Thinking outside the (balikbayan) box (Business Mirror (Philippines))

FOR the millions of Filipinos working and living abroad, the balikbayan box they send to their loved ones here in the country is not just a box full of canned goods, apparel or toys for their kids to enjoy.

The balikbayan box, according to Mario Ares, a Filipino working in Saudi Arabia, is a symbol of his hardship and perseverance, of his love for his family and, most important, of his being a Filipino. Thus, it should be treated with utmost respect and handled with care.

But, what if opened, instead of finding goods and other items that are intended to somehow bring a smile on the faces of an overseas Filipino worker’s (OFW) loved ones, what would be discovered are guns, drugs and other items that are not only prohibited but are also considered potential threats to the state’s security or the well-being of other people?

Would it be proper and just for the Bureau of Customs (BOC) to fully implement the law that allows a 100-percent physical examination of such boxes?

The law

Chapter VII of Republic Act 1937, or the Tariff and Customs Code of the Philippines, describes balikbayan boxes as packages of personal effects and/or pasalubong sent by Filipinos residing or working abroad to their families or relatives in the Philippines to enhance Philippine tradition and culture for the promotion and preservation of strong family ties through love and caring expressed in gift-giving.

Under the law, the contents of a balikbayan box must not exceed P10,000 in value and that only the importation of personal and household effects belonging to residents of the Philippines returning from abroad are exempt from duties, provided they are accompanied by the returning resident.

Also banned and/or regulated are firearms and ammunition, prohibited dugs, pornographic materials and gambling materials/apparatus.

The law prescribes a 100-percent examination of the consolidated shipments.

Consolidated shipments are two or more balikbayan boxes from two or more individual senders abroad, assembled and consolidated at one point of origin/exportation and shipped together under a single master ocean bill of lading or master airway bill by a freight forwarder to its consolidator-agent in the Philippines.

The inspection is necessary, according to the BOC, to protect the legitimate interests of senders and their consignees, in particular, and the transacting public, in general; to protect the interests of the government; and to prevent and suppress smuggling and other fraud.

Canned goods, grocery items and other household effects must not exceed a dozen of a kind, while apparel, whether used or new, must not exceed three yards per cut.

Only one consignment per sender during a one-month period is allowed.

Based on the data provided by the BOC, a total of 1,500 containers arrive in the country every month, or 18,000 containers every year, with each container carrying a maximum of 440 standard-sized balikbayan boxes.

Pandora’s box

Instead of containing pasalubong or gifts for their loved ones, some unscrupulous individuals have managed to turn these balikbayan boxes into a Pandora’s box full of contraband.

Early this year, combined elements of the BOC, the Philippine Drug Enforcement Agency and the Philippine National Police arrested a Filipino for using container vans carrying balikbayan boxes to smuggle into the country some 38.65 kilograms of methamphetamine hydrochloride-locally known as shabu-concealed in a water tank.

Authorities also intercepted 1,360 pieces of methylenedioxymethamphetamine, or Ecstasy, at the Philippine Postal Corp., and the consignee was arrested.

Some two kilos of liquid cocaine were found concealed in a balikbayan box at the Ninoy Aquino International Aiport (Naia), as well as items declared as food supplement but were later found to be date-rape drugs (Alprazolam).

Aside from illegal drugs and medicines, balikbayan boxes are also being used to smuggle into the country firearms, ammunition and accessories such Rainer Arms (.56) and Kreiger (5.56).223 Wylde, armalite magazine, rifle scope and steel-frame gun parts that were also seized.

Balikbayan boxes are also being used to bring into the country commercial goods or goods in commercial quantity, such as wristwatches and bags of various brands, and laptops.

BOC takes action

Fully aware of the situation, Customs Commissioner Alberto Lina promptly ordered the strict implementation of the law governing the inspection of balikbayan boxes to prevent the entry of undervalued items and underdeclared contents reaching the country’s ports.

