Attached for your information and guidance is the Amended Joint Order No. 1-91 issued by the Secretary of Finance, Secretary of Trade and Industry and the Governor of the Bangko Sentral ng Pilipinas incorporating all the amendments in the implementation of the Comprehensive Import Supervision Scheme (CISS) beginning March 16, 1998, referred to as the Selective Pre-shipment Inspection-Advance Clearance System (SPACS).

Kindly be guided accordingly.

Adopted: 16 March 1998

(SGD.) GUILLERMO L. PARAYNO JR.
Commissioner


Amended Joint Order 1-91

In compliance with Memorandum Order No. 391 dated September 2, 1991, the Secretary of Finance, the Secretary of Trade and Industry and Governor of the Bangko Central ng Pilipinas hereby reissue this Joint Order 1-91 incorporating all the amendments thereto for the implementation of the Comprehensive Import Supervision Service (CISS):

1. Importation of goods may be effected by a Letter of Credit (L/C) or without the use of an L/C as provided by existing laws, circulars, rules and regulations.

2. Except as otherwise provided for herein, goods destined for importation into the Philippines from all countries of supply shall be subject to the CISS to be undertaken by the SGS being the inspector duly authorized by government, thru SGS Registration/Selective Pre-shipment Inspection Advance Clearance System (SPACS), under which SGS shall:

a. Check the compliance of the shipment to the convention on the proper description of imported goods as provided for under CMO 46-94.

b. Verify from the data warehouse value and report the availability of export and transaction values;

c. Ascertain and report the proper classification of shipment based on the data bank of classification.

d. Make a risk assessment profile of the shipment by checking its particulars against the intelligence database.

The SPACS combines and converts the existing IAN process and the Import Entry Declarations (IED) into a Clean Report of Findings (CRF).

The import of these goods into the Philippines customs territory is only permitted after SGS registration is done and the Clean Report of Findings (CRF) is issued by SGS.

3. The conduct of the selective pre-shipment inspection under SPACS shall be limited to:

a. Shipments of goods description of which do not conform to the convention under CMO 46-94.

b. Goods that require laboratory or complex test procedure to establish its identity, classification and proper valuations.

c. Shipments declared to be seconds, off-quality, stocklot and other descriptions connoting sub-standard or not prime quality.

d. Waste materials to ascertain compliance with environmental standards.

e. Other shipments ascertained by the Bureau of Customs to be high risk.

f. Shipments volunteered for inspection to take advantage of quick release processes in the ports.

4. The Government of the Philippines may require SGS to conduct physical pre-shipment inspection on goods otherwise exempt from pre-shipment inspection under paragraph 5 below in which case such inspections shall be conducted as provided under the terms of the Agreement between the Government and SGS. SGS will cooperate with Philippine Government officials designated by the Government through the Bureau of Customs, or otherwise, to witness the inspections performed subject to legal restrictions in the host country.

5. The following importations of goods are exempt from the CISS:

a. Goods imported pursuant to Section 105 of the Tariff and Customs Code of the Philippines but not including commercial imports under consignment basis.

b. Crude oil and petroleum products in bulk such as but not limited to crude oil, LPG, Naphtha, Gasolines, Reformates, Kerosenes, Aviation fuels, Gas Oils, Base Oil for lubricants, Fuel Oils, Asphalt-all in bulk but not including chemicals and their products, petroleum additives and lubricating oils.

c. Shipments of explosives, ammunition, arms and equipment and other strategic materials certified as such by the Department of National Defense but not including raw materials such as chemicals for the manufacture of explosives and firearms and ammunition for commercial use.

d. Precious stones, artifacts and precious metals.

e. Fresh, frozen or chilled foodstuff and fruits.

f. Live animals.

g. Works of art.

h. Current newspapers and periodicals.

i. Parcel post.

j. Individually-owned motor vehicles qualifying under the provisions of Executive Order no. 248, Vehicle Development Program, Series of 1987, specifically relating to the no-dollar importation of second hand motor vehicles of returning residents or immigrant.

k. Goods the FOB value of which as declared in Letter of Credit is less than US$500 FOB or its equivalent in other currencies at the time of L/C opening but not including part shipments invoiced at less than US$500 f.o.b against a Letter of Credit the value of which exceeds US$500 f.o.b. In the case of goods financed by means other than a Letter of Credit, goods where the value of the total invoice covering the shipment is less than US$500 or its equivalent in other currencies.

