Guidelines for Disposition of Seized Products

Legal basis and binding coverage

DTI Department Order No. 17 is issued pursuant to Section 9 of Executive Order No. 913, Series of 1983.
Section 1 covers products that are seized and subject to disposition under DTI enforcement activities.
Sections 2, 3, 4, and 5 provide disposition rules that apply across multiple product categories handled under the Order.
Sections 8 and 14 impose audit-witnessing and accounting compliance requirements for disposition activities.

Policy and purpose

DTI Department Order No. 17 establishes procedural guidelines for the disposition of seized and forfeited products, including those bought by DTI agents or submitted to DTI by private parties as evidence.
Section 1 directs that where a product adversely affects health or safety, the process ends with referral for technical evaluation and, if unfit, destruction.
Section 6 requires that seized product disposition occurs only when forfeiture is expressly decided and has become final and executory, subject to specific perishable and exceptional sales rules.
Sections 2, 3, 5, and 14 require that disposition be conducted in a manner consistent with public interest and proper accounting/auditing controls.

Key terms and scope rules

Section 1 requires the Regional/Provincial Director to endorse a covered product for examination and technical evaluation when the Director believes it will adversely affect health or safety.
Section 2 covers “seized products which adversely affect health or safety” and mandates destruction/condemnation.
Section 3 covers seized products or goods that do not adversely affect health or safety and mandates disposal through specified modes.
Section 4 covers:
- products bought by DTI agents as evidence, and
- products abandoned under the administrative-case rule for unclaimed private submissions.
Section 5 covers disposition of counterfeit and substandard products under the same framework as destruction/other modes, subject to a prohibition on selling as to reputation.

Destruction or technical condemnation

Section 1 requires that if a referred product is found unfit or a menace to public health or safety, the Director shall forthwith order its destruction in accordance with Section 2.
Section 2 mandates destruction/condemnation of adversely health/safety-affecting seized products in the presence of:
- representatives of the apprehending unit, and
- the Commission on Audit.
Section 2 requires a certification issued by all present regarding such destruction/condemnation.
Section 2 requires the place, date, and time of disposition to be determined by the concerned Regional/Provincial Director, with notice given to all interested parties.

Disposition modes for non-hazardous products

Section 3 requires the Regional/Provincial Director to dispose of seized products or goods that do not adversely affect health or safety through one or more of the following modes.
Section 3(a) — Sale at Public Auction authorizes disposal by public auction, requiring:
- preparation of a list and particular description of products/goods covered by the Order,
- an appraisal at wholesale quantities by the Regional/Provincial Director’s representative and the Commission on Audit,
- assistance by persons with required technical knowledge and training or any agency of the Department when necessary to determine actual value.
Section 3(a) requires that the price set be treated as the floor price or starting bid price.
Section 3(a) — Notice of Sale requires:
- if the value of the goods does not exceed PHP 50,000.00, notice be posted conspicuously in public places for at least seven (7) days in the Regional/Provincial Office and at the Provincial Capital Municipality/City Hall of the place where seizure was made; and
- if the value of the goods exceeds PHP 50,000.00, notice be published in a newspaper of general or local circulation.
Section 3(a) requires Notice of Sale to indicate the date, time, and place of sale and a description of goods, and to include statements that:
- DTI reserves the right to reject any or all bids, and
- DTI may waive any defect or informality in bids, and
- DTI will accept bids considered most advantageous to the department.
Section 3(a) requires bidders to submit all bids in sealed envelopes addressed and filed with the Regional or Provincial Office.
Section 3(a) provides that the highest bid bidder is the winner; in case of a tie, re-bidding must be held following the same procedure.
Section 3(a) requires proceeds of the sale to be deposited with the National Treasury through the Cashier’s Office of the Regional/Provincial Office.

Sale through negotiation and other modes

Section 3(a.1) — Sale through negotiation allows resort to negotiation by a committee composed of:
- the Provincial Director as Chairman,
- a Commission on Audit representative, and
- the Financial Management Service representative.
Section 3(a.1.1) allows negotiation only in cases of failure of public auction.
Section 3(a.1.1.1) defines failure of public auction where there is only one offer, and provides that if sealed, the offer/bid shall not be opened.
Section 3(a.1.1.2) defines failure of public auction where all offers/tenders are non-complying or unacceptable, including tender unacceptability when it does not comply with prescribed legal, technical, and financial requirements for prequalification.
Section 3(a.1.2) allows negotiation singly (one-on-one) or in a group, provided due communication is established so the government gets the best price, and a member of the private sector preferably the People’s Economic Council (PEC) witnesses the negotiation.
Section 3(a.1.3) requires that to avert collusion, a record of negotiations must be maintained.
Section 3(a.1.4) requires that the agreed negotiation price shall not be lower than the floor price fixed by government or the highest offer submitted at the failed public auction—whichever is higher.
Section 3(b) authorizes donation to Government Agencies/Local Government Units including Barangays, with priority for those in areas declared under a state of calamity caused by natural or man-made disasters.
Section 3(c) authorizes donation to charitable or relief institutions that must be duly registered with the Department of Social Services and Development.
Section 3(c) requires donations under the donation modes to be photographed in group and duly receipted by the donees.
Section 3(d) authorizes exportation of imported products by ordering return to the country of origin, with exportation costs borne by the respondent in the pertinent administrative case.
Section 3(e) authorizes recycling at reasonable cost when ordered disposed of in the manner provided in Section 3.
Section 3(f) authorizes other modes determined or authorized by the Secretary or his duly authorized representative.

