INTRODUCTION

The Ninoy Aquino International Airport (NAIA)-Customhouse, otherwise known as the Bureau of Customs (BOC), Collection District No. III is the third largest revenue generating port of the BOC. It is vested with the right of supervision and police authority over the country’s premier international airport. Formerly, the agency was only an extension office of the BOC, Port of Manila; however, it became a separate collection district on 16 September 1960 through the issuance of Customs Administrative Order No. 2149.

The Collection District’s principal missions are: to collect and protect revenue to fund government operations and projects; enforce customs and other related laws, rules and regulations; and serve the transacting public.

For the calendar year 1999, the NAIA-Customhouse reported a total collection of P8.703 billion, which comprised of P8.446 billion in cash collection and P0.257 billion from non-cash collection usually in the form of tax credit certificates and deferred payments. Despite a decline of P1.446 billion or 4.05% in the tax base of 1999 which only amounted to P34.231 billion as against P35.677 billion in 1998 and reduction in the tariff rates of some imports, through hardwork and concerted efforts of the NAIA-Customhouse’ rank and file, the collection target of P7.761 billion for the year 1999 was surpassed by P0.942 billion or 12.14%.

The NAIA-Customhouse, in addition to the unused fund transfer as of 31 December 1998 amounting to P9,363,828.53, received a total fund transfer of P162,009,979.05 from BOC (Main) in the year 1999. Out of the aggregate resources of P171,373,807.58, the agency spent P170,082,084.29, thereby showing an unexpended balance of P1,291,723.29 as of 31 December 1999.

SCOPE OF AUDIT

The audit covered the operations and financial transactions of the NAIA-Customhouse from 01 January 1999 to 31 December 1999 and also a part of the 1998 transactions due to some significant deficiencies that were noted in 1999. It was aimed at ascertaining whether customs duties, taxes and other fees, charges and penalties on dutiable goods were duly assessed, collected, receipted, accounted for and deposited to the interest earning savings account of the Treasurer of the Philippines with authorized government depository banks. Moreover, the audit evaluated the monitoring/control system of the agency in the custody and disposition of seized/forfeited and abandoned/unclaimed cargoes with the goal of identifying areas of improvements. Also, the audit delved into the internal control system of the collection district to ascertain whether resources were utilized in an economical, efficient, and effective manner and for the purposes for which these were intended.

To effectively address our audit undertakings, we focused our audit on collections of revenues.

SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS

Hereunder are the significant findings and observations discovered in the audit of the NAIA-Customhouse’ operations and financial transactions for the year ended 31 December 1999. Likewise, the corresponding recommendations are given to correct the deficiencies noted and to enhance the operations of the Collection District:

1. The agency’s monitoring of seized/forfeited goods was lax, thereby resulting to several losses. Likewise, control over abandoned cargoes was deficient that numerous shipments since 1996 are still at the different warehouses being left to deteriorate/depreciate instead of having these sold in public auction which could have generated additional revenue for the government.

Improve internal control on seized/forfeited and abandoned goods/cargoes by implementing the recommendations discussed in detail in Part II, Finding No. 1 of the attached report.

2. The NAIA-Customhouse could have generated additional revenue of P2,978,635.89 had its customs examiners, appraisers, and assessors strictly followed the provisions of CMO 20-88, CMO 24-95 and E. O. 736 implemented by CMO 58A-81 and had they exercised due care in the determination of customs duties, taxes and other fees on imported articles.

Instruct customs examiners, appraisers and assessors to strictly adhere to the provisions of CMO 20-88, CMO 24-95, and EO 736 implemented by CMO 58A-81, in determining the dutiable and taxable value of imported articles subject to customs duty, value added tax and other customs fees. Likewise, instruct customs examiners, appraisers and assessors to be extra-careful in their mathematical calculations of dutiable/taxable value of goods, so as to minimize under-assessments found in post-audit. Moreover, impose penalties/sanctions or reprimand those customs examiners, appraisers and assessors who willfully lessen the duties and taxes due the government.

3. Audit charges, disallowances and suspensions amounting to P7,179,990.78, P2,103,101.27 and P40,827, respectively remained unsettled in violation of Section 9.1 of the Revised Manual on Certificate of Settlement and Balances (CSB).

Direct the officials and employees liable therefor to effect the immediate settlement of the audit charges, disallowances and suspensions. If possible, deduct the amount charged from the salaries of concerned customs examiners, appraisers and assessors or require the person/s liable to send collection letters to consignees or importers to exact payment from them. Likewise, exert all efforts to identify the illegible signatures on Baggage Declarations/Import Entries to pinpoint accountability and in order to hasten the settlement of audit charges. On the other hand, instruct all examiners, appraisers and assessors to legibly affix their names on the Baggage Declarations/Import Entries. Also, direct the Collecting Officers not to accept the Baggage Declarations/Import Entries if the names of the examiners, appraisers and assessors are not legibly written. In case they failed to do so, their names will be included as among the persons liable.

4. The Invoice Receipts for Property were not accomplished by the Chiefs of the Customs Wharfinger of the different public bonded warehouses and by the Chief, In-bond when they were reshuffled/transferred contrary to Sections 104 and 449 of the Government Accounting and Auditing Manual Volumes I and II, respectively, thus total properties turned over from the outgoing to the incoming accountable officers were not determined.

Require the preparation of the Invoice Receipt for Property whenever there is a change of accountable officer. As far as the existing abandoned cargoes are concerned, direct the current Chiefs of the Wharfingers to inventory the same and have these turned over to Auction and Cargo Disposal Division for proper disposal. See to it that no reshuffling/transfer of accountable officers is effected without proper turn-over of accountability to pinpoint responsibility/liability.

The above findings and the corresponding recommendations were brought to the attention of the concerned officials and employees of the agency and their comments are included in the attached Report, where appropriate.

STATUS OF IMPLEMENTATION BY THE AUDITEE OF PRIOR YEARS’ AUDIT RECOMMENDATIONS