BOC Commissioner Angelito A Alvarez

AAA SPEECH/ FEDERATION OF PHILIPPINE INDUSTRIES
11 MAY 2011
GOOD AFTERNOON!
Thank you for having me here today.
At a time when yours truly and even my Boss, Secretary Cesar Purisima,
have been at the receiving end of dirty tricks from people who obviously
have been adversely affected by our campaign to stamp out corruption and
smuggling in the Bureau of Customs, it feels good to spend quality time
with people like you who share our passion for good, honest-to-goodness
and efficient governance.
So many things have happened on the smuggling and corruption front
since November last year when he had our first anti-smuggling summit at
the Hotel Intercontinental in Makati.
In that brief period spanning five months, the BOC under my watch had
seized more than P2 billion worth of assorted smuggled commodities that
included illegal drugs, high-end vehicles, metal and metal products, rice,
sugar, onions, wearing apparels with intellectual property rights issues,
bunker oil, diesel fuel, ten-wheeler trucks, liquor, ceramic tiles, frozen
mackerel, household appliances, musical instruments, molding machine
and ukay-ukay. Just this morning, we confiscated P20 million worth of
precious corals which were concealed in two twenty-footer container vans
at the Port of Manila.
During the same period, we filed before the Department of Justice
smuggling cases against a lady gun smuggler, two metal and metal product
importers, a CD duplicating machine importer, two major meat importers,
a sliced potato importer, a palm oil importer, a polyester and cotton yarn
importer and two petroleum product importers with claims exceeding P10
billion. The two oil-related smuggling cases we recently filed in addition to
the three others we brought to the attention of the DOJ between July and
October last year are a manifestation of the high priority the BOC is giving
to our goal of putting an end to the fraudulent entry of imported oil products
into the country.
I am happy to report that the DOJ has already approved for filing in court of
the case involving Viking Haulers, the companythat allegedly smuggled
luxury vehicles into the country, We also understand that 21 other cases
are already up for resolution by the DOJ.
Needless to say, the above multi-billion peso seizures and multi-billion
peso smuggling cases we have filed against powerful interest groups have
made us obvious targets of retaliatory attacks. Not the least of these dirty
tricks is the recent spate of media attacks on the BOC and Department of
Finance leadership based on fabricated charges that were allegedly file by
customs employees. However, we were also surprised to find out that the
supposed to be complainant, a certain Amie Arciaga ‘s name does not
appear in the personnel records of the BoC.
Needless to say, the claims hurled against us were full of factual errors:
a) Guillermo L. Parayno was never an undersecretary of Finance;
b) E-konek, one of the 3 Value Added Service Providers (VASPs)
c) started doing with BoC wayback in 2007 when I was still working
at the private sector;
d) Of the two names specifically mentioned as those belonging to the
2500 alleged “Hao Shiaos” operating at the BoC, we were able to
find out that these two people are actually legitimate employees of
the BoC.
Obviously, there are people and organizations out there who would stop
at nothing to derail the programs of reform and renewal we have initiated in
the Bureau of Customs.
That is why I find it truly comforting to spend the next hour or so with you,
knowing full well that I am in the company of people whose unbroken
determination to help us succeed in our crusade against smuggling and
corruption is in full evidence in this venue today.
I find it truly inspiring that while our programs for reform,modernization and
renewal often require difficult period of adjustments, your group has
decided not only to take the path of no resistance but also, and more
importantly, to join us in taking a dramatic leap of faith.
Already, our partnership has produced a rich harvest of good results.
As you may have heard, Pulse Asia, a reputable public opinion pollster, has
reported a historic decline in the corruption rating of the BOC.
The results of a recently concluded nationwide survey revealed that fewer
Filipinos, specifically 6.9%, now remain critical of corruption in the BOC.
That was a sharp improvement compared with the results of a 2009
survey, also done by Pulse Asia, in which 14.7 % of Filipinos put the
Bureau of Customs in the league of most corrupt agencies in the
bureaucracy.
The inevitable conclusion is that the general public has taken cognizance of
the BOC’s high-profile campaign against corruption and smuggling,
meaningful reform and renewal programs, proactive initiatives to enhance
institutional efficiency and integrity as well as our single-minded pursuit of
customs modernization and trade facilitation.
Of course, the present stewards of the BOC have not lost sight of the fact
that we still have miles to go, so to speak, before we can honestly claim
that the process of change and transformation has developed deep and
sturdy roots.
But there is also no denying that we getting there. To date, we have taken
small but cumulative steps that bring us closer to our goal of curtailing
smuggling and stamping out corruption in the BOC.
These include:
1) The continuous updating of the reference values for every description
and tariff heading. The idea is to give customs personnel the necessary
tool to detect gross undervaluation of importations and protect
legitimate importers from unreasonable assessment of their imported
commodities;
2) Adoption of worldwide freight rate reference for containerized cargoes
to help the agency’s assessment personnel to detect under-declarations
in freight charges.
- Studies have shown that the BOC was losing more than P1.3
billion a year from freight undervaluation due to absence of a
reliable reference rate which the agency’s assessment personnel
could use to check under-declarations in freight charges.
- Until recently, mere photocopies of the bill of lading submitted
by the importer/broker were accepted by customs assessment
personnel as valid supporting documents in import entry
declarations.
