Republic of the Philippines le Ree EIVED A
HOUSE OF REPRESENTATIVES 3 DATE: AUG 0 5 uke
Quezon City

Eighteenth Congress
Second Regular Session

HOUSE BILL NO. 7272

Introduced by Congressman Deogracias Victor Savellano

EXPLANATORY NOTE

As tobacco excise taxes increase, illicit trade not only grew but it also evolved. From
2017, the illicit trade landscape has evolved. Rather than illicit products mainly coming from
one source, there are now several small to medium-sized illicit factories operating in various
parts of the Philippines. During raids conducted by both the Bureau of Internal Revenue and
Bureau of Customs, it has been observed that several of these smaller factories are principally
operated by foreign nationals. Based on available data shared with the House Committee on
Ways and Means, the number of illegal factories manufacturing cigarettes are increasing. From
two (2) illegal factories raided in 2016 and 2017, there were seven (7) factories raided in 2018
and an alarming twelve (12) factories in 2019. Based on conservative estimates, one line of
cigarette maker and packer can produce more than 3.6 million sticks of cigarettes per day or
about 43.68 million packs a year. At the current excise tax rate of P45 per pack, the government
is losing around P1.965 billion per one line of cigarette maker and packer.

The objective of HB Nos. 6507 and 6508 is to deter further illicit trade in order to revert
volumes to the legal market to boost revenue collection and to ensure that the local tobacco
industry shall continue and grow for our tobacco farmers and their families, our workers in the
processing and manufacturing plants and all stakeholders in our tobacco industry. The illegal
trade in tobacco is a knife that pierces the heart of the farmers and workers toiling in the fields
and at the factory floor, and that same knife cuts a gaping hole on the coffers of government.

The foregoing consolidated bill seeks to dull that knife by increasing penalties against
illicit traders by increasing penalties which under certain conditions shall be deemed non-
bailable. By doing so, that revolving door of arresting-then-releasing illicit traders on bail will
remain shut.

The consolidated bills also sharpen government's teeth to fight illicit trade by providing
the needed-resources for the task forces of the BIR and BOC to sustain their enforcement
measures against illicit traders.

In view of the forgoing, the passage of this bill is earnestly soughy

HON. DEOGRACIAS
Republic of the Philipy

‘OR “DV” B. SAVELLANO.

AUG 0 5 2020


HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
Second Regular Session

HOUSE BILL NO. 7272

Introduced by Congressman Deogracias Victor Savellano

AN ACT TO STRENGTHEN LAWS AGAINST THE ILLICIT TRADE OF TOBACCO
PRODUCTS AND RELATED RAW MATERIALS BY AMENDING SECTIONS 3 AND
4 OF REPUBLIC ACT NO. 10845, OTHERWISE KNOWN AS THE ANTI-
AGRICULTURAL SMUGGLING ACT OF 2016, AMENDING SECTION 1141 AND
CREATING A NEW SECTION 1700-A OF REPUBLIC ACT NO. 10863, OTHERWISE
KNOWN AS THE CUSTOMS MODERNIZATION AND TARIFF ACT, AMENDING
SECTIONS 129, 131, 156, 159, 225, 275 AND 288 OF REPUBLIC ACT NO. 8424, AS
AMENDED, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE
CODE OF 1997, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 3 of Republic Act No. 10845 or the Anti-Agricultural Smuggling
Act of 2016 is hereby further amended to read as follows:

SEC. 3. Large-Scale Agricultural Smuggling as Economic Sabotage. ~ The
crime of large-scale agricultural smuggling as economic sabotage, involving sugar,
corn, pork, poultry, garlic, onion, carrots, fish, and cruciferous vegetables, in its raw
state, or which have undergone the simple processes of preparation or preservation for
the market, with a minimum amount of one million pesos (P1,000,000.00), or rice, with
a minimum amount of ten million pesos (P10,000,000.00), OR TOBACCO,
WHETHER MANUFACTURED OR UNMANUFACTURED, INCLUDING
FINISHED PRODUCTS SUCH AS CIGARS, CIGARETTES OR HEATED
TOBACCO PRODUCTS, WITH A MINIMUM EXCISE TAX AND VAT
PAYABLE IN THE AMOUNT OF FIFTY MILLION PESOS (P50,000,000.00),
as valued by the Bureau of Customs (BOC), is committed through any of the following
acts:

(a) Importing or bringing into the Philippines without the required
import permit from the regulatory agencies;

