DOJ allows withdrawal of tax cases vs Mighty Corp

MANILA, Philippines — The Department of Justice has allowed the tax dodging cases filed by the Bureau of Internal Revenue against Mighty Corporation to be withdrawn after the cigarette company agreed to a settlement of its tax-related issues.

According to a joint resolution dated October 2, the Department of Justice should grant the motion to withdraw by the BIR on September 26 to promote the greater interest of the parties to the case.

"Wherefore, premises considered, complainant BIR's motion to withdraw dated Sept. 26, 2017 is hereby granted. The complaints in the instant cases are hereby deemed withdrawn," according to the resolution signed by Senior Assistant Prosecutor Sebastian Caponong Jr. and Assistant Prosecutors Ma. Lourdes Uy and Mary Ann Parong.

The BIR cited in its motion to withdraw the approved settlement of Mighty Corporation's excise tax deficiency and the compromise settlement of all its pending tax-related issues including those of its officers and shareholders.

President Rodrigo Duterte in July allowed the Department of Finance and the BIR to accept the P25 billion tax settlement offer of Mighty Corporation for its liabilities over the years.

The P25-billion offer was made by Mighty President and Director Oscar Barrientos in a letter sent to BIR Commissioner Cesar Dulay on July 10.

According to Barrientos, the settlement offer includes P3.5 billion for the deficiency in its excise taxes on its tobacco products and P21.5 billion for its internal revenue tax liabilities including income taxes from 2010 until it clinched an acquisition deal with Japan Tobacco.

According to the BIR, Section 204 of the National Internal Revenue Code gives authority to the Commissioner of the tax-collection agency to "compromise, abate and refund or credit taxes."

The motion for remand and reinvestigation of the cases dated July 20, 2017 and submission dated Sept. 7, 2017 filed by Sigfrid Fortun and Matthew Aaron Ong, lawyers for the cigarette firm, had been rendered moot and academic by the approved motion for withdrawal, according to the DOJ.

Before the deal with the government, Mighty has already made an initial payment of P3.44 billion to the government.

Mighty said that its settlement would be financed by an interim loan and the proceeds of its sale to Japan Tobacco.

Duterte said part of the money from the compromise settlement would be used to finance the rehabilitation of strife-torn Marawi City where security forces are still engaged in a protracted combat with Islamist militants who tried to establish a so-called Islamic State province in the area in May.

The fighting has destroyed many structures and homes in the city's central district and displaced hundreds of thousands of residents of the town and neighboring areas.