Sponsorship Speech for SB 3396

(Act Amending RA 9280/Customs Brokers Act of 2004)

It is my honor and privilege to sponsor before this august Chamber Senate Bill No. 3396=, under Committee Report No. 552, entitled “An Act Amending Republic Act No. 9280, otherwise known as the Customs Brokers Act of 2004, and for other purposes.

International trade and commerce are vital to economic development in an increasingly globalized environment. In the current, fast-paced business arena, restrictive statutory controls can be disadvantageous and will result in significantly costly lags. Our government should therefore respond by enacting appropriate laws that will enhance commerce, instead of creating roadblocks and bottlenecks to progress, i.e., the flow of goods should be facilitated, rather than hampered, as much as possible. 

Pursuant to the policy of the state of giving priority attention and support to the professionalization of the practice of the Customs Brokers Profession, Congress in 2004 enacted Republic Act No. 9280, otherwise known as the Customs Brokers Act of 2004. Said law serves to uplift the profession by providing a climate conducive to the practice that will maximize their capability and potential.

However, since its enactment, numerous stockholders in the import and export sectors have raised objections and apprehensions with certain provisions of RA No. 9280 that they believe impede, rather than facilitate, the smooth and rapid flow of commerce into the country.

Chief of these concerns are the prohibition against a corporation engaging in the business of customs brokerage and the requirement that import and export entry declarations should only be signed by a customs broker.

This bill therefore seeks to address this problem by providing a reasonable rule on the aforementioned matter. Under the proposed bill, the Committee clarifies that import entry have to be signed not only by the customs broker but also by the importer/consignee/owner. This amendment will establish in very clear terms the responsibility and liability of the importer and, at the same time, avoid the possibility of customs brokers releasing shipments without the foreknowledge or consent of the importers.

With regard to export declarations, laws and previous rules and regulations allow exporters to process their exports shipments with minimal need for customs brokers since the former are allowed to process and sign their documents. However, when RA No. 9280 was enacted, Section 27 of the said law specifically states that only a customs broker should sign the export entry declaration.

The Export Development Council and PhilExport vigorously supported the move to amend Section 27 of RA NO. 9280, arguing that the deletion of the word “exports” will remove the ambiguity vis-à-vis the last phrase of the section which states, “based on the covering documents submitted by the importers.”

The imposition of the customs broker’s signature goes against the policy of the government of eliminating fees, reducing transaction charges and eliminating layer of signatures to help exporters especially during economic downturns. The services of Customs Brokers are not necessary in the filing and processing of export documents because exports do not require classification of goods and computation of taxes. Customs brokers are trained to classify and compute tax on imports, not on exports. Export document contains only basic facts and information about the export goods: the exporter, the buyer, the carrier and other basic transactional information for recording and monitoring purposes. The exporter themselves can best represent and vouch for the authenticity of the information found in an export declaration compared to the broker.

Further, Section 27 is contrary to international trade practice where traders may or may not hire the services of customs brokers. The said practice is in recognition that some traders have the technical capabilities to deal and comply with the customs requirements of their governments without the help of a third party.

The most controversial provision of Republic Act No. 9280 is Section 29 which prohibits any firm, company, association from being registered or licensed as such for the practice of customs broker’s profession. Section 29 was understood as a prohibition against companies or firms from employing brokers and thereby crippling their business in the process.

The simplicity and speed of bringing goods from the port of origin to the port of destination using the technologies afforded by logistics and multimodalism where transport, customs clearance and delivery are handled by one single transport operator in a single transport chain under a one-stop-shop arrangement is the type of system desired by the business community. Unfortunately, unless the present law is amended, total logistics services by a single provider will be impossible, as a single individual customs broker operating by himself would have to be inserted in the transport chain. Thus, trade facilitation will be replaced by a time-consuming process accompanied by the attendant increase in costs caused by a segmented transport and delivery system.

Moreover, big companies are uneasy about entrusting their customs clearance requirements to a single customs broker. They argue that single brokers cannot comply with the bonding, security, financial and transport requirements of larger companies.

It should be noted that before the passage of Republic Act No. 9280, Section 3401 of the Tariff and Customs Code provides that “no corporations, associations, or partnerships shall engage in customs brokerage business unless at least two (2) of the members of such corporation or association or at least (2) of the members of such partnership have such a certificate.”

Under the proposal, your Committee proposes to amend Section 29 of the present law to read as follows:

Sec. 29. [Prohibition Against Corporate Practice] ADMISSION TO PROFESSIONAL PRACTICE. – The practice of customs broker is a professional service, admission to which shall be determined upon the basis of individual and personal qualifications. [No firm, company, or association may be registered or licensed as such for the practice of customs broker profession.] HOWEVER, NOTHING IN THIS ACT SHALL PREVENT A CORPORATION FROM BEING REGISTERED FOR THE PURPOSE OF ENGAGING IN THE BUSINESS OF CUSTOMS BROKERAGE AS LONG AS THEY ENGAGE OR HIRE THE SERVICES OF AT LEAST ONE (1) CUSTOMS BROKER.

FOR PURPOSES OF THIS ACT, THE PHRASE ‘ENGAGING IN THE BUSINESS OF CUSTOMS BROKERAGE’ SHALL MEAN MAKING REPRESENTATION IN BEHALF OF IMPORTER-CLIENTS IN THE BUREAU OF CUSTOMS (BOC) AND OTHER GOVENRMENT AGENCIES: PROVIDED, THAT SUCH CORPORATIONS ENGAGED IN THE BUSINESS OF BROKERING SHALL HAVE A MINIMUM PAID-UP CAPITAL OF ONE MILLION PESOS (P1, 000,000.00) BEFORE THEY ARE ACCREDITED BY THE BOC.

However, despite the wordings of the proposed amendment, it should not be construed as allowing corporations the right to engage in the profession of customs brokerage. It is submitted that while only individual and natural persons can be legally licensed by the government regulatory agency for the purpose of regulating a profession, corporations must not be barred from extending brokerage services to traders as long as this is done by them through licensed customs brokers who are connected with the corporation concerned. The amendment will preserve the sanctity and exclusivity of the profession to duly licensed customs brokers and, at the same time, clarify that corporations or firms may engage the services of a custom broker in the pursuit of its customs brokerage business.

In light of the foregoing, it is the hope of this Committee that the proposed amendment will balance the seemingly stringent features of the law that prevents, if not hampers, the free flow of trade into our country without however sacrificing the objectivity and reliability of our customs brokers and the important role they play in the entire process.

Thank you Mr. President and Good Afternoon.

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