June 14, 1991

CUSTOMS MEMORANDUM ORDER NO. 054-91

TO : All District/Port Collectors of Customs,

Others Concerned

SUBJECT : Formally Establishing the Interline Section and the In-Bond Section
under the Baggage Assistance Division, NAIA, and Supervision of the Operations of
Interline and Customs Baggage Rooms

I. OBJECTIVES:

1. To delineate the functions of the Interline Section and the In-Bond Section under
the Baggage Assistance Division; cd

2. To provide the requirements, conditions and operations of the Interline Baggage

Room (IBR) and the Customs Baggage Room (CBR); and

3. To ensure the security of the baggage/articles stored at the IBR and CBR.

II. GENERAL AND ADMINISTRATIVE PROVISIONS:

II.A Statement of Functions

II.A.1 Baggage Assistance Division

II.A.1.a Receives and stores articles, luggage held in bond by the Bureau;

II.A 1.b Supervises the storage of transit and unaccompanied luggage;

II.A.1.c Conducts inventory, examination and appraisal of in bond/interline

baggage and collects duties and taxes, if any;

II.A.1.d Recommends the institution of seizure and/or forfeiture proceedings

against cargo found to be misdeclared or under-valued, banned, prohibited, and
abandoned/unclaimed merchandise in accordance with Customs laws, rules and
regulations;

II.A.1.e Performs such other appropriate functions consistent with the assigned
tasks. cdasia

II.A.1.1. Interline Section

II.A.1.1.a Receives and handles the storage of the following kinds of baggage
placed at the IBR:
II.A.1.1.a.1 Mishandled Baggage

II.A.1.1a.1.1 Baggage tagged to foreign destination and erroneously off-loaded at

Manila;

II.A.1.1a.1.2 Baggage mistagged Manila and confirmed as such by a representative of

the airline concerned, within (24) hours upon arrival of aircraft;

II.A.1.1a.1.3 Baggage which arrived ahead or after the arrival of passenger-owner;

provided, however, that it is tagged Manila or with proper identifying marks and
confirmed as such by a representative of the airline concerned;

II.A.1.1a.1.4 Baggage tagged to Manila or other identifying marks, left unclaimed at the
Customs inspection area, to be matched against baggage traced or with a pending
claim. Unless otherwise directed by the District Collector of Customs or a duly
designated representative to be placed at the CBR.

II.A.1.1.a.2 Baggage/dutiable articles left and found on board an arriving aircraft with
flight terminating Manila.

II.A.1.1.a.3 Transit baggage or articles, checked or handcarried, belonging to transient

passengers deposited in bond for safekeeping during the passenger's stay in the
Philippines.

II.A.1.1.b Processes, examines and appraises baggage before the same are issued
to the Claimant;

II.A.1.1.c Conducts inventory on all baggage which have been left unclaimed for
purposes of abandonment proceedings.

II.A.1.2 In-Bond-Section

II.A.1.2.a Receives and handles the storage of the following kinds of baggage
placed at the CBR:

II.A.1.2.a.1 Baggage/articles held by Customs due to:

II.A.1.2.a.1.1 Insufficient funds for duties and taxes assessed; aisadc

II.A.1.2.a.1.2 Pending presentation of the received permit/clearance from the

government agency concerned; and

II.A.1.2.a.1.3 Violation of the Customs and tariff laws, as well as Central Bank rules and
regulations and other related laws.
II.A.1.2.a.2 Baggage that arrived on a flight without tag or other identifying marks left
unclaimed in the Customs inspection area, after prior notice has been given to the
airline concerned.

II.A.1.2.b Examines, conducts inventory and appraises all baggage held in bond
(except those with prior examination/appraisal made in the Customs Arrival Examination
Area) and recommends the following actions, to wit:

II.A.1.2.b.1 Release of baggage after payment of duties and taxes;

II.A.1.2.b.2 Referral to the Central Bank for clearance of those baggages whose value
is in excess of what is allowed without the need of Central Bank Release Authority;

II.A.1.2.b.3 Seizure of articles/baggage if warranted due to violation of existing rules

and regulations of the Central Bank, the Tariff & Customs Code of the Philippines and
other related laws, rules and regulations; and

II.A.1.2.b.4 Inventory/appraisal of baggage/articles which have remained unclaimed

for purposes of abandonment proceedings.

II.A.1.2.c Performs such other actions as may be required by the District Collector
Customs.

II.B. Conditions for the operations of the IBR and CBR:

II.B.1. Interline Baggage Room

II.B.1.a Operator — The IBR shall be operated by the Philippine Airlines Inc.,
hereinafter referred to as the Operator, which facility shall be under the immediate
supervision of the Interline Section, Baggage Assistance Division.