Our spot checks from several warehouses show how misconstrued the rules may have become. People are sending in used clothing, home appliances and items of the same kind that can well may be used for commercial purposes. Nagkamali ba ang sender o nagkulang ang freight forwarder? Is there misinformation to drive their businesses? Lina asked.

To protect the legitimate interests of the transacting public, the commissioner said the examination of these consolidated shipments should be made mandatory.

P600 million lost annually

The BOC also lamented that the government is losing about P600 million a year in revenues from technical-smuggling activities using balikbayan boxes.

We really do not have an exact figure on the losses, but we are estimating that it is a P50,000 underpayment for every container van [filled with balikbayan boxes]. So if there are 1,000 container vans coming in every month, that means that a rough estimate of P50 million is lost in government coffers, Deputy Commissioner for Assessment and Operations Coordinating Group Agaton Teodoro Uvero said.

Revenue losses, he said, are expected to double-or even triple-as the number of container vans carrying balikbayan boxes could increase to 2,000 or 3,000 during Christmas season.

It is okay if it would be for the personal use of the OFW’s family. But what if it is being used for businesses such as several watches, bags, perfumes and other imported goods, he pointed out.

He recalled that a spot check on balikbayan boxes recently conducted yielded 11 brand-new LED television sets, some were 55-inches and 32 inches in size, that were placed inside a custom-size box.

BOC’s intelligence head Jessie Dellosa also did not discount the possibility that the packages might be used by smugglers in their illegal trade, although his office has received only a little information about it.

That is a possibility. Based on our information, we act only if there is a reliable information. We cannot just open everything. How about the innocent, how about the legal [shipments]? Many would be inconvenienced, so we would act on intelligence information, he explained.

Revised rules

However, due to the strong opposition to the random and manual inspections, the BOC has acceded to the directive of President Aquino to abandon the idea and instead rely on x-ray machines in scrutinizing balikbayan boxes.

Lina said shipments containing balikbayan boxes will undergo mandatory X-ray examination from now on.

Lina noted that the use of x-ray machines to check balikbayan boxes is common all over the world as part of procedures to eliminate manual inspection.

At the same time, it will also be easier for customs personnel assigned to check balikbayan boxes as it will save time and energy.

If Customs finds derogatory findings in the x-ray examination, then the container van will be opened so boxes can be individually scanned through smaller x-rays. Only then will a physical inspection be considered, he said.

Aside from the x-ray machines, the hiring of dogs that are trained to detect explosives and illegal drugs will also be utilized, as well as the more than 200 closed-circuit television (CCTV) cameras that the agency recently procured to stop the illegal activities.

BOC Deputy Commissioner for Revenue Collection Monitoring Group (RCMG) Arturo Lachica also said new rules have been issued for a uniform handling of balikbayan boxes by all concerned personnel.

Under Customs Memorandum Order 27-2015, which was signed last Tuesday, balikbayan boxes of OFWs shall not be subjected to random or arbitrary physical inspection and only undergo mandatory x-ray scanning.

The x-ray scanning shall be conducted at the X-Ray Inspection Project (XIP) Designated Examination Area (DEA) for preliminary examination of noncommercial inbound consolidated shipment.

In cases of noncommercial inbound consolidated shipment tagged suspect after x-ray scanning, the XIP image-analysis inspector shall identify the balikbayan boxes with possible violation and recommend the issuance of an alert order.

For balikbayan boxes without violation, they will be segregated and provisionally released to allow continuous processing.

For balikbayan boxes alerted, they will be subjected to 100-percent physical examination at the authorized examination area to be conducted by a customs examiner in the presence of the apprehending officers, freight-forwarder consolidator, representatives of the Overseas Workers Welfare Administration (OWWA) and/or a designated officer of an OFW association.

Failure on the part of the responsible customs official or personnel to comply with the directives will result in administrative sanctions.