(b) Using import permits of persons, natural or juridical, other than
those specifically named in the permit;

(c) Using fake, fictitious or fraudulent import permits or shipping
documents;

(d) Selling, lending, leasing, assigning, consenting or allowing the use
‘of import permits of corporations, nongovernment organizations,


associations, cooperatives, or single proprietorships by other
persons;

(¢) Misclassification, undervaluation or misdeclaration upon the filing
of import entry and revenue declaration with the BOC in order to
evade the payment of rightful taxes and duties due to the
government;

(f) Organizing or using dummy corporations, nongovernment
organizations, associations, cooperatives, or single proprietorships
for the purpose of acquiring import permits;

(g) Transporting or storing the agricultural product subject to economic
sabotage regardless of quantity;

(h) Acting as broker, AGENT, FACILITATOR, FORWARDER,

OR LESSOR OF A WAREHOUSE, BUILDING, LAND OR

STRUCTURE WHERE THE AGRICULTURAL PRODUCT

MAY BE FOUND/OR STORED, of the violating importer;

ALLOWING THE USE OF A PRIVATE PORT, FISH PORT,

FISH LANDING SITE, RESORT, AND/OR AIRPORT TO

PERPETUATE THE ECONOMIC — SABOTAGE

REGARDLESS OF QUANTITY

(j) MANUFACTURING OR IMPORTING _ FINISHED
PRODUCTS SUCH AS CIGARETTES, CIGARS, AND
HEATED TOBACCO PRODUCTS, THAT ARE NOT
REGISTERED WITH THE BUREAU OF INTERNAL
REVENUE. FOR THIS PURPOSE, THE BUREAU OF
INTERNAL REVENUE SHALL PUBLISH AND
REGULARLY UPDATE THE LIST OF FINISHED GOODS
THAT ARE REGISTERED IN THEIR OFFICE, STATING
THEREIN THAT ALL UNREGISTERED PRODUCTS ARE
ILLEGAL AND ARE SUBJECT TO IMMEDIATE
CONFISCATION.

(k) MANUFACTURED TOBACCO REFERS TO ANY
PRODUCT THAT CONSISTS OF LOOSE TOBACCO THAT
CONTAINS NICOTINE AND IS INTENDED FOR USE IN A
CIGARETTE, INCLUDING ANY PRODUCT CONTAINING
TOBACCO AND INTENDED FOR SMOKING OR HEATING
OR PUFFING OR ORAL OR NASAL USE.
UNMANUFACTURED TOBACCO REFERS TO.
AGRICULTURAL COMPONENTS DERIVED FROM THE
TOBACCO PLANT, WHICH ARE PROCESSED FOR USE IN
THE MANUFACTURING OF CIGARETTES AND OTHER
TOBACCO PRODUCTS.

di

SECTION 2. Section 4 of Republic Act No. 10845 or the Anti-Agricultural Smuggling
Act of 2016 is hereby further amended to read as follows:

SEC. 4. Penalties. - (a) The penalty of life imprisonment and a fine of twice the
fair value of the smuggled agricultural product and the aggregate amount of the
taxes, duties and other charges avoided shall be imposed on any person who


commits any of the acts enumerated under Section 3 of this Act. HOWEVER,
IN THE CASE OF TOBACCO PRODUCTS, WHETHER
MANUFACTURED OR UNMANUFACTURED, THE PENALTIES TO
BE IMPOSED ARE THOSE SPECIFIED UNDER PARAGRAPH (E) OF
THIS SECTION.

(b) The penalty of imprisonment of not less than seventeen (17) years but not
more than twenty (20) years, and a fine of twice the fair value of the smuggled
agricultural product and the aggregate amount of the taxes, duties and other
charges avoided shall be imposed on the officers of dummy corporations,
nongovernment organizations, associations, cooperatives, or _ single
proprietorships who knowingly sell, lend, lease, assign, consent or allow the
unauthorized use of their import permits for purposes of smuggling.

(c) The penalty of imprisonment of not less than fourteen (14) years but not
more than seventeen (17) years and a fine equal to the fair value of the smuggled
agricultural product and the aggregate amount of the taxes, duties and other
charges avoided shall be imposed on the following:

(1) The registered owner and its lessee or charterer, in case of lease, of
a chartered boat, motorized commercial vessel of more than three (3)
gross tonnage, who knowingly transports the agricultural product
subject to economic sabotage, regardless of quantity;

(2) The registered owner and its lessee, in case of lease of six (6) or more
wheeler trucks, vans and other means of transportation, who knowingly
transports the agricultural product subject to economic sabotage,
regardless of quantity;

(3) The registered owner and lessee of a warehouse, or any property,
who knowingly stores the smuggled agricultural product subject to
economic sabotage; or

(4) The registered owner, lessee, president or chief executive officer of
the private port, fish port, fish landing sites, resorts, and airports who
knowingly allows the agricultural product to be smuggled into the
country.