Counterfeit and substandard controls

Section 5 requires disposition of counterfeit and substandard products under the framework of Sections 1, 2, and 3, subject to an additional restriction.
Section 5 prohibits selling counterfeit/substandard products in any manner that prevents DTI from acquiring the reputation of being a seller of counterfeit/substandard products.
Section 3 (counterfeit-donation safeguard) requires that in donations of counterfeit products, the infringing trademarks and trademarks found on labels, hang tags, or other portions must be:
- first removed to prevent association with the intellectual property owner, and if removal is not practicable, then
- the marks and names must be defaced.

Disposition of evidence-buys and abandoned items

Section 4 requires disposition of:
- products bought by DTI agents as evidence, and
- abandoned products covered under the same abandonment rule,
  to follow Sections 1, 2, and 3.
Section 4 provides that products owned by private parties and submitted to DTI as evidence are considered abandoned if not claimed within four (4) months from the time the administrative case becomes executory.
Section 4 grants the Regional/Provincial Office the right to dispose of abandoned private submissions without need of notice to the owner.

When forfeiture is required

Section 6 requires that disposition of seized products occur only when the administrative decision expressly states that the products are forfeited in favor of the Government and when the decision has become final and executory.
Section 6 allows ordinary sale of perishable products when:
- the products are perishable, and
- there is no easy and inexpensive way to preserve them until the termination of the proceedings.
Section 6 sets an ordinary sale window for perishable products at within 60 days from date of seizure.
Section 6 requires at least seven (7) days notice to all interested parties before any perishable ordinary sale.
Section 6 allows prevention of disposition if the respondent:
- files within two days from notice a written objection to disposition of perishable products, and
- pays for the expenses of preservation.
Section 6 provides that regardless of the outcome of administrative proceedings, all expenses for preservation of perishable products are for the account of the respondent.

Exceptional immediate sales in price-control cases

Section 7 authorizes, notwithstanding Section 6, immediate ordinary sale upon seizure in highly exceptional cases involving enforcement of laws and rules on:
- price control,
- profiteering,
- hoarding,
- price manipulation, and allied laws and rules.
Section 7 requires that immediate sale is allowed only when there is declaration of calamity or acute shortage in the supply of the seized products.
Section 7 directs that the sale be made to the consuming public at legal prices through retailer/s under terms and conditions determined by the Regional/Provincial Director.
Section 7 requires the proceeds less expenses of the sale be held in trust by the Cashier of the Regional/Provincial Office until the termination of the administrative proceedings.
Section 7 requires that if the respondent is found not to have violated the applicable laws, the proceeds be given to the respondent.
Section 7 requires that if the respondent is found to have violated the applicable laws, the proceeds be forfeited in favor of the Government.

Audit presence and required witnesses

Section 8 requires disposition activities to be conducted in the presence of a Commission on Audit representative.
Section 8 requires the Commission on Audit representative to witness the proceedings and sign the report together with members of the Enforcement Team.

Seizure receipts and accounting distribution

Section 9 requires every Apprehending Officer to issue a receipt for every seizure/confiscation they make, regardless of articles or amounts involved.
Section 9 requires receipts to be signed by:
- members of the Enforcement Team, and
- the owner of the establishment or his representative.
Section 9 provides that if the owner/representative refuses to sign, such refusal must be duly noted and signed by Team Members.
Section 9 requires receipts to be accomplished in five (5) copies, distributed as follows:
- Original to the owner of the articles seized; in his absence to the occupant of the premises or person in charge; and if still none, the Original must be posted in the premises where articles were seized.
- Duplicate to the Regional/Provincial Director.
- Triplicate to the Auditor or his representatives.
- Quadruplicate to the receiving officer (in charge of storage).
- Quintuplicate kept by the Apprehending Officer.
Section 9 requires distribution of the copies within 24 hours after seizure.

Government accounts and custodianship

Section 10 sets up accounts for recording and reporting monies realized from sale or disposition of seized products:
- 8-70-500 Inventories a Goods/Merchandise confiscated
- 8-86-500 a Miscellaneous Liabilities and Deferred Credit Goods
- Sub-Account 1-58-500 a Miscellaneous Income a Sale of Goods/Merchandise Confiscated
Section 11 requires the Regional/Provincial Director to designate an employee as Custodian for seized/confiscated products and for products used/submitted to DTI as evidence.
Section 11 assigns the Custodian duties to:
- preserve and ensure safe keeping;
- record the value of all covered products (seized/confiscated; bought by DTI agents and used as evidence; submitted to DTI as evidence by private parties);
- record return of products to rightful owners; and
- record sale, donation, exportation, recycling, etc.

Monthly reporting to Commission on Audit

Section 12 requires the Regional/Provincial Office to submit to the Commission on Audit a monthly report of all products acquired through seizure/confiscation.
Section 12 requires the report to include:
- description of products,
- quantity,
- estimated value,
- date, place, and mode of acquisition, and
- location or where stored.
Section 12 requires dispositions made during the month to be indicated.
Section 12 mandates that the inventory report be submitted within ten (10) days of the following month.

Jurisdiction for OLA-forfeited cases

Section 13 requires that disposition of products ordered seized and forfeited by the Office of Legal Affairs in an administrative case elevated by DTI-NCR to OLA shall be disposed of by DTI-NCR.

Accounting and auditing compliance

Section 14 requires all concerned to follow applicable accounting and auditing rules and regulations in disposition of products under the Order.

Exclusion: real properties

Section 15 requires that the Order does not cover seized and forfeited real properties.
Section 15 directs that real properties must be disposed of under existing laws and rules.

Repeal and separability

Section 16 modifies or revokes all existing orders and directives or parts thereof inconsistent with the Order’s provisions.
Section 17 governs effectivity through publication and the fifteen (15) days post-publication rule.