SECTION 1. SCOPE. - Implements Section Nos. 130 and 131 of Title VI and Section 225 of Title VIII of the National Internal Revenue Code of 1997, as amended (Tax Code) to impose the modes of disposition of seized/forfeited articles.
“SEC. 131. Payment of Excise Taxes on Imported Articles. –
- Persons Liable. – Excise taxes on imported articles are paid to the Custom officers before its release from the customs house by the owner or importer, or by the person who is found in possession of the articles which are exempt from excise taxes other than those legally entitled to exemption.
Articles confiscated shall be destroyed using the most environmentally friendly method available in accordance with the rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioners of Customs and Internal Revenue.
SEC. 225. When Property to be Sold or Destroyed. – Sales of forfeited chattels and removable fixtures shall be effected in the same manner and condition as the public notice and the time and manner of sale as are prescribed for sales of personal property distrained for the non-payment of taxes.
Distilled spirits, liquors, cigars, cigarettes, other manufactured products of tobacco, and all apparatus used in or about the illicit production of such articles may, upon forfeiture, be destroyed by order of the Commissioner, when the sale of the same for consumption or use would be injurious to public health or prejudicial to the enforcement of the law.
All other articles subject to excise tax, which have been manufactured or removed in violation of this Code, as well as dies for the printing or making of internal revenue stamps and labels which are in imitation of or purport to be lawful stamps, or labels may, upon forfeiture, be sold or destroyed in the discretion of the Commissioner.
Forfeited property shall not be destroyed until at least twenty (20) days after seizure.”
SECTION 2. OBJECTIVE. - With the increasing enforcement operations on the illicit trade of cigarettes, vape, perfumes, toilet waters, sweetened beverages, and other locally manufactured and imported articles subject to excise tax that leads to confiscation, a need to dispose of such articles deemed either as injurious to public health or prejudicial to the enforcement of the law arises.
Thus, these Regulations are being issued to decongest the offices, facilities, or premises used for storage pursuant to the powers of the CIR provided under Section 225 of the Tax Code. Provided, however, the disposition of seized or forfeited articles shall adhere to the procedures hereunder.
SECTION 3. GENERAL PROVISIONS. –
- Seized/Forfeited Articles subject to Excise Tax During the Enforcement Operations, Relative to the Unlicensed/Illicit/Unauthorized Production, Importation, Trade, Sale, or Possession:
- Injurious to public health refers to articles that pose a threat or harm to the well-being of persons, encompassing physical health risks such as illness, injury or disease.
- Tobacco products, heated tobacco products, vapor products, novel tobacco products, cigars, and cigarettes, including but not limited to raw materials, packages, cigarette paper, tipping paper, cigarette filter tips, ingredients, used for their production
- Distilled spirits, wines and fermented liquors, including but not limited to, raw materials, packages, ingredients, used for their production; and
- Sweetened beverages, including but not limited to, raw materials, packages, ingredients, used for their production.
- Prejudicial to the enforcement of the law and other regulated articles refers to articles that obstruct or undermine the effective implementation of tax laws and revenue issuances. These include article that facilitate evasion of taxes or impede the implementation of laws and revenue issuances.
- Non-essential goods, such as but not limited to perfumes and toilet waters, jewelries, yachts and other vessels intended for pleasure or sports
- Manufactured oils and other fuels
- Automobiles
- Mineral products
- Machinery, equipment, apparatus, mechanical contrivances, and removable fixture of any sort used for their production
- All other articles subject to excise tax, which have been manufactured or removed in violation of this Code, as well as dies for the printing or making of internal revenue stamps and labels which are in imitation of or purport to be lawful stamps, or labels; and
- All other seized/forfeited articles in violation of the Tax Code.
- Modes of Disposition
Seized/forfeited articles referred to in the preceding section may be disposed in any of the following manner:
[See illustration on the next page]
| Mode of Disposition |
Definition |
Requirements |
| Public Auction |
Mode of sale of seized articles on behalf of the government to multiple buyers thru competitive bidding. |
None |
| Negotiated or Private Sale |
Sale of seized/forfeited articles that remain unsold after the conduct of two (2) failed public auctions that are not suitable either for official use or donation.
|
a. Conduct of two (2) failed public auctions; and
b. Prior approval of Secretary of Finance
Except:
In the case of personal properties, the aforementioned requirements may be dispensed with. |
| Official Use of the BIR |
Use of seized articles that are suitable for official use
|
Provided the following is present:
a. Unsold after conduct of two (2) public auctions
b. Declaration of CIR that the article is for official use; and
c. Prior approval of the Secretary of Finance |
| Donation |
Donation to another government agency of seized articles that are not suitable for official use, and which remain unsold after at least two (2) failed public auctions. |
Provided the following is present:
a. Unsold after conduct of two (2) public auction
b. Recommendation of the CIR; and
c. Once ascertained that Seized/Forfeited Articles are not suitable for official use of the BIR. |
| Destruction |
Removal, disposal and any other processes that render the seized/forfeited articles unusable, in an appropriate and most practicable manner if such are injurious to public health or prejudicial to the enforcement of the law. |
Order of the CIR or his/her duly authorized representative. |