The exemption provided for in this paragraph will not apply to goods invoiced or declared in the shipping documents, as off-quality under such descriptive terms as stock-lots, side-runs, cull rolls, seconds, mill lots, scraps, off-grade, reconditioned, used, junk, or similar terms conveying or purporting to convey the condition of the article as sub-standard or off-grade and not of prime quality.

l. Importation into the Philippines where the consignee is either the Government of the Philippines or any of its corporation, agencies, and instrumentalities, but not including goods imported on behalf of these entities by private importers.

m. Importation of semi-conductor and allied enterprises subject to the qualification requirements of the Board of Investments.

n. Importation by export processing zone enterprises duly registered as such with the Philippines Economic Zone Authority.

o. Importation of equipment, machinery, spare parts and other materials for oil, coal mining and geothermal operations by petroleum, geothermal and coal service contractors pursuant to P.D. Nos. 529, 972 and 1442 as certified by the Office of Energy Affairs.

p. Importation by member firms of the automotive wiring harness industry.

q. Importation of pre-cut fabrics and accessories for processing into finished garment and textile products for export by firms which have been engaged in the garment and textile exports for the last five (5) years subject, however, to the following conditions: (1) the firm and/or any of its officers have not violated any rules and regulations of the GTEB and BOC governing import/export operations during this five year period nor have any pending case whether administrative or judicial regarding the conduct of importation of its raw materials; (2) the firm must not be delinquent in the liquidation of imported raw materials; (3) the said pre-cut fabrics and accessories are directly used in the manufacture of the products to be exported; and (4) the firm must present an exemption certificate issued by the Ad Hoc Committee on the CISS thru the Garments Textile Export Board.

r. Importations by enterprises/firms registered with the Subic Bay Metropolitan Authority (SMBA) and Clark Special Economic Zone (CSEZ), subject to the implementing rules and regulations jointly promulgated by the SBMA, CSEZ and the Bureau of Customs, except for shipment bound for duty free shops, outlets or trading warehouses catering to duty free shops and outlets.

s. All duty and tax exempt shipments including those entered under the CBMW (Customs Bonded Manufacturing Warehouse).

6. Importation into the Philippines which are subject to SGS CISS under the provisions of this Joint Order, may be subject to further examination and appraisal by the Bureau of Customs at the discretion of the Collector. The CRF shall be considered recommendatory in nature with regard to the Tariff and Customs Code Classification. However, except where the value in the invoice or the published value is higher, the dutiable value reported in the Clean Report of Findings shall be the basis for the assessment of duties and taxes.

7. The inspection to be conducted under the Selective Pre-Shipment inspection Advance Clearance System (SPACS) shall consist of:

Inspection and Price verification:

- inspection of quality;

- inspection of quantity;

- price verification;

- determination of dutiable value as defined by paragraph 1 of Section 201 of the Tariff and Customs Code;

- verification of freight charges in accordance with Customs rules and regulations;

- verification of Tariff and Customs Code Classification and Tariff rate.

8. Procedures for importation effected through the opening of an L/C:

a.    At the convenience of the importer, he may consider any of the following two procedures to comply with the Selective Pre-Shipment inspection Advance Clearance System (SPACS) as provided for by this Order.

-  Self Assessment

The importer shall declare at the time of L/C opening whether his proposed shipment is subject to the requirement of physical pre-shipment inspection as described in section 3 of this Order.

-  Assessment by SGS

Prior to L/C opening, the importer may directly approach SGS Manila Liaison Office or any of its satellite offices which will provide within 12 hours an SGS registration document clearly indicating whether the proposed shipment is subject to the requirement of physical pre-shipment inspection as described in section 3 of this Order.

b. The importer shall apply for the L/C with the Opening Bank. The L/C application shall state the type, quality, quantity, unit price and total value, freight charges, country of supply and PSCC Code number of the goods.

c. The L/C opened by the Opening Bank shall have the following annotation if the goods are subject to SGS pre-shipment inspection:

"Goods are subject to the prescribed SGS Pre-shipment inspection, in which case beneficiary certificate to this effect is required."

d. The importer shall inform the recipient of the L/C in writing or by electronic means as to whether the goods are subject to the requirement of physical pre-shipment inspection by SGS under the SPACS as provided for by this Order. The recipient of the L/C shall be responsible for facilitating the smooth physical inspection of the goods by SGS and the bank shall only make payment upon submission of the beneficiary's certificate confirming compliance with the required SGS PSI.

