Where do seized and forfeited goods go?
By: Atty. Aziza Hannah A. Bacay on November 20,2025
TO effectively implement the Customs Modernization and Tariff Act (CMTA), the head and other officials of the Bureau of Customs (BOC) are granted the authority to exercise police authority, which includes the seizure and forfeiture of goods.
Seizure refers to the actual or constructive taking of the goods through a duly issued Warrant of Seizure and Detention. Forfeiture is the acquisition of ownership of goods as a result of forfeiture proceedings. Forfeiture and seizure are applicable in circumstances such as when the goods are prohibited, undeclared, or unmanifested, or when there is failure to pay the appropriate duties and taxes on the importation of goods, among others.
Certain provisions of the CMTA, as implemented by Customs Administrative Order (CAO) 03-2020, outline the rules and regulations on the modes of disposition of seized, abandoned, and forfeited goods in BOC custody.
Different modes
The disposition of goods varies depending on the nature of the goods involved.
Forfeited and seized goods, including perishable ones, may be sold at a public auction. If the goods remain unsold due to lack of bidders or lack of acceptable bids, they may be donated to another government agency or declared for official use of the BOC. If the goods are deemed not suitable for donation to a government agency or for an official use, they may be subject to a negotiated sale or re-export.
However, there are goods which cannot be subject to a public auction. Those which are injurious to public health and are prohibited (i.e., infringing goods, adulterated and misbranded goods for human consumption, etc.) are subject to destruction or condemnation.
Meanwhile, goods manufactured in gold, silver, or other precious metals wherein the stamp, brand, or mark does not indicate the actual finesse of the quality of the metal — while categorized as prohibited goods — shall not be destroyed, but turned over to the Bangko Sentral ng Pilipinas.
Similarly, restricted and regulated goods shall be turned over to the appropriate government body or agency. Restricted goods, such as marijuana, opium, and synthetic drugs, shall be turned over to the Dangerous Drugs Board. Dynamite, gunpowder, and ammunition shall be turned over to the Armed Forces of the Philippines.
In all modes of disposition of goods, government agencies and the public shall be invited by the BOC to witness it.
CAO 03-2020 likewise provides guidelines and requirements in the conduct of a public auction.
Subject to posting of notice of public auction and its publication in a newspaper of general circulation, the auction shall be made at the port where the goods are located. For heavy equipment, motor vehicles, and other goods which require appraisal, the public auction may be conducted by a third-party auctioneer.
The floor price of the goods subject to a public auction shall not be less than the landed cost of the goods, taking into consideration the normal depreciation value, which shall be computed in accordance with the guidelines in CAO 03-2020.
While the auction is open to the public, the bidders must be registered, and should not be any of the following: (a) an employee or official of BOC; (b) the importer or consignee of the goods being auctioned; (c) the defaulting offeror who failed to pay the bidding price; or (d) the offerors who are not present during the opening of the sealed offers.
The highest bidder shall be given the Certificate of Award upon full payment of the bid amount.
In case of failed biddings, the goods may be the subject of a negotiated sale. The Committee of Negotiated Sale shall implement the sale and shall ensure that the offers shall be most advantageous to the interests of the government. Upon identification of the most advantageous offer and payment of the bid price, the offeror shall be issued a Notice of Award, which shall still be subject to the approval or disapproval of the Department of Finance.
Where do proceeds go?
Upon sale of the goods subjected to auction, the following expenses and obligations shall be paid from the proceeds thereof:
1. Customs duties, except in case of forfeited goods
2. Taxes and other charges due to the government
3.Government storage charges
4. Expenses for appraisal advertisement, and sale of auctioned goods
5. Arrastre, private storage, and demurrage charges
6.Freight
The remaining proceeds from the public auction, after deduction of the abovementioned expenses, shall be deposited to an account called the Forfeiture Fund. This shall be utilized by the BOC to outsource certain services, such as management of inventory, maintenance and sale of goods, among others. It shall also be used to facilitate customs proceedings, to enhance customs intelligence and enforcement capability, and to support modernization and trade facilitation initiatives of BOC.
Aziza Hannah A. Bacay is a Senior Associate of Mata-Perez, Tamayo & Francisco (MTF Counsel). This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com
The article was published at the More to Follow Column at The Manila Times on November 20,2025. Please see this link.
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