Win-win solution

We are not oblivious to the concerns of the stakeholders, and what we are trying to do is we try to do our part in implementing the rules. If, in the course of implementing the rules, we hear some grievances, we try to adjust, Lachica said. If there is an alternative solution, if it will result in a win-win solution, we will welcome it with open arms.

When asked if subjecting all balikbayan boxes to x-ray scanning-instead of a random and manual inspection-can be considered a win-win solution for the BOC and OFWs, Lachica replied: We can call it a win-win solution.

BOC mandate

Amid the swirling issues on balikbayan boxes, several lawmakers on Wednesday asked the BOC to pursue its antismuggling measures while protecting the rights of OFWs.

House Committee on Ways and Means head and Liberal Party Rep. Romero Quimbo of Marikina, National Unity Party Rep. Elpidio Barzaga Jr. of Cavite and LP Rep. Mel Senen Sarmiento of Samar admitted that there is a law mandating the BOC to inspect balikbayan boxes, not only to raise revenue from them through taxes, but also to address alleged smuggling activities using the balikbayan boxes.

There’s nothing wrong with these inspections because that is part of the BOC mandate [to address smuggling], Sarmiento said.

However, he said that the bureau should conduct inspections on arriving balikbayan boxes with all the necessary measures put in place to ensure that no parcel is lost or damaged in the process.

Quimbo said the BOC is allowed to open balikbayan boxes. However, the BOC should inspect them in line with the bureau’s standard operating procedure, meaning by using its computer system.

Lina earlier said the bureau will implement its policy to randomly open balikbayan boxes and impose taxes on taxable items.

Lina said they are not targeting the OFWs but the smugglers who are abusing the overseas workers’ rights through consolidated shipments of contraband stashed inside balikbayan boxes.

We estimate revenue losses from smuggling activities riding through balikbayan boxes at P50 million a month. That’s a conservative estimate, Lina said.

However, President Aquino last week stopped the BOC from conducting physical inspections of balikbayan boxes in reaction to a public outcry.

Amend the law

Meanwhile, Sarmiento urged Congress to amend the 37-year-old Presidential Decree (PD) 1464, or the Tariff and Customs Code of 1978, which imposes taxes on balikbayan boxes.

Sarmiento said the P10,000-and-below threshold for tax exemption on balikbayan boxes is already obsolete and should no longer be applied until new tax amendments are introduced.

The BOC said Filipinos returning from abroad are only exempt from paying taxes and duties for bringing with them goods with an aggregate value of P10,000 under existing regulations.

There’s nothing wrong with these inspections because that is part of the mandate of the BOC. I’m afraid, however, that our kababayan who are sending balikbayan boxes to their relatives and friends here in the Philippines are also correct in their claim that the threshold for taxable parcel, which is P10, 000, is already too unrealistic and outdated. This is something that the BOC should consider for humanitarian grounds until Congress makes the necessary correction on our present Tariff and Customs Law, Sarmiento said.

Commissioner Lina should realize that P10,000 today is only worth two pairs of shoes or just 100 cans of Spam. Using the taxable threshold set by a 37-year-old law is definitely unacceptable and outrageous to overseas Filipinos whose remittances have been the country’s lifeblood, Sarmiento added.

At present, the lawmaker said the international threshold for tax-free overseas parcel is $1,000 and below, or P44,000 and below.

Since the threshold amount is the only provision in the entire PD 1464 that requires amendment, Sarmiento said Congress can just pass a joint resolution increasing the P10,000 tax-free threshold to P50,000 and below to avoid a long-drawn legislative process.

If there’s one thing positive that came out of this controversy, it is the realization that we already have an obsolete Tariff and Customs Law. We should quickly amend this. But in the meantime, I think that the BOC should be more considerate as far as these balikbayan boxes are concerned. We can skip the normal process of legislating laws by simply passing a joint resolution amending the threshold for tax exemptions, Sarmiento said.

