BIR files P9.56-B tax evasion raps vs Mighty

MANILA, Philippines - The Bureau of Internal Revenue (BIR) yesterday filed a P9.564-billion tax evasion case against cigarette manufacturer Mighty Corp. for the alleged use of counterfeit tax stamps.

In the criminal case filed before the Department of Justice (DOJ), the BIR accused the Bulacan-based cigarette firm and its officers of non-payment of excise tax and possession of counterfeit internal revenue stamps.

The respondents included former Armed Forces chief Edilberto Adan, the firm’s president; retired judge Oscar Barrientos, executive vice president; Alexander Wongchuking, vice president for external affairs and assistant corporate secretary; and company treasurer Ernesto Victa.

The complaint involved the fake tax stamps found by the BIR and the Bureau of Customs (BOC) in four of the cigarette firms’ warehouses in San Simon Industrial Park (SSIP), San Isidro, Pampanga on March 1.

According to the BIR’s inventory, 66,281 master cases containing 33.14 million packs of cigarettes were stored in the warehouses. Of these packs, the BIR said 87.5 percent bore fake tax stamps.

“The stamps are fake since they did not contain one of the multi-layered security features of a valid internal revenue stamp,” the BIR said in a statement.

“Likewise, they were not affixed at the production plant of Mighty Corp. in Barangay Tikay, Malolos, Bulacan as required by law since no official delivery receipts for the SSIP warehouses were presented,” it added.

The BIR explained the lack of official delivery receipts meant the cigarette packs found in the warehouses did not come from its Bulacan plant where the stamps should have been affixed.

It was also revealed that the subject warehouses in Pampanga were not registered with the BIR as confirmed by its Excise Large Taxpayer Regulatory Division.

“Thus, Mighty Corp. cannot legally remove these packs of cigarettes from their only plant in Tikay, Bulacan for delivery to the said unregistered warehouses,” the BIR said.

The BIR stressed the mere possession of the cigarette packs bearing fake tax stamps is illegal and a violation of the National Internal Revenue Code.

“As a consequence of its acts and omissions, Mighty Corp., together with its responsible corporate officers, is liable to pay an estimated aggregate deficiency excise tax liability in the total amount of P9.564 billion,” the BIR said.

Mighty Corp., through its legal counsel Sigfrid Fortun, welcomed the tax evasion case filed by the BIR.

“The company welcomes the filing by the BIR of the complaint as it provides us an opportunity to clear our names and show we violated no tax laws. We will continue to cooperate with government in its continuing effort at tax collection,” Fortun said.

Earlier, Mighty Corp. had agreed to pay P3 billion as a compromise settlement initially offered by President Duterte.

Duterte later increased the amount to P15 billion.

The Office of the President received the letter of Wongchuking signifying his agreement to the offer of P3 billion to be used for building hospitals in Basilan and Jolo, Sulu as well as improve the Mary Johnston Hospital in Manila.

Finance Secretary Carlos Dominguez III, however, said the government should file a case against Mighty Corp. before a settlement can be reached.

Justice Secretary Vitaliano Aguirre II agreed the filing of the charges against Mighty and its officers is necessary before the settlement can be considered.  

In a related development, Customs officials seized P15 million worth of imported cigarettes in Tagoloan, Misamis Oriental.

Teddy Raval, deputy commissioner of the BOC’s Intelligence Group, said the consignee declared the shipment as disposable diapers.

“The manifest reflects (it was) containing disposable diaper but when we (looked into) the second and third layer, we found boxes of cigarettes,” Raval said.

He said the smuggled cigarette brands were Septwolves and Farstar from Singapore.  – With Gerry Lee-Gorit