P26.93-billion tax-evasion case filed vs Mighty

Another tax-evasion case, this time to the tune of P26.93 billion, was slapped against Mighty Corp., as the government threatens to confiscate the cigarette manufacturer’s assets if it fails to settle its tax liabilities.

The Bureau of Internal Revenue (BIR) charged before the Department of Justice (DOJ) Mighty Corp. officials President Lt. Gen. Edilberto P. Adan, AFP (Ret.); Executive Vice President Oscar P. Barrientos; Vice President for External Affairs and Assistant Corporate Secretary Alexander D. Wongchuking, and Treasurer Ernesto A. Victa.

They were charged with 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 the National Internal Revenue Code of 1997.

The case stemmed from the raid conducted in a warehouses in Bulacan, where the cigarettes seized carry fake tax stamps.

“As a consequence of the criminal act of Mighty Corp., together with its responsible corporate officers, of using fake internal revenue stamps, it evaded payment of the correct excise tax and is liable to pay an estimated aggregate deficiency excise tax liability in the total amount of P26.93 billion, inclusive of increments,” the BIR said in a statement.

As an offshoot of the surveillance and seizure activities conducted by the Bureau of Customs (BOC) in March 2017, BIR Commissioner Caesar R. Dulay issued a mission order directing revenue officers of the Large Taxpayers Service to conduct an inventory of the cigarettes stored in Mighty Corp.’s warehouses at Kilometer 64, Barangay Matimbubong, San Ildefonso, Bulacan.

According to the BIR, the raid resulted in the seizure of a total of 81,591,500 cigarette packs contained in 163,183 master cases. 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.

Based on the 24-day validation activity conducted from March 27 to May 5, 2017, 100 percent of the total stamps tested on 536,000 cigarette packs, or 1,072 master cases, in both warehouses were found to be fake, according to the BIR.

The master cases containing the cigarettes with fake stamps were marked and seized. The stamps were deemed fake, since they did not contain one of the multilayered security features of a valid internal-revenue stamp.

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 two warehouses were presented by the respondent company  per certification of revenue officers.

Failure to present the official delivery receipts, according to the BIR, means the cigarette packs in the warehouses did not come from the manufacturing plant in Barangay Tikay, where the stamps should have been affixed, and to confirm that the proper taxes are paid before the articles subject to excise tax are removed from the production plant.

The BIR further stated the warehouses in Barangay Matimbubong, San Ildefonso, Bulacan, are not registered with the BIR, as certified by the Excise Large Taxpayer Regulatory Division, meaning Mighty Corp. cannot legally remove the packs of cigarettes from its only plant in Tikay, Bulacan, for delivery to the said unregistered warehouses.

“Mighty Corp.’s mere unexplained possession of the said packs of cigarettes with fake internal-revenue stamps is illegal and a violation of the Tax Code,” the BIR statement said.

This is the second case filed against Mighty Corp., and is the 23rd filed under the Run After Tax Evaders program of the BIR.

The first complaint filed by the BIR at the DOJ against the cigarette maker was a P9.56-billion tax-evasion case for the alleged use of fake tax stamps on its cigarette products found in five of its warehouses in San Simon, Pampanga.

Finance Secretary Carlos G. Dominguez III earlier said an estimated four to five more cases will be filed by the BIR against Mighty Corp. Dominguez, on the sidelines of the recent Asian Development Bank (ADB) Annual Meeting in Japan, said the government’s computation of Mighty’s tax liabilities could reach as much as P30 billion, pending the filing of new tax-evasion cases in the next two weeks.

He said Mighty Corp. will be forced to pay what it owes the BIR, even if it would mean selling off its assets and the company, or having the government takeover the company and collect the proceeds.

Rea Cu, Joel San Juan, Cai Ordinario