Sarmiento, meanwhile, expressed support for President Aquino’s decision to order BOC to stop opening balikbayan boxes unless x-ray and K-9 examinations indicate possible contraband items.

On his part, Barzaga questioned the untimely decision of the BOC to conduct inspections on balikbayan boxes.

Yes, it is a mandate of the BOC, but the perception of the people is that the BOC has x-ray machines so why the need to open the boxes? It is also very untimely because of the forthcoming Christmas season. Considering that it is election period, their actions will be subjected to scrutiny and adverse criticism, he said.

Also, I am sure that their decision is based on old law and many people are questioning why the inspections are done only now, why the BOC wants to impose the old law only now? said Barzaga.

X-ray machines

Liberal Party Rep. Roman Romulo of Pasig City said the BOC should run after syndicated smugglers, instead of nickel and diming the balikbayan boxes of OFWs.

It is embarrassing for the government to resort to a nickel-and-dime operation targeting our OFWs, ostensibly to fight smuggling, when in truth we have countless well-entrenched smugglers-of rice, fuel, sugar, pork, cigarettes, liquor and so on-roaming free, Romulo said.

Romulo has filed House Resolution 2311 seeking an inquiry into the BOC’s use of its intelligence funds meant to detect, identify and apprehend big smugglers and their coddlers.

He said the bureau has plenty of intelligence funds, which could be spent to pin down smugglers and interdict their contraband.

We want the [House] Ways and Means Committee to ascertain the manner by which the bureau has been spending its intelligence funds to run after these tax evaders and economic saboteurs, Romulo said.

LP Rep. Winston Castelo of Quezon City, chairman of the House Committee on Metro Manila Development, meanwhile, asked the BOC to use the modern x-rays that the bureau has purchased recently.

Also, the use of CCTV on suspicious packages will eliminate pilferage and smuggling. There are ways to deter crimes without tampering on the hard-earned gifts that OFWs send to their loved ones, Castelo said.

For Liberal Party Rep. Edcel Lagman of Albay, the BOC should subject all containers carrying balikbayan boxes to x-ray examination at every port of the country in lieu of random inspections.

Nationalist People’s Coalition Rep. Sherwin Gatchalian of Valenzuela said, The BOC should use technology such as x-ray machines to detect smuggling. The unscrupulous importers should be penalized, too.

Deputy Majority Leader and National Unity Party Rep. Magtanggol T. Gunigundo of Valenzuela also noted the importance of x-ray screening complemented by K-9 units.

The President’s instructions stand as a general policy. It goes without saying that in case of derogatory information, the BOC can still require specific importations to undergo x-ray and K-9 unit screening, Gunigundo said.

If the concern is drug smuggling, PDEA expertise can be used to build country profiles of ports of origin so that the BOC can be more exacting in validating derogatory information, he added.

Tighten control

Liberal Party Rep. Jerry Trenas of Iloilo said the BOC should tighten control on its Interline Baggage Release (IBR) in Naia if the bureau wants a successful crackdown against smuggling using balikbayan boxes.

Trenas said that, based on tips he received, it is in the IBR that balikbayan boxes containing smuggled items are being processed through an elaborate scheme and a network of collaborators to avoid detection by the BOC Intelligence and Enforcement Group.

Trenas added that, based on his information, smugglers would send balikbayan boxes from other countries as baggage and not cargo using their contacts in airline companies and using fictitious names and addresses.

The scheme is very complex. The baggage are checked in without any accompanying passengers. These smugglers have their contacts and insiders in airline companies so that it becomes possible for them to transport their contraband without the person whose name is in the baggage, Trenas said.

Upon reaching Naia, the baggage naturally would not have any claimant and, therefore, diverted to the IBR, which is basically an extension for the baggage-claim conveyor belt to accommodate unclaimed baggage, the lawmaker said.

On any given day, Trenas said, there are at least 500 to 1,000 kilos of these unclaimed baggage that end up in the IBR.