II.B.1.b Bond — The posting of an irrevocable domestic letter of credit, bank

guarantee or bond acceptable to the District Collector of Customs in the amount of One
Hundred Thousand Pesos (P100,000.00) to guarantee compliance by the Operator:

II.B.1.b.1 with the terms of this Order and such other terms and conditions
prescribed in connection therewith; cdtai

II.B.1.b.2 for the prompt payment of any loss or damage that may be sustained by
the Bureau of Customs or any person whomsoever resulting from causes due to
negligence in the operation of the IBR by the Operator.

II.B.1.c Extent of Liability for Loss or Damages, etc.

The Operator, shall upon formal receipt of the articles in the IBR, be held liable for any
loss or damage, theft, robbery, pilferage or embezzlement to the extent of the loss or
damage proportionate to the value declared by the owner or the airline's liability under
existing international agreement, whichever is lower. However, the Operator shall not be
held liable for articles susceptible to deterioration or decay, or damage previously
sustained and surveyed, or where the disintegration, deterioration or damage of the
contents is not visible or in any way determinable at the time or receipt in the IBR or
where the damage, loss or destruction is due to natural calamity or force majeure.

When found liable for the loss, damage, etc., under this Memorandum, the Operator
shall pay all the duties, taxes and other charges due in accordance with the Tariff and
Customs Code, as amended within thirty (30) days from demand for payment. Failure to
pay such duties, taxes and other charges within the said period shall be sufficient cause
for the revocation of the permit of the Operator.

II.B.1.d Period of Storage, Storage Charges and/or Service Fees

II.B.1.d.1 Baggage tagged to a foreign destination, erroneously off-loaded at NAIA

and/or baggage mistagged Manila shall remain in storage in the IBR for a period not
exceeding (30) days for matching with baggage under claim or search. If not forwarded
to its correct destination, within the prescribed storage period, said baggage shall be
reported to the District Collector for appropriate action.

II.B.1.d.2 Mishandled baggage indicated in Par. II.A.1.1.a.1 (3 & 4), and those left
and found on board an arriving aircraft, tagged/terminating Manila shall remain in
storage in the IBR for a period not exceeding (5) days for matching with baggage under
claim and search. Provided, that the District Collector may grant an extension of not
more than (5) days. If not restored to its owner within the prescribed period, the same
shall be inventoried and reported to the District Collector for appropriate action. cdtai

II.B.1.d.3 Baggage/articles deposited by transient passengers shall remain in

storage in the IBR for a period not exceeding (15) days from date of deposit, unless
prior notice was given that it will be stored for a period of more than (15) days. Any such
baggage not claimed within the prescribed storage period or an extension thereof shall
be reported to the District Collector for appropriate action.

II.B.1.d.4 The Operator may collect storage charges and/or service fees for
baggage/articles stored or deposited in the IBR. The rates and schedules of which shall
be established by the Operator, subject to the approval of the District Collector of
Customs.

II.B.1.e Free Access to all Authorized Customs Officer & Employees

II.B.1.e.1 The District Collector or his Authorized representative, while in the

performance of their official duties, shall have free access to the IBR.
II.B.1.e.2 The Operator shall present upon written acknowledgment any piece of
baggage or article therein that may be designated for examination and appraisement.

II.B.1.f Audit and Examination of Record — The District Collector of Customs or his duly
authorized representative, or the Auditor representing the Commission on Audit, shall,
during office hours, have the right to examine all the books of accounts and records of
the Operator maintained and kept in connection with the operation of the Interline
Baggage Room.

II.B.1.g Manual of Procedures — The Operator shall prepare a Manual of

Procedures with respect to the receiving, storage, custody, transfer, disposition, and
delivery of baggage/articles which shall be submitted to the District Collector of
Customs for approval within thirty (30) days from the date of effectivity of this
Memorandum Order.

II.B.1.h Liability of the Bureau of Customs and Its Personnel — In the operation of
the Interline Baggage Room, the Operator shall hold the Bureau of Customs, its officers
and employees, free and harmless from any and all claims on account of risks, losses
or damages that may be incurred in connection with baggage or articles received or
delivered to its owners or authorized claimants.

II.B.1.i Revocation, Rescission, Repeal, Etc. — The Commissioner of Customs

reserves the right to revoke, rescind, repeal, alter, amend, or modify, in whole or in part,
any and all provisions of this Memorandum Order after reasonable prior notice to the
Operator for just cause. cdt

II.B.2 Customs Baggage Room

II.B.2.a Operator — The CBR shall be operated by the Bureau of Customs under
the immediate supervision of the In-Bond Section, Baggage Assistance Division.