(d) The penalty of imprisonment of not less than twelve (12) years but not more
than fourteen (14) years and a fine equal to the fair value of the smuggled
agricultural product subject to economic sabotage and the aggregate amount of
the taxes, duties and other charges avoided shall be imposed on the following:

(1) The registered owner and its lessee or charterer, in case of lease, of
a chartered boat, motorized commercial vessel of three (3) gross tonnage
or less, who knowingly transports the agricultural product subject to
economic sabotage, regardless of quantity; or

(2) The registered owner and its lessee, in case of lease, of less than six
(6) wheeler trucks, vans and other means of transportation, who


knowingly transports the agricultural product subject to economic
sabotage, regardless of quantity.

(E) THE PENALTY OF IMPRISONMENT OF NOT LESS THAN
THIRTY (30) YEARS BUT NOT MORE THAN FORTY (40) YEARS
AND A FINE OF TWICE THE FAIR VALUE AND THE AGGREGATE
AMOUNT OF THE TAXES, DUTIES AND OTHER CHARGES
EVADED OF THE SMUGGLED TOBACCO, WHETHER
MANUFACTURED OR  UNMANUFACTURED, INCLUDING
FINISHED PRODUCTS SUCH AS CIGARS, CIGARETTES OR
HEATED TOBACCO PRODUCTS, WITH A MINIMUM AMOUNT OF
ONE HUNDRED MILLION PESOS (P100,000,000.00), SHALL BE
IMPOSED ON THE FOLLOWING:

(1) |THE REGISTERED OWNER AND ITS LESSEE OR
CHARTERER, IN CASE OF LEASE, OF A CHARTERED BOAT,
MOTORIZED COMMERCIAL VESSEL, WHO KNOWINGLY
TRANSPORTS THE TOBACCO PRODUCT SUBJECT TO
ECONOMIC SABOTAGE, REGARDLESS OF QUANTITY;

(2) | THE REGISTERED OWNER AND ITS LESSEE, IN CASE
OF LEASE OF TRUCKS, VANS AND OTHER MEANS OF
TRANSPORTATION, WHO KNOWINGLY TRANSPORTS THE
TOBACCO PRODUCT SUBJECT TO ECONOMIC SABOTAGE,
REGARDLESS OF QUANTITY;

(3) THE REGISTERED OWNER AND LESSEE OF A
WAREHOUSE, OR ANY PROPERTY, WHO KNOWINGLY
STORES THE SMUGGLED TOBACCO PRODUCT SUBJECT
TO ECONOMIC SABOTAGE; OR

(4) | THE REGISTERED OWNER, LESSEE, PRESIDENT OR
CHIEF EXECUTIVE OFFICER OF THE PRIVATE PORT, FISH
PORT, FISH LANDING SITES, RESORTS, OR AIRPORTS
WHO KNOWINGLY ALLOWS THE TOBACCO PRODUCT TO
BE SMUGGLED INTO THE COUNTRY.

PROVIDED, THAT FOR PURPOSES OF THIS ACT, THE
OFFENSE UNDER THIS PARAGRAPH SHALL BE NON-BAILABLE.

In all cases, the smuggled agricultural products shall be confiscated and the
property used in agricultural smuggling, consistent with Section 2530 of the
CUSTOMS MODERNIZATION AND TARIFF ACT and without prejudice
to Section 2531 of the same ACT, shall be forfeited in favor of the government.

PROVIDED, HOWEVER, THAT THE GOVERNMENT MAY MOVE
FOR THE SALE OF PERISHABLE AGRICULTURAL PRODUCTS,
EXCLUDING MANUFACTURED AND FINISHED TOBACCO,
DURING THE PENDENCY OF THE CRIMINAL PROCEEDINGS.


THE PROCEEDS OF THE AUCTION SHALL BE HELD IN ESCROW
UNTIL THE FINAL RESOLUTION OF THE PROCEEDINGS.