- More often than not ,the photocopies of bills of lading being
received by customs personnel did not reflect the actual
transportation costs paid for the importation, thereby resulting in
revenue loss.
- With the conference freight reference covering 280 ports from
70 countries provided by the Philippine Shippers Bureau, BOC
assessment personnel are now able to detect wrong entries in
transport cost declarations.
3) Warehousing reforms that include automation of bond processing
and recording, re-training of personnel assigned to the Bonds
Divisions on the mechanics and nuances of the customs bonding
system and cancellation of warehousing privileges of importers
with outstanding customs bonds issues.
4) Retroactive verification, audit and reconciliation of insurance
declarations of all imports beginning with those made in 2010 to
put an end to the widespread practice of importers to underdeclare their insurance premiums with the end in view of scaling
down the dutiable base of their incoming shipments. Through an
administrative issuance, I have directed all BOC District Collectors
to immediately retrieve all marine insurance policies that were
submitted to the BOC in support of import entries that were filed in
2010.In the event that discrepancies are discovered,District
Collectors “are authorized to allow the correction of errors and readjustment of assessments for importers who wish to voluntary
avail themselves of said remedial measures.Importers who fail to
effect re-adjustment or correction of errors would be subjected to
the administrative tools available to the BOC which may include
withholding of the release of future shipment unless payment of
deficiencies is made.
5) Thorough screening and validation of “Certificate of Origin” (CO)
covering importations claiming preference under various Free
Trade Agreements (FTA) following reports of rampant use of fake
documents to obtain reduced tariff on certain import products. The
evaluation and review process is intended to ferret out suspected
spurious Certificates of Origin which will then be subjected to
further verification process thru the cooperation of the issuing
authority in the exporting countries. The link up will be made
possible by the Bureau of International Trade Relations of the
Department of Trade and Industry.The results of the retroverification process will be the basis of actions to be taken by the
Bureau of Customs, among them the collection of proper duties
and taxes and the filing of smuggling cases if and when the
commission of fraud is proven.
6) Re-deployment of under utilized Xray machines to the busy ports
in Manila, hopefully to deter mis-declaration and undervaluations.
7) In coordination with the Banker’s Associaition of the Phillipines, we
we will soon automate the reconciliation process between BoC’s
owned collection records as compared with the amount actually
remitted to the National Treasury. Thru this move, we are
confident that the use of fakes Official Receipt will soon be a thing
of the past.
8) On bulk and break-bulk cargoes that are subject to review by the
six surverying companies accredited by the BoC, the submitted
Load Survey Report will now be reconciled with the figures
submitted in the Import Entry Declaration.
During the first Anti-Smuggling Summit, a resolution adopted by the
participants recommended the exercise by the BOC of its right to
Compulsary Acquisition of grossly undervalued importations.
Unfortunately, while I have vigorously pursued this initiative, the
Department of Finance has recently expressed reservations about this in
the light of an unexpected discovery that the re-selling of seized
undervalued goods at the prevailing market value could violate World
Trade Organization rules. Among the concerns being raised is the issue
of the right valuation of undervalued products. In the light of this
development, I solicited inputs from FPI and other concerned
stakeholders on how we could address this matter at the soonest time
possible.
Another item in the adopted resolution was the recommendation for the
BOC to engage the services of qualified private auditing firms to
undertake post-entry audit. Again, while I tried to push this idea off the
drawing board, one of the biggest auditing firms in the country told me
that there could be ethical issues to the idea of compensating the
participating auditing firms based on a percentage of what is collected
from positive findings. Again, I would like to solicit ideas on how we can
overcome that particular ethical encumbrance.
I also fully support the idea of creating special courts to hear and try
smuggling cases and I believe we should work on this together. I am
also with the FPI in its desire to have Malacanang certify as urgent the
passage of the Anti-Smuggling Bill now pending in Congress. And if the
proposal of the FPI to a establish a Public-Private Sector (PPP) AntiSmuggling Oversight Committee earns the approval of higher
authorities, I would like to state for the record that I believe Mr. Jess
Aranza is the best man for the job.
I would like to thank you once more for inviting me here today which I
take the liberty of interpreting as an expression of encouragement for
the new stewards of the BOC to remain firm in our resolve, faithful in our
conviction, upbeat in mood and bold in decision.
The road to excellence and modernization is littered with difficult
challenges.
But if we pull in the same direction and remain committed to the same
noble goal, we have no reason to fail.
In closing, let me quote Sec. Cesar Purisima of the Department of
Finance. “ Reforms are also continuously being undertaken in the Bureau
of Customs to improve its operation and cleanse it of corrupt officials. This
is not an oversight job and we will not stop until we see a Customs Bureau
at par with the rest of the world. We understand that throughout the
campaign, we will inevitably lock horns with those whose interests lie in the
preservation of the status quo. “
“ Our efforts at raising revenues have produced the desired results and we
assure the nation that your Department of Finance will not be distracted in
its duties by some petty, unsubsantiated complaints.
Comparing our 2010 collections with that of 2011, we are very proud to
report that our cash collections during the first 4 months of the year
already exceded the 2010 levels by 5.5 billion pesos, in spite of the fact
that the tariff on oil & steel products were reduced to zero when I assumed
my position mid last year.
We will continue to do our job and we seek the public’s help in running after
smugglers and tax evaders by reporting to us any knowledge of wrong
doing.
Marami pong salamat.