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All imported articles of finished products shall either be exported or withdrawn for domestic consumption within the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.

2.
3.
4.

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
Public/Private Bonded Warehouse
Customs Bonded Trading Warehouse
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 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 20012004 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, 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.

b.

The application to operate a garment 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.
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.

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 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
disposed of in accordance with existing rules and regulations.

accounted for and

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

together with the

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.

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.
TITLE VII
EFECTIVITY CLAUSE

Section 55.

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

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.