PROVIDED FURTHER, THAT THE CONFISCATED
MANUFACTURED TOBACCO AND FINISHED TOBACCO
PRODUCTS UNDER THIS ACT SHALL BE DISPOSED BY
DESTRUCTION AFTER SUMMARY PROCEEDINGS, IN SUCH
MANNER AS THE CASE MAY REQUIRE AS TO RENDER THEM
ABSOLUTELY WORTHLESS, IN THE PRESENCE OF A
REPRESENTATIVE FROM THE DEPARTMENT OF JUSTICE,
BUREAU OF CUSTOMS AND, IF POSSIBLE, A REPRESENTATIVE
OF THE AFFECTED PRIVATE STAKEHOLDER AFTER BEING
GIVEN NOTICE, WITH THE ALLOWANCE OF RETENTION OF
REPRESENTATIVE SAMPLES FOR FURTHER CRIMINAL
PROSECUTION.

When the offender is a juridical person, criminal liability shall attach to its
president, chief operating officer or manager who consents to or knowingly
tolerates the commission of the prohibited crime.

Any person, natural or juridical, found guilty under this Act shall also suffer the
penalty of perpetual absolute disqualification to engage in any business
involving importation.

In applying the abovementioned penalties, if the offender is an alien and the
prescribed penalty is not life imprisonment, he/she shall be deported after
serving the sentence without further proceedings for deportation.

If the offender is a government official or employee, the penalty shall be the
maximum as hereinabove prescribed and the offender shall suffer an additional
penalty of perpetual disqualification from public office, to vote and to
participate in any public election.

SECTION 3. Section 1141 of the Customs Modernization and Tariff Act (CMTA) is
hereby further amended to read as follows:

See. 1141. Mode of Disposition. — The goods subject to disposition may be
donated to another government agency or declared for official use of the Bureau,
after approval of the Secretary of Finance, or sold at a public auction within
thirty (30) days after a ten (10)-day notice posted at a public place at the port
where the goods are located and published electronically or in a newspaper of
general circulation

“DISTILLED SPIRITS, LIQUORS, WINES, CIGARS, CIGARETTES,
HEATED TOBACCO PRODUCTS, OTHER MANUFACTURED
PRODUCTS OF TOBACCO, AND ALL APPARATUS USED IN OR
ABOUT THE ILLICIT PRODUCTION OF SUCH ARTICLES,
REGARDLESS IF THE SAME CAN BE USED FOR ANY OTHER
LEGITIMATE PURPOSE, SHALL, UPON FORFEITURE, BE
IMMEDIATELY DESTROYED BY ORDER OF THE


COMMISSIONER, AND SHALL BE PROHIBITED TO BE DISPOSED
OF IN ANY OTHER MANNER”

For purposes of donating the goods as above described, goods suitable for
shelter or consisting of foodstuffs, clothing materials or medicines may be
donated to the DSWD.

SECTION 4. A new section designated as Section 1700-A of the Customs
Modernization and Tariff Act (CMTA) is hereby inserted to read as follows:

SEC. 1700-A. SPECIAL TASK FORCE AGAINST ILLICIT
TRADE OF EXCISABLE PRODUCTS. TO FURTHER CURTAIL THE
PROLIFERATION OF ILLICIT TRADE OF EXCISABLE PRODUCTS
SUCH AS TOBACCO, HEATED TOBACCO PRODUCTS, ALCOHOL,
PETROLEUM, SUGAR-SWEETENED BEVERAGES,
AUTOMOBILES, MINERAL PRODUCTS AND OTHER NON-
ESSENTIAL GOODS, THE BUREAU OF CUSTOMS SHALL
INSTITUTIONALIZE A TASK FORCE AGAINST ILLICIT TRADE OF
EXCISABLE PRODUCTS. THE TASK FORCE SHALL ACT AS THE
LEAD AND POINT COORDINATOR OF ALL OF THE BUREAU’S
ENFORCEMENT ACTIVITIES AGAINST COUNTERFEIT OR
SMUGGLED EXCISABLE PRODUCTS, MACHINES, EQUIPMENT,
COMPLEMENTS AND OTHER RAW MATERIALS IMPORTED FOR
THE ILLEGAL MANUFCATURE OF EXCISABLE PRODUCTS.

