for the revocation of the license, permit and the business name of the subject importer,” the senator said.

The bill also provides for the modes of disposition for properties seized. For example, when the seized property has export potential, the same shall be exported through a government entity which shall be designated to perform said task.

“When the article is not suitable for exportation or for use against smuggling or other frauds upon customs, then it may be channeled to the official use of other offices of the national government,” Recto said.

Other modes of disposition are provided, depending on the nature of the seized smuggled goods.

“This measure is in line with President Aquino’s campaign to rid the government, particularly those in the revenue-generating sector, of corruption,” Recto said.

“The passage of this bill, therefore, becomes imperative.”