REVENUE MEMORANDUM ORDER NO. 16-2023 issued on May 17, 2023
provides supplemental guidelines and procedures on the implementation of
Revenue Memorandum Order (RMO) No. 40-2022 to ensure effective conduct of
apprehension/seizure and detention of unlicensed/unregistered articles.
The BIR personnel coming from the concerned team of the BIR STRIKE
Group shall be authorized to conduct covert surveillance activities on identified
business establishments for possible violations of the provision of the National
Internal Revenue Code (NIRC) of 1997, as amended, based on a validly issued
Mission Order (MO) signed by the Deputy Commissioner – Operations Group
(DCIR-OG), Assistant Commissioner – Large Taxpayers Service (ACIR-LTS) or
the concerned Regional Director (RD), and shall perform the following procedures:
a. Observe the business operations of the subject. Develop leads from
other sources by obtaining information from neighboring business
establishments, locating additional outlets, stores, production
plant/factory, warehouses/storage, or branches of subject.
b. Know the suppliers and suppliers and buyers, and volume of deliveries
made to any by the subject. This should be done discreetly.
c. Perform test-buy operations in furtherance of the surveillance, if
applicable.
d. Determine any violation of internal revenue laws, rules and regulations
committed by the subject.
e. Submit a report within twenty-four (24) hours after completion of the
said activity.
After the conclusion of the covert surveillance, a Memorandum Report shall
be prepared recommending the necessary enforcement action, if the result of
surveillance activities warrants the same. In such case, the Memorandum Report
must state that there are reasonable grounds that articles subject to Excise Tax
are produced or kept, so far as may be necessary to examine, discover, or seize
the same.
Within forty-eight (48) hours from submission of the Memorandum Report
finding that there are reasonable grounds recommending for the necessary
enforcement action, the concerned BIR Strike Team shall prepare the necessary
MO for the Enforcement Action.
The BIR personnel coming from the concerned team of the BIR STRIKE
Group shall be authorized to conduct overt surveillance activities on identified
business establishments for possible violations of the provision of the NIRC of
1997, as amended, based on the issued MO signed by the concerned authorized
revenue official. The most important factor in overt surveillance is the element of
surprise. The subject must be caught unaware to prevent him from committing acts
which may defeat the purpose of the surveillance. When the subject is caught in
flagrante delicto of committing crimes punishable under the NIRC of 1997, as
amended, the concerned team of the BIR STRIKE Group must immediately
proceed to the enforcement action.
All enforcement activities shall be covered by MOs to be signed by the
DCIR-OG, ACIR-LTS or the concerned RD. The MOs shall be issued in
quadruplicate to be distributed as follows:
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Original – Revenue Officer/s directed to conduct the surveillance
and to be attached to the report on surveillance after
termination of the activity
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nd copy – Investigating office’s/division’s file copy
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rd copy – Issuing office’s/division’s file copy
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th copy – Subject’s copy
In addition to the procedures provided under subparagraph 4.2 of RMO No.
40-2022, the MO shall be served to the subject through personal service by
delivering personally a copy of the MO at the specified place stated in the MO. RD
or ACIR-LTS issuing the MO shall make sure that all personnel involved in the
enforcement operations are included in the MO.
In case personal service is not possible, the MO shall be served by
substituted service. However, substituted service can only be resorted to when the
subject is not present at the specified place stated in the MO. The different ways
by which substituted service shall be done are specified in Section 3.2.b.1 of this
Order. The service shall be proven by an Affidavit of Service of the concerned BIR
Strike Team who served the MO.
Together with the service of MO, the concerned BIR Strike Team shall
present to the subject a Checklist of Documentary Requirements (as specified in
the Order), if applicable, to be submitted/presented to the BIR by the latter within
two (2) days.
The taking of inventory count shall be attended by the concerned BIR Strike
Team; photographer and/or videographer; and subject or its authorized
representative. The absence of the subject or its authorized representative shall
not invalidate the inventory count.
The concerned BIR Strike Teams shall adequately secure the
location/storage room where the evidence is kept during the count to examine and
verify the authenticity of the articles found in the place of the subject. The steps to
be followed to secure the articles are specified in the Order. Whenever necessary,
secure assistance with other government agencies, such as but not limited to
National Bureau of Investigation (NBI), Bureau of Customs (BOC), Philippine
National Police (PNP), and concerned Local Government Unit (LGU).
After the inventory stock-taking/physical count and determining that the
items found in the subject’s premises are illicit (e.g. no stamps, fake stamps, etc.),
the same shall be immediately seized and confiscated, subject to the issuance of
the Apprehension Slip (BIR Form No. 0423).
