DTI-BIR joint ops yield shop closure, seizure of non-compliant vape products in Manila

By DTI-Fair Trade Enforcement Bureau
June 23, 2023

MAKATI CITY – The joint forces of the Department of Trade and Industry (DTI) and Bureau of Internal Revenue (BIR) resulted in the closure of two (2) vape stores and confiscation of 989 units of non-compliant vaporized nicotine and non-nicotine products and novel tobacco products worth P344,520.00 during the focused enforcement operation in Manila City, on 19 June 2023.

DTI-Consumer Protection Group (CPG) Undersecretary Atty. Ruth B. Castelo, together with the DTI-FTEB Director, Atty. Fhillip D. Sawali, led the inspection of vape products sold or offered for sale by 14 vape stores, while BIR Assistant Commissioner Atty. Jethro M. Sabariaga led the BIR registration inspection.

Recognizing that business registration requirements and tax obligations are part of the implementation of the Republic Act (RA) No. 11900, also known as the “Vaporized Nicotine and Non-Nicotine Products Regulation Act", the BIR has been very active in conducting inspection and pursuit against illegal sellers and traders of vape products.

Out of the 14 monitored vape stores, seven (7) non-conforming shops were issued a Notice of Violation (NOV) by the DTI-FTEB enforcement teams, requiring each to submit a written explanation within 48 hours from receipt thereof.

The common violations of vape retail establishments consist of: failure to post the minimum age requirement, lack of point-of-sale signage, and sale of vapor products that are appealing to minors, such as those with fruit, candy, and dessert flavors; and packaging that features cartoon characters.

Moreover, two (2) of the monitored non-compliant vape stores were found selling and promoting vape products within 100 meters from a playground, or entertainment facility frequented by minors. Consequently, the vape stores immediately stopped their operations at the order of the mall administrator.

USec. Atty. Castelo emphasized that the Department will maintain its heightened enforcement operations against violators of R.A. No. 11900 and its Implementing Rules and Regulations (IRR).

“The Department has done its part to guide business establishments and enrich their understanding of R.A. No. 11900 and its IRR. The violations that we observe today are a blatant disregard of the said reminders and advisories, particularly the law. With this, the Department will continue to conduct intensified enforcement operations to ensure appropriate actions are being taken against violators,” said USec. Atty. Castelo.

USec. Atty. Castelo added that apart from physical stores, the Department is also active in monitoring the compliance of e-commerce platforms.

With the DTI as the lead agency responsible for regulating the importation, manufacture, sale, packaging, distribution, use and communication of vaporized nicotine and non-nicotine products and novel tobacco products, USec. Atty. Castelo expressed gratitude to BIR for supporting the campaign against violators of R.A. No. 11900.

“In support of the DTI’s campaign against sellers of vape products that do not comply with the requirements of the law, the BIR issued the Revenue Regulations (RR) No. 14-2022, which set the tax guidelines for the subject vape products in accordance with R.A. No. 11900,” BIR Assistant Commissioner Atty. Jethro M. Sabariaga underscored.

He also highlighted that, like physical stores, RR No. 14-2022 also mandates online vape sellers to comply with the BIR and Department of Trade and Industry (DTI) or Securities and Exchange Commission (SEC) and Cooperative Development Authority (CDA) registration requirements to avoid penalties.

Accordingly, DTI-FTEB Director Atty. Sawali expressed that with the full support of other government agencies, the DTI enforcement team will keep up its momentum in enforcing R.A. No. 11900 and its IRR to protect minors from having access to vape products.

As of 15 June 2023, the enforcement teams have monitored and visited 621 physical vape stores. While 249 firms were found to be compliant during the physical validation, 229 firms were issued with Show Cause Orders (SCO) and Notices of Violation (NOV), mandating non-compliant firms to submit a written explanation within 48 hours from their receipt of SCOs and NOVs. The rest of the monitored stores were either closed or no longer selling vape products. In sum, the enforcement operations resulted in the seizure of 1,503 units of vape products worth P4,555,353.00.

Alongside the DTI- FTEB's enforcement operations in physical stores, its Online Monitoring Unit (OMU) has also intensified its monitoring initiatives, resulting in 31,570 monitored online vape stores. Of these, only 219 online stores were compliant, while 31,351 were non-compliant. Of the non-compliant online stores, only 1,525 have valid addresses and have been subjected to validation and physical inspection. During the said physical validation cum inspection, 46 NOVs were issued, while the rest were either closed or cannot be located.

Recognizing the challenge of regulating the selling of vape products by online merchants, twenty-six (26) SCOs were issued to different online platforms notifying them of online merchants selling or offering for sale vape products that do not conform with RA 11900 and its IRR. They were given 48 hours from receipt thereof to submit a written explanation.

The OMU monitors seven (7) major online platforms and 14 company websites daily.

Through the combined efforts of the on-the-ground and online enforcement teams, there are already 82 formal charges filed against violators of R.A. No. 11900 and its IRR. A case has also been filed against one of the largest e-commerce platforms in the country.

R.A. No. 11900 vests the regulatory jurisdiction over vapes and other novel tobacco products in the DTI while providing complementary roles to other government agencies, particularly the Department of Health (DOH), Food and Drug Administration (FDA), Bureau of Internal Revenue (BIR), Department of Social Welfare and Development (DSWD), Department of Education (DepEd), and Local Government Units (LGUs).

Further, the DTI also engages in a nationwide campaign against uncertified items in the market, including the enforcement of DTI technical regulations mandating compliance with Philippine Standard Certification Mark Schemes, particularly Department Administrative Order No. 02, Series of 2007.

To protect consumers or potential buyers of electrical and electronic products; mechanical or building and construction materials; and chemical and other consumer products and systems, DTI–Bureau of Philippine Standards (DTI-BPS) covers products and systems through implementing Mandatory Product Certification Schemes: the Philippine Standard (PS) Quality and/or Safety Certification Mark Licensing Scheme and the Import Commodity Clearance (ICC) Certification Scheme.