The L/C should be opened not later than ten (10) days prior to the scheduled date of shipment, if subject to preshipment inspection abroad.

e. Prior to issuance of the L/C, the Importer shall complete the Import Entry Declaration (IED) stating the tariff heading (HS Code), import duty charges due on the shipment, the importer's Tax Identification Number (TIN) and all other information as required by the Bureau of Customs and/or the Commercial Bank, and shall pay the estimated advance customs duties due to the Opening Bank. Where an importation has been exempted from payment of advance duties the importer shall furnish the Opening Bank with a letter of exemption from the authorized government agency;

f. The Opening Bank shall checkwrite/validate the IED on the advance duties collected. The Opening Bank prepares copies of the following documents for collection by the SGS Manila Liaison Office (Liaison Office)

- all copies of the L/C whether subject to SGS physical pre-shipment inspection, registration or not.

- seller's pro forma invoice

- the IED

- the SGS Registration document on cases where this has been acquired prior to LC opening

- copies of authority exempting the importation from duty and/ or taxes and in the case of regulated imports, the authority for their importation issued by the responsible agency.

g. The Liaison Office shall register the L/C and the IED and issue an SGS Registration document, if none has yet been issued. One copy of the SGS Registration document shall be sent either electronically or by regular mail to the importer and another transmitted to the SGS inspection office in the country of sale and country of supply;

h. On cases where shipment is subject to physical pre-shipment inspections by SGS under the Selective Pre-shipment inspection Advance Clearance System (SPACS) as provided for by this Order, the following procedures will apply;

h.1. The inspection offices shall send an Advice of inspection requirement to the shipper/consigned/seller (Seller) of the goods.

h.2. The seller of the goods shall advise the inspection office of the date and place of inspection and send the documentation to the inspection office, giving at least three (3) days advance notice. In exceptional circumstances, the seller may request the inspection office to perform an inspection prior to the receipt by the inspection office of the SGS Registration document number. However, no CRF can be issued until the SGS registration document number has been received by the inspection office;

h.3. The inspection office shall perform the physical inspection; verify the declared tariff heading (HS number) and tariff rate; verify that the invoice value and other elements of the total amount charged by the supplier correspond within reasonable limits of the export market price level generally prevailing in the country of supply, or where applicable, the world market: determine the dutiable value, and, if warranted issue a CRF. The CRF shall indicate the acceptable dutiable value which shall be determined on the basis of the criteria set forth in Paragraph 1 of Section 201 of the Tariff and Customs Code. The issuance of a CRF will not be warranted where uncorrected discrepancies in quality or quantity are not accepted by the importer or in the case of regulated commodities no authority issued by the responsible agency has been presented,

i. On cases where no physical pre-shipment inspection is necessary under the Selective Pre-Shipment Inspection Advance Clearance System (SPACS) as provided for by this Order, SGS shall combine the SGS Registration document and the IED into a Clean Report of Findings (CRF) reporting the elements as described in section 2 of this Order.

j. The seller shall present its final settlement invoice to the advising/correspondent (a/c) bank which will send the documents and the final settlement invoice to the opening bank;

k. The opening bank shall advise the importer of the arrival of the documents and the importer shall collect the documents.

l. The importer shall be supplied a copy of the CRF directly by the SGS Liaison Office. This copy may either be delivered by mail or electronically at the importers request. A copy of the CRF will also be provided to the exporter by SGS.

m. The importer/importer's broker will prepare electronically or by regular procedures the import entry from the authenticated or electronic customs copy of the CRF with the additional duties and taxes due, if any. The importer will then file their customs entry declaration with the Bureau of Customs either through electronic means as per Philippine regulations or via regular manual processing. If by regular manual processing, the normal documents required for clearance together with the authenticated customs copy of the CRF are submitted by the importer to the Bureau of Customs;

n. The Bureau of Customs shall verify the documents and calculate the difference between the deposit paid and duties due as well as the compensating/advance sales tax due. The importer shall prepare the import entry and internal revenue declaration (IEIRD) for final payment of balance of duties and taxes due.