II.B.2.b Period of Storage — The storage and the disposition of baggage/articles

in the CBR shall be governed by the rules and regulations which have been or
hereinafter may by prescribed by the District Collector of Customs

II.C Working Hours/Overtime Services

The IBR and CBR shall be operational and made available at anytime to receive
baggage/articles for storage. The clearance and delivery of baggage/articles to its
owner or authorized claimant shall, except when specifically authorized by the District
Collector of Customs/Duty Collector, be limited to prescribed working hours on regular
working days. Overtime pay, transportation and meal allowance for the services
rendered outside the regular office hours in connection with the supervision of the IBR
and CBR shall be governed by existing regulations on overtime services.
III. OPERATIONAL PROVISIONS:

III.A. Interline Baggage Room

III.A.1 Receipt of Baggage for Storage

III.A.1.1 All baggage/articles for storage in the IBR shall be received by the
Customs Warehouseman and the Operator's Storekeeper, and shall jointly verify the
date, flight no., and baggage tag numbers, destination, weight, and the passenger's
name and address, if available, nothing there on the following:

III.A.1.1.a Visible or apparent damage to either outer container or contents of the

baggage or article which shall be appropriately secured;

III.A.1.1.b Other pertinent information relative to the condition or status of the

baggage/article. The Customs Warehouseman shall retain the duplicate copy of the
Unclaimed Baggage Report (marked as Annex A), and shall maintain his/her own
logbook where pertinent information on the receipt and release of baggage/articles
stored at the IBR shall be entered.

III.A.1.2 Baggage or articles which has been opened for examination and
appraisement but not release to the owner, the same shall be returned to the IBR after
having been re-checked, reweighed and re-sealed in the presence of the Customs
Examiner and the Operator's Storekeeper. cd

III.A.1.3 Baggage/articles shall at all times be within the custody and responsibility
of the Operator, except when the same has been temporarily transferred to the custody
of the Bureau of Customs for examination or for any other purpose and/or until the
same have been duly authorized for release by Customs and delivered to the owner or
authorized claimant.

III.A.2 Report of Unclaimed/Overstaying Baggage/Articles and Storage Charges

The Operator shall submit to the District Collector of Customs a monthly list of all
unclaimed or overstaying baggage or articles which has remained in the IBR beyond the
period of storage. Such baggage or articles shall be transferred to the Collector's Corral
until disposal thereof shall have been determined by the District Collector. Provided,
however, that when such unclaimed or overstaying baggage or article is eventually
claimed the same shall not be released from customs custody unless duties, taxes and
other charges, and the storage charges are paid.

III.A.3 Monthly Inventory Report — The Operator shall undertake monthly inventory of
the contents of the IBR, stating the following:

III.A.3.1 Date of Receipt of Baggage/Articles;

III.A.3.2 Condition of the Baggage/Article when received.

The District Collector and the airlines concerned shall be furnished copies of the Report.

III.A.4 Temporary Stoppage of Work, Effect — The Bureau of Customs in the interest of
the service shall take over the operation of the IBR in the event of a temporary work
stoppage due to labor dispute or for any other cause. During this period, the Bureau of
Customs shall have the authority to collect storage charges and/or service fees for the
account of the Operator and to make disbursements from such collection for all the
incidental and necessary expenses that may be incurred.

III.B. Customs Baggage Room

III.B.1 Receipt of Baggage/Articles for Storage

Receipt of baggage/articles held by Customs, placed at the CBR shall be effected in the
following manner:

A Held Baggage Receipt (HBR), marked as annex B, shall be prepared by the Customs
Examiner after examination and appraisal of the baggage/articles have been conducted.

The baggage shall be weighed prior to actual receipt of the same by the Customs
Warehouseman assigned at the CBR. Thereafter, the Customs Examiner, Customs
Appraiser, Duty Collector and the Warehouseman shall all affix their signature on the
HRR, which shall be distributed as follows:

original passenger

duplicate Baggage Assistance Division

triplicate Customs Data Monitoring Division

III.B.2 Report of Unclaimed/Overstaying Articles — The Chief, Baggage Assistance

Division shall submit to the District Collector a monthly list of all unclaimed or
overstaying articles/baggage which have remained in the CBR beyond the storage
period prescribed by the District Collector of Customs.

III.B.3 Monthly Inventory and Report — The In-Bond Section shall undertake the
monthly inventory of the contents of the CBR and shall report thereof, in a format
marked as Annex C. The same shall be prepared by the Customs Warehouseman
concerned, duly signed by the Customs Examiner, Customs Appraiser, the Chief,
Baggage Assistance Division, COA representative/Apprehending Officer, in case of
alerted cargoes.

IV. APPLICABILITY CLAUSE:

The provisions of this Memorandum Order shall apply to other international airports of
entry, whenever applicable.

V. REPEALING CLAUSE:

This Memorandum Order supersedes MIA Customs Memorandum Order No. 2-81
dated 3 March 1981.

VI. EFFECTIVITY

This Order shall take effect on June 14, 1991.

(SGD.) SALVADOR M. MISON

Commissioner