What’s happening to the Mighty tax evasion case?
SPYBITS - Babe G. Romualdez (The Philippine Star) - May 9, 2017 - 12:00am

We have been receiving emails inquiring about the status of the P9.56 billion tax evasion case against local cigarette manufacturer Mighty Corp. and urging us to write about what’s happening. Many of our readers are also wondering why the “news coverage for such a high profile case like this one seems to have suddenly waned,” as one of our email writers noted.

We asked Finance Secretary Sonny Dominguez about the case of Mighty Corp. and he told us that a complaint has been filed by the Bureau of Internal Revenue (BIR) before the Department of Justice  (DOJ) – and so the ball is now definitely in the latter’s court. Several sources however claim that certain people in the DOJ have allegedly been “foot dragging,” with slow progress having been made following the creation of a panel of prosecutors to conduct a preliminary investigation of the tax raps filed against the Bulacan-based manufacturer. The preliminary investigation would determine whether officials of the embattled cigarette manufacturer should be charged for the use of fake stamps on cigarettes and for tax evasion.

Operatives of the Bureau of Customs (BOC) conducted a raid last year on warehouses in Pangasinan allegedly owned by Mighty Corp. which resulted in the seizure of smuggled raw materials and fake cigarettes. This was followed by a series of raids in several warehouses located in Pampanga, General Santos City and Bulacan that led to the discovery of thousands of cases of cigarettes bearing fake BIR stamps.

The BOC said their Pampanga raid yielded 62,000 master cases of cigarettes with fake stamps; the General Santos raid yielded more than 11,000 master cases, while an estimated 160,000 master cases were found in two warehouses during the Bulacan raid conducted last March. Incidentally, one master case contains 500 packs of cigarettes.

Mighty Corp. officials, among them former Armed Forces Deputy Chief of Staff Edilberto Adan – who is an executive vice president of the company – contend that the allegations have no factual basis, adding that the BIR did not conduct a prior tax assessment. The BIR however maintains that Mighty has been faking its own tax stamps, pointing to regenerated or reused quick reference (QR) codes.

To the uninformed, a QR code is a barcode that contains a UIC or unique identifier code that is printed on the tax stamp that is put on every individual cigarette pack. These tax stamps containing unique QR codes could be traced to the particular cigarette manufacturer or importer that had the stamps printed.  

It can be recalled that earlier in March, a Manila Regional Trial Court  judge issued a 20-day temporary restraining order that prevented BOC operatives from conducting further raids and inspections on the warehouses of Mighty Corp. after previous raids yielded billions worth of cigarettes with fake tax stamps. The BOC quickly filed an administrative complaint against the RTC judge for blatantly disregarding the “long-established rule that courts do not have jurisdiction over seizure and forfeiture proceedings,” and that based on Section 202 of Republic Act 10863 or the Customs Modernization and Tariff Act, it is the BOC that has the “exclusive jurisdiction” over all seizure and forfeiture cases.

The TRO made the local cigarette manufacturer virtually “untouchable and immune” from the BOC, the agency said. What was also surprising about the TRO is that Mighty only asked for a 72-hour stay but the judge “went overboard” and gave the company 20 days, remarked an official of the BOC which also ordered the suspension of accreditation of Mighty following the series of raids. The judge who issued the TRO eventually inhibited from the case following a flurry of criticisms and public uproar. 

Several readers pointed out that when President Rodrigo Duterte publicly declared that he was willing for Mighty to settle its tax deficiency case for P3 billion, the company was quick to agree to the settlement – but offering to pay on an “installment” basis – which the president rejected. Finance Secretary Dominguez also strongly voiced his opposition, saying the cigarette manufacturer is liable for “10 times” the said amount for failing to pay its excise taxes.

The fact is, allegations against Mighty for technical smuggling and tax evasion have been swirling over the past few years. Sources claim that as early as 2013, then-Finance secretary Cesar Purisima ordered the BOC and the BIR to conduct a probe against the company for suspected technical smuggling through under-declaration. The same source said Mighty reportedly declared 37 million cigarette packs when the volume was actually 100 million. Following an audit from the BIR, Mighty changed its declaration to 61 million packs.

In January 2014, a party list congressman wanted to conduct a probe on Mighty Corp.’s alleged non-payment of P4.4-billion excise tax on cigarettes and for under-declaration of raw materials. Despite a DOF memo that listed findings on alleged anomalies – with a Finance undersecretary, the BIR and the BOC heads also tasked to probe the corporation – no report was submitted.

We’re told the P9.56-billion tax case is only the first salvo as the DOF is preparing more complaints based on other raids conducted on warehouses reportedly owned by Mighty Corp. This case should be closely watched and monitored as it could provide a big windfall for the government if the billions in unpaid taxes are collected.

The P9.56 billion could be used to fund part of the government’s critical infrastructure projects in the countryside or the construction of rehabilitation centers for drug addicts. Or as DepEd Secretary Leonor Briones noted, the money can used for the construction of 7,600 classrooms or pay for the salaries of 35,000 more public school teachers. 

As one email sender stressed, “the DOJ owes it to the people to see to it that this case is pursued expeditiously and not allow it to fade into oblivion like what happened all these years.” +++

* * *

Email: spybits08@gmail.com

 

 

 

 

EVASION CASE
Philstar
Facebook
  • Latest
  • Trending
Trending
Latest
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

SIGN IN
or sign in with
Read and share the latest news
whenever and wherever you are.
Top Stories
Features the most relevant stories,
exclusive content, analyses and special reports.
As It Happens
Get bite-sized highlights and up-to-date
information as the news breaks.
Latest
View the most recent
stories of the day.
Log-in
Lorem ipsum dolor sit amet,
consectetur adipiscing elit.
Quisque justo est, auctor vel ullamcorper.
Log-in
Lorem ipsum dolor sit amet,
consectetur adipiscing elit.
Quisque justo est, auctor vel ullamcorper.
How to follow As It Happens stories
STEP 1
Click the story in the As it Happens section.
How to follow As It Happens stories
STEP 2
Click "Follow Story" for updates on the news.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aliquam eu metus vitae felis tincidunt finibus ut id sapien. Integer volutpat dui eu malesuada dignissim. Sed varius justo nulla, fringilla convallis sem porta sed.
How to follow Author
STEP 1
Click on the author's name in the article.
How to follow Author
STEP 2
Once you click on the author's name, you will be
brought to the Authors page. Click "Follow Author"
to stay updated on the author's works
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aliquam eu metus vitae felis tincidunt finibus ut id sapien. Integer volutpat dui eu malesuada dignissim. Sed varius justo nulla, fringilla convallis sem porta sed.
How to follow Tags
STEP 1
Click on a tag in the article.
How to follow Tags
STEP 2
When you click on a tag, it will take you to the
dedicated tag page where you'll see the article
viewed, along with other stories with that tag.

Click the "follow tag" button to stay updated on
the topic.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aliquam eu metus vitae felis tincidunt finibus ut id sapien. Integer volutpat dui eu malesuada dignissim. Sed varius justo nulla, fringilla convallis sem porta sed.