o. The importer shall present the IEIRD and the CRF to the opening bank and pay the balance of duties and taxes due;

p. The opening bank shall accept the payment for the balance of duties and taxes due and issue to the importer the machine-validated IEIRD

q. The importer/importer's broker shall present to the Bureau of Customs the original customs copy of the CRF authenticated by the liaison office together with the other documents required for clearance or alternatively can be submitted by the acceptable electronic means in accordance with the Philippine rules and regulations. The Bureau of Customs shall issue the delivery permit for the release of the goods and retain the authenticated customs copy of the CRF;

r. The liaison office shall transmit electronically to the Bureau of Customs details of the CRF for verification purposes not later than the day following its receipt from the SGS issuing office abroad.

9. Procedures for importations effected without a letter of credit (Open Account (OA); Documents Against Acceptance (DA); Documents Against Payment (DP); Direct Remittance (DR); Self-Funded (SF); No-Dollar Import arrangements and importations on consignment.): -

a.    The importer shall submit written details of his proposed importations together with the Seller's pro forma invoice to the GTEB (in the case of goods regulated by the GTEB) or to the Liaison Office in the case of all other goods indicating:

- Importer's name and address; telex/telephone;

- Importer's Tax Identification Number (TIN);

- Currency of transaction;

- Value of goods to be imported and unit price;

- Country of supply if different from that of Seller;

- Name and address of seller; telex/telephone;

- Type quantity and quality of goods;

- Freight charges and compensating/advance sales tax due on shipment;

- HS Code of goods to be imported;

The details should be submitted not later than ten (10) days prior to the scheduled date of shipment.

In case of commodities to be imported for the first time into the Philippines, or if the Liaison Office has doubts if the commodities to be imported are regulated or not, the Liaison Office shall refer the same to the BSP Foreign Exchange Department for comments/recommendations.

b. The Liaison Office shall then issue an SGS Registration document with an assigned number. One copy of the SGS Registration document shall be sent, either by mail or electronically to the Importer and another transmitted to the Inspection Office in the country of sale and country of supply.

c. On cases where shipment is subject to physical pre-shipment inspection by SGS under the Selective Pre-shipment inspection Advance Clearance System (SPACS) as provided for by this Order, the following provisions will apply:

c1. The Importer shall instruct the seller to arrange for inspection by SGS and advise the Seller of his responsibility to facilitate smooth inspection by the inspector. All contracts must stipulate the requirement of physical pre-shipment inspection as provided by Paragraphs 2 and 3 of this Joint Order.

c2. The Inspection Office shall send an advice of inspection requirements to the Seller; cdt

c3. The Seller of the goods shall advise the Inspection Office of the date and place of inspection and send the documentation to the Inspection Office, giving at least three (3) days advance notice. In exceptional circumstances, the seller may request the Inspection Office to perform an inspection prior to the receipt by the Inspection Office of the SGS Registration Document Number. However, no CRF can be issued until the SGS Registration Document Number has been received by the Inspection Office;

c4. The Inspection Office shall perform the physical inspection, verify the declared tariff heading (HS No.) and tariff rate; verify that the invoice value and other elements of the total amount charged by the supplier correspond within reasonable limits of the export market price level generally prevailing in the country of supply, or where applicable, the world market; determine the dutiable value, and if warranted issue a CRF. The CRF shall indicate the acceptable dutiable value which shall be determined on the basis of the criteria set forth in Paragraph 1 of Section 201 of the Tariff and Customs Code. The issuance of a CRF will not be warranted where uncorrected discrepancies in quality or quantity are not accepted by the importer of in the case of regulated commodities no authority issued by the responsible agency has been presented;

d. On cases where no physical pre-shipment inspection is necessary under the Selective Pre-shipment inspection Advance Clearance System (SPACS) as provided for by this Order, SGS shall issue the SGS Registration document and the Clean Report of Findings (CRF) reporting the elements as described in section 2 of this Order.

