Senator Sherwin Gatchalian called for a stronger conviction rate in cases involving illicit product arrests and seizures, urging enhanced coordination among government agencies
“We need to avoid dismissal of cases due to technicalities. This goes to the BOC [Bureau of Customs], BIR [Bureau of Internal Revenue] and the DOJ [Department of Justice]. Number two, we need to impose administrative penalties to officials found to be negligent in implementing technical rules,” Gatchalian said during the Senate Committee on Ways and Means hearing on April 2, 2025.
Gatchalian, who led the hearing, said that of 1,296 raids conducted by the BOC between 2018 and 2024, only 64 cases were filed. He expressed concern over the low conviction rate, adding that less than 1 percent of seizures result in convictions.
“Sad to say that we’re losing the fight against illicit trade in tobacco because we’re not prosecuting and we’re not convicting enough,” Gatchalian said.
BIR head revenue executive assistant Dondanon Galera said that from 2023 to 2025, the BIR filed 35 tax evasion cases with the DOJ, involving an estimated tax liability of P17.3 billion.
The BOC reported filing 64 cases with the DOJ from 2018 to 2025, involving a dutiable value of P2.8 billion and estimated duties and taxes of P3.9 billion. However, BOC assistant commissioner Vincent Philip Maronilla noted that only five of those cases remained pending in courts, with others undergoing preliminary investigation or automatic review.
“That is a very complicated process. However, we want to make sure that enforcement and conviction are achieved at the same time. I commend the BOC and the BIR for doing their job in doing the raids and enforcing the laws, but we want to see conviction in these cases. At the end of the day, it’s the conviction that matters,” Gatchalian said.
The Department of Trade and Industry also reported filing 32 formal charges against manufacturers, importers and vape brands since September 2024, and taking down over 4 million online posts selling illicit vape products.
“We have taken down 4,047,279 online posts or pages,” a representative of the DTI said. “But what has been happening, is that as soon as we take down, there are new ones coming out, but we are constantly coordinating with all these platforms.”
Gatchalian said unchecked smuggling not only robs the government of revenues but also endangers public health and fuels organized crime.
“Enforcement and prosecution are a more effective way of combating illicit trade than the severity of the punishment. The certainty of being caught and the certainty of being convicted are very important in deterring illicit trade,” said Gatchalian.
Department of Health (DOH) director Maria Kristina Marasigan said the department supports the Senate’s investigation on illicit trade.
“Illicit trade undermines landmark tobacco control policies such as the Sin Tax Reform Law and the Graphic Health Warnings Law,” she said.
Federation of Philippine Industries (FPI) chairman Jesus Lim Arranza also cited the need for stronger enforcement against smugglers. “Who should be liable for the dereliction of duty? Why are there no suspects being arrested,” asked Arranza.
Philippine Tobacco Institute (PTI) president Jericho Nograles cited the need for interagency coordination against illicit goods.
Nograles asked the government to revisit the policy of automatic annual tax indexation.
“The mechanical escalation of excise tax each year without regard to actual market and enforcement conditions has already resulted in declining government revenues and increased smoking prevalence due to the shift of consumers toward untaxed, unregulated products. Indexation, while administratively simple, is contributing to a policy environment where legitimate businesses are increasingly displaced by smugglers and counterfeiters,” said Nograles.
“The consequences of inaction are clear: shrinking government revenues, reduced effectiveness of public health programs and increasing dominance of criminal syndicates in the excisable product market,” he said.
National Economic and Development Authority director Bien Ganapin said that aside from the economic impact, there are other economic costs due to illicit trade, including market distortions. “The presence of cheaper and unregulated tobacco products can reduce the sales of legitimate businesses. This negatively affects their profitability,” Ganapin said.