Gov’t gets P3.44-B partial settlement from Mighty

The government will accept a portion of the settlement being pitched by Mighty Corp. as payment for its unsettled taxes but Finance Secretary Carlos G. Dominguez III said the homegrown cigarette manufacturer and its officials were not yet off the hook.

In a statement, Dominguez said the Department of Finance would receive an initial payment of P3.44 billion from Japan Tobacco International’s Philippine unit, which deposited a manager’s check in the name of the Bureau of Internal Revenue yesterday in the Land Bank of the Philippines branch at the Social Security System compound in Quezon City.

“We will accept the initial payment,” the Finance chief said.

Asked if the acceptance of the initial payment meant the government was accepting the P25-billion full settlement offer of Mighty, the DOF said it was still awaiting a directive from Malacañang.

JTI Philippines made the payment on behalf of Mighty Corp. following the signing of a memorandum of agreement (MOA) between the two cigarette firms. The signing paved the way for JTI’s purchase of Mighty’s assets for P45 billion.

Industry sources said the MOA essentially meant it was “a done deal” between the two cigarette firms.

“The next step is the purchase agreement,” a source said.

“Before the month ends, half of the P25-billion tax compromise will be remitted to the government/the Bureau of Internal Revenue,” the source added.

Last week, the DOF quoted Mighty president Oscar Barrientos as saying in a July 10 letter to Internal Revenue Commissioner Caesar R. Dulay that the settlement sum would be funded by an interim loan from JTI Philippines and portion of the proceeds from the sale of Mighty’s manufacturing and distribution business.

However, Dominguez said that “even if the government accepts Mighty’s settlement offer, this does not preclude any criminal charges that the BIR may file against the company in connection with its tax-related cases, as these cannot be compromised.”

Dulay earlier told the Inquirer that the fate of the tax evasion cases that the BIR had filed against Mighty in the Department of Justice would “depend on the conditions and nature of the approval from the DOF.”

A source noted that since JTI’s parent firm Japan Tobacco Inc. remained partly owned by the “conservative” Japanese government, it might buy Mighty’s assets only when the company was cleared of the tax evasion charges.

In all, Mighty had been slapped three tax evasion cases for P37.9 billion in unpaid excise taxes due to its alleged use of fake tax stamps to dodge payments.