AN AMOUNT OF NOT LESS THAN TWO HUNDRED MILLION
PESOS (P200,0000,000.00) ANNUALLY SHALL BE EARMARKED FOR
THE TASK FORCE. THE TASK FORCE SHALL BE COMPOSED OF
BUREAU OFFICIALS AND EMPLOYEES HOLDING
CONFIDENTIAL OR PERMANENT POSITIONS. THE FUNDS
ALLOTTED SHALL BE USED PRIMARILY ON THE FOLLOWING:

a) SALARIES OR ADDITIONAL PAY FOR MEMBERS OF
ENFORCEMENT TEAMS;

b) PURCHASE OF PROTECTIVE GEAR DURING
ENFORCEMENT ACTIONS;

c) TRANSPORT, HAULING, WAREHOUSE AND
DESTRUCTION EXPENSES OF SEIZED ILLICIT
FINISHED GOODS, RAW MATERIALS AND MACHINES,
INCLUDING THE HIRING OF THIRD PARTY SECURITY
SERVICE PROVIDERS FOR THE STORAGE FACILITIES;

d) FUNDS FOR INTELLIGENCE GATHERING AND

SURVEILLANCE OPERATIONS;

VEHICLES, FUEL, MEAL ALLOWANCES AND OTHER

OPERATING EXPENSES DURING ENFORCEMENT

ACTIONS;

f) TRAINING FUNDS FOR INTELLIGENCE GATHERING
AND SURVEILLANCE OPERATIONS.

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THE TASK FORCE SHALL SUBMIT AN ANNUAL REPORT TO
THE COMMISSIONER OF CUSTOMS AS WELL AS TO THE
SECRETARY OF FINANCE. SUCH REPORT SHALL ALSO BE
SUBMITTED TO THE JOINT CONGRESSIONAL OVERSIGHT
COMMITTEE CREATED UNDER SECTION 1700 OF THE
CUSTOMS MODERNIZATION AND TARIFF ACT.

SECTION 5. Section 129 of the National Internal Revenue Code of 1997, as amended,
is hereby further amended to read as follows:

“SEC.129. Goods subject to Excise Taxes. - Excise taxes apply to goods
manufactured or produced in the Philippines for domestic sales or consumption
or for any other disposition and to things imported. The excise tax imposed
herein shall be in addition to the value-added tax imposed under Title IV.

For purposes of this Title, excise taxes herein imposed and based on
weight or volume capacity or any other physical unit of measurement shall be
referred to as ‘specific tax’ and an excise tax herein imposed and based on selling
price or other specified value of the good shall be referred to as ‘ad valorem
tax!

THE BUREAU SHALL EXERCISE REGULATORY
AUTHORITY OVER ALL ARTICLES SUBJECT TO EXCISE TAX
INCLUDING THOSE PRODUCED OR KEPT IN AREAS DEEMED OR
MANAGED AS SEPARATE CUSTOMS TERRITORIES SUCH AS BUT
NOT LIMITED TO SPECIAL ECONOMIC ZONES, ECONOMIC
ZONES AND FREEPORTS. PENDING INVESTIGATION OF
VIOLATIONS OF THIS TITLE, THE LICENSES OF LOCATORS
OPERATING INSIDE SUCH SPECIAL ECONOMIC ZONES,
ECONOMIC ZONES AND FREEPORTS, SHALL BE SUSPENDED
AND THEREAFTER REVOKED AFTER THE COMMISSION OF THE
OFFENSE IS ESTABLISHED BY THE BUREAU.”

SECTION 6. Section 131 of the National Internal Revenue Code as amended by RA
9334 and 10351 should be amended to read as follows:

(A) Persons Liable. - Excise taxes on imported articles shall be paid by the
owner or importer to the Custom Officers, conformably with the regulations of
the Department of Finance and before the release of such articles from the
‘customs house, or by the person who is found in possession of articles which
are exempt from excise taxes other than those legally entitled to exemption.

In the case of tax-free articles brought or imported into the Philippines by
persons, entities, or agencies exempt from tax which are subsequently sold,
transferred or exchanged in the Philippines to non-exempt persons or entitles,
the purchasers or recipients shall be considered the importers thereof, and shall
be liable for the duty and internal revenue tax due on such importation.