An Apprehension Slip shall be issued for all seized/confiscated articles, raw
materials, packages, cigarette paper, tipping paper, cigarette filter tips,
ingredients, machinery, equipment, apparatus, mechanical contrivances, and
removable fixture of any sort used for their production and the use or possession
of false, counterfeit, restored or altered BIR internal revenue stamps, labels or tags
found to be in violation of any tax laws, rules and regulations. The subject must be
provided a copy of the Apprehension Slip, with proof of receipt thereof.
Within seven (7) days from receipt of the last Apprehension Slip concluding
the entire enforcement action, a Demand to Comply shall be communicated to
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subject relative to the detention of package containing taxable articles, pursuant
to Section 172 of the NIRC of 1997, as amended.
The subject, as part of due process, should be served with the MO,
Checklist of Documentary Requirements on the start of the enforcement activity
and whenever applicable, Apprehension Slip/s and Inventory Sheets on the last
day of the enforcement action and Demand to Comply.
A final Memorandum Report on all apprehended items with corresponding
Apprehension Slip/s must be prepared and issued by the Apprehending Team
within seven (7) days from the date of issuance of the last Apprehension Slip.
The apprehended items, which are in violation of the provision of the NIRC
of 1997, as amended, shall be considered evidence against the subject. It is the
duty of the Apprehending Team to check the proper turnover of evidence to the
Storage of Facility. The turnover of evidence shall be witnessed by the BIR Strike
Team, photographer and/ or videographer and subject or its authorized
representative.
The subject’s failure to attend, after being duly notified, shall be construed
as a waiver of his/her right to witness the turnover. A Certificate of Acceptance
must be issued and duly signed by the Apprehending Team and the representative
of the storage facility.
The DCIR-OG, as the Over-all Head, shall designate the storage facility for
the Large Taxpayers Service (LTS) Office and Regional Offices. However, the
custody of the apprehended items shall remain within the storage facility with the
LTS/Revenue Region having jurisdiction over the subject.
If the subject fails to comply and/or disagrees with the initial findings stated
in the Demand to Comply, the BIR Strike Team shall issue a Collection Letter
within five (5) days, for the collection of deficiency Excise Taxes arising from the
enforcement operation. No Preliminary Assessment Notice (PAN) shall be issued
when the excise due on excisable articles has not been paid pursuant to Section
228 of the NIRC of 1997, as amended. If the Excise Tax discrepancies remained
unsettled/unpaid, the corresponding Final Assessment Notice (FAN) and Formal
Letter of Demand (FLD) shall be issued and served upon the subject.
The subject, or any officer or employee of such subject, or any person
having possession, custody, or care of the books of accounts and other accounting
records containing entries relating to the business of the subject liable for tax, or
any other person, can be summoned to appear before the Commissioner of
Internal Revenue (CIR) or his duly authorized representative at a time and place
specified in the summons and to produce such books, papers, records, or other
data, and to give testimony. A criminal complaint for failure to obey summons shall
be initiated and filed against the subject and other responsible officer/person in
case of failure to obey the SDT within the prescribed period.
In any case the subject offers to pay the deficiency excise taxes and
corresponding penalties, the offer of payment must originate from the subject. The
imposition of the compromise penalties shall be in accordance with revised
schedule of compromise penalties prescribed under existing revenue issuances
and regulations. However, imposition of/acceptance of compromise penalties are
amounts suggested for the settlement of criminal offense, thus, proper evaluation
of the case must be made determine if the offer to pay the compromise penalty by
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the subject should be accepted by the BIR Strike Team. The offer of compromise
settlement shall be governed by Section 204 of NIRC of 1997, as amended, and
as implemented by existing revenue issuances and regulations.
The result of the investigation and/or operation pursuant to this Order shall
be forwarded to the Prosecution Division for Large Taxpayers Service or the Legal
Division of the concerned Revenue Region, as the case may be, for evaluation
and filing of appropriate legal action in accordance with existing laws, rules and
regulations. A Demand Before Suit shall be issued for criminal complaints
involving collection of tax liabilities.
In the event that a case has already been filed in court, proper leave of court
for destruction should be filed before said court.
A Certificate of Remaining Evidence shall be issued pertaining to the
remaining evidence left to the Storage Facility, to be signed by the Apprehending
Team, attending lawyer, authorized representative of the Storage Facility, and two
(2) disinterested witnesses. A final memorandum report shall be issued by the
Apprehending Team stating the sample taken and the recommendation for
destruction of the remaining evidence in the Storage Facility, for approval of the
DCIR, OG.
The remaining apprehended items, regardless of subsequent payment of
unpaid Excise Taxes and incremental penalties, must be disposed of by
destruction or by any other appropriate modes of disposition at the discretion of
the CIR, subject to existing rules and regulations.
The DCIR-OG, ACIR, LTS and concerned RDs should assign a focal person
who will document the process of the seized/unlawful articles from the
commencement until completion.
It is the duty of the Apprehending Team to preserve all reports, photos and
videos of all activities relevant to the entire enforcement and operation until proper
turn over to the proper authority/office.