DOJ will consolidate tax evasion cases against Mighty Corp.

The Department of Justice will consolidate the two multibillion-peso tax evasion cases filed by the Bureau of Internal Revenue (BIR) against tobacco firm Mighty Corp., whose liabilities now total P36.5-billion.

“The two cases involve similar facts and issues. We will consolidate them,” Justice Secretary Vitaliano Aguirre II said on Wednesday at the weekly Kapihan sa Manila Bay.

At last Monday’s Cabinet meeting, the compromise settlement between the government and Mighty was against discussed, according to Aguirre.

President Rodrigo Duterte was still open to a settlement, Aguirre said. But Finance Secretary Carlos Dominguez stressed that a settlement must be a reasonable amount, considering that the tax liabilities of Mighty from its use of fake tax stamps has now reached P36.5 billion.

Earlier, Aguirre said Mighty was amenable to paying P3 billion as a compromise.

“The President asked how much was the proposed compromise amount and I said we already declared P3-billion,” Aguirre said. “Vehemently, Secreary Dominguez said it should not be less than P15-billion.”

Nothing was final about the deal, he added.

Mighty cigarette products kept in San Simon warehouse in Pampanga.
CONTRIBUTED PHOTO

Meanwhile, he said the DOJ investigation through its prosecution panel would proceed as scheduled.

In the latest complaint, the BIR accused Mighty Corp. executives, led by owner Alexander Wongchuking, of violations of the National Internal Revenue Code for unlawful possession of articles subject to excise tax without payment of the tax and for possessing false, counterfeit, restored or altered stamps.

The BIR again named as co-respondents in this case Edilberto Adan, Mighty president; Oscar Barrientos, company executive vice president; and Ernesto Victa, company treasurer .

Adan is a retired lieutenant general who was an deputy chief of staff in the Armed Forces of the Philippines, and Bararientos is a retired judge.

The new complaint stemmed from a raid conducted by the BIR and Bureau of Customs last March 24 on the tobacco firm’s warehouses in Barangay Matimbubong in San Ildefonso, Bulacan. The raiding team found 536, 000 cigarette packs in 1, 072 master cases with fake stamps.

“Internal revenue stamps affixed on the cigarette packs were tested using the Taggant reader, a BIR-registered equipment used to test the authenticity of stamps affixed on cigarette packs,” the BIR said. “Based on the 24-day validation activity conducted from March 27, 2017 to May 5, 2017, one hundred percent of the total stamps tested on 536,000 cigarette packs are fake. The master cases containing the said cigarettes with fake stamps were marked and seized.”

The 536, 000 cigarette packs were part of the 81, 591, 500 packs contained in 163, 183 master cases found in the warehouses.

The bureau alleged that the stamps were fake since they did not contain the multi-layered security features of a valid internal revenue stamp and were not affixed at the production plant of Mighty Corp. in Bulacan as required by law, which means the seized master cases came from another manufacturing plant.

The BIR further cited the lack of official delivery receipts for the San Ildefonso warehouses.

“Such failure to present the official delivery receipts showed that the cigarette packs in the subject warehouses did not come from the manufacturing plant in Barangay Tikay where such stamps should have been affixed to confirm that the proper taxes are paid before articles subject to excise tax are removed from the production plant,’ the complaint pointed out.

The first tax evasion case filed by the BIR against Mighty Corp. last March involved the master cases of cigarettes worth P2.3 billion bearing fake tax stamps seized from the firm’s warehouse in San Simon Industrial Park in Pampanga.

The DOJ panel of prosecutors, led by Senior Assistant State Prosecutor Sebastian Caponong, has already started the preliminary investigation on the first case.

In a hearing last May 4, Wongchuking, Barrientos and Victa appeared before the panel and submitted their counter-affidavits denying the allegations of the BIR and seeking dismissal of the charges. /atm