The provision of any special or general law to the contrary notwithstanding, the
importation of cigars and cigarettes, distilled spirits, fermented liquors and
wines, into the Philippines, even if destined for tax and duty-free shops shall be
subject to all applicable taxes, duties, charges including excise taxes AND VAT
due thereon. THE SAME TAXES, DUTIES AND CHARGES shall apply to
cigars and cigarettes, distilled spirits, fermented liquors, and wines brought
directly IMPORTED, TRANSHIPPED THROUGH, or DELIVERED TO,
AREAS CREATED, MANAGED AND OPERATED AS SEPARATE
CUSTOMS TERRITORIES SUCH AS BUT NOT LIMITED TO the duly
chartered or legislated ECONOMIC ZONES of the Subic Special Economic
Zone AND CLARK SPECIAL ECONOMIC ZONE;created under Republic
Act No. 7227, The Cagayan Special Economic Zone and Freeport created under
Republic Act No. 7922, Zamboanga City Special Economic Zone created under
Republic Act 7903, TAWI SPECIAL ECONOMIC ZONE AND
INTERNATIONAL CONTAINER PORT, AREAS ESTABLISHED AS
SEPARATE CUSTOMS TERRITORIES UNDER THE PHILIPPINE
SPECIAL ECONOMIC ZONE ACT OR REPUBLIC ACT 7915 AS
AMENDED, and ALL such other AREAS THAT ARE OR HEREAFTER
CREATED, MANAGED AND OPERATED AS SEPARATE CUSTOMS
TERRITORIES. Provided, further, That notwithstanding the provisions of
Republic Act Nos. 9400 and 9593, importations of cigars and cigarettes,
distilled spirits, fermented liquors and wines made directly by a government-
owned and operated duty-free shop, like the Duty-Free Philippines (DFP), shall
be exempted from all applicable duties only: Provided, still further, That such
articles directly imported by a government-owned and operated duty-free shop,
like the Duty-Free Philippines, shall be labeled ‘duty-free’ and 'not for resale’:
Provided, finally, That the removal and transfer of tax and duty-free goods,
products, machinery, equipment and other similar articles other than cigars and
cigarettes, distilled spirits, fermented liquors and wines, from one freeport to
another freeport, shall not be deemed an introduction into the Philippine
customs territory."

Cigars and cigarettes, distilled spirits and wines within the premises of all duty-
free shops which are not labelled as hereinabove required, as well as tax and
duty-free articles obtained from a duty-free shop and subsequently found in a
non-duty-free shop to be offered for resale shall be confiscated, and the
perpetrator of such non-labelling or re-selling shall be punishable under the
applicable provisions of this Code.

Articles confiscated shall be destroyed using the most environmentally friendly
methods available in accordance with the rules and regulations to be
promulgated by the Secretary of Finance upon the recommendations of the
Commissioners of Customs and Internal Revenue

‘The tax due on any such goods, products, machinery, equipment or other similar
articles shall constitute a lien on the article itself, and such lien shall be superior
to all other charges or liens, irrespective of the possessor thereof.


SECTION 7. Section 156 of the National Internal Revenue Code of 1997, as amended,
is hereby further amended to read as follows:

SEC. 156. Labels and Form of Packages. - All articles of domestic
manufacture subject to excise tax and all leaf tobacco shall be put up and
prepared by the manufacturer or producer, when removed for sale or
consumption, in such packages only and bearing such marks or brand as shall
be prescribed in the rules and regulations promulgated by the Secretary of
Finance; and goods of similar character imported into the Philippines shall
likewise be packed and marked in such a manner as may be required

PROVIDED THAT, IN THE CASE OF TOBACCO PRODUCTS
INCLUDING CIGARS, CIGARETTES AND HEATED TOBACCO
PRODUCTS BEARING LABELS WITH BRANDS NOT REGISTERED
WITH THE BIR, PERSONS WHO POSSESS, IMPORT, OR
MANUFACTURE SUCH PRODUCTS, SHALL SUFFER
IMPRISONMENT OF RECLUSION PERPETUA AND A FINE OF AT
LEAST TWENTY MILLION PESOS OR UP TO TEN TIMES THE
AMOUNT OF EXCISE TAXES EVADED, WHICHEVER IS HIGHER,
WHEN THE EXCISEABLE VALUE OF SUCH PRODUCTS BEARING
NON BIR-REGISTERED BRANDS IS AT LEAST FIFTY MILLION
PESOS.

SECTION 8. Section 159 of the National Internal Revenue Code of 1997, as amended,
is hereby further amended to read as follows:

“SEC. 159. Proof of Exportation; Exporter's Bond. - Exporters of goods that
would be subject to excise tax, if sold or removed for consumption in the
Philippines, shall submit proof of exportation satisfactory to the Commissioner,
and, when the same is deemed necessary, shall be required to give a bond prior
to the removal of the goods for shipment, conditioned upon the exportation of
the same in good faith. NO EXPORTERS BOND SHALL BE RELEASED,
NO CLAIM FOR PRODUCT REPLENISHMENT SHALL BE
ALLOWED, AND NO APPLICATION FOR THE REFUND FOR
EXCISE TAXES, SHALL BE GRANTED UNLESS PROOF OF
PAYMENT OF IMPORT DUTIES AND OTHER APPLICABLE TAXES
IMPOSABLE ON THE EXCISABLE GOODS AT THE PORT OF
DESTINATION SHALL BE PRESENTED BY THE EXPORTER TO
THE BUREAU.”

SECTION 9. Section 225 of the National Internal Revenue Code of 1997, as amended,
is hereby further amended to read as follows:

SEC. 225. When Property to be Sold or Destroyed. - Sales of forfeited
chattels and removable fixtures shall be effected, so far as practicable, in the
same manner and under the same conditions 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
SHALL, 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 SHALL, 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 10: Section 275 of the National Internal Revenue Code is hereby amended
to read as follows:

SEC. 275. Violation of Other Provisions of this Code or Rules and
Regulations in General AND NON BAILABLE OFFENSES. - Any person
who violates any provision of this Code or any rule or regulation promulgated
by the Department of Finance, for which no specific penalty is provided by law,
shall, upon conviction for each act or omission, be punished by a fine of not
more than One thousand pesos (P1,000) or suffer imprisonment of not more
than six (6) months, or both.

THE FOLLOWING ACTS SHALL BE DEEMED NON-BAILABLE
OFFENSES AND SHAL BE PUNISHED BY RECLUSION PERPETUA
AND A FINE OF AT LEAST FIFTY MILLION PESOS (P50,000,000.00)
OR UP TO TEN (10) TIMES THE VALUE OF THE EXCISE TAX
EVADED.

a) WHEN A PERSON HAS NO WRITEN PERMIT REQUIRED UNDER
SECTION 164 TO MANUFACTURE OR IMPORT, AND WHEN THE
OFFENDER POSSESESS ANY CIGARETTE PAPER, CIGARETTE
TIPPING PAPER, CIGARETTE FILTER TIPS, TOBACCO LEAF,
RAW MATERIALS, MACHINES OR MECHANICAL CONTRIVANCE,
AND FINISHED TOBACCO PRODUCTS (BASED ON EXCISE AND
VAT DUE), WITH A CUMULATIVE VALUE OF AT LEAST FIFTY
MILLION PESOS (P50,000,000.00).

b) WHEN A PERSON HAS POSESSION OF
FALSE/COUNTERFEIT/RECYCLED TAX STAMPS IN EXCESS OF A
CUMULATIVE AMOUNT OF FIFTY MILLION PESOS
(P50,000,000.00) WITHOUT AUTHORIZATION FROM THE
COMMISSIONER.

c) WHEN A PERSON POSSESSES, IMPORTS, OR MANUFACTURES
TOBACCO PRODUCTS INCLUDING CIGARS, CIGARETTES AND
HEATED TOBACCO PRODUCTS BEARING LABELS WITH BRANDS


NOT REGISTERED WITH THE BIR, AND WHEN THE EXCISEABLE
VALUE OF SUCH PRODUCTS BEARING NON BIR-REGISTERED
BRANDS IS AT LEAST FIFTY MILLION PESOS (P50,000,000.00).

THE FOLLOWING ACCUSED PERSONS SHALL BE HELD LIABLE
AND DETAINED WHEN THE OFFENSE COMMITTED IS NON-
BAILABLE,

a) IN THE CASE OF ASSOCIATIONS, PARTNERSHIPS OR
CORPORATIONS, THE PARTNER, PRESIDENT, GENERAL
MANAGER, BRANCH MANAGER, TREASURER, AND OFFICER-IN-
CHARGE.

b) IN THE CASE OF SINGLE PROPRIETORSHIPS, THE PROPRIETOR
WHETHER REGISTERED OR NOT WITH THE DTI SHALL BE HELD
LIABLE FOR THE OFFENSE

ANY PERSON, NATURAL OR JURIDICAL, FOUND GUILTY UNDER
THIS ACT SHALL ALSO SUFFER THE PENALTY OF PERPETUAL
ABSOLUTE DISQUALIFICATION TO ENGAGE IN ANY BUSINESS
INVOLVING THE MANUFACTURE, DISTRIBUTION OR
IMPORTATION OF TOBACCO PRODUCTS.

IN APPLYING THE ABOVEMENTIONED PENALTIES, IF THE
OFFENDER IS A FOREIGN NATIONAL, HE/SHE SHALL BE
DETAINED WITHOUT BAIL FROM THE TIME OF ARREST OR
VOLUNTARY SURRENDER UNTIL THE TERMINATION OF THE
CRIMINAL PROCEEDINGS FOR THE VIOLATION OF THIS
SECTION. MOREOVER, HE/SHE SHALL NOT BE DEPORTED
UNTIL AFTER HE/SHE IS ACQUITTED OF THE OFFENSE OR
AFTER HE/SHE HAD SERVED THE SENTENCE.

SECTION 11. Section 288-A of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

SEC. 288-A. Disposition of Revenues from Excise Tax on Sweetened
Beverages, Alcohol, Tobacco Products, Heated Tobacco Products, and
Vapor Products. -

(A) Revenues from Excise Tax on Sweetened Beverages from Republic Act No.
10963. - xxx

(B) xxx
(C)Revenues from Excise Tax on Tobacco Products. ~ The provision of existing

laws to the contrary notwithstanding, the total revenues collected from the
excise tax on tobacco products shall be distributed in the following manner:


(1) xxx;
(2) xxx;

(3) TO FURTHER CURTAIL THE PROLIFERATION OF ILLICIT TRADE
OF TOBACCO PRODUCTS, THE BUREAU OF INTERNAL REVENUE
SHALL INSTITUTIONALIZE THE STRIKE TEAM ON ILLICIT
TRADE OF TOBACCO PRODUCTS. THE STRIKE TEAM SHALL
ACTS AS THE LEAD AND POINT COORDINATOR OF ALL OF THE
BUREAU’S ENFORCEMENT ACTIVITIES AGAINST LOCALLY
MANUFACTURED COUNTERFEIT TOBACCO PRODUCTS.

AN AMOUNT OF NOT LESS THAN TWO HUNDRED MILLION
PESOS (P200,000,000.00) ANNUALLY SHALL BE EARMARKED FOR
THE TASK FORCE. THE STRIKE TEAM SHALL BE COMPOSED OF
BUREAU OFFICIALS AND EMPLOYEES HOLDING PERMANENT
POSITIONS. THE FUNDS ALLOTTED SHALL BE USED PRIMARILY
ON THE FOLLOWING:

a. SALARIES OR ADDITIONAL PAY FOR MEMBERS OF
ENFORCEMENT TEAMS;

b. PURCHASE OF PROTECTIVE GEAR DURING
ENFORCEMENT ACTIONS;

c. TRANSPORT, HAULING, WAREHOUSE AND
DESTRUCTION EXPENSES OF SEIZED ILLICIT
FINISHED GOODS, RAW MATERIALS AND MACHINES,
INCLUDING THE HIRING OF THIRD PARTY SECURITY
SERVICE PROVIDERS FOR THE STORAGE FACILITIES;

d. FUNDS FOR INTELLIGENCE GATHERING AND
SURVEILLANCE OPERATIONS;

VEHICLES, FUEL AND MEAL ALLOWANCES DURING
ENFORCEMENT ACTIONS;

e.

f. TRAINING FUNDS FOR INTELLIGENCE GATHERING
AND SURVEILLANCE OPERATIONS.

THE TASK FORCE SHALL SUBMIT AN ANNUAL REPORT TO THE
COMMISSIONER OF INTERNAL REVENUE AS WELL AS TO THE
SECRETARY OF FINANCE. SUCH REPORT SHALL ALSO BE
SUBMITTED TO THE JOINT CONGRESSIONAL OVERSIGHT
COMMITTEE ON ILLICIT TRADE ON EXCISABLE PRODUCTS
CREATED UNDER SECTION 290-A OF THE NIRC, AS AMENDED.

(D) xxx
(E) xxx


SECTION 12. Repealing Clause. All laws, executive orders, presidential decrees,
rules and regulations and other issuances contrary to or inconsistent with this Act shall be
deemed repealed or modified accordingly.

SECTION 13. Separability Clause. — If any provision of this Act is subsequently
declared invalid or unconstitutional, the other provisions hereof which are not affected thereby
shall remain in full force and effect.

SECTION 14. Effectivity. This Act shall take effect fifteen (15) days from the date of
publication in the Official Gazette or in a newspaper of general circulation.

Approved,