e. The Liaison Office will transmit the authenticated customs copy of the CRF to the importer either by mail or electronically or to the GTEB (in the case of commodities regulated by the GTEB); Also a copy of the CRF will be provided to the exporter by SGS.

f. The Liaison Office shall transmit electronically to the Bureau of Customs details of the CRF for verification purposes not later than the day following its receipt from the SGS issuing office abroad;

g. The importer/importer's broker will prepare the Customs Entry Declaration from the authenticated or electronic customs copy of the CRF with the additional duties, if any, and taxes due. The importer will then file their Customs Entry Declaration to the Bureau of Customs either through acceptable electronic means as per Philippine regulations or via regular manual processing. If by manual regular processing, the normal documents required for clearance together with the authenticated customs copy of the CRF are submitted by the importer to the Bureau of Customs;

h. The Bureau of Customs shall verify the documents and calculate the duties dues as well as the compensating advance sales tax due. The importer shall prepare the IEIRD for final payment of duties and taxes due;

i. The importer shall present the IEIRD and the CRF to the importer's bank and pay the duties and taxes due;

j. The Importer's Bank shall accept the payment for duties and taxes due and issue to the Importer the machine-validated IEIRD and send a copy of the same to the Liaison Office;

k. The Importer/Importer's Broker shall present to the Bureau of Custom the original customs copy of the CRF authenticated by the Liaison Office together with the other documents required for clearance; the Bureau of Customs shall verify the documents and issue the Delivery Permit for the release of the goods, retaining the authenticated customs copy of the CRF.

10. In all cases where shipment is subject to physical pre-shipment inspection by SGS under the SPACS as provided for by this Order:

a. The Seller is bound to provide all necessary facilities so that the Inspection Office can carry out the quality and quantity inspection, price/EV comparison, verification of Tariff and Customs Code classification and verification of Tariff rate and conduct all such test, analysis, etc., as may be required.

b. The Seller shall make the necessary arrangements for handling, presentation, sampling, shop testing, etc., of the goods for the purpose of inspection and any expenses incurred therefor shall be for the account of the Seller.

11. The Seller or the importer, as a pre-condition to the issuance of a Clean Report of Findings, shall submit to the Inspection Office or to the SGS Manila Liaison Office or any of its satellite offices, a copy of his final settlement invoice covering the goods. A Report of Findings may be issued in the absence of the Seller's final settlement invoice only where the both seller and importer have jointly signed a Release, Waiver and Quitclaim and have submitted the same to the Inspection Office.

12. No customs Entry shall be filed or accepted or any shipment released in respect of any goods which require a CRF regardless if it was subjected to selective physical pre-shipment inspection as provided for by this Joint Order. Where the Importer is unable to produce to the Bureau of Customs the authenticated customs copy of the CRF, with or without fault on the part of the importer, such goods shall be subject to automatic seizure by the Bureau of Customs or to the existing rules and regulations of the Bureau of Customs in handling cases of shipments without the required physical pre-shipment inspection by SGS. The Seller is, therefore, warned against the shipment of goods which have not been inspected or for which a CRF has not been issued.

13. All questions concerning the findings/reports of SGS on value and classification and other matters such as but not limited to shipments effected without the required pre-shipment inspection shall be referred to the Bureau of Customs-Valuation and Classification Committee under the office of the Commissioner of Customs.

14. The Seller is furthermore warned that pre-shipment inspection of the goods is not intended to relieve him of his contractual obligations to the buyer.

15. The issuance of SGS CRF regardless if it was subjected to the provisions of the SPACS as provided for by this Order, does not relieve the Importer from compliance with all laws, rules, and regulations pertaining to the import of goods, nor does it constitute proof of such compliance.

16. This Joint Order shall amend Joint Order 1-91 and shall take effect on March 16, 1998, which effectivity shall be set by an official Memorandum of the Bangko Sentral ng Pilipinas.

17. The provisions of this amended Joint Order shall apply to goods covered by Philippine L/Cs or SGS Registration Documents opened/issued on or after March 16, 1998.

Adopted: 16 March 1998

(SGD.) Ma. Cecilia G. Soriano
Acting Secretary of Finance

(SGD.) Cesar B. Bautista
Secretary of Trade and Industry

(SGD.) Gabriel C. Singson
Governor Bangko Sentral Ng Pilipinas