BIR files P9.56-B tax evasion case vs Mighty Corp
MANILA, Philippines (UPDATED) – The Bureau of Internal Revenue (BIR) filed a P9.564-billion tax evasion complaint against cigarette firm Mighty Corporation and its executives for allegedly using fake stamps on their products to dodge excise tax payment.
BIR Public Information and Education Division chief Reymarie dela Cruz confirmed to Rappler that the agency filed the complaint before the Department of Justice (DOJ) Wednesday morning, March 22.
The complaint is filed against Mighty, together with its officers: retired general Edilberto Adan, president; retired judge Oscar Barrientos, executive vice president; Alexander Wongchuking, vice president for external affairs and assistant corporate secretary; and Ernesto Victa, treasurer.
The BIR said the complaint is based on "Unlawful Possession of Articles Subject to Excise Tax without Payment of the Tax, and for Possessing False, Counterfeit, Restored or Altered Stamps, in violation of Sections 263 and 265(c) of the National Internal Revenue Code of 1997, as amended (Tax Code)."
The complaint was filed following raids of the Bureau of Customs, BIR personnel, and local police on Mighty's warehouses in San Isidro, Pampanga yielding billions of pesos worth of cigarettes with fake stamps.
Mighty promised to cooperate with the government.
"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," Mighty's legal counsel, Sigfried Fortun, told Rappler in a text message.
Fake tax stamps
The BIR noted that the only Mighty production plant registered with the bureau is the one in Barangay Tikay in Malolos, Bulacan.
It was then discovered that 4 warehouses at the San Simon Industrial Park (SSIP) in San Isidro, Pampanga were being leased to Mighty.
BIR personnel inspected the Pampanga warehouses and randomly tested 10 master cases of cigarettes. BIR personnel declared the tax stamps on all 10 cases as fake.
After an inventory of all 66,281 master cases, the BIR found that 87.5% of the total 33,140,500 packs of cigarettes had 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.
The BIR also noted that because the Malolos warehouse was the only one registered with the bureau, tax stamps should have been affixed on the cigarettes inside the Malolos warehouse premises.
"They were not affixed at the production plant of Mighty Corporation in Barangay Tikay, Malolos, Bulacan as required by law since no official delivery receipts for the SSIP warehouses were presented by the respondent," the BIR said.
The BIR pursued the case even after Mighty owner Alexander Wongchuking took the offer of President Rodrigo Duterte to pay the government P3 billion, which is "double" the P1.5 billion worth of Mighty cigarettes found with fake stamps.
Duterte threw the challenge to Wongchuking on March 9, and said in a media interview that if the businessman agreed, he would "forget about the printing of P1.5 billion worth of fake stamps."
Wongchuking wrote the Office of the President a week later to inform the Chief Executive that he was ready to settle for P3 billion – P1 billion up front, and the rest to be paid on installment.
The amount of taxes Mighty allegedly owes the government, however, is more than thrice as much.
The President had earlier ordered the arrest of the Mighty owner for alleged "economic sabotage."
The President's directive, however, was not carried out then as there were no pending charges against Wongchuking. Instead, Justice Secretary Vitaliano Aguirre II issued Immigration Lookout Bulletin Orders against Wongchuking and his brother, Caesar.
Mighty had denied the use of fake tax stamps, and alleged that based on its own check, the BIR used "faulty" machines during its raids.
The case against Mighty is the 9th case filed by the BIR since it started its Run After Tax Evaders (RATE) program when BIR Commissioner Caesar Dulay took office. – Rappler.com