You can just imagine the extent of their operation. Three pieces of expensive iPhone 6 barely weigh one kilo, and we are talking about a ton of these small articles being smuggled into the country every single day, Trenas said.

Apart from highly sought gadgets and mobile-phone brands such as iPhone and Samsung, these baggage would contain small but expensive articles like signature bags, clothing, perfume, shoes, jewelry and even precious stones, he added.

Trenas said that through their contacts in the airline companies, the smugglers would be given the necessary claim stubs to be able to secure without any question the baggage that end up in the IBR, paying taxes on a per kilo basis and not on the appraised value of their contents.

This elaborate smuggling scheme does not just involve corrupt BOC personnel but it also involves some employees of carriers such as Philippine Airlines, Cebu Pacific, Cathay Pacific and China Southern, he said.

I think that the BOC should really put a stop to this practice and remove the IBR system. If a baggage is unclaimed, it should be immediately secured by the BOC and checked for possible contraband content, Trenas added.

The furor

The furor over the planned opening of balikbayan boxes refused to die down even though President Aquino had already ordered Lina to desist from going on with his plan.

The latest group to oppose Lina’s design is a coalition of OFW Party List and the Federation of Filipina Women in Italy. They have started a signature campaign in Rome and in key cities in Italy to signify their vehement opposition to the BOC’s plan to inspect the balikbayan boxes.

Despite the President’s order to stop balikbayan box inspections, the OFWs in Italy are still wary about the BOC plan. They are also protesting Lina’s announcement for additional taxes on their boxes, sent through door-to-door delivery by consolidated freight forwarders.

Several legislators have latched on the bandwagon to denounce the BOC, and one of them, Sen. Ferdinand Bongbong Marcos, had to remind Lina that the origin of the balikbayan box can be traced to the time of President Ferdinand Marcos when Section 105 of the Tariff and Customs Code of the Philippines was amended to provide duty- and tax-free privileges to OFWs so they can send personal effects, including gift items, to their families.

To the BOC, I ask: Have you no shame? For every OFW, a balikbayan box is the equivalent of his or her love letter to a spouse and the rest of the family. Every item inside that box was bought with a specific person and purpose in mind, bought for with the hard-earned money of our modern-day heroes. So if a single item there gets lost, can you imagine how that feels to an OFW who invested so much emotion and money just to get those goods home?

Not content with the initial victory over President Aquino’s order to stop the random inspection of balikbayan boxes, Migrante party list has called for a Zero Remittance Day to press the government to junk its P600-million revenue target from packages sent home by overseas Filipinos.

While saying they were pleased by Aquino’s order, Connie Bragas-Regalado, chairman of the party list that advocates the rights of OFWs, noted that the BOC had earlier blamed monthly losses of P50 million, or P600 million annually, from smuggled goods or nondeclared goods in balikbayan boxes for the controversial decision to subject the boxes to random inspections.

What is the real score behind this planned rummaging of the poor man’s Louis Vuitton that has reached cult status? A balikbayan box, measuring roughly one square meter, and invented in the 1980s to take advantage of the B747’s cavernous belly, combined with cheap fuel then, had sparked a revolution in the cargo-forwarding business.

At the airport

The BusinessMirror asked an official of the BOC at the Naia, Belinda C. Copioso, acting assistant chief of arrival, Operations Division. Her explanation is clear. Nothing is being violated by the BOC order and despite Lina’s or the President’s directives, the law on balikbayan boxes remains unequivocal: The BOC is legally allowed by law to subject not only balikbayan boxes but any piece of luggage that could potentially contain highly dutiable goods or drugs or any of the various illegal items that could be brought into the country.

All persons and baggage are subject to search anytime, according to Section 2210 and 2212 of the Tariff and Customs Code of the Philippines, as amended.

Section 100: All articles, when imported from any foreign country into the Philippines, shall be subject to duty upon their importation, even though previously, exported from the Philippines, except as otherwise specifically provided for in this Code or in other laws.

Passengers coming into the country should read this fine print in the Customs Declaration. This piece of document is given to each passenger to fill out, and includes not only the person’s identity but five questions such as bringing live animals and plants, legal tender in excess of P10,000, prohibited materials, regulated items such as CD, DVD, VCD; jewelry and electronic items; and articles that could be in violation of copyright laws.

At the Naia arrival area, Copioso said there are booths that are marked Red and Green. The booth marked green means that any passenger or OFW or balikbayan who has nothing to declare could go through without inspection.

The booth marked red means that those who have dutiable items should allow themselves to be subjected to inspection.

But there is a caveat. According to Copioso, not all of those who go through the green booths are scot-free. We still have the right to subject those boxes or pieces of luggage to random inspection, based on risk-management technique.

She said this is a worldwide practice, a kind of standard that applies to every passenger.

Section 105 of the Tariff and Customs Code says a balikbayan or OFW is entitled to bring in P10,000 worth of goods, with the exception of personal effects and used articles.

Copioso added that an additional privilege of P10,000 is given to those who bring in used appliances, provided it is one of its kind. If the amount exceeds P10,000, the passenger will pay ad valorem duty of 50 percent across the board. This means if a passenger brought in items worth P20,000, the amount of P10,000 would be subtracted and the remaining P10,000 is subject to taxation, which would be P10,000 multiplied by 50 percent. The tax would amount to P5,000.

She said the law defines a balikbayan as someone who stayed abroad continuously for six months or more.

She said those who went abroad to visit relatives and come back after less than six months must pay taxes for the items they bring in.

Profiling technique

According to Copioso, there are countries considered high risk because they are the sources of either taxable goods or drugs, so that passengers coming from these countries could expect to be subjected to examination at the Naia.

The high-risk countries are Hong Kong, Japan, the United States, Singapore, Bangkok, South Korea and China. From Hong Kong, South Korea and Singapore come expensive, highly taxable items, while the US is the source of guns, ammunition and related hot items. China and Bangkok are sources of illegal drugs.

The Middle East and Europe are low-risk countries.

The other profiling techniques Copioso revealed are derogatory information received from abroad. This pertains not only to passengers but also to cargoes, which could contain illegal items and therefore subject to scrutiny.

She said the BOC at the Naia opens balikbayan boxes that come through bonded warehouses only in the presence of the consignee or relatives of the consignee or duly appointed representatives such as licensed brokers.

The BOC will never open a balikbayan box without the presence of those mentioned above, Copioso said.

On the other hand, balikbayan boxes sent through door-to-door delivery by freight forwarders, or consolidators, are usually destined to major ports. Here they undergo examination in bulk.

At the sea port

Balikbayan boxes sent through freight forwarders pay from $50 to $60 per box, and the law says the content shall not be more than $500. Beyond this amount, the articles within are subject to taxation.

There are now bills in Congress calling to increase the tax exemption to $2,000.

The BOC reported that some 7.2 million balikbayan boxes arrive at the Manila International Container Port (MICP) and the Port of Manila every year. The sheer number of boxes, along with other cargoes, would pose a logistical problem by physically examining each box.

That is why the MICP and the Port of Manila resort to the use of huge x-rays and scanners to examine whole containers.

To speed things up, the consolidators and freight forwarders reportedly make arrangements of paying something like P200,000 to P300,000 per cargo container.

This is where smuggling occurs. Some unscrupulous importers, consolidators or freight forwarders allegedly would include highly taxable goods in the cargo containers.

These are the probable targets of Lina’s ire.

Observers say the public needs to bear with the BOC because it needs to think outside the box to safeguard revenues and public safety. So, while the inspection of balikbayan boxes sees to put the modern-day heroes at a disadvantage, it may just be one of those bitter pills that the country needs to swallow